Review of Litigation Costs - The Jackson Report
23 Feb 2010
In January 2009 the then Master of the Rolls, Sir Anthony Clarke, appointed Lord Justice Jackson to lead a comprehensive review of the rules and principles governing civil litigation costs and to make recommendations designed to promote access to justice at proportionate cost. In his final report Jackson LJ presents the findings of his review and proposes substantial reforms to the civil litigation system in England and Wales. The final report was delivered to Sir Anthony’s successor, Lord Neuberger, in late December 2009 and was published on 14 January 2010.
Jackson LJ’s "Review of Civil Litigation Costs: Final Report” can be accessed at:
http://www.judiciary.gov.uk/about_judiciary/cost-review/reports.htm
In his final report Jackson LJ has presented extensive proposals which are intended to be a "coherent package of interlocking reforms designed to control costs and promote access to justice”. In doing so Jackson LJ has identified and addressed key questions and issues that impact upon the current costs regime. For example, how existing costs principles, such as the requirement of the losing party to pay costs to the winning party, operate and how they influence the behavior of both parties to litigation and practitioners. Another important aspect of Jackson LJ’s review is his consideration of the effect case management/procedural rules have on costs and how changes in procedure could lead to more proportionate costs
Jackson LJ’s proposed reforms, if implemented by Government, would affect almost every area of civil litigation ranging from small personal injury claims to high value commercial litigation and could potentially have a needed practical and positive effect on the civil litigation system.
For more detail on the aspects of Jackson LJ’s report set out below, click on the relevant link:
Contested Probate
Bringing a claim against an Estate of a deceased person is often a difficult decision to make and due to the nature of the claim more often than not ends up with potentially costly litigation being commenced.
Lord Justice Jackson, in his costs review, is looking at litigation costs in general but also more specifically at claims of this nature. Due to the type of claim costs information is not exchanged between parties at the same early stage as with other litigation making settlement hard to consider. Lord Justice Jackson has recommended that the costs regime is altered so that parties do have to exchange costs information shortly after the commencement of proceeding which should assist settlement.
Lord Justice Jackson has also recommended that any costs deductible from the Estate should be set at a proportionate level at the outset of the litigation. The Judge would need to decide who would pay any balance of the costs. This ‘saving’ provision means that parties may be dissuaded from incurring huge costs on a point of principal.
The benefit of these recommendations, to the parties conducting the litigation, is that they are fully appraised of the costs risks that they face early on and therefore there is a greater chance that attempts at settlement will be made.
If you would like any further information on contested probate claims then please contact Philip D’Arcy on 0118 951 6828 or Jessica Irwin on 0118 951 6824.
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Tenant Disrepair Claims
Lord Justice Jackson in his current review of costs is tackling a range of areas in the property sector, one of which is claims brought by tenants for disrepair to residential property.
Landlords should be aware at the outset of a tenancy that they have repair obligations as set out in Section 11 of the Landlord & Tenant Act 1985. Often, when claims arise the parties try to resolve matters without the need to resort to litigation. This is due to the fact that the landlord understands his obligations and the tenant cannot afford to commence expensive legal proceedings.
Lord Justice Jackson recognises that there are limited methods of funding claims for tenants, which may be stifling tenants claims. After the event insurance is seldom available and no win no fee arrangements are unlikely to be appropriate. Therefore the only remaining methods are by way of legal aid, which is also limited by virtue of its assessment of applicants’ means, or paying privately, which is not often an option for tenants.
However, Lord Justice Jackson is recommending that the costs position is altered so that more people will benefit from the costs protection afforded to those with Legal Aid. This alteration will give a tenant greater protection from adverse costs risks meaning that any costs awarded will be in proportion to their means.
The risk, if the recommendations are accepted, is that tenants may commence proceedings more readily even if the merits of their claim are not strong, and yet the landlord, if successful, is unlikely recover his costs whilst the tenant if successful will still recover his costs. Landlords should, as a matter of course, to try to avoid such claims wherever possible.
If you would like any further information on disrepair claims then please then please contact Jessica Irwin on 0118 951 6824 or Lauren Hales on 0118 951 6944.
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Possession Claims
This article considers the implications of the review in relation to possession claims. A later article will deal with the implications for tenant disrepair claims.
