Civil Litigation Reforms. March 2013

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1 Civil Litigation Reforms March

2 contents Introduction... 2 The Jackson Report... 4 Implementation...5 Referral fees... 6 Conditional Fee Agreements... 8 After the Event Insurance Damages Based Agreements Other litigation funding Part Qualified One Way Costs Shifting Fast track fixed costs Costs budgeting Proportionality Small claims Low value claims process Damages for non-pecuniary loss Case management Assessment of costs Appendices 1. Glossary of abbreviations 2. Key contacts Birmingham Exeter London Manchester Nottingham

3 introduction April 2013 brings in the most significant changes to the way in which litigation is conducted since the introduction of the Civil Procedure Rules (CPR). Following on from the Jackson report there has been a full and comprehensive debate on the way in which cases are run and the costs associated with them. We have seen numerous consultation exercises being run by the Government and interested parties encouraged to submit their views both on the proposed reforms and the most practical ways of implementing them. The detail of the Rule changes was made available at a late stage just over six weeks before the Rules were due to take effect. The reforms look at a variety of issues from the funding of claims to the costs which may be claimed to the case management procedures themselves. In this guide we review the major changes and look into our crystal ball as to how the changes will impact on litigation and litigation behaviour. We anticipate that at the outset there will be test cases and satellite litigation in relation to some of the more ambiguous sections of the Rules. There may be amendments at an early stage if rules are not achieving their intended outcomes. We also expect to see novel funding arrangements being road tested as a result of success fees no longer being recoverable. The next few months will bring with it a period of uncertainty, before matters settle down and we can see if these reforms do bring about the cost savings promised. The new Rules can be found in full at Please do contact us if you have any questions or thoughts on the reforms. Best wishes talk to us Nichola Evans James Arrowsmith

4 the Jackson report On 14 January 2010, Lord Justice Jackson published the final report of his Review of Civil Litigation Costs. He impressed his readers with a comprehensive investigation of the drivers behind litigation costs and went on to please many and infuriate many others with his recommendations to reduce them. The guiding principle which underlies his recommendations is that litigation should provide value for money, and costs should be managed in such a way that litigants themselves have an interest in ensuring this is the case. His key recommendations were: abolition of recoverable success fees and After The Event insurance (ATE) premiums referral fees to be banned introduction of Damages Based Agreements (DBAs) a small claims and fast track in the Patents County Court fixed costs across much of the fast track one way costs shifting costs budgeting for higher value cases increase in damages for non pecuniary loss (general damages) revisions to Part 36 Jackson also made it very clear that his proposed reforms would only work if introduced as a package. While the path to implementation has not been an entirely smooth one, many of Jackson's proposals will indeed come into effect, as a package, in April Shortly after Jackson published his report a new process for low value injury claims arising from Road Traffic Accidents (RTAs) was introduced. Jackson was not able to comment on the effectiveness of the process, and Professor Fenn who examined the outcomes in a piece of work for the Government last year considered it was still too soon to form a view. Nonetheless, the Government have confirmed that the process will be extended to a wider range of injury cases from the end of July 2013 at the same time as a scheme of fixed costs. 4

5 implementation Litigation imposes substantial demands on the public purse, particularly through the legal aid budget (not dealt with by Jackson) and the cost of claims to public bodies such as Local Authorities and the National Health Service. It is therefore, perhaps unsurprising that the Government took up Jackson s recommendations with some enthusiasm. Within 6 months, a green paper in relation to implementation of many of Jackson s recommendations was published, and this coincided with a paper on Legal Aid. By summer 2011 the Legal Aid, Sentencing and Punishment of Offenders (LAPSO) Bill was making its way through parliament. At around the same time, the Government began to consult on amendments to the small claims and fast track limits, and an extension to the then relatively new process for low value injury claims arising RTAs. The Government encountered strong opposition to its efforts to introduce the reforms, but nonetheless pressed ahead to bring into law the Legal Aid, Sentencing and Punishment of Offenders Act in May The Act itself introduces a ban on recoverable success fees and ATE premiums, DBAs and a ban on referral fees, but in all areas Orders and Regulations were needed in order to set out the detail of the new regime. Other reforms proposed by Jackson were to be brought in by changes to the Civil Procedure Rules. The preparation of this secondary legislation and new rules has proved to be the most challenging aspect of implementation of Jackson s proposed reforms, and there have been significant delays. Orders and Regulations on DBAs, Conditional Fee Agreements (CFAs) and Part 36 were finalised in January, and CPR rule amendments finally published on 12 February, with practice directions following and the first minor amendments to rules soon after that. Updated rules in relation to the new process and fixed costs for low value injury claims are still awaited, as is regulators guidance on the scope and enforcement of the ban on referral fees. Even where rules have been finalised, there will need to be a bedding in period before the courts and practitioners establish a clearer understanding of how they will be applied in all cases, and where there are uncertainties these are likely to erupt into satellite litigation. The full detail of the rules therefore remains unknown, and the way in which they will be applied in practice will only emerge over time. We predict that the rules will, in time, produce a more cost effective court process, but the full benefits will take time to be realised. 5

