The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

[JustAboutMad]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

and again he misses the point toooooo

Its the Defendants FUNDED BY A CFA who will suffer, the banks have total backing with their assets to bank roll whatever litigation they want, so the bank can pay out to sue you and you cant recover your lawyers full fees if you win

fair? fck no it is not, the bank should pay for its cockups imho yet the defendant will suffer with this new law

I don't think any of the letters I've read on here state those facts so blatently

I was just thinking it's a subject thats hard to follow as I was reading through. Would it not be worth writing a template in layman terms such as 'our particular concerns involve the impact these changes would have on consumer credit cases etc' Its just that MPs don't always understand the full implications of these things. The matter has basically been raised due the 'compensation culture' so thats all they are thinking about. They have PI claims on the brain and you can tell by the MP's response above that he totally doesn't understand the point you are trying to make.

You all understand consumer credit law and are on the same page. IMHO they don't get the angle you are coming from i.e what happens when you are not claiming anything? Why should a winning defendant pay any fees if they have not gained anything? I think you need a template that your average Joe could easily understand. Then everyone could copy and paste away!

[pompeyfaith]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

Justaboutmad,

Whilst I see you point regarding a template letter I feel on this issue it really has to be in the writers own words, while Paul can post why it is wrong and its merits for and against writers should use that as the basis for there letter.

Imagine MP's getting a stack of letters on the issue identical in text.

[Susie]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

One thing I am thinking is that perhaps its best not to mention consumer credit law since so many MP's look on it as being wrong and that the poor banks are suffering. Perhaps if it was worded that if Mr Rich tripped over your doorstep and decided to sue you, he could afford lawyers and you (Mr Poor) would be all alone in court. If it stops the ambulance chasers thats fine, but defendants should still have access to legall representation.

[JustAboutMad]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

Imagine MP's getting a stack of letters on the issue identical in text.

Thats exactly what happened via email regarding the changes that were being made to Disability Living Allowance last week. One template emailed to as many MPs as possible by hundreds of different people. Mostly co-ordinated via twitter!

The result was the amendments that were requested were included. Now I'm not saying that was purely due the emails, but the point is it showed there was a lot of people that wanted exactly the circumstances to be considered. I just think that the politicians care more about the number of voices that can be heard, than what the voices are actually saying

[transformer999]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

Just a little info to add to this thread!

Government announcement on Jackson reforms

• United Kingdom
• June 12 2012

The Government has announced that it will be delaying the proposed changes to Conditional Fee Arrangements ("CFA") and After the Event ("ATE") Insurance, in respect of insolvency proceedings, until 2015.


The Legal Aid, Sentencing and Punishment of Offenders Bill, delivered to Parliament in June 2011, contains draft provisions dealing with litigation funding and costs which would abolish the recoverability of CFA success fees and ATE premiums from the losing party in any form of litigation. There is widespread concern that these proposals would have a negative impact on insolvency litigation, as it would make it more difficult for Insolvency Practitioners and their lawyers to recover funds from unscrupulous directors and third parties.


In view of the increasing use of CFAs in insolvency litigation, the Government announcement is welcome news as it demonstrates that the Government appreciates that insolvency should be treated differently to other areas of litigation and it will allow the insolvency profession to work with the Government to implement alternative measures to allow these cases to be pursued in the future.
The implementation of all other proposals under the Jackson reforms for non-insolvency proceedings, originally expected in October of this year, has been delayed until April 2013.



Therefore, where there are cases to be pursued by way of a CFA, it would be prudent to move quickly to ensure that they are dealt with before the changes come into force.

[transformer999]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

Just some further info today:

Consequences of civil costs reform


The Legal Aid, Sentencing and Punishment of Offenders Act received the Royal Assent on 1 May 2012. It contains a number of reforms of civil litigation costs, which will have significant consequences for litigants and their advisers.


For example, where (previously) claimants with strong cases could enter into conditional fee agreements and after the event insurance policies, and pass the success fees and premium costs onto the other side if they were unsuccessful, those additional costs (which claimants will still be allowed to incur if they wish) will now have to be paid by the party incurring them in any event. These added costs burdens, even if the claimant wins, are likely to make claims pursued on this footing considerably less commercially attractive.


