Posts Tagged ‘cost of litigation’
Consultation on extending Fixed Recoverable Costs
Historically the civil justice system in England and Wales has operated under a ‘loser pays’ model, whereby the unsuccessful party to litigation covers the costs of the successful party. This can lead to high costs for the unsuccessful party.
In recent years, increasing consideration has been given to the idea that the costs paid by the loser should be fixed. Fixed Recoverable Costs (FRC) prescribe the amount that the winner can claim back from a losing party in civil litigation. These legal costs are set in advance by reference to grids of costs. Thus FRC have the advantage of giving both parties certainty as to the maximum amount they may have to pay if they are unsuccessful in their case. FRC can also ensure that the costs of cases are proportionate to the sum in issue.
FRC currently operate in most low value personal injury cases. The government and senior judiciary announced their support for extending FRC in November 2016, and Sir Rupert Jackson, then a judge of the Court of Appeal, was commissioned by the senior judiciary to develop proposals. Sir Rupert’s report, which was published in July 2017, follows on from his major report of 2010 looking at civil costs more widely, which led to significant reforms to controlling costs, including ‘no win, no fee’ reforms in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).
Sir Rupert’s July 2017 supplementary report which focuses on the extension of FRC, completes his recommendations. (See this blog, 29 September 2017) The Government has now decided that the time is now right to consider the extension of FRC to more cases, on the lines recommended by Sir Rupert.
The Government is not planning to take forward all Sir Rupert’s recommendations. This Consultation focusses on three specific matters:
- Extending FRC to cases valued up to £25,000 in damages in the fast track. (This principle has already been adopted for Clinical Negligence claims);
- A new process and FRC for Noise Induced Hearing Loss;
- Expanding the fast track to include the simple ‘intermediate’ cases valued £25,000–£100,000 in damages.
The Consultation runs until 28 June 2019.
For details go to https://consult.justice.gov.uk/digital-communications/fixed-recoverable-costs-consultation/
Post-implementation review of LASPO Part 2: the Jackson Reforms
I have noted elsewhere the fact that the Government has started a post-implementation review of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO). (See this blog, March 2018 and September 2018).
The principal focus is on changes to the legal aid scheme – Part 1 of the Act.
Part 2 of the Act introduced changes to the costs rules relating to civil litigation proposed in the review led by Lord Justice Jackson.
Progress with this review has been slower than with the legal aid review. But in June 2018, the Government published a short statement on how it thought the changes were going, and set out a number of questions on which it sought evidence from practitioners and other civil justice stakeholders.
The focus of the inquiry is on the five principal reforms contained in the Act. They are
- (i) non-recoverability of Conditional Fee Agreement success fees;
- (ii) non-recoverability of After the Event insurance premiums,
- (iii) the introduction of Damages-Based Agreements,
- (iv) section 55 changes to Part 36 offers to settle proceedings,
- (v) banning referral fees in personal injury cases.
The preliminary view of officials is that while their introduction was very contoversial, they are working pretty well in practice.
In June 2018, the Government has published an initial assessment together with a list of questions to which it hopes practitioners will respond during the summer of 2018. A further report will be published in due course.
The document is available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/719140/pir-part-2-laspo-initial-assessment.pdf
More fixed costs in civil litigation?
Lord Justice Jackson is indefatigable. He has not abandoned the issue of the cost of litigation on which he produced a major report at the end of 2009. Since then the Government has taken steps to implement some of Jackson’s proposals. But in his opinion, these have not yet gone far enough. So he has taken a recent opportunity to argue that now is the time for much greater use of fixed costs in the course of litigation.
He set out his views in a lecture delivered in January 2016. You can read the lecture at https://www.judiciary.gov.uk/wp-content/uploads/2016/01/fixedcostslecture-1.pdf
It is not yet known how far the Government is likely to take his proposals, but with the ferment of reforms currently surrounding the civil justice system (among others) it is reasonable to suppose that at least some further extension of fixed costs will be introduced in the not too distant future.
Litigation (crowd) funding – a new approach
Litigation funding is normally associated with high value commercial cases. Litigation funders provide the financial resources for high cost litigation and commercial arbitration on the basis that they will receive a return on their investment – often a percentage of damages recovered or agreed. Litigation funders will not take on personal injury cases or consumer cases because the damages involved are (usually) too low
But an article in the Sunday Times 21 June 2015 caught my attention. Under the headline Man, 87, sues care home for right to kiss his wife it was reported that an 87 year old man was seeking to establish a right to kiss his wife, who lives in a care home suffering from dementia.
At the end of the article it was stated that the man’s lawyers were working pro bono but also they were seeking to raise £4000 for legal fees through a new company called CrowdJustice.
