Jackson recommends abolition of success fee and ATE recoverability

Lord Justice Jackson's long-awaited Review of Civil Litigation Costs has recommended that claimants should no longer be entitled to recover their lawyers' success fees or 'after the event' (ATE) insurance premiums and that, instead, one-way costs shifting should be introduced to protect claimants against the cost of losing a claim in most cases, including personal injury and judicial review.

Presenting the report this morning (14th January), Lord Justice Jackson said that the recoverability of success fees and ATE premiums introduced by the Access to Justice Act in 2001, had been the biggest contributor to spiralling legal costs in recent years. Jackson also recommended that any uplift on a conditional fee arrangement should be borne by the claimant and limited to 25% of the fee. To compensate claimants, he also recommended that the levels of damages paid in civil litigation be increased by 10%. Referral fees charged by claims management and 'before the event' insurers for cases should also be banned.

Jackson said: “A costs war has broken out. There has been too much focus on lawyers' remuneration and too little on compensation for victims. If my recommendations are accepted as a whole, it will bring costs back under control while providing access to justice at a proportionate cost. There is a clear link between costs and access to justice. Access to justice should be available to defendants as well as claimants.”

In a report which was far more radical than many expected, Jackson also recommended that contingency fees – in which lawyers take a percentage of damages won – should be permitted although the proportion of this that would be claimed by the losing party would be capped at the “normal” level of legal fees, with the remainder paid by the claimants.

Jackson's Review of Civil Litigation was commissioned in 2008 by the Master of the Rolls in response to judicial concern about the disproportionate rise in legal costs following the implementation of the Access to Justice 1999. Many of the recommendations of the report will require primary legislation. The report has been sent to will the Ministry of Justice, but is not binding on it.

The full report can be downloaded here.