6 referral fees Fees paid between solicitors, claims management companies (CMCs), insurers, credit hire companies, medico legal agencies and others in return for referred work are currently commonplace in certain areas of litigation, particularly personal injury claims. While not an element of recoverable costs, referral fees (which may be in the region of 700 for even a relatively modest injury claim) form a significant part of the overheads of many businesses dealing in claims and therefore have the potential to have a knock on effect in relation to costs. However, research undertaken by the Association of Personal Injury Lawyers (APIL) suggests that direct marketing costs for personal injury claims typically amount to around 500 per claim. Section 56 of the LASPO Act introduces a ban on paying, receiving or arranging referral fees (which includes any consideration save for hospitality) in relation to accidents giving rise to personal injury. There is also a ban on referral fees if the arrangement is for a third party to pick up work. The ban applies to regulated persons so the ban applies to a wide spectrum of people. As a result the Financial Services Authority (FSA), Solicitors Regulation Authority (SRA), Bar Council and Claims Management Regulator are charged with the implementation and enforcement of the ban. The SRA has given some guidance as to how they will look at this and the test will be: was there a referral was there a payment (of any kind of consideration) was the payment for that referral The difficulty, the SRA argues will be in determining whether the payment was for that particular referral. So for example if a firm of solicitors subscribes to a scheme for a fixed fee for their details to be provided to potential clients who contact a website when they have been injured, the view appears to be taken that this would not constitute a referral fee. However if, for example, a claims management company takes brief details of a potential claimant and then passes those details on for the payment of a fee, that is likely to be caught by the ban. The onus would be on the law firm to demonstrate that payment was not for the referral. We can foresee that there will be all kinds of questions raised with regard to referral arrangements. Whilst the legislation looks relatively clear, there are still many grey areas that may require investigation. For instance, marketing and claims related services may still be bought in, for a reasonable fee. 6

7 The SRA has also made it clear that if solicitors and CMCs join forces through an Alternative Business Structure (ABS) then this will not be caught by the ban. We would also expect novel business arrangements including joint marketing or services procurement. So far as the SRA is concerned, the changes to the regulatory framework are expected to be published during March We are also told that further guidance will be made available shortly by the SRA with definitions of what they consider to be a referral fee. 7

8 conditional fee agreements Conditional Fee Agreements are the main funding mechanism for personal injury claims, and have played an increasingly important role in commercial litigation. They allow solicitors and their client to share risk, by permitting the solicitor to deal with the claim on the basis that they will recover either no fee or a reduced fee if unsuccessful but, in return for that risk, receive an enhancement on their standard fees (generally on an hourly rate basis, but increasingly as a fixed fee) if successful, known as a success fee;. This success fee has, for a number, of years been recoverable from the losing party. However section 44 of the LASPO Act abolishes that right of recoverability. The winning party will not be able to recover the success fee as against the losing party. That is not to say that a party cannot enter into a CFA it is just that the success fee will be recovered from that party s damages. The new rules capture CFAs entered into after 1 April 2013 and also to group CFAs (known as Collective Conditional Fee Agreements (CCFAs)) where work is commenced on a particular case post 1 April. LASPO has now been supplemented by the Conditional Fee Agreements Order 2013 which sets out the requirements needed in order for a CFA to be enforceable. So what are the key provisions? The maximum percentage uplift is 100% of base costs incurred by the lawyer (article 3) however, the maximum uplift permissible in personal injury claims is 25%. Further, the uplift can only attach to damages for pain and suffering, loss of amenity and damages for past pecuniary loss. It can only attach to damages net of any monies owed to the Compensation Recovery Department (article 5). Therefore, although the success fee is calculated on the basis of fees, the cap on how much can be claimed from a client relates to the amount of damages. The best way of demonstrating how this works is to look at a practical example, in this instance from a personal injury claim: A claimant is awarded 10,000 in damages. Of that sum, 6,000 is for pain and suffering, loss of amenity and past pecuniary loss. The Compensation Recovery Unit (CRU) recover 1,000. This leaves 5,000 to which the agreement might attach. Assuming that the claimant s lawyer s fee are 2,000 and are recovered at that amount then the sum of 500 will be deducted from damages, that is, 25% uplift on fees. 8

