Lord Justice Jackson’s report on costs in civil litigation

Lord Justice Jackson’s report on costs in civil litigation has been published today.  His proposals make dramatic reading.

The headline proposals are as follows:

• Conditional fees.  These are commonly known as “no win, no fee” agreements.  In his view, these agreements have been a major contributor to disproportionate costs and therefore success fees and after-the-event insurance should no longer be recoverable from unsuccessful opponents.  The “no win, no fee” could still be recoverable from clients’ lawyer, but the success fees will be payable by the client and likely to come out of the damages recovered.
• Qualified one way shifting.  This would mean that the claimant would not pay the defendant’s costs, if unsuccessful, but the defendant would be required to pay the claimant’s costs if the claimant was successful.  There would need to be further consultation on which categories this qualified one way shifting would apply to.
• Contingency fees. This is where a lawyer will only be paid if their claim is successful and the lawyer is paid out of the settlement sum or damages recovered and usually as a percentage of that amount.  Lawyers should now be allowed to enter into contingency fees.  If ordered to pay costs, the unsuccessful party will only be required to pay a conventional amount with any difference paid by the successful party.  This is a very dramatic proposal. Previously, contingency fees have been associated with the perceived problems of litigating in the US.
• Before the event insurance (“BTE”).  This covers legal expenses and is taken out before an event which gives rise to civil litigation.  Lord Justice Jackson proposes that if BTE were to be used more widely it could produce benefits for small and medium sized enterprises. 
• Fixed costs in fast track litigation.  Personal injury costs should be fixed.  For other cases there should be a dual system whereby costs are fixed for certain types of case and in other cases, there be a financial limit on costs recoverable.  The ideal is for costs to be fixed for all types of claims in the fast track.
• Bankruptcy and insolvency.  For routine bankruptcy and insolvency cases the costs should be benchmarked.
• Pre-action protocols.  The specific protocols should remain and have been successful, but substantial parts of the general pre-action protocol should be repealed as “the one size fits all approach” has not worked.
• Alternative dispute resolution (“ADR”).  ADR has a vital role to play.  Lord Justice Jackson has not gone as far as saying that ADR should be compulsory, but proposes that there should be a serious campaign to ensure that everyone is better informed.  An authoritative handbook for ADR should be prepared.
• Disclosure. Disclosure is necessary, but can be an expensive process particularly in higher, complex cases.  Where the costs are likely to be disproportionate there should be a “menu” of disclosure options.
• Witness statements and expert evidence.  There is nothing fundamentally wrong with the manner in which evidence is currently adduced, but the substantial complaint is that witness statements and expert reports are unduly long.  Lord Justice Jackson recommends that for appropriate cases controls should be imposed on the content or length of the statement and costs sanctions should be imposed.
• Case management.  Where practicable cases should be allocated to judges with relevant expertise, a case remains with the same judge (as far as possible), standardising case management directions and ensuring that case management conferences and other interim hearings are not formulaic, but are used for effective case management. 
• Costs management.  Lawyers and judges should receive training in costs budgeting.  There should be a standard costs management procedure, which the Judges would have discretion to adopt.
• Part 36.  Part 36 does not go far enough and defendants need even more encouragement to accept offers made by claimant.  Where a defendant fails to beat a claimant’s offer, the claimant’s recovery should be enhanced by 10%.
• IT.  IT has an important role to play and e-working should be rolled out across the High Court in London and suitably adapted for the county courts.
• Summary and detailed assessments.  This generally works well.  For detailed assessments a new format for bills should be developed.