Originally posted November 2009
Sir Rupert Jackson’s final report on his review of civil litigation costs is expected in December. Since the 650 page interim report was published in May this year it has received a wide range of reactions and generated a certain amount of apprehension in the legal community.
While CfJ awaits his final report with interest we believe that the review is not going to deal with the real issues that lie at the heart of the problems plaguing the litigation process and which the Centre has itself been set up to overcome.
The legal system, so far as it deals with contentious matters, is in need of a radical change of approach if it is to address the needs of businesses in the community and also provide access to justice. Although the interim report itself provides no firm conclusions it appears doubtful that effective changes to the system will be forthcoming when the final report is released at the end of the year.
The areas of review are as follows:-
Alternative Dispute Resolution
CfJ was disappointed to learn that Sir Rupert would not be making any changes to the role of ADR in the current court system, though he does seem to be focussing largely on mediation.
At the moment ADR is an entirely voluntary process which both parties must themselves choose. Sir Rupert gave his opinion that sophisticated parties and their solicitors were already well aware of the advantages of ADR over litigation. As a consequence his review was not going to recommend that these parties should be forced into pursuing ADR when they have already made the decision to litigate.
Sir Rupert held firm to this belief in spite of the many arguments presented to him in favour of the compulsory adoption of ADR, such as inserting the process into the court timetable or only allowing listing of a trial date if ADR had been attempted.
While there are doubts about compulsory mediation CfJ believes that Sir Rupert’s stance on the issue ignores the fact that too many disputes, for which lengthy proceedings are entirely unnecessary, reach court when they could be settled. The problem of litigation cost is best solved by providing parties with the means to avoid them in the first place.
Fixed Fees
The interim report considered the advantages of fixed legal costs for lower value claims. This practice, already implemented in Germany and elsewhere, is currently used to help keep costs down, increase efficiency and inject certainty into proceedings.
Since the interim report was published Sir Rupert has confirmed that he is very much interested in extending the fixed costs regime to all fast-track claims under £25,000. In July this year the Civil Justice Council, at Sir Rupert’s request, brought together 13 representatives from the legal and insurance industry to set fixed fees on low value road traffic (both PI and non-PI), employer’s liability, public liability and housing cases, with the intention of including these figures in the final report.
Sir Rupert is not in favour of implementing one set of fixed costs for every type of case but instead basing the system on a set of tariffs. One very strong opposing voice to this proposal comes from the PI sector where the often complex nature of non-road traffic accidents means fixed fees for such cases are highly inappropriate.
CfJ would agree that not all fast track claims are suited to fixed fees and indeed this approach could lead to ‘rough and ready’ justice where the legal advisers to a particularly complex dispute are not awarded costs which accurately reflect the time and work required to properly prepare a case for trial. If it becomes no longer economically viable for legal advisers to take on certain types of claims, individuals and businesses may find it extremely hard to find proper representation or, in some cases, any representation. There is criticism in contintental jurisdictions, where fixed fees apply, about the injustices that result and the damage this does to the credibility of the courts.
Considering the potential for such an outcome CfJ believes that Sir Rupert should be doing more to encourage ADR in low value claims.
Conditional Fee Agreements
The dire predictions of a developing ‘compensation culture’ have been primarily fuelled by the conditional fee agreement, a particular bête noir of defendants who find claimants’ success fees and excessive ATE premiums often wholly disproportionate to the size of the claim itself. The report states that the cost of settling a claim over the last ten years has increased by 30% because of ATE premiums and success fees. It would appear that defendants’ criticisms of CFAs are not unfounded.
The report offers serveral different proposals to try and overcome this problem: the most drastic being that the success fee and ATE premium are no longer recoverable. By making claimants responsible for paying their own premiums it is hoped competition would be reinjected into the ATE insurance market as discerning consumers shopped around for the best price.
It also suggests that success fees, if recoverable, are staggered so that solicitors receive an amount linked to the stage at which their client’s claim was ‘won’. The level of recoverable success fee should also be reviewed.
This is probably a welcome recommendation for defendants, but tempered with the prospect that ATE premiums are no longer recoverable is the idea of 'one way' costs shifting where defendants to certain types of claims (such as personal injury) will no longer be able to recover their costs if they win. Successful claimants will of course continue to be able to recover their fees, though with expensive ATE insurance now obselete such fees would be greatly reduced.
CfJ maintains that there are serious problems with the conditional fee agreement system from both the view of the defendant and the claimant. Although it was originally touted as a replacement to legal aid it has often been used to lure in deperate claimants who do not fully understand its risks or it will turn away those with a genuine and important case with too low a likelihood of success rate for the solicitor to consider taking it on. Solicitors will be even more likely to cherry-pick the easy and certain winners.
Contingency Fees
Perhaps the most controversial area in this report has been the suggestion of introducing contingency fees into England and Wales, an approach where the successful party’s legal advisers are paid by taking a certain percentage of their client’s damages. This is a highly contentious proposal not least because it compromises a solicitor’s ability to act in the best interests of his client but also encourages lawyers to pursue only those cases they can win with minimum effort and at minimum risk.
Although Sir Rupert reassures us that the US approach to contingency fees is not the approach he is suggesting it remains to be seen how in practice such a process could be so regulated well enough to ensure it works, that clients are protected and solicitors are prevented from either an overly aggressive pursuit of the highest award possible, or settling on unfavourable terms when the case remains strong but requires greater work from the lawyer.
CfJ is highly critical of introducing such a measure and maintain that a solicitor’s complete neutrality to the possible award his client could achieve is the only way to ensure a system that is just for both the claimant and the defendant.
Conclusion
Change for change’s sake will not in the long run improve the litigation process or provide greater access to justice. Those who are regularly involved in litigation will appreciate that Sir Rupert’s review is a genuine and well-researched attempt to tackle a very difficult set or problems but we are firmly of the view that in the end it will not be radical or far-reaching enough to effect the changes so desperately needed.
Note from CfJ
At CfJ we have been working on these problems over a long period to come up with what we believe to be more workable solutions. While these cannot provide a perfect answer to every situation we believe the process we have developed holds many of the answers Sir Rupert has been seeking. It is our hope that the process will work for all in the community and help disputes to be resolved more quickly, cost-effectively and supportively.