The government's much criticised civil justice reforms will come into force at the beginning of April 2013 and any injured claimants bringing personal injury claims are strongly advised to take urgent action before the changes take effect.
The plans to reform the funding of civil claims, which include both personal injury and clinical negligence claims, impact injured claimants' rights to recover elements of their legal costs.
By way of a summary, the following changes will be implemented:
1. Recoverability of Success Fees
At present solicitors are entitled to charge a success fee (a percentage uplift on their fees) in Conditional Fee (“no win no fee”) Agreement cases to balance out the potential risk of losing a case and not being paid at all. At present these success fees are paid by the other side in addition to damages and legal costs. However from April 2013, success fees will no longer be recoverable from the other side, instead they will be paid by claimants themselves.
2. Damages Based Agreements
Damages Based Agreements will be permitted as an alternative means of funding cases. Fees is successful cases will be calculated at an agreed percentage (capped at 25%) of the damages recovered by the claimant, although this is offset against any costs that are recovered directly from the opponent.
3. "One way costs shifting" and Recoverability of After the Event Insurance Premiums
Under the present system, the default position is that the winning party in any case pays the loser’s costs. However, from April 2013 "Qualified one way costs shifting" is being introduced which will mean that the claimant will not be responsible for the Defendant's costs in unsuccessful cases (although this will not apply if the Claimant fails to beat an offer made by the Defendant).
An After the Event Insurance is currently often taken out to cover any liability to pay the other side’s costs (and to pay the Claimant’s own disbursements) in case the claim is lost. However from April 2013 the premium for such insurance will not be recoverable from the other side, except potentially only in respect of medico-legal reports in some clinical negligence claims.
In addition to the above, an increase in the Small Claims Limit has been proposed. At present only personal injury and clinical negligence claims where the damages for injury, pain and suffering is less than £1,000 fall within the small claims limit, where no costs at all are recoverable from the other side. The government have proposed to increase this limit to £5,000 for road traffic personal injury claims. Most "whiplash" injuries are worth less than £5,000 and this means they will fall within the small claims limits. No legal costs will be recoverable from the other side in these cases. Injured claimants would have to meet their own costs.
This increase in the small claims limit is still at consultation stage, however its implementation is likely at some stage.
The above changes are significantly less advantageous to injured claimants than the current funding system. Any potential claimants who are considering bringing a claim for personal injury or clinical negligence are therefore strongly advised to seek specialist legal advice without delay.