Lord Justice Jackson is concerned that the existing legal position in the above areas is complex and in need of simplification. The question is what could this review mean for landlords and tenants?
The review’s proposals include the following;
a) Greater use of fixed costs in possession claims, limiting landlords recovery of their costs,
b) Encouraging the use of the online issuing service, Possession Claims online.
c) The Rent Arrears Pre Action Protocol to be brought into line with the European Convention on Human Rights, and
d) Those not adhering to the Pre Action Protocols will suffer cost consequences.
The outcome of these recommendations is that landlords and tenants will face increased levels of costs if they do not conduct themselves appropriately. The aim of the recommendations being that the overall costs are minimised and the court process is streamlined. These are only recommendations at present and it will be interesting to see if the next government adopts them.
If you would like any further information on disrepair claims then please then please contact Jessica Irwin on 0118 951 6824 or Lauren Hales on 0118 951 6944.
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Defamation
Defamation claims are one of the few areas where the decision is still reached by jury – unusual in civil cases. Whilst the presence of a jury is comforting to many bringing a defamation claim it is more expensive than trial by judge. Lord Justice Jackson recommends that automatic trial by jury in these cases should be reconsidered.
Under the current system the cost of bringing a claim for defamation, often brought by an individual or small business enterprise against a large newspaper or other more wealthy defendant, is most often borne by insurance taken out after the event or by the solicitors taking the case charging a success fee. Both of these arrangements would be prohibited for defamation cases under Jackson’s recommendations.
In order to counteract the impact of the removal of the most common methods of funding Lord Justice Jackson suggests that the usual damages awarded in defamation and privacy cases should be increased by 10%. Given that the effective cap on damages for privacy cases is £60,000 and for defamation claims £200,000, said figured determined over time by the courts, 10% of most claims will not be more than £500 and will not do much to redress the balance.
For more information on defamation, privacy and reputation management contact Emma Banister Dean or Jacques Smith. For more details of our services in these areas click here.
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Technology and Construction Court – If it Aint Broke…
Lord Justice Jackson’s costs review has considered the work of the Technology and Construction Court or “TCC”.
Generally the evidence received by Jackson LJ during the consultation phase indicated a relatively high degree of satisfaction with the TCC on the part of that Court’s users.
One of the important factors behind this support appears to be the TCC’s practice of assigning one Judge to deal with a case from start to finish. The Court also undoubtedly benefits from the extensive experience built up by its Judges who specialise solely in construction disputes.
Against this background, Jackson LJ understandably recorded that he felt he should be extremely cautious before recommending any significant changes to the existing procedures of the TCC.
There were however certain areas where Jackson LJ considered improvements can be made. These relate to the prolixity of witness statements, the exchange of lists of issues and costs proportionality in low value construction disputes.
- Lengthy Witness Statements
Jackson LJ spent four years as the head of the TCC trying all types of its case load. It was perhaps a comment from the heart when he observed that he could not see how any party’s position is improved or protected by the inclusion of witness statements commenting on the mass of contemporaneous documents evidencing every stage and nuance of the project in question.
On this point, Jackson LJ concluded that there was no rule change needed to deal with this issue, but that the Court should more readily use its existing powers to disallow costs incurred in preparing or dealing with unnecessarily prolix witness statements.
- Lists of Issues
Various submissions were made to Jackson LJ to the effect that parties should no longer be required to exchange lists of issues, the most forceful argument in support of this point being that the issues should be clearly identified from the statements of case.
In this regard Jackson LJ recommended that the requirements set out in the TCC Guide should be simplified in order to exphasise that lists of issues should focus on key issues rather than all issues which have arisen in the case.
- Low Value Construction Disputes
In this field, Jackson LJ observed that there is no fast track in the TCC and he recommended that amendments should be made to the Civil Procedure Rules to permit TCC cases to be allocated the fast track, when appropriate. Such cases are those where no more than £25,000 is in issue, where the trial can be concluded within a day and where there is one expert on each side.
Jackson LJ also suggested that lower value construction disputes which are outside the scope of the fast track should be assigned to the County Court TCC at the earliest possible time so that such cases can be managed and tried by Judges or recorders with specialist expertise and at proportionate cost.
