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The Jackson Reforms: Overview

The Jackson Reforms: Overview

What is Happening What this means Where to find the rules

Payin

g for Litig

ation

Contingency fees, or Damages Based Agreements (DBAs), are

being introduced. Lawyers will be able to share in the damages awarded to a claimant by way of payment for their legal services. The proportion of damages which can be shared as a contingency fee will be capped at 25% for PI claims, 35% for employment matters and

50% for commercial and other claims.

• In the right cases, provides a new funding option allowing a client to keep litigation costs off balance sheet.

• Lawyer and client are aligned in sharing the risks of litigation. Lawyers are a new entrant to the funding market, potentially increasing competition and choice for clients.

• Costs recovery from a losing opponent will continue as before but the client will be liable for any further amounts up to the percentage contingency fee agreed.

CPR 44.18

Damages Based Agreements Regulations 2013

CFA success fees and ATE premiums will no longer be recoverable from a losing opponent for arrangements made after 1 April 2013. Exceptions will exist for insolvency claims, privacy and

publication proceedings and mesothelioma claims.

• Winning parties must meet any agreed success fee and/or insurance premium from their own funds.

• Losing parties no longer face liability above and beyond the costs of the litigation itself.

• Risk that lower value cases are no longer economic to pursue.

Conditional Fee Order 2013

CPR 48.1 - 48.2 on transitional arrangements

CPR PD 48

10% increase in contractual or tortious general damages (non-monetary losses like pain, suffering, loss of amenity, nuisance, defamation).

• The quid pro quo for the loss of the ability to recover CFA success fees from a losing opponent, so not available if the claimant has a recoverable CFA under transitional rules or exceptions.

• Unlikely to affect commercial cases significantly; nor is the additional 10% likely to adequately compensate for the increased payments out of damages

a claimant may now face.

Simmons v Castle [2012] EWCA Civ 1039 and [2012] EWCA Civ 1288

Managin

g C

ost

s

Focus on proportionality. A new court test demands that the costs spent on a case bear a proportionate relationship to what is at stake, be it financial amounts, reputation or complexity. The Overriding Objective will include the need to deal with cases justly but also in a proportionate fashion.

• The court will not allow costs which are disproportionate to the global dispute, even if they are reasonably or necessarily incurred. This must be considered when taking strategic decisions and as costs accumulate.

• Proportionality will underpin the way the courts view cases but there is little guidance on how this will be applied in practice by the court.

CPR 1.1

CPR 44.3(7) on transitional

provisions

CPR 44. 4(5)

Costs management. In multi-track cases commenced after 1 April, parties must file prospective cost budgets. If the court then makes a Costs Management Order, on assessment the court will not depart from that approved budget figure without “good reason”. Commercial Court claims and claims above £2m in the TCC, Mercantile Courts and

Chancery Division will be outside the regime, unless the court otherwise directs.

• Handled well, a budget is a vital management tool for lawyers and for clients. Increased costs visibility between parties should be beneficial.

• If the regime works well, detailed assessments when the order is for standard costs should go. But the regime may take time to develop, especially when so many cases will not be affected.

CPR 3.12 - 3.18

CPR PD 3E

CPR 44.4(h)

CPR PD 44.3.1 - 44.3.7

Qualified One Way Costs Shifting (QOCS) will be introduced for personal injury and clinical negligence claimants.

• Even successful defendants will have to meet their own costs. Effectively, a losing claimant will not be liable for costs unless claim is struck out for abuse of process, or if claim is fundamentally dishonest.

• May affect attitudes to settlement: e.g. a successful Part 36 offer will shift the costs burden back to the claimant.

• The regime may apply in future to Judicial Review and privacy/publication cases. Potential defendants of these type of claims should watch with interest.

CPR 44.13 - 44.17

CPR 48.2

CPR PD 44.12.1 – 44.12.7

What is Happening What this means Where to find the rules

Managin

g L

itig

ation

Tougher stance by the court on managing cases or offering relief from sanctions.

• Parties must be well prepared for procedural steps in cases as breaches of court orders will be taken more seriously by the court and relief from the usual sanctions may not be given.

CPR3.1(8)

CPR3.9(1)

Disclosure. Parties must file and exchange information about their potential disclosure before first CMC. Standard disclosure will not be the usual direction: judges can choose from a “menu” of different directions.

• Increased reasons for parties to consider their documents earlier and better.

• Early engagement with the court and opponent may help achieve an appropriate disclosure order. Better prepared parties may prevail where the

right order is in contention.

CPR 31.5

A defendant who fails to beat a claimant Part 36 offer must pay an extra 10% on damages, as well as the usual costs penalties. The percentage is tapered after £500,000, and the maximum additional amount is £75,000.

• May incentivise defendants to make well-considered offers, or seriously consider claimant offers.

• £75,000 maximum penalty may not deter defendants in high value cases.

CPR 36.14(3)

Witness statements may be limited by the courts. New rules increase the court’s power to control number of witnesses and issues to deal with, and limit length of witness statements.

• Increased control may be welcomed by parties and witnesses: this is a phase of litigation which can become unnecessarily lengthy.

• Parties may be better placed to seek orders against opponents who are not proportionate in their approach to witness evidence.

CPR 32.2

Experts’ costs will be better monitored and potentially

curtailed. Parties must give costs estimates for expert evidence early in the case; courts will be able to order concurrent expert evidence,

which may increase efficiency/ curtail costs.

• Parties need to consider expert evidence earlier, and potentially obtain competitive quotes to justify costs to the court.

• Experts may need to prepare themselves for the new demands of concurrent evidence.

CPR 35.4

CPR PD 35.11.1 - 35.11.4

This document provides a general summary only and is not intended to be comprehensive nor legal advice. Specific legal advice should always be sought in relation to the particular facts of a given situation.

Nick Pryor Knowledge Development Lawyer Disputes T: +44 (0)20 3400 2676 Nick.pryor@blplaw.com

Sarah Breckenridge Knowledge Development Lawyer Disputes T: +44 (0)20 3400 4069 Sarah.breckenridge@blplaw.com

Claire McNamara Associate Director Disputes T: +44 (0)20 3400 4044 Claire.mcnamara@blplaw.com

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London, Moscow, Paris and Singapore www.blplaw.com

Getting in touch If you would like to discuss any of the reforms outlined in this overview, or need any more information, please get in touch. Claire McNamara Associate Director Disputes T: +44 (0)20 3400 4044 claire.mcnamara@blplaw.com Sarah Breckenridge Knowledge Development Lawyer Disputes T: +44 (0)20 3400 4069 sarah.breckenridge@blplaw.com Nick Pryor Knowledge Development Lawyer Disputes T: +44 (0)20 3400 2676 nick.pryor@blplaw.com

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