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Jackson reforms

27 August 2013

The Ministry of Justice’s newly launched web page, which they will use to publish updates on civil litigation reform, has already been used to provide further clarification of the Government’s position on contingency fee agreements, referral fees and reform in relation to low value claims.

Contingency fee caps announced
Among Lord Justice Jackson’s recommendations to be brought into effect next April via the Legal Aid, Sentencing and Punishment of Offenders Act are a ban on recovery of success fees relating to conditional fee agreements (CFAs) and the introduction of damages based agreements (DBAs) in litigated claims. It is likely many litigants will have to find this money from the damages they recover. To protect litigants, and particularly personal injury claimants, from excessive deductions from damages, Jackson proposed that consideration to given to imposing a cap on success fees by reference to the level of the damages award. He also recommended a cap on the fees available under DBAs. Since then it has been widely expected that the cap for personal injury claims would be 25% and it was thought probable that this would be calculated against general damages.

The MoJ’s announcement confirms for the first time the level of the caps to be introduced. These will be:

  • for personal injury claims, 25% of damages, excluding damages for future care and loss under CFAs and
  • DBAs for all other claims, there will only be a cap in relation to DBAs, at 50% of damages.

The wording ‘future care and loss’ is an unusual one which is perhaps designed to ensure that future gratuitous care is also captured (though most lawyers would agree this is a loss). The decision to include all past losses will be a controversial one, particularly as many past losses will be real financial liabilities that have either been discharged by the claimant or will need to be discharged once damages are available. One stark example might be a catastrophically injured claimant who by the time of trial might already have spent in excess of £1 million in purchasing suitable accommodation and paying for private care. Claimants may now adjust their tactics so that such regimes are put in place only after trial. In any event, there is a clear risk of solicitor-client disputes where a tactical decision to put such a regime in place might allow the solicitor to recover more cost.

Referral fees ban
The Government has confirmed its intention to ensure regulators have effective rules ready to bring a ban into effect in April 2013. This is despite concerns expressed by regulations in relation to the effectiveness of a ban, and ongoing uncertainty as to just which activities amount to referrals and which are advertising, for example.

Low Value Injury Claims Reform
The Government has confirmed on more than one occasion its intention to extend the existing pre action protocol for low value injury claims arising from motor accidents to include employers and public liability claims, and to raise the cap on claims subject to the process from £10,000 to £25,000. To date, the MoJ has insisted it wishes to see this in place by April 2013, although many industry observers have said for some time that there is a real risk of the deadline being pushed back given the need not only to draft appropriate rules, but also to modify the electronic claims portal which facilitates the process.

Though there has been no unambiguous statement that the deadline will be moved, there is a notable lack of any mention of April 2013 on the new MoJ website, which simply states that reforms will be brought in “in the future”. This could indicate that Helen Grant who has recently taken on the civil litigation reform brief at the MoJ has decided the May 2013 deadline is unrealistic, or at lest at risk.

Earlier this year, the Government expressed its intention to consult on increasing the small claims track limit to £5,000 and to introduce measures aimed at reducing whiplash claims. The website confirms that this remains the government’s intention. Any increase in the small claims track limit would intrude into the value bands currently reserved for the low value claims protocol, and there would be sense in completing this consultation before any amendment to the protocol. Whether that is the Helen Grant’s new plan, only time will tell.

For more information
Please get in touch  if you would like more information about the ongoing reforms to civil litigation. We will also be holding seminars in London, Birmingham and Manchester in November.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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