On the other hand, new forms of funding will be available. The long standing ban on contingency fee agreements (where the lawyer can be paid a capped share of the damages recovered, in lieu of a fee) is to come to an end, giving claimants greater flexibility in the way in which they share risk with their advisers.


These reforms, coupled with other changes that are in the pipeline which may ultimately see claims as high as £15,000 falling into the “small claims track” (and therefore under a regime where each party bears their own costs whatever the outcome), and an increasing emphasis on mediation and alternative dispute resolution, are set to dramatically alter the dispute resolution landscape in the coming months and years.

[Paul.]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

Just some further info today:

Consequences of civil costs reform


The Legal Aid, Sentencing and Punishment of Offenders Act received the Royal Assent on 1 May 2012. It contains a number of reforms of civil litigation costs, which will have significant consequences for litigants and their advisers.


For example, where (previously) claimants with strong cases could enter into conditional fee agreements and after the event insurance policies, and pass the success fees and premium costs onto the other side if they were unsuccessful, those additional costs (which claimants will still be allowed to incur if they wish) will now have to be paid by the party incurring them in any event. These added costs burdens, even if the claimant wins, are likely to make claims pursued on this footing considerably less commercially attractive.


On the other hand, new forms of funding will be available. The long standing ban on contingency fee agreements (where the lawyer can be paid a capped share of the damages recovered, in lieu of a fee) is to come to an end, giving claimants greater flexibility in the way in which they share risk with their advisers.


These reforms, coupled with other changes that are in the pipeline which may ultimately see claims as high as £15,000 falling into the “small claims track” (and therefore under a regime where each party bears their own costs whatever the outcome), and an increasing emphasis on mediation and alternative dispute resolution, are set to dramatically alter the dispute resolution landscape in the coming months and years.

or to put it another way

This con-dem government has royally fucked the consumer, and is now laughing in their faces while the insurance companies and banks profit from the misery

[transformer999]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

Just a little bit more info I was reading this morning.

Cost reforms in civil litigation...the end of no win no fee?



Since Lord Justice Jackson published his report into civil litigation funding in January 2010, fundamental changes to litigation funding have been inevitable. On 1 May 2012 Parliament passed the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”, also known as the Justice Act), which will come into force after April 2013 (date yet to be determined).
“Risk free” litigation.........


LASPO is likely to fundamentally alter the landscape of litigation funding by bringing an end to the current “risk free” litigation available to claimants under the current regime.


For example, many people will have heard of the popular “no win no fee” agreement (formally known as a conditional fee agreement (CFA)), particularly common in personal injury cases. These agreements enable a claimant to obtain legal representation and only make payment if their case is successful. A successful claimant is entitled to recover their legal fees from their opponent, together with a “success fee”, being up to 100% uplift on those fees. The success fee compensates the law firm for the risk it assumes when it agrees to act under a CFA. As both the claimant’s legal fees together with the success fee are currently recoverable from the opponent, the claimant may have no legal fees to pay upon the successful conclusion of litigation.


CFAs are also commonly associated with “After the Event Insurance” (ATE). ATE is available to potential claimants (and defendants, in some circumstances) to insure them against the risk that they will be ordered to pay their opponent’s costs if they are unsuccessful in litigation. In the current system, the insurance premium is only payable if the claimant succeeds in the litigation, in which case it is payable by the opponent. If the claimant is unsuccessful, the insurer waives the premium.
Effectively, the combination of CFAs and ATE enables a claimant to commence risk-free litigation. However, an unsuccessful defendant can currently face the prospect of paying not only the judgment award to the claimant, plus the claimant’s costs, but also a success fee and ATE premium. The possible risk of losing in such litigation places an enormous pressure on a defendant to seek early settlement of proceedings, regardless of the merits of their defence.
......And its abolition?


