Jackson's brave new world

The Jackson Review, published on 14th January, proved to be a far more radical document than most in the litigation industry expected.

While there was a widespread expectation that Jackson would recommend some adjustments to smooth out the worst effects of the conditional fee regime introduced by the Access to Justice Act 1999, very few anticipated that he would go as far as recommending the end of recoverability for success fees and after-the-event (ATE) insurance premiums for most cases or that he would suggest that one-way costs shifting should be introduced in favour of claimants for some types of case. Significantly for local authority lawyers, these include personal injury claims and judicial review proceedings, both of which Jackson suggested would be suitable candidates, although he did suggest that “unreasonable” claimants could be made liable for costs.

At the press conference to mark the report's publication, 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.

He 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.

Jackson also recommended that any uplift on a conditional fee arrangement should be borne by the claimant and limited to 25% of the fee while fixed fees should introduced for cases up to £25,000. 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.

For local authorities and other public sector bodies that have been at the sharp end of lawyers success fees and ATE premiums for almost a decade now, Jackson's findings will present some relief. One irony of the Access to Justice Act is that, with the public sector being the defendant in many claims, the net cost to the public purse of personal injury claims has actually increased as a result of the withdrawal of Legal Aid in 2001 thanks to the level of success fees and insurance premiums it has had to pay out.

Nevertheless, some caution is needed. The quid pro quo for ending success fees is that damages will rise by 10%. Given that success fees for cases which settle early are relatively low, Jackson calculates that the majority of smaller claimants will actually be better off as a result, which means that defendants with large numbers of small claims may yet find themselves out of pocket.

What the reforms, if enacted,  would mean however is that cost penalties for defendants to dispute a claim would be less prohibitive, which Jackson hopes will mean that more defendants will choose to defend unmeritorious claims rather than settling them early for fear of racking up disproportionate costs. As Jackson said: “Access to justice should be available to defendants as well as claimants.”

Also of note for local authorities is Jackson's (surprising) endorsement of contingency fees – in which lawyers take a percentage of damages won – which the legal establishment has generally resisted for fear of unleashing a US-style litigation culture. Although this recommendation cam e with the caveats that. the proportion of this that would be paid by the losing party would be capped at the “normal” level of legal fees (with the remainder paid by the claimants) and that the use of contingency fees be regulated. The prospect for claimant lawyers to grab a piece of the action in this way, perhaps in conjunction with one of the litigation funding vehicles currently attracting interest on the stock exchange, may prove hard for many to resist.

The big question hanging over the Jackson Review is whether his recommendations will ever be put into effect as many of the main proposals will require primary legislation. The review 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. The report has been sent to will the Ministry of Justice, but is not binding on it.

Given Jackson's implied criticism of the Access to Justice Act, which was the creation of a Labour Government, it would seem unlikely that the present administration would seize on it enthusiastically while an incoming Conservative government would have a very full agenda already. Whatever its merits, it may be some time before the Jackson Review's recommendations become a reality.


The full report can be downloaded here.