Finally, Jackson LJ echoed comments and recommendations made elsewhere in his report by emphasising that it is particularly important to pursue mediation in the context of lower value construction disputes in the event that conventional negotiation is unsuccessful.
Other chapters of the report (for example those which deal with disclosure and evidence) will also be relevant to the operation of the TCC, but Jackson LJ accepts whether tacitly or expressly that those changes need not have any significant impact on the day to day workings of the TCC.
Whilst Jackson LJ’s observations and recommendations in respect of the TCC are unsurprising, they do emphasise the fact that the greater degree of specialism achieved by TCC Judges, together with their more energetic case management has created an efficient Court which enjoys a comparatively high level of satisfaction in the eyes of its users. These features of the TCC might well be replicated elsewhere in the civil justice system in the interests of achieving the stated objectives of the Jackson review.
For advice on construction disputes or on construction contracts contact Jacques Smith or Emma Banister Dean on 0118 951 6926.
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Before the Event Insurance
The nature and availability of before the event insurance fell within the scope of Lord Justice Jackson’s recent costs review of the litigation process since this form of insurance is playing an increasingly significant role in the funding of the costs of civil litigation.
The term “before the event insurance” (also known as “legal expenses insurance”) refers to insurance taken out by either a claimant or a defendant before the occurrence of an event giving rise to a legal claim. The insurance is designed to cover the insured’s legal fees, and possibly also those of its opponent.
Jackson LJ looked specifically at before the event insurance in the context of personal injury claims and small business disputes.
- Personal Injury Claims
With reference to before the event insurance in personal injury claims, Jackson LJ considered that there was some merit in the proposal that before the event insurance should be compulsory, for example for motorists. However, he ultimately concluded that this was not desirable.
Jackson LJ had received submissions from the TUC and certain solicitors to the effect that before the event insurance should not be promoted further on the basis that this would lead to increased premiums. Cover provided by current before the event insurance was also criticised on the ground that such cover is limited, usually to £50,000.
The insurers themselves perhaps unsurprisingly were strongly supportive of this type of cover, as were the Counsel of Her Majesty’s Circuit Judges.
Ultimately Jackson LJ concluded that if the main recommendations contained in his report are implemented, the world in which before the event insurance is offered will be a very different one to the present. Jackson LJ concluded that before the event insurers will adapt their products to suit this new world and such insurance will continue to be offered as an add on to motor insurance policies. He therefore decided that it was not necessary to make any specific recommendations in respect of before the event insurance for personal injury claims.
- Small Business Disputes
Jackson LJ remained of the opinion expressed in his preliminary report that this type of cover is beneficial. He also commented that a substantial extension of before the event cover for small businesses in respect of litigation costs as well as tribunal costs would be highly beneficial. He therefore recommended that both insurers and the Department for Business Innovation and Skills should make serious efforts to promote the forms of before the event insurance available and their attendant costs. He sees a greater take up of before the event insurance by small businesses as one way of promoting access to justice.
Concerns were raised by the Law Society about the operation of before the event insurance generally, and more specifically in connection with the ability of the insured to chose his or her lawyer. Whilst the client’s right to chose his or her own lawyer is enshrined in the Solicitors’ Rules of Professional Conduct and the Insurance Companies’ (Legal Expenses Insurance) Regulations 1990, the right under those Regulations applies only to any “enquiry or proceedings”. Insurers have frequently taken the position that this definition does not extend to pre-action protocol procedure.
Jackson LJ expressed the view that these concerns would be met by amendment of the Regulations but felt that before any such amendment is considered, the effect on before the event insurance premiums should first be reviewed.
Accordingly, in summary, the Jackson report sees before the event insurance as being an important feature in the future mechanism for funding legal costs in civil litigation. However, for the reasons mentioned, Jackson LJ did not feel it appropriate or necessary to make specific recommendations on this subject at present.
There are genuine grounds for concern in relation to the client’s ability to chose his or her own lawyer where the lawyer’s fees are being funded by an insurer. This is perhaps of particular importance where the client is an individual as against a commercial organisation. There is nevertheless no doubt that before the event insurance offers a valuable method for funding legal costs for civil litigation. Provided that the premiums for this type of cover do not rise beyond the reach of individuals and small businesses, it is to be hoped that this form of funding will play an important role in the “post Jackson world”. This is despite the fact that the Jackson report makes no specific recommendations aimed at directly enhancing the availability and take up of this form of funding.