Lord Justice Jackson’s report recommended the abolition of both success fees and ATE premiums. This has now been approved by Parliament and is included in part 2 of LASPO, which will see a successful claimant being required to pay their own success fee and ATE premium. The only exception to this will be ATE premiums in respect of the cost of obtaining expert reports in clinical negligence cases.
LASPO also proposes a maximum limit on the level of success fee a law firm can charge in certain types of claims. Whilst this is yet to be formally determined, it is likely to be based on a percentage of the damages awarded. The response paper published by the Ministry of Justice in March 2011 suggested the cap would be 25 per cent and would apply to personal injury cases.


Fairness for all?
Clearly, the reforms introduced by LASPO are geared toward shifting the litigation risk onto a middle ground between the claimant and defendant, whilst maintaining some level of access to justice for impecunious claimants. These reforms, together with a host of reforms that are outside the scope of this article, will undoubtedly bring about a new era in the funding, and tactics, of future litigation. The reforms may also mean that universities will experience a decline in claims against them if claimants are required to pay their own success fee and ATE premium.

[transformer999]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

Damages to increase by 10% in civil claims



1 April 2013 is an important date for lawyers. It is when the new rules on recovery of legal costs in legal proceedings are planned to come into force.


These follow a lengthy review and consultation undertaken by Lord Jackson into the costs and expense of bringing legal claims in England and Wales. Issues such as “no win/no fee” arrangements, where lawyers take on cases and only receive payments if successful, and after-the-event insurance, where Claimants insure themselves against the risk of losing and recover the premium from the unsuccessful Defendant, were considered real impediments to the orderly conduct of justice. The odds were stacked up against Defendants who found themselves facing Claimants with little incentive to settle and facing increased claims for legal and insurance costs if they did settle.


Lord Jackson’s solution to this problem was to propose that success fees (i.e. the uplift received by lawyers if successful in the claim) and insurance premiums should not be recoverable from unsuccessful Defendants. Instead, there would be a 10% increase in the headline rates of general damages awarded in specified types of claims, with the Claimants left to meet the lawyers’ success fee and their insurance costs themselves out of their increased winnings. Claims included are Personal Injury (pain suffering and loss of amenity), Defamation, Nuisance (unlawful interference with enjoyment of property) and any other claim involving suffering inconvenience and distress. Parliament has legislated to abolish the recovery of success fees and insurance costs, but it was left to Judges to award higher levels of damages.


In anticipation of these rules changes, the Court of Appeal has used the recent case of Simmons v Castle to confirm that guideline rates of damages in these cases will indeed increase by 10% from 1 April 2012. The reason for announcing the increase now is so that parties can make appropriate plans for specific cases. This does leave a lacuna in that, as things stand, Claimants who start their claims before 1 April 2012 will benefit both from the 10% uplift in damages and also be able to recover success fees and insurance premiums from unsuccessful Defendants.
For Claimants, therefore, there is a potential advantage in commencing proceedings before 1 April 2012. Defendants may find it more advantageous to try and settle claims before 1 April 2012, alth

[transformer999]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

Have you advised your client on the changes to litigation funding?



The Legal Aid Sentencing and Punishment of Offenders Act (“the Act”) received Royal Assent on 1 May 2012 and the majority of the Act is due to come into force April 2013.


The Act will bring in a new dimensions of funding by developing third party funding and introducing contingency fees, also known as damage based agreements (“DBAs”). Prior to this Act, contingency fees were only allowed in employment tribunal cases and noncontentious work.


The Act reverses the growth of conditional fee agreements (“CFAs”) and after the event (“ATE”) insurance (putting us back in the position of pre-April 2000, when success fees and ATE premiums were not recoverable from the losing party). The changes are likely to cause confusion to companies and individuals as complex documents will need to be drawn up to reflect the agreement entered into. It is therefore paramount that you are fully up to speed with the latest developments and that you are able to advise your client of their options.



CFA’s
Lord Justice Jackson (“LLJ”) believed that excessive costs i.e. uplift and ATE premiums placed undue pressure on the paying party to settle claims at an early stage. Due to the changes in the legislation, success fee and ATE premiums will not be recoverable from your opponent . However, solicitors will still be able to recover the ATE premiums and success fees from their client.


