Martin Partington: Spotlight on the Justice System

Keeping the English Legal System under review

Posts Tagged ‘costs

Consultation on extending Fixed Recoverable Costs

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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:

  1. 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);
  2. A new process and FRC for Noise Induced Hearing Loss;
  3. 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/

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Post-implementation review of Legal Aid, Sentencing and Punishment of Offenders Act 2012, Part 2 (The ‘Jackson’ reforms on costs)

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Part 2 of LASPO introduced changes recommended by Lord Justice Jackson on the rules relating to the costs of civil litigation. The Post-Implementation Review (PIR) report, also published in February 2019,  covers the following five changes made by the Act:

  • non-recoverability of conditional fee agreement (CFA) success fees;
  • non-recoverability of after the event insurance (ATE) premiums;
  • the introduction of Damages-Based Agreements (DBAs);
  • section 55 changes to Part 36 offers; and
  • banning referral fees in personal injury (PI) cases.

These changes came into effect in April 2013. Other changes – dealing with different issues, and which came into effect at different times – were not within the scope of the PIR

According to the PIR review, the changes had five objectives:

  1. reducing the costs of civil litigation (Objective 1);
  2. rebalancing costs liabilities between claimants and defendants (Objective 2);
  3. promoting access to justice at proportionate cost (Objective 3);
  4. encouraging early settlement (Objective 4); and
  5. reducing unmeritorious claims (Objective 5).

The review drew on evidence presented to the review team by a range of stakeholders involved in civil litigation. Data were also subject to empirical analysis by Professors Fenn and Rickman – two researchers with a long track record of empirical analysis of court and process data.

The overall conclusion of the Review was that, in general, the objectives of the legislation had been met.

There was concern that the regulations relating to Damages Based Agreements were not as clear as they might be; the Government will consider whether to amend them in due course.

The Review did not consider other reforms made by Lord Justice Jackson, in particular relating to much greater use of fixed recoverable costs. The Report states that the Government is not currently minded to introduce these further changes.

Practitioners had expressed the view, during review, that a period of regulatory stability would be welcome. It seems that  the Government has largely accepted this.

The Press Release and Report can be accessed at https://www.gov.uk/government/publications/post-implementation-review-of-part-2-of-laspo

 

 

 

 

Written by lwtmp

March 10, 2019 at 1:45 pm

Review of Civil Litigation Costs: Supplementary Report – Lord Justice Jackson

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When Lord Woolf started out on his major programme of reform of the Civil Justice system – which came into effect with the introduction of new Civil Procedure Rules in 1999 – he was concerned about a wide range of issues. The most intractable of the problems he identified was how could the costs of litigation be kept proportionate to the subject matter and value of the dispute.

While there was considerable agreement that many of the changes he recommended had worked well, his proposals on the control of costs had not been as successful as they should have been.

Thus in 2009, Lord Justice Jackson was asked to undertake more work on the costs of civil litigation. His first report on the issue was published in 2010. (Noted in this blog in March 2010)

In 2016, Jackson was asked to revisit this topic, on which he has now published (July 2017) this supplementary report.

As Jackson notes:

In England and Wales, the winning party in litigation is entitled to recover costs from the losing party. The traditional approach has been that the winner adds up its costs at the end and then claims back as much as it can from the loser. That is a recipe for runaway costs.

He therefore argues (as indeed he did in his first report) that there are two fundamental ways to prevent runaway costs.

(i) a general scheme of fixed recoverable costs , i.e. those costs that the winning party can claim from the losing party;

(ii) imposing a budget for each individual case (“costs budgeting”)

Although fixed recoverable costs (FRC) had been introduced for  limited categories of cases before he reported in 2010, he recommended that FRC should be introduced for all fast-track cases. In its response to his first report, the Government did not at the time go that far.

The introduction of costs budgeting was also regarded initially by the legal profession as very controversial, and was not universally welcomed. In this later report, however, evidence from witnesses to his review stated that the system for costs budgeting had now settled down and was widely seen to be working pretty well.

