On the 1st of April of this year, Lord Jackson’s reforms concerning the recovery of legal costs in civil litigation will come into place. These new laws are supposed to put an end to the excessive financial success fees (and ATE premiums) in the Personal Injury sector.
Consequently, the reforms will involve the policing of rigid costs budgeting by the judiciary. They will have further authorities to control legal costs by using fixed budgets to limit sums of money that can be recovered.
Third party funding will experience a rise due to these reforms. This is mainly because the new costs procedure puts civil litigation in a very attractive light and a powerful investment opportunity for funders.
Contingency fees will become permissible. This will allow lawyers who advise on commercial disputes to charge fees of up to 50%, (dependent on whether they win the case) of the damages that they recover.
However, could we be heading for disaster with these reforms? Last week, the chief of the LSLA (London Solicitors Litigation Association) described the lack of regulations and practice directions just 10 weeks before the introduction of the reforms as “wholly unacceptable” and predicts that civil litigation could descend into chaos. Ms Kaye added that if a set of draft rules had been issued and consulted six months ago “rather than the overwhelming and dark impenetrable silence we have experienced”, lawyers and consultants may not be dreading the introduction of the Jackson Reforms.
These reforms mean considerable change in the claims industry, but as of yet their full impact is unknown. Only April will reveal their effects on personal injury claims, and the management of these changes will be eagerly and perhaps warily anticipated.