Contingency Fees/ DBAs
Section 45 of the Act introduces a new dynamic to funding. It enables litigants to enter “no win, no fee” agreements with their solicitor. The solicitor will be able to recover a percentage of the damages awarded as their fee , if their client is successful. The percentage will be agreed from the outset. However, it is unlikely to be higher than 45-50% as this could be perceived that the solicitor will be taking control of the litigation from a professional and personal point of view.
It may be possible to obtain an insurance policy between an insurer and the law firm to cover the solicitor’s fees if the client is unsuccessful.



It is LJJ’s view that DBAs will provide access to the courts for those that would normally be unable to afford litigation. However, in reality, it is likely to reduce the number of cases that are issued as solicitors will decide not to enter into DBAs if they are high risk. There have been reports that in the United States (“US”), firms have over-leveraged on DBAs which has resulted in them collapsing. It is therefore important that risk assessments are undertaken before entering into a DBA.
1There is a common law duty to advise your client of their funding options and the SRA has set out several Principles and Rules on this subject, in particular: Principle 4 “you must act in the best interests of each client”; (1.6) “you only enter into fee agreements with your clients that are legal, and which you consider are suitable for the client's needs and take account of the client's best interests;” O(1.12) “clients are in a position to make informed decisions about the services they need, how their matter will be handled and the options available to them” IB (1.16)) “discussing how the client will pay, including whether public funding may be available, whether the client has insurance that might cover the fees, and whether the fees may be paid by someone else such as a trade union”.
2Section 44 of the Act

The US have used contingency fee agreements for many years, particularly in relation to personal injury cases and many law firms have developed their business model around them. Commercial clients have pushed for alternative structures in the US which has resulted in “partial contingency agreements” or “mixed contingency agreements” as we may know it.


It is still unclear how DBAs will fit into our legal system and therefore, a working party has been set up to prepare a report and establish some of the fundamental issues, these are:

• Will law firms be liable if their client accepts liability for adverse costs but cannot or will not pay them?
• Should there be a model form of DBA?
• How would you terminate a DBA?
• How are DBAs going to be regulated?
• Should there be a cap on the percentage of damages payable to solicitors and counsel under a DBA.

The report is expected at the end of July which should provide some clarity of how DBAs will be implemented into our legal system.


Third Party Funding
Third party funding is a developing market which is regulated by the SRA Code of Conduct. It is an arrangement whereby a commercial funder or investor (with no connection to the legal proceedings) finance all or part of their legal costs in return for a share of a monetary award, in the event of success. If the case fails, the funder loses its investment and could be liable for an adverse cost order, leaving a third party funder open to a costs order that could exceed their own funding!
Third party funders may fund both your client’s legal fees and disbursements, they will also bear the risk of your opponent's costs by offering an indemnity or paying for an insurance policy. The burden placed on a third party funder is more onerous than that of a solicitor; they are required to maintain adequate financial resources to cover their funding liabilities for a minimum period of three years and they could find themselves on the wrong side of a costs order.



Insurance
There may be a decline in individuals/companies entering into CFA’s and ATE policies which may lead to an increase of ATE premiums. Success fees and ATE premiums will be unrecoverable from the losing party, leaving the solicitor to recover them from its client which may be an unattractive position.
Insurance companies will need to be alive to the changes and may consider offering indemnity to law firms if they enter into DBAs.



Food for thought
An innovative approach should be taken when considering your client’s position on funding – you may want to consider entering into a “mixed DBA”, where some steps of the litigation are paid by a fixed fee agreement, and some by way of a percentage of the damages, as a result, the solicitor will take a lower percentage of the damages if their client is successful.

[alangee]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

I must admit to not reading every word on this, but the change in rules all seem to be pointing to the claimant. How does this affect the defendant?

There also seems to be several questions still about the DBAs.