At the heart of this review, there are the following recommendations:

  1. FRC should be introduced for all fast track cases. The amount of costs which are recoverable are laid out in a grid. Different sums are permitted for different stages of proceedings.
  2. Above the fast track, Jackson recommends the creation of a new ‘intermediate’ track for certain claims up to £100,000 which can be tried in three days or less, with no more than two expert witnesses giving oral evidence on each side. The intermediate track will have streamlined procedures and its own grid of FRC.
  3. Clinical negligence claims are often of low financial value, but of huge concern to the individuals on both sides. The complexity of such cases means that they are usually unsuited to either the fast track or the proposed intermediate track. For these Jackson recommends that the Department of Health and the Civil Justice Council should set up a joint working party with both claimant and defendant representatives to develop a bespoke process for handling clinical negligence claims up to £25,000. That bespoke process should have a grid of FRC attached. This scheme will capture most clinical negligence claims.
  4. In relation to business cases, Jackson states that it is essential that small and medium-sized enterprises  should have access to justice. The Federation of Small Businesses argued that there should be an FRC regime for commercial cases up to £250,000; the costs levels must be reasonable; they must balance incentives and “reduce the costs of going to law for small businesses”; there must be rigorous case management of cases subject to this regime; and there must be investment in modern IT systems to speed up court processes. Jackson does not think that all business cases require FRC up to the level suggested by the Federation. Instead he recommends a voluntary pilot of a ‘capped costs’ regime for business and property cases up to £250,000, with streamlined procedures and capped recoverable costs up to £80,000. If the pilot is successful, the regime could be rolled out more widely for use in appropriate cases.
  5. Jackson recommends measures to limit recoverable costs in judicial review claims, by extending the protective costs rules which are currently reserved for environmental cases. As he observes: Citizens must be able to challenge the executive without facing crushing costs liabilities if they lose.
  6. In relation to costs management, the budgeting process will continue to apply to proceedings falling outside the scope of FRC. One problem is that costs management cannot currently apply to costs incurred before the costs management process takes place. Jackson thinks that at some point further consideration may need to be given to setting a limited to these incurred costs, but that should not be considered further at this stage.

It is not known what the response of Government to these proposals will be. Any changes would be subject to further consultations.

The 2017 Jackson review may be accessed at https://www.judiciary.gov.uk/wp-content/uploads/2017/07/fixed-recoverable-costs-supplemental-report-online-2-1.pdf

 

Written by lwtmp

September 29, 2017 at 3:35 pm

Reforms to Civil Justice 2013 – funding of civil litigation

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Keeping track of the changes made to the Civil Justice system, in particular those which followed the reforms recommended by Lord Justice Jackson, is quite a challenge. The Ministry of Justice has provided a useful summary of the changes in the following note. There is also a link to a further website that gives more detail of the legislative basis for the changes that have been made. Links to both sites are set out below.

The main changes are:

  • No win no fee Conditional Fee Agreements (CFAs)remain available in civil cases, but the additional costs involved (success fee and insurance premiums) are no longer payable by the losing side.
  • No win no fee Damages Based Agreements (DBAs) are available in civil litigation for the first time.
  • Referral fees are banned in personal injury cases.
  • The introduction of new protocols extending the Road Traffic Act personal injury scheme to £25,000.
  • A new fixed recoverable costs (FRC) regime.
  • Claimants’ damages are protected: the fee that a successful claimant has to pay the lawyer – the lawyer’s ‘success fee’ in CFAs, or ‘payment’ in DBAs – is capped at 25% of the damages recovered, excluding damages for future care and loss
  • General damages for non-pecuniary loss such as pain, suffering and loss of amenity are increased by 10%
  • A new regime of ‘qualified one way costs shifting’ (QOCS) is introduced in personal injury cases which caps the amount that claimants may have to pay to defendants.  Claimants who lose, but whose claims are conducted in accordance with the rules, are protected from having to pay the defendants costs.
  • A new sanction on defendants to encourage earlier settlement of claims.

In addition, the functions of the Advisory Committee on Civil Costs, which was to provide advice to the Master of the Rolls on the Guideline Hourly Rates for solicitors, was transferred to the Civil Justice Council with effect from January 2013.

Information in this blog has been adapted from http://www.justice.gov.uk/civil-justice-reforms

More details are available at http://www.justice.gov.uk/civil-justice-reforms/main-changes

 

Written by lwtmp

January 1, 2014 at 10:16 am

Posted in Chapter 10, Chapter 8

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