For information on funding litigation please contact the Dispute Resolution Team on 0118 951 6831.
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After the Event Insurance
Insurance was one of the major issues considered in Lord Justice Jackson’s recent costs review.
The increased availability and uptake of after the event insurance, together with existing Court rules in relation to the recoverability of premiums for this kind of insurance was one of the more significant areas that fell within the Jackson review.
As the name implies, after the event insurance is insurance cover taken out against the risk of having to pay an opponent’s legal costs where that insurance is taken out after the event giving rise to the Court proceedings.
Under the current English legal system, the premium in respect of after the event cover is recoverable by the insured from an unsuccessful opponent.
This kind of insurance is more commonly taken out by a claimant who insures in respect of the defendant’s legal costs in the event that the claim is unsuccessful.
The central issue considered by Jackson LJ in this context was whether after the event insurance premiums should continue to be recoverable from the opposing party - the “recoverability” issue.
Jackson LJ received a number of submissions during the consultation process to the effect that after the event insurance premiums should not continue to be recoverable, since these place an intolerable burden on defendants. An example was sited in which the damages claimed in the case where eight million pounds and the claimant was taking out after the event insurance at a premium of between four and five million pounds. It was said that the threat of this additional liability to the defendant was a major cause for settlement of the case which otherwise may have been fought at Court, and where the defendant had a reasonable defence. Accordingly, the complaint is that after the event insurance has come to be used by claimants as a tactical device to force settlement in cases which might otherwise be properly fought to trial.
In considering the recoverability issue, Jackson LJ commented that after the event insurance is an extremely expensive form of one way costs shifting (i.e the position where a successful claimant can recover its costs from the Defendant, but if the Defendant is successful, he may not recover his costs from the claimant). Having received evidence as to the typical cost of after the event insurance, Jackson LJ comments that it would be substantially cheaper for defendants to bear their own costs in every case whether won or lost, than to pay out after the event insurance premiums in those cases which they lose.
Jackson LJ concluded that after the event insurance premiums ought not to be recoverable in the future. He pointed out that the regime of recoverable after the event insurance premiums is based on the premise that certain claimants need to be protected against the risk of having to pay the defendants costs is there claim fails. However, Jackson LJ considered that the flaw in this arrangement is that it is not targeted to those who merit such protection, but it is available to anyone who can find a willing insurer, regardless of whether that person is deserving or undeserving of the protection afforded by the after the event insurance.
Jackson LJ accordingly concluded that the present regime of recoverable after the event insurance premiums is both unfair to opposing parties and an unsatisfactory way of achieving the intended social objective. He also concluded that if after the event insurance premiums are no longer recoverable, the only sensible way to give effect to the social policy of protecting those claimants who should be protected against adverse costs is to introduce one way cost shifting. As mentioned above, this would mean that in certain cases, an unsuccessful claimant would not be required to pay the defendant’s costs and therefore in Jackson LJ’s view this protection can be targeted to the benefit of those who need it rather then being offered as a gift to the world at large.
Having said this, Jackson LJ largely refused to specify the cases where one way cost shifting should apply in future considering that this should be the subject of further consultation. He did however make it clear that it would not be appropriate for these to be one way cost shifting or recoverable after the event insurance premiums in the context of commercial, construction or similar litigation. He took the view that the present ability of a party involved in such litigation to ensure against adverse costs at the expense of the other side as neither logical nor grounded in any discernable social policy, but that it in fact subverts the purpose of the current cost shifting rule. He therefore concluded that in ordinary commercial, construction and similar litigation there should be no special rules to protect weaker parties against adverse costs orders, but that if any party wishes to obtain insurance against adverse costs liability, it should do so at its own expense and not on the basis that the costs can be recovered from the opponent.
Jackson LJ did recommend a form of qualified one way cost shifting in personal injury cases in order to afford protection to claimants against adverse costs orders. This is in order to avoid deterring injured persons from bringing claims for compensation, and therefore facilitating access to justice.
