March 2010

In January the eagerly awaited Report of Lord Justice Jackson on civil litigation costs was published. It recommended significant reforms to civil litigation potentially affecting almost every area of civil litigation from personal injury and defamation through to commercial litigation.

The key proposals made in the Report include the following:

Costs shifting - The Report proposes that in certain types of cases, in particular personal injury, judicial review and defamation cases, the long-established "loser pays" principle be partially abolished and replaced by qualified, 'one-way', cost shifting whereby an unsuccessful claimant would not be required to pay the defendant's costs but the defendant would be required to pay the claimant's costs if it was successful;

Success fees and After The Event ('ATE') insurance premiums - The Report recommends that success fees payable by litigants under conditional fee agreements (CFAs) and ATE insurance premiums to cover the adverse costs of litigation should not be recoverable from the other side if the client wins the case.

An increase in general damages – The Report proposes an increase to claimants' general damages in some types of cases, in particular personal injury and defamation cases, to enable them better to afford the success fees and premiums.

Contingency fees - Significantly, the Report recommends that lawyers should be able to enter into contingency fee agreements with their clients for contentious business provided that, among other things, the terms of such agreements are regulated;

Fixed costs for fast track cases – The Report proposes that a fixed costs regime for all fast track personal injury cases be considered. For other types of fast track cases, the Report proposes that there should be a financial limit on recoverable costs.

Commercial Court – The Report acknowledges the high degree of satisfaction amongst Commercial Court users (where much large commercial litigation is conducted), and does not propose any major changes save to stress the need for judges (both in the Commercial Court and generally) to take a firmer control of the process and the resulting costs;

Procedural changes - The Report encourages a greater understanding (by judges and lawyers alike) of the importance of electronic disclosure, as well as making recommendations about matters such as the Part 36 offer mechanism, the Pre-action protocols and controls on the length and content of witness statements and expert reports.

Comment - As Lord Justice Jackson trenchantly states in the foreword to his lengthy and detailed Report, his aim was to 'propose a coherent package of interlocking reforms, designed to control costs and promote access to justice.' He has gone a considerable way to achieving this commendable aim. However, while the Judiciary has given its 'unqualified support' for the Report, it of course remains to be seen how and when Lord Justice Jackson's proposed reforms will be implemented.