The Jackson Proposals take a Further Step towards Becoming Law
Key elements of the Jackson Report have now been formally embodied in the Legal Aid, Sentencing and Punishment of Offenders Bill 2010-11, which received its second reading in Parliament yesterday (only one week after its publication and first reading).
Although the Bill is a composite Bill, it does contain a number of the proposals originally set out by Lord Jackson in his Report reviewing civil litigation funding last year – proposals which the Government already said they intended to implement. The new provisions are set out in sections 41 to 50 of the draft Bill. In its current form, the Bill will have a significant impact on civil litigation funding and in particular the funding of personal injury claims.
As it currently stands, the law allows solicitors to charge a success fee in claims which are funded by way of a “no win no fee” agreement (conditional fee agreement) to reflect the risk of not being paid should the claim be unsuccessful. It is also common practice for Claimants in such cases to take out an after the event Insurance policy to insure themselves against the risk of having to pay the Defendant’s costs if their case is unsuccessful. At present both this success fee and the insurance premium is usually paid for by the losing Defendant.
Under the new provisions, although solicitors will still be entitled to claim a success fee when acting under a “no win no fee” agreement in successful cases, the losing Defendant will not have to pay it. Instead the Claimant will pay it out of their compensation. In addition, in most cases the losing Defendant will not have to pay any after the event insurance premiums. The exception to this provision is that insurance premiums will remain recoverable in clinical negligence cases where the after the event insurance policy has been taken out solely in respect of the cost of obtaining an expert report.
The Bill is likely to be met with mixed emotions, with Claimant Solicitors concerned that these provisions will lead to a restriction in access to justice particularly as it comes at the same time as the Government proposes to abolish Legal Aid funding for clinical negligence cases but with Defendant insurers commending the reduction in costs that they will have to pay. What is clear is that if these provisions receive Royal Assent then the legal costs system for personal injury claims in this country will be dramatically changed.
The full draft Bill can be viewed at http://services.parliament.uk/bills/2010-11/legalaidsentencingandpunishmentofoffenders.html.