In making these proposals, Jackson LJ recognised that if his recommendations are implemented, the after the event insurance industry will suffer a significant loss of business. He did however express his firm view that the present regime of recoverability of after the event insurance premiums is one of the factors that has driven up litigation costs, and that it was not appropriate to maintain this element of the costs regime in order to support one sector of the insurance industry. Jackson LJ also noted that a possible consequence of his proposed reforms to after the event insurance would be a growth in before the event insurance and possibly a widening of the cover offered by those insurers. Whilst before the event insurance premiums may well rise as a consequence of such developments, it would be extremely surprising if they were to rise to the levels currently seen in respect of after the event insurance premiums, principally due to the large volume of before the event insurance policies sold by comparison to after the event insurance. It is also the case that the insured under a before the event insurance policy is highly unlikely to actually make a claim, whereas the reverse is true in the case of the insured under an after the event policy taken out specifically in contemplation of or during the course of litigation.
Perhaps in recognition of the radical nature of his recommendations, Jackson LJ also put forward various fall back recommendations which are suggested in the even that his principal recommendation that after the event insurance premiums should not be recoverable is not implemented. Essentially these amount to a number of restrictions on the recoverability of after the event insurance premiums which are intended to control the premiums that would be recoverable.
Even if the recoverability of after the event insurance premiums is disallowed entirely, there would nevertheless seem to be a reasonable prospect that such cover would still be offered and taken up by potential litigants, provided of course that the scales of the premiums are appropriate by comparison to the value of the case in question. In our experience after the event insurance premiums can be as low as 20% of the cover provided under the policy. If those sorts of premium levels are maintained after implementation of these suggested reforms, it seems likely that there would still be appreciable take up particularly by corporate litigants, and despite the fact that the premium will not be recoverable from the other party to the litigation.
For information on funding litigation please contact the Dispute Resolution Team on 0118 951 6831.
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Contingency Fee Proposals
During the course of his investigations and consultations allied to his recent review of costs in litigation, Jackson LJ spent an appreciable amount of time on the subject of conditional fee arrangements, given that in principle this type of arrangement (currently not permitted for Court proceedings in the English jurisdiction) arguably offers a mechanism for achieving the desired policy objective of increased access to justice.
A contingency fee arrangement is one where the lawyer and the client agree that the lawyer’s fee will be calculated as a percentage of any sum of money recovered, and where no fee will be payable if no recovery is made.
This contrasts with a conditional fee arrangement, which involves a success fee payable to the lawyer which is not calculated as a proportion of the money recovered in the case.
A slightly anomalous situation exists in the English system at present since solicitors are able to enter into contingency fee agreements in respect of employment tribunal cases, but barristers are not permitted to do so.
One of the central arguments advanced by those opposed to contingency fees is that they are likely to give rise to a conflict of interest between the solicitor and the client, given the fact that the solicitor will have a direct financial interest in the outcome of the case or the terms on which it is settled.
During the course of the consultation process, Jackson LJ received submissions from those who pointed out that a similar opportunity for conflict arises in the context of conditional fee arrangements, and yet these have been permitted and have been used to a large extent in the English system for some time. It was also argued that to the extent that there have been concerns about how contingency fees operate, particularly by unregulated providers, such concerns can be dealt with by appropriate regulation. Others who made submissions to Jackson LJ during the consultation process argued strongly against the introduction of contingency fees on the basis that there is no need for such arrangements to be available, given the availability of conditional fee agreements and third party funding.
Jackson LJ however concluded that both solicitors and barristers should be permitted to enter into contingency fee agreements, but on the basis that in so far as the contingency fee exceeds the amount chargeable under a normal fee agreement, that is paid by the successful litigant. This recommendation is similar to Jackson LJ’s proposal in respect of conditional fee agreements.
Jackson LJ’s conclusion on this issue was driven by the straightforward desire to ensure that as many funding methods as possible are made available to litigants, thereby improving access to justice. Jackson LJ was also influenced by the argument that people should be free to enter into such contracts as they wish, particularly in the case of commercial organisations. As far as private litigants are concerned, (for example personal injury claimants) Jackson LJ considered that those individuals should also have freedom to contract as they see fit and therefore to enter into contingency fee agreements, provided that before doing so they are required to obtain independent legal advice.
