Lisa Wainwright of BHW Solicitors gives a guide to the Jackson reforms
Lord Justice Jackson’s much anticipated report was published on 14th January 2010 following a yearlong review of the costs of Litigation. Lord Justice Jackson examined the problems with the existing costs system and recommended improvements. Subsequently, there have been a number of important changes in the law which are effective from 1st April 2013.
The changes involve costs, funding and conduct of Litigation and will affect the way Judges, lawyers and the parties themselves approach it.
The overriding objective is to ensure proportionate costs linked to the value of the claim. This means that the Courts can now consider how complex the claim is and the behaviour of the parties during litigation, but proportionality will be key. The costs incurred by a party could be reasonable and even necessary but if they are considered to not be proportionate then they are unlikely to be awarded.
Conditional Fee Agreements
Conditional Fee Agreement success fees and After the Event Insurance premiums are no longer recoverable from the losing party where the Conditional Fee Agreement or insurance policy was entered into after 1st April 2013 (delayed for defamation and mesothelioma claims and until April 2015 for insolvency).
The losing party will only have to pay standard costs, with the Claimant having to pay any success fee and ATE premiums from their own damages.
Damage Based Agreements or Contingency fees
Damage Based Agreements will now be available which allows the lawyer to run a case and in return receive a share of the damages recovered. The level of this share is capped at 50% of the damages recovered in commercial claims, 35% in employment claims and 25% in personal injury claims.
Losing Defendants will only have to pay standard costs, so no increased costs liability, with any shortfall on costs to come out of the Claimant’s damages.
Costs of Litigation
A new costs management system, piloted in the Technology and Construction Court, is now in place for multi-track cases for claims that are started on or after 1 April 2013. Courts will now be able to control costs of the litigation from a very early stage by approving costs budgets at an early Case Management hearing.
Any costs incurred by the successful party which are over the approved budget figure, will not be awarded by the Court without good reason.
The limit of Small Claims has previously been fixed at £5,000 for a number of years, but as of 1st April 2013 is being increased to £10,000.00. This has a significant impact on claims under the £10,000 bracket, as there will now be a very limited recovery of costs on these claims, even if you succeed.
The limit for Personal Injury and housing claims remains at the current limit of £1,000.00.
Personal Injury claims – Qualified one-way costs shifting
Claimants will be awarded costs if successful but if they lose will not have to pay the Defendant’s costs unless the Claimant fails to beat a Part 36 settlement offer or where the Claimant has been fraudulent or the claim struck out.
Standard disclosure will no longer be the usual process for multi-track claims, although this remains for fast track matters. There will now be new menu of disclosure orders, with the Court having a greater control over the scope of disclosure, witness statements and Experts.
Where a party has failed to comply with a Court rule or Order, it will now be significantly more difficult to obtain the Court’s permission for relief from sanction. The argument that your opponent has suffered “no prejudice” will no longer be sufficient.
Such powers will force the parties to get on with the litigation and not allow delay, focusing on the litigation being conducted efficiently.
Part 36 – Settlement Offers
There is an additional sanction in respect of Claimant’s Part 36 Offers to settle.
In the event that the Claimant beats its offer at trial, the Claimant will now be awarded an additional 10% on top of the damages (up to a maximum of £75,000.00) which is on top of the existing penalties of costs awarded against them on an indemnity basis and interest of up to 10% above base rate on both damages and costs.
Lisa Wainwright is an Associate Solicitor at BHW Solicitors in Leicester and writes regularly on Dispute Resolution matters. Lisa can be contacted on 0116 281 6223 or firstname.lastname@example.org