Alan

[transformer999]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

All you need to know about the Jackson reforms





04 October 2012


Six months to go before the biggest shake-up of the civil litigation costs and funding regime since 2000. That was when success fees and premiums became recoverable from the losing party. You’ve realised that there’s been a U-turn on that front but what else do you really need to know before the changes take effect in April 2013?
LASPO Act

The Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012 abolishes recoverability, introduces a new form of contingency fee agreement (damages based agreements) and imposes an additional penalty on unsuccessful defendants under Part 36. The Act also removes legal aid for many types of claim and prohibits payment and receipt of referral fees in personal injury cases.
Recoverability

After the event insurance premiums and success fees will cease to be recoverable from the losing party.

• This will not apply to claims by liquidators, administrators and trustees in bankruptcy until 2015 and there is a moratorium concerning mesothelioma claims.
• Premiums to cover the cost of expert reports in clinical negligence cases will still be recoverable.
• Premiums and success fees will continue to be recoverable where the policy or conditional fee agreement is entered into before 1 April 2013.

Damages based agreements

DBAs will be extended beyond the scope of employment claims to all civil disputes. The lawyer is paid only if his client succeeds and the payment is calculated as a percentage of the damages awarded to the client. There will be a cap on the contingency fee in personal injury cases of 25 per cent of damages (excluding damages for future care and loss) and a cap of 50 per cent in all other cases (the 35 per cent cap in employment cases will remain unchanged). Costs will be recoverable against opposing parties on the conventional basis (hourly rate and disbursements) and not by reference to the contingency fee. Where the fee agreed under the DBA exceeds what would be chargeable on the conventional basis, the claimant will pay that difference from their damages (see the Civil Justice Council’s recent report and the government’s announcement on 4 October 2012).
Additional Part 36 sanction for defendants

Defendants who do not accept a claimant's reasonable offer which they fail to beat at trial will be subject to an additional sanction equivalent to 10 per cent of the value of the claim or, for non-damages claims, 10 per cent of costs. It will be tapered down for claims over £500,000 and the maximum sanction is likely to be £75,000.
Qualified one-way costs shifting - QOCS

In personal injury cases, including clinical negligence, a claimant will in general no longer have to pay the defendant's costs if the claim fails, but the defendant will continue to have to pay the claimant's costs if the claim succeeds.

Announcements to date indicate that there will be no means test or minimum payment for claimants to qualify for QOCS but that it will not apply where the claim is found to be fraudulent or is struck out. If the claimant fails to beat the defendant’s Part 36 offer, Part 36 principles will defeat QOCS, but the claimant’s liability for costs will be capped at the level of damages recovered.
General damages increase

To make up for the fact that an injury claimant will no longer be able to recover a success fee or premium, there will be a 10 per cent increase in general damages for personal injuries, nuisance and all other civil wrongs to individuals. The Court of Appeal announced in Simmons v Castle that the increase would apply to judgments given from 1 April 2013 but are now to reopen the appeal in response to concerns that this would entitle some claimants to recover both success fees and premiums and the increase in damages.
CPR changes with effect from April 2013

• The costs management pilots will be extended to all multi-track cases in the county court, Chancery and QB Divisions begun on or after 1 April 2013.
• Relief from sanctions will become harder to obtain.
• The new tougher proportionality test recommended by Jackson LJ will apply to the assessment of costs.

What do we not yet know?

• Precisely how caps on contingency fees under DBAs will work.
• To which claims the 10 per cent increase in general damages will apply.
• Details concerning the additional sanction for defendants under Part 36.
• Whether the government’s plans to extend the RTA fixed fee portal to road traffic cases worth £25,000 and to employers’ and public liability (EL/PL) claims will be achieved by April 2013.
• How the proposed ban on referral fees in personal injury cases will be implemented.

[transformer999]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

This is very interesting and there are many ramifications that spread well beyond the realm of UE and related court cases.

Is there a link to the source of the info above where we can go and find out more?

sorry FP...here it is...


All you need to know about the Jackson reforms - Lexology

[transformer999]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

Oh its so easy to register.....I just get emails from them daily....that's all.