Jackson LJ also agreed with the submissions made to him to the effect that regulation would be appropriate. Jackson LJ therefore suggested a package of safeguards to be introduced in conjunction with contingency fees. In summary these included:
- The introduction of regulations concerning the:
- advice and information to be provided to consumers;
- a maximum percentage payable in fees from damages recovered; and
- the control of the use of unfair terms and conditions of business.
- Agreement must be reached at the outset as to how any adverse costs order will be met (whether this is to be borne by the solicitor or the client or funded by other means).
- In order to be legally binding it will be necessary for a contingency fee to be counter signed by an independent solicitor certifying that he or she has advised the client about the terms of the agreement.
- Personal injury litigation to be included in the scheme subject to a cap to the effect that no more than 25% of the claimant’s damages can be deducted in respect of the contingency fee.
The final ingredient of these proposals is that the costs would remain recoverable against opposing parties on the conventional basis and not by reference to the contingency fee. Accordingly, in practice the contingency fee would be completely or substantially funded by the client from damages recovered.
This package of recommendations which effectively opens up an additional funding method for potential litigants is to be welcomed since it clearly does support the overarching objective of increasing access to justice. The regulatory measures suggested by Jackson LJ (and which were originally proposed by the Ministry of Justice) would also provide a workable framework for minimising the undesirable potential effects of conflict of interest as between the lawyer and client.
For information on funding litigation please contact the Dispute Resolution Team on 0118 951 6831.
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Settlement Offers
Part 36 of the Civil Procedure Rules was introduced to provide litigants with a formal procedure whereby either party could make a settlement offer to the other. The rule contains various costs sanctions for rejecting an offer which were designed to encourage litigants to carefully consider an offer to settle. However, whilst the introduction of this rule has been largely viewed as a success, there are concerns that the current system offers no real incentive to litigants to enter into negotiations. The recommendations made by Lord Justice Jackson are aimed at making the sanctions imposed by Part 36 more evenly balanced between the parties and therefore creating a more effective negotiating tool.
At present, a Claimant’s Part 36 offer holds much less negotiating weight than a Defendant’s and as a result, offers made by a Claimant to settle are often not carefully considered by a Defendant. The costs consequence for a Claimant, who, having rejected a Part 36 offer fails to recover more than the sum offered at trial, is far more substantial than that for a Defendant. A Defendant will know that in most circumstances, if it is unsuccessful at trial, it will be liable to pay the Claimant approximately 80-90% of its costs. Any additional sanctions that may be imposed by its failure to accept a Claimant’s Part 36 will often be minimal and potentially still further reduced by judicial discretion. Lord Justice Jackson’s proposed changes to Part 36 looks to correct this imbalance by offering greater rewards to a Claimant who recovers more at trial than that previously put forward to the Defendant by way of a Part 36 offer.
The change proposes a 10% uplift in the damages or other money sum awarded to a Claimant and to the financial value of any non- monetary claim in the event that a Defendant rejects a Claimant’s offer and the Claimant is then later successful at trial. This sanction may potentially have significant adverse financial consequences for a Defendant who has failed to carefully consider a Claimant’s Part 36 offer and/or has rejected a sensible offer to settle. It is however recognised, that with higher value cases there may be the requirement to cap any such uplift.
The aim of the change is to create a more level playing field for Claimants and Defendants in attempting to negotiate a settlement. To encourage litigants to settle cases at an earlier stage by requiring a Defendant to carefully consider all offers made by the Claimant.
For further information on settlement options please contact Katherine Cameron or Emma Banister Dean on 0118 951 6831.
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Witness Statements & Expert Evidence
Witness statements and expert evidence are two key stages of the litigation process which can be extremely costly. In his recent report on the cost of litigation, Lord Justice Jackson has sought to identify the reasons why these stages can be so expensive and recommend a number of ways to reduce the costs.
Witness statements are exchanged by the parties prior to trial. A party’s witness statement tells his side of the story in relation to the events giving rise to the dispute and should contain an explanation of any evidence which the party will rely on in support of his case. The main problem Jackson LJ has identified as to why witness statements are so costly is that they often include irrelevant information. A witness is not generally allowed to give evidence at the trial in relation to anything which is not included in his witness statement. The temptation for parties and their lawyers, therefore, is to include elaborate background and explanatory information for fear of missing something vital.
