Major litigation and funding changes will affect your business

30 Apr 2013

This article will appear in the May 2013 edition of the Hampshire Chamber Business News circulated with the Southern Daily Echo.

Some time ago now this I wrote an article to inform Chamber members and others in the business community about planned changes to legal costs.  The article was entitled "Legal costs reforms could be good news for your business".  That article concluded by explaining that many of the changes would be welcomed by business but that as always the devil would be in the detail and that careful drafting would be required to implement some of the proposed changes.

These reforms arise from the report of Lord Justice Jackson.  They were largely implemented on 1 April 2013.  The reforms are complex and detailed and I cannot hope to convey the detail of all the changes in this short article.  However, it is important to be aware of some of the headlines if your business is currently involved in litigation of any kind or if litigation is contemplated.  They will have an affect on the way the litigation is dealt with and in turn an affect on your business.

One important change is the increase in the small claims limit from £5,000 to £10,000.  In small claims cases the general rule is that you cannot recover the bulk of your legal costs even if you are successful.  This is likely to mean that you will need to look at new strategies with your lawyers as regards how best to pursue monies owed to your business as well as how best to defend claims made against your business.   There are some new funding models such as damages-based agreements which may help here.

Another major change is in relation to so-called "no win-no fee" agreements.   In most cases, if such an agreement is entered into after 1 April 2013, it will no longer be possible to recover a success fee or a so-called "after the event" insurance premium from the losing party.  This will be welcomed by many businesses for whom the fear of a large costs bill was the primary reason why they felt compelled to settle borderline cases.  They may now feel that this re-balancing enables them to take a more robust stance against unmeritorious claims.

Overall the detail is indeed devilish so do seek advice and assistance where required.