Justice Secretary ends CFA success fee and ATE recoverability

The use of conditional fee agreements (CFAs) will be severely restricted under new reforms to the civil justice system announced by the Justice Secretary, Ken Clarke.

Introducing the government's response to its consultation on Lord Justice Jackson's recommendations on civil costs this afternoon (29 March), the Justice Secretary said that the present system, in which claimant lawyers can be awarded a 100% uplift on their fees, paid for by the losing party, in many types of civil claim would be abolished. Likewise, the cost of 'after-the-event' litigation insurance policies will no longer be awarded against losing parties (with the exception of clinical negligence cases).

Instead, the government has accepted the main thrust of Lord Justice Jackson's recommendations and will cap uplifts in personal injury claims to 25% of lawyers' fees, to be paid from the claimant's award. To compensate claimants for the loss of recoverability, general levels of damages will be raised by 10%.

Personal injury cases will also see the introduction of another of Jackson's recommendations  - Qualified One Way Costs Shifting, meaning that claimants will not be responsible for defendants' costs in the event of an unsuccessful claim. In all cases, a new test of proportionality in costs assessment will be introduced so that "only reasonable and proportionate" costs may be recovered from the losing party.

The government also said that it would permit the use of contingency fees (otherwise known as damage-based award) in civil litigation for the first time, again with 25% cap for personal injury cases.

Clarke said: “The cost of claims has soared and its become a terrible burden for a lot of people that are sued. We are going back to the way that CFAs were when they introduced in the 1990s. Unfortunately, the changes made in 1999 [by the Access to Justice Act] went too far and led to an explosion in costs. It is now denying justice to people because it is so expensive to defend yourself against one of these claims. Defendants often pay out more in legal costs than they do in damages to the claimant.

“It is extremely important for both claimants and defendants that the system is made more friendly. The normal man or woman in the street would have a mortal dread that they would have anything to do with the law courts – it is expensive, it is slow, and people don't think it's the best way to resolve their disputes."

Clarke said: “Unless you qualify for Legal Aid, you should be expected to pay something towards the cost of bringing a legal claim. Going to court should be the last resort.”

The measures would bring the civil costs in England and Wales broadly into line with the system in Scotland, where according to the Access to Justice Action Group, the number of claims per head of population is 25% lower. Its co-coordinator Andrew Dismore claimed that the reforms, in conjunction with cuts to legal aid, would deprive many legitimate claimants from taking legal action.

He said: "The legal aid cuts are serious, but the impact of the wider cuts in civil justice funding will affect far more claimants. The government estimates that at least 50,000 people (but probably a lot more) will be denied access to justice as they cannot afford it.”

At the same time, the Justice Secretary announced a new consultation - Solving disputes in the county courts - on further reforms to the civil justice system. The proposals include:

• expanding significantly other appropriate forms of dispute resolution by requiring all cases below the small claims limit to have attempted settlement by meditation, and introducing compulsory mediation information/assessment sessions for claims above the small claims limit;
• introducing a simplified claims procedure on a fixed costs basis, similar to that for road traffic accidents under £10,000, for more types of personal injury claim and lower value clinical negligence claims;
• moving some lower value claims from the High Court to County Courts;
• setting court fees to be set at levels that reflect the full cost of the service being provided (with fee waivers where appropriate to ensure that access to justice for the less well-off is protected);
• increasing the upper jurisdiction threshold for small claims (excluding personal injury and housing disrepair) from £5,000 to £10,000, £15,000 or £25,000;
• ensuring more effective enforcement of court judgments.

Links:

A copy of the government's response to the Jackson Recommendations can be found by clicking the following link: JacksonResponse

A copy of the government's consultation paper Solving disputes in the county courts can be found by clicking the following link: CivilLitConsultation