Huge Changes to Civil Litigation Claims from 1st April 2013
The government is making sweeping changes to the way in which litigation claims are funded, and these come into force as soon as April 2013. Although not widely known outside of the legal industry, these are some of the biggest changes since the introduction of the Civil Procedure Rules in 2000 and will have a substantial impact
Conditional Fee Agreements (CFAs), more commonly known as ‘no win, no fee’ agreements, were introduced in 2000 following the abolition of legal aid, allowing individuals to pursue claims for grievances, such as a personal injury. These agreements allowed the claimant’s solicitor to recover all of the claimant’s legal costs, as well as a success fee from the defendant should they win.
However, if the case was lost the claimant’s solicitor would not get paid and the claimant would be liable for the costs of the opposing side. The client would ultimately be protected from this possibility with Legal Expenses Insurance (LEI) and often an After the Event (ATE) policy.
From 1st April 2013, the Legal Aid, Sentencing and Punishment of Offenders Act 2012 will be implemented. CFAs will still be available for claimant’s wishing to pursue personal injury and other civil litigation claims, but all agreements signed after 1st April 2013 will not allow the claimant’s solicitor to recover the success fee or ATE premium from the losing defendant.
These costs will now be the responsibility of the claimant. The success fee will be deducted from the compensation that the claimant receives. Most importantly for the claimant it will be capped at 25% of the general damages (the compensation received for pain, suffering and loss of amenity), and all financial losses apart from future financial losses. However, the general damages recovered by the claimant will be increased by 10% to help with these costs.
These reforms have become known as the Jackson reforms, as they follow a review undertaken by Lord Rupert Jackson, a judge in the Court of Appeal. The changes have the greatest impact on personal injury litigation, but also include changes to general civil litigation. For example, Damages Based Agreements (DBAs) will now be available for all potential claimants in civil litigation claims, including personal injury. If the claim is successful then the claimant will pay their solicitor an agreed proportion or percentage of the compensation recovered, perhaps meaning that claimants who would have previously been deterred by the unknown cost of a litigation case may now feel secure enough to access justice. Litigation cases can sometimes be settled after the sending of just one letter – other cases may continue for years. Providing a DBA will mean clients will know where they stand from the beginning – sometimes the client will benefit more than the solicitor from this agreement, sometimes vice-versa, dependent on the length and complexity of each individual case.
The landscape of litigation claims is most certainly changing but at Gill Akaster we are committed to ensuring that all members of our team remain fully trained and up to date on this new legislation. Our highest priority is always our clients and we strive to make sure they receive the best possible legal advice and service at all times.
Rebecca Brisley, Associate