Jackson LJ recommends that judges should be more willing to allow small amounts of supplementary information (i.e. information which was not included in a party’s witness statement) at trial. However, he advises that the primary way of reducing the cost involved in preparing witness statements is for judges to become more involved. In a typical case under the current system, a judge’s only involvement in witness statements is to direct a date by which they should be exchanged. Jackson would like to see judges giving detailed directions on the content and length of witness statements, for example that a witness statement must not be longer than ten pages, or that a witness statement which exceeds five pages must include a summary at the beginning. He also recommends that a party whose statement exceeds the length directed by the court (without good reason) should have costs ordered against it.
Jackson LJ would also like to see increased use of technology to deal with documents. In most witness statements, a party will make reference to various documents, and these must be attached to or ‘exhibited’ to the statement. Often the parties on each side of a dispute will refer to the same documents and these documents are duplicated. Jackson LJ suggests the use of a centralised, electronic database for the storage of documents, the contents of which is agreed between the parties. Each witness statement will then cross-reference or hyperlink to these documents to avoid duplication.
In relation to expert evidence, the main concerns identified by Jackson LJ are the length of expert reports and the significant cost of instructing experts. Again, he suggests that the answer lies with judges, who should make focused orders on which experts each party may call and on what issues. Jackson LJ also recommends that parties who apply to the Court for permission to rely on an expert witness should have to provide the Court with an estimate of how much this evidence will cost, and that the Court should order limits on the fees and expenses of experts which may be recovered from the other party.
Finally, Jackon LJ recommends piloting the use of concurrent evidence, also known as 'hot tubbing'. This is a method used in Australia whereby parties' experts, who disagree on one or more pertinent issues, testify together in a joint session. Concurrent evidence is less formal than the traditional method whereby experts are cross-examined by the other party’s lawyer. Instead, experts typically make an extended statement, comment on other experts' evidence, ask each other questions and test opposing opinions. Each party’s lawyer and the judge also have the opportunity to ask questions. Evidence is given through discussion rather than in a strict question and answer format. Experts must follow a code of conduct to ensure that they are independent and do not show any bias in favour of one party over another.
The use of concurrent evidence in Australia has proven effective in many areas. Jackson LJ recommends that its use be piloted in suitable cases, provided that all the parties, lawyers and experts involved consent.
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Disclosure of Documents
Disclosure is the process whereby each party to litigation reveals to the other party all documents upon which he relies; which adversely affects his own case; adversely affects another party’s case; or supports another party’s case. This process is intended to assist both parties in considering their case and forms the basis of the documentation to be considered by a Judge at trial. However, the application of the disclosure rules is said to give rise to a number of problems which frequently result in the parties incurring wasted costs.
It appears that a common trait amongst lawyers when dealing with disclosure is to disclose all documentation regardless of its relevance. This not only affects the essence of what the disclosure process hopes to achieve but potentially renders the process ineffective, time consuming and costly to a litigant. LJ Jackson as a result of the above has considered potential reforms to both the disclosure of electronic documentation (E-disclosure) and of documentation generally.
LJ Jackson proposes that both lawyers and the judiciary be educated generally about the E-disclosure process. This includes the nature of how documents are held and the storage of information. It is recognised that certain lawyers and members of the judiciary may have a limited commercial background and insight into the electronic storage of documentation.
LJ Jackson also recommends that lawyers should think carefully about the documents that they disclose. LJ Jackson is aware that considering documentation and its relevance is an onerous task in larger cases and has therefore considered the possibility of introducing ‘disclosure assessors’ for specifically dealing with this task. This idea has been met with some reservation, with it feared that such action would increase litigation costs considerably. In light of this, LJ Jackson has recommended that in relation to larger commercial cases a “menu option” rule should be adopted. The ‘menu option’ involves lawyers agreeing on the scope and breadth of disclosure required subject to the Court’s appraisal. The solicitors for each party would identify the broad categories of documents that exist, where they may be located and the costs involved in giving standard disclosure. This would be done in advance of any Case Management Conference at Court and is intended to help a Judge deal with the management of the case and to decide what is viewed as proportionate disclosure.