9 Alternatively assume that for the same case the lawyer s fees are 8, % of that is 2,000. However under the terms of this Order the maximum amount of uplift which can be charged against damages is 1,250 that is 25% of 5,000. The lawyer would only be able to recover the sum of 1,250 as the success fee from damages and therefore loses out to the tune of 750. There are a few exceptions to the Act where success fees can still be recovered and these are: asbestos related disease litigation insolvency proceedings (until 2015) publication proceedings However, the CPR amendments already include provisions to extend the ban on recoverable success fees in these areas, and so implementation of a ban in one or more of them may not be far off. 9

10 after the event insurance Litigants have for many years been used to obtaining After The Event Insurance which provides cover against an order for adverse costs and may also cover own disbursements. This insurance tends to be deferred and contingent which means that the insured does not have to pay the premium unless successful and until the conclusion of the case. When Lord Justice Jackson reported, he did not object to ATE itself (which provides individuals and businesses with a useful way of obtaining cost certainty) but saw it as part of the funding structure which (with CFAs) gave access to risk free litigation. His proposal was therefore to end recoverability of the ATE premium. His view was that this would still allow access to insurance for those who wanted it, but would place the responsibility on them to source a reasonably priced policy, such that they would be willing to pay the premium. Under Section 46 of the LASPO Act from 1 April 2013 one will no longer recover an ATE premium from the losing party. There is a balancing measure so far as personal injury litigation is concerned and that comes via Qualified One Way Cost Shifting (QOCS). A full explanation as to how QOCS will work follows later in this guide. Despite the introduction of QOCS as a balancing measure, claimants in personal injury litigation still need to pay for disbursements which can be expensive in a complicated claim. There has been a significant debate as to how disbursements will be funded going forward. It has been suggested that many ATE insurers will adapt their business models so that disbursement funding and some adverse costs cover will be made available. This will be at a cost or an overhead to the solicitor s practice. However, for non personal injury litigation, parties who wish to ensure that they have insurance cover for adverse costs will have to pay that premium themselves. We will have to monitor going forward if that premium will continue to be deferred or whether companies will expect payment up front. Having spoken to a number of providers they expect to see a continued demand for ATE in commercial disputes where the biggest deterrent to bringing a case continues to be the prospect of paying an adverse costs order. There are some exceptions to this provision where ATE premiums will continue to be recoverable namely: clinical negligence so far as the disbursements relate to expert s reports on liability and causation asbestos related disease insolvency proceedings (until 2015) publication proceedings 10

11 damages based agreements Like Contingency Fees, Damages Based Agreements are only payable to a solicitor by their client in the event that a claim concludes successfully. However the fee payable to the solicitor is calculated as a percentage of damages, rather than on the basis of an hourly rate + success fee. In essence the solicitor takes a cut of their client s winnings. DBAs have been available in relation to non-contentions legal services and in employment tribunals for some time, but until now have been banned in relation to litigation. However, that will all change as of 1 April 2013 when DBAs will be permitted in civil proceedings pursuant to Section 45 of the LASPO Act. The detail as to how DBAs will operate in practice can be found in The Damages-Based Agreements Regulations The terms and conditions must state: the claim or proceedings to which the agreement relates when payment becomes due to the legal representative the reasoning behind setting the amount of the success fee The maximum amount which may be deducted from damages is 50% but with personal injury claims the level is set at 25%. Also in personal injury claims the success fee can only be deducted from damages for pain and suffering, loss of amenity and for past pecuniary loss and net of any payment made to the Compensation Recovery Unit. The indemnity principle is specifically retained in the Regulations so that a lawyer cannot recover any more than the DBA fee. A practical example demonstrates why this might be important in practice. If we take the example outlined in the section on CFAs, namely a claimant who recovers 10,000 in a personal injury claim where the amount of damages to which the DBA can attach is If for instance the defendant was ordered to pay 1,000 in costs (inclusive of VAT and disbursements) the claimant would have to pay his solicitor 250 of his damages (that is 25% of the 5,000-1,000 plus 250). If the defendant was ordered to pay the sum of 1,250 in costs then there would be no deduction from damages as the sum recovered is equal to 25% of damages. 11