[transformer999]

Re: The Jackson reforms to Civil Litigation funding. NO MORE NO WIN NO FEE!!

Are you ready for Jackson? - Lexology


Are you ready for Jackson?



Introduction

In November 2008 Lord Justice Jackson was appointed to lead a wide-ranging review into the costs of civil litigation. Nearly four years on, some of the recommendations from the Jackson Review have already been implemented. However, the majority of the changes will come into force in April 2013. It is no exaggeration to say that this will be the most significant shake-up of the civil justice system since the implementation of the Woolf reforms in 1999. With six months to go, this update outlines the key changes and what they mean for lawyers and their clients.

How will the changes be made?

The changes in law required by the Jackson Review are contained in the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which was given royal assent in May 2012.

The changes to the Civil Procedure Rules required by the Jackson Review are expected to be released in December 2012 before implementation in April 2013.

What key changes are already implemented?

Costs management pilots
The Jackson Review recommended active costs management by the courts, which would involve the parties preparing costs budgets (more detailed than the current costs estimates). The judge would review these budgets and indicate the extent to which they were approved. Cost assessment at the end of the case would then be carried out by reference to the initial budget. Pilot schemes are currently underway for all cases in the Technology and Construction Court and Mercantile Court, and for defamation cases in the Royal Courts of Justice and the Manchester District Registry. These will continue until the end of March 2013.

Hot tubbing pilot
'Hot tubbing' is the practice, developed in the Australian courts and used in some international arbitration, of experts giving evidence concurrently. The experts are sworn in and the court effectively chairs a discussion between them, with questions from counsel as and when allowed by the judge. This is thought to offer potential time and cost savings over the current system of sequential evidence. The Jackson Review recommended its use in all cases where the parties agree to it. A pilot has been in place in the Manchester Technology and Construction Court and Mercantile Court since June 2010, although with relatively low take-up.

Docketing pilot
The Jackson Review recommended expanding the availability of docketing – the process by which one judge controls a case from beginning to end – as a means to encourage judges to take a more hands-on approach to case management. Docketing has been piloted at the Leeds County Court and Registry (although it is already available to a variable extent in other courts). The results, unsurprisingly, were positive, with an evaluation concluding that docketing "brought advantages using existing resources and without major reorganisation". However, widespread availability of docketing is unlikely until some time after April 2013.

Enabling provisions of the Legal Aid, Sentencing and Punishment of Offenders Act
Some sections of the act have already been brought into force, which will enable appropriate changes to be made to the Civil Procedure Rules in time for the full roll-out of the Jackson reforms in April 2013.

What key changes will be implemented in April 2013?

Success fees in conditional fee agreements no longer recoverable
A success fee is a fee, calculated by reference to the lawyer's standard fees, that the client agrees to pay to a lawyer in the event of success. For example, a lawyer may charge an uplift of 100% on his or her fees if the case is won, and charge nothing if he or she loses (ie, 'no win, no fee'). The Jackson Review identified a number of disadvantages to this type of deal, including unfairness to defendants. In accordance with the recommendations of the review, success fees will no longer be recoverable from losing defendants. This means that the claimant must pay its lawyer's success fee out of its damages, which in turn is likely to reduce the use of conditional fee agreements. As this change may reduce access to justice for impecunious claimants, particularly in personal injury cases, the Jackson Review proposed various measures to mitigate these concerns, such as a modest increase in the level of damages awarded in personal injury cases. However, the most significant measure is the introduction of alternative funding schemes, such as damages based agreements.

After the event insurance premiums no longer recoverable
After the event (ATE) insurance allows a party to insure against the risk of losing the case and having to pay the other side's costs. Premiums may be deferred and contingent (ie, the party must pay the premium only if it wins, at which point it is recoverable from the other side). ATE policies are often used hand in hand with conditional fee agreements to enable a claimant to litigate at zero or negligible cost or risk. Again, the Jackson Review concluded that this can be unfair to defendants. As such, parties that succeed at trial will no longer be able to recover their ATE premium from the losing party. This is likely to reduce the use of ATE policies.