LJ Jackson does not believe that this approach should be limited to the larger commercial cases but that it should be extended to any case where the cost of standard disclosure is likely to be disproportionate. LJ Jackson believes that this approach will encourage more rigorous case management in relation to disclosure. However, there are concerns that such proactive case management may lead to satellite litigation in circumstances where lawyers are unable to agree on the appropriate form of disclosure.
If you require any further information about disclosure or the litigation process, please do not hesitate to contact Katherine Cameron or Emma Banister Dean on 0118 951 6831.
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Reversing the Burden of Costs
The main thrust of Lord Justice Jackson’s Review of Civil Litigation Costs is to recommend a shift in the burden and risk of litigation from the Claimant to the Defendant. The main way in which he does this is to recommend a change to the costs risk in personal injuries litigation.
The current costs rule in litigation is that whilst costs are at the court’s discretion and the judge can impose a costs penalty for various matters the loser usually pays the winner’s costs. This means that an individual who decides to bring a personal injury claim because they have been hurt by tripping over a broken pavement risks having to pay the relevant local authority’s legal costs, and those of their insurer, if their claim is unsuccessful. This is a big risk for an individual to take.
Lord Justice Jackson suggests that if a claimant looses their case against an insured defendant then the claimant should no longer have to pay the defendant’s legal costs. Only fraudulent or “conspicuously wealthy” claimants would be at risk of being ordered to pay
What Lord Justice Jackson is advocating is similar to the position prior to 1 April 2000, the date on which legal aid for personal injury claims was withdrawn. The problem is that in the absence of legal aid there is no safety net for the payment of out of pocket expenses incurred by a claimant’s solicitor on behalf of their client. A claimant could therefore find themselves held liable for tens of thousands of pounds in respect of expenses such as the fee for a medical report.
Much of the current personal injury litigation is brought by individuals who have agreed with their solicitor that he or she will take their fees out of what is known as a “success fee” or who take out insurance policies covering the possible liability for costs after the incident giving rise to the claim has taken place. Neither of these arrangements would be permitted for personal injury claims under the Jackson proposals.
For those who would be able to pay their solicitor’s out of pocket expenses without too much difficulty there would be a different concern – the mention of some sort of means test. For example would an individual claimant with a reasonable amount of equity in his or her house be deemed to be “conspicuously wealthy”? This would mean that they would actually run a higher risk in bringing such litigation than they do at present when after the event insurance and success fee agreements are available to them.
Under the new Jackson proposals personal injury litigation may not in fact be as risk free as it first appears.
For information on funding litigation or on personal injury claims please contact the Dispute Resolution Team on 0118 951 6831.
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Referral Fees – Unnecessarily costly?
Referral fees are a sum paid by a firm of solicitors in exchange for being referred a case. The referrer of the case is usually another firm of solicitors or another organisation. Not all firms of solicitors pay referral fees.
Lord Justice Jackson takes the view that referral fees increase the overheads for a paying firm thereby making fewer resources available to be used for the benefit of the client. There is also a feeling amongst some that situations might arise where an organisation refers a client to a particular firm because that firm pays a fee rather than because it is the best firm for the client. The rules of professional conduct governing solicitors in their work have rules to prevent this from happening but it nevertheless remains a concern for some.
Lord Justice Jackson proposes that referral fees should be banned or at least capped at £200 for personal injury cases. He goes on to recommend that such a move should be considered for other types of litigation.
Lord Justice Jackson’s definition of referral fees would include situations where firms of solicitors club together to pay for advertising campaigns. The resulting higher spending power enables firms to give information to many more prospective claimants about who to contact to bring a claim and arrangements for fees. This has markedly increased access to justice for a considerable number of people and banning of such schemes could have an adverse effect on that access.
Whatever the public’s view of referral fees, and the evidence is that client of law firms that receive such fees have no objection to them, once the soon to be legal expansion of the provision of legal services beyond the legal profession to large supermarkets and other household names takes place, the suggested restriction on referral fees for law firms will be a restriction that is not applicable to non-solicitor claims handlers and could give rise to unfair competition. These issues would need to be addressed again at that point.
For information on funding litigation please contact the Dispute Resolution Team on 0118 951 6831.
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