Launched on 25 May 2015, CrowdJustice seeks to raise modest sums – up to £5000 – to help defray costs in cases which the company thinks have some social importance, such as the treatment of the elderly and vulnerable or have a wider community impact.
An example of the latter is the case being brought by a Colombian man, Gilberto Torres, who is fighting a legal case before the UK High Court in order to end the impunity of British oil companies’ actions abroad. He claims that
Me and my family have had our lives destroyed because I tried to take a stand when I saw human rights and environmental abuses being committed to protect the interests of BP in Colombia, where I worked as an engineer. I was kidnapped and tortured in retribution, and now we’ve been forced to leave Colombia and live in exile. Help us get our lives back, and help expose in court the human rights violations committed by fossil fuel companies abroad.
At the moment, CrowdJustice is taking cases on an invitation-only basis. But it inviting those who think they may have a case that affects their community to get in touch.
The website states:
When someone has a court case that they feel passionate about and that affects others in their community, they can set up a Case Page on CrowdJustice that explains what the case is about and why they need help funding it. That person – the Case Owner – sets a deadline and funding target of the amount they need to raise to help offset the costs of taking their case forward. It’s up to you to support them, help spread the word and make pledges to help them meet the funding target.
Only when the funding target is met do the pledges get collected and backers’ cards get charged. If the funding target is not met, the pledges made do not get collected.
When a case is successfully funded, a Case Owner will keep in touch and update backers about the latest developments in a case.
Unlike litigation funding, those who invest in these community cases will not usually see any return on their investment (unless they have pledged more than £1000, where they may receive a percentage of the sum pledged back). Any surplus at the end of a case is paid to the Access to Justice Foundation.
This is an innovative approach to the challenge of enabling access to justice in cases of potential social importance. For more details go to https://www.crowdjustice.co.uk/
For more details on the very different work of commercial litigation funders go to the home page of the Association of Litigation Funders of England and Wales at http://associationoflitigationfunders.com/.
This site gives links to the member companies who are offering litigation funding in commercial cases.
Paying for civil justice: policy on court fees
Late in 2013, the Government announced a short consultation on fees to be charged for using the civil courts. The Government’s argument is that, at a time or austerity, those who seek to use the courts – in particular to resolve high value disputes – should pay more towards to cost of so doing.
The Government’s case was summarised thus:
“The courts play a vital role in our democracy. They provide access to justice for those who need it, help to maintain social order and support the proper functioning of the economy. They:
- deal with those accused of committing crimes, acquitting the innocent and convicting and punishing the guilty;
- provide the right environment for business and commerce to flourish, giving people the confidence to enter into business safe in the knowledge that the commercial arrangements they agree will be recognised and enforced by the courts; and
- deal with matters affecting families, from protecting children at risk of harm to making arrangements for couples who are separating.
For many years, users have been charged fees to access the civil court system, which includes all civil, family and probate jurisdictions, as well as the Court of Protection and the Court of Appeal (Civil Division).
The power to charge fees in the civil court system of England and Wales is set out in a number of pieces of legislation, including the Courts Act 2003 and the Mental Capacity Act 2005. When setting fees in the civil court system, the Lord Chancellor is required to have regard to the principle that access to justice must not be denied.
In recent years, the government’s policy has been to set fees on the basis of full cost recovery: that is, the use of fee income to recover the full cost of the court system, minus the cost of the remissions system (fee waivers). However, until now, the courts have been operating at less than full cost recovery, which has diverted resources from other areas of operations.
It is critical that the courts are properly funded if they are to continue to provide access to justice whilst contributing to the ongoing development of a more efficient, modernised court service.
At the same time, the government has made reducing the fiscal deficit a top priority, in order to set the economy on course for growth. Under the terms of its Spending Review settlement, the Ministry of Justice is required to reduce its annual spending by over £2.5 billion by 2014/15. The courts, and those who use them, must make a contribution to reducing public spending.
Achieving this outcome in this environment involves some difficult choices: there is a limit to how much can be achieved by those spending cuts alone. For these reasons, the government believes that it is preferable that those who can afford to pay should contribute more to the costs of the courts, so that access to justice is preserved and the cost to the taxpayer is reduced.”
Within this context, proposals for very significant rises in court fees were floated. Some have argued that a consequence would be that high value international cases will move to other jurisdictions where fees are less. Others have argued that the proposals will have significant human rights implications.
Detailed policy announcements are anticipated later in 2014. Whatever the outcome, they will be very controversial.
See: https://consult.justice.gov.uk/digital-communications/court-fees-proposals-for-reform
Martin Partington: Introduction to the English Legal System 15th ed 2021
Oxford University Press Learning Link Resources
Martin Partington: Spotlight on the Justice System 