Legal Costs Reforms could be good news for your business

06 Jun 2011

If your business has ever found itself on the wrong end of a claim then read on.  The Government has launched an attack on “No Win, No Fee” arrangements and the so-called “Compensation Culture”, which can only be a good thing for most businesses.

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


–  Reform of the CFA (“No Win, No Fee”) regime so that success fees and After the Event Insurance (ATE) premiums will no longer be recoverable from the losing side.


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, said “Many of the reforms outlined 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.  These changes 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”.


This article appears in the June 2011 edition of The Southern Daily Echo/Hampshire Business.