Costs changes announced by Ken Clarke ‘not revolutionary’

30 Mar 2011

Justice Secretary Ken Clarke has indicated that legislation will be introduced to give effect to Lord Justice Jackson’s reforms.  Ken Clarke addressed the House of Commons yesterday regarding the Government’s plans to implement the civil litigation reform proposals put forward by Lord Justice Jackson.

Since Lord Justice Jackson’s report in January 2010 there has been uncertainty as to how the proposed reforms would be taken forward, if at all. This uncertainty has been increased given the changing political landscape during the course of the year.

The reforms include:

  • Reform of the CFA regime so that success fees and After the Event Insurance (ATE) premiums will no longer be recoverable from the losing side.
  • Allowing lawyers to enter into damages-based agreements or contingency fees.
  • Increasing General Damages by 10 per cent.At the same time Mr Clarke has outlined a further consultation entitled Solving Disputes in the County Courts: Creating a simpler, quicker and more Proportionate System. This proposes increasing the number of cases dealt with under the low value road traffic accident scheme and also opening it up to employer’s liability and public liability claims. The new consultation also raises other proposals including:
  • Raising the threshold for small claims cases where legal costs are not recoverable.
  • Introducing compulsory mediation for small claims.

Commenting on the reforms Ken Clarke stated “With no major reform for 15 years, the civil justice system got out of kilter. Businesses and other people who have been sued can find that spiralling legal costs, slow court processes, unnecessary litigation and the no win no fee structure…….are setting them back millions of pounds each year”.

Commenting on the announcements Kelvin Farmaner, Partner and Head of Insurance Litigation at Trethowans Solicitors, said

“It is helpful that the Government have now reduced the uncertainty by giving the clearest indication yet of the direction they intend to pursue with regards civil litigation and costs reforms. Many of the reforms outlined yesterday are not revolutionary but rather amount to a return to the situation which pertained in 1999 before any concerns were raised about the so-called compensation culture and before the Access to Justice Act.

Genuine Claimants should have nothing to fear as long as care is taken in the implementation of these changes and they will be welcomed by most businesses. As always the devil will be in the detail and in that respect careful drafting will be required to implement some of the changes. In particular if contingency fees are to be permitted in litigation then the draftsmen will have to revisit and tackle old chestnuts such as the indemnity principle and the common law concepts of maintenance and champerty”