Introduction of contingency fees
A contingency fee is an agreed fee payable to a lawyer on success, calculated as a percentage of the sum recovered. Contingency fees are currently prohibited in most forms of court proceeding in the United Kingdom, as they are thought to carry the risk that the lawyer, whose interests are tied to the outcome of the case, may fail to give impartial advice to the client. However, the Jackson Review recommends the introduction of contingency fees based on the Ontario model (sometimes referred to as damages based agreements), which is designed to mitigate this risk, alongside certain other procedural safeguards to be introduced. Essentially, this allows for contingency fees, but with the proviso that recovery from the losing party is limited to the lawyer's normal costs. This means that a claimant would have to pay any contingency fee to the lawyer out of its damages. From a claimant's perspective, similar arrangements are already on offer through third-party litigation funds that will typically require a fixed percentage of any recovery in return for funding legal costs.The new development will mean that lawyers will be able to offer these arrangements themselves, rather than referring clients to third-party funds.

Part 36 'plus'
The Jackson Review recommended the introduction of an additional penalty (10% of the value of the claim) to be paid by defendants who refuse a reasonable Part 36 offer from the claimant and then fail to beat it at trial. Section 55 of the Legal Aid, Sentencing and Punishment of Offenders Act is now in force, enabling appropriate rules to be made. An amendment will therefore be made to Civil Procedure Rule 36.14(3) to implement this recommendation. Many litigation lawyers and clients with regular litigation will have experience of cases where the parties' opposing offers stalled within 10% of each other. This change should encourage settlement of such cases.

Disclosure 'menu' for large claims
The Jackson Review concluded that the default requirement of standard disclosure should be dropped in favour of a 'menu' of disclosure options that may be more or less onerous than standard disclosure, so that a choice can be made according to the requirements of the case. As such, a new Civil Procedure Rule 31.5A is to be introduced, which will provide a number of disclosure options from which the court and the parties can choose. This is a long-overdue change that will bring court procedure more into line with the practice in arbitrations, where parties often agree speedier, cheaper mechanisms for disclosure.

Costs management
Following the pilot projects outlined above, a standard costs management procedure will be introduced into the Civil Procedure Rules. This will apply to all multi-track cases commenced from April 2013 in a county court, the Chancery Division or the Queen's Bench Division (except the Admiralty and Commercial Courts). Additionally, the courts will have the power to order a case either in or out of the system. This will be a major procedural change and all litigation practitioners should be familiar with the new rules before their implementation. The extent to which the new regime will benefit litigants by reducing costs will largely depend on how it is implemented in practice by the judiciary.

Hot tubbing
If the results of the hot tubbing pilot are positive, there is expected to be an amendment to Civil Procedure Rule 35 to provide for the use of that system in appropriate cases. However, it is not certain at this stage whether this will be introduced in April 2013.

Comment
The centrepiece of the Jackson reforms lies in the abolition of recovery of conditional fee agreement success fees and ATE premiums, and the introduction of damages based agreements. Under a conditional fee agreement, a lawyer's maximum uplift is limited to 100% of fees. Under a damages based agreement, the lawyer may be paid a percentage of damages and payment is unlimited (although in personal injury cases, fees will be capped at 25% of damages). A law firm, or counsel, will need only one success in a claim worth hundreds of millions, or billions, to make profits which are out of all comparison to existing business. This may have major consequences for the legal profession.


Furthermore, the economics of funding cases will change. Cases are unlikely to be funded under damages based agreements where the potential damages – and therefore the pot available to pay the lawyer – are low. At the moment, these cases are likely to be perfectly viable under conditional fee agreements, as the legal costs and success fee can be recovered from the other side, leaving damages largely intact. Once recoverability of success fees is abolished, this will no longer work. Hence, an impecunious claimant may be unable to bring such claims in future.
The other key Jackson changes to Part 36, disclosure and costs management, among other things, will require time to bed in before their impact can be fully assessed. However, as with Woolf, it may be that the changes establish a culture which then generates a momentum of its own.