12 However, if the claimant s costs were, say 8,000 then the claimant s lawyer would only be able to recover the sum of 1,250 from the defendant as a result of the indemnity principle remaining in place. The claimant s lawyer would also not be able to recover the shortfall from his client. Its worth noting that after July fixed fast track costs in an Employers Liability (EL) claim of this value settled prior to litigation (but not in the portal) would be 2,480, nearly 1,000 more than allowed under the DBA. In claims proceeding to litigation fixed costs would be higher but the fee under the DBA would not change. The fixed costs themselves have been challenged as being too low. The Regulations do not provide a mechanism whereby the claimant s solicitor has to give notice to a defendant that he is working pursuant to a DBA. It remains to be seen if further provisions will be brought in via the Rules for such notice to be given. Clearly in a low value, complicated case there may be tactical implications. It may well be worthwhile for a defendant in such proceedings to make an early low offer as it may work as an incentive to the claimants team to settle as they end up with more money in their pockets. This may be a particularly useful tactic for defendants to personal injury claims where the defendant will be working pursuant to QOCS (covered later) and so will not be recovering its own costs in any event and can limit its own legal spend with an early settlement. Given that the choice of a DBA or CFA can result in such substantial differences in recoverable costs, it will be important to be alert to the possibility of novel funding arrangements being tested, or questionable practices emerging. For example, if DBAs need not be notified then a paying party may have no ability to check the proper basis of recovery. Will some representatives attempt to recover on the more favourable basis, for example if a defendant makes an all in costs and damages offer, or in an injury claim, if fixed costs are more generous? New funding arrangements designed to maximise recovery could also emerge. For example, at the outset a DBA may apply, with a switch to a CFA at a defined stage. 12

13 other litigation funding 1. Before the Event Insurance Before The Event insurance (BTE) is a policy taken out before the occurrence of an event giving rise to litigation, which will provide access to legal representation. BTE is commonly sold as an add on to motor or household insurance policies, at low cost. However this form of BTE often relies on a model in which the insurer refers the claim to a solicitor in return for a fee, with the solicitor the entering into a CFA. The less common, more costly, model of BTE involves the insurer actually paying the solicitors costs direct. Lord Justice Jackson favoured BTE as a means of providing access to justice and thought that the uptake of BTE would increase following implementation of his other reforms, but also encouraged the Government to actively promote its use. However we have not seen any movement on the question of BTE from the Government. In addition, with more and more customers using price comparison websites there has been a downturn in the purchase of BTE products as customers choose not to purchase add on cover to either their household or motor insurance policies. It remains to be seen whether businesses will increasingly turn to BTE when the rules change on the recoverability of success fees and ATE with it offering a relatively cheap way of ensuring that they have access to justice in the event of a dispute. 2. Third Party Funding Under a Third Party Funding arrangement, a funder who is otherwise unconnected with the claim provides financial support in respect of claim, in return for a percentage of the sums recovered, if the funded party succeeds. This is usually backed up with an ATE policy to insure against the possibility of an adverse costs order. Traditionally third party funding has been made available for big ticket litigation and generally for commercial litigation only. Over the past few years there have been a number of new entrants to the market. We believe that this will continue to form a useful tool for many companies wishing to undertake large scale litigation but we cannot see that third party funding will be extended to other areas such as smaller Mercantile Court matters or indeed fast track or smaller multi track personal injury cases. 13

14 3. Solicitors One of the recommendations from Lord Justice Jackson is that solicitors themselves could fund claims. To a degree this already happens. However there are dangers in solicitors doing this as was highlighted in the case of Germany v Flatman [2011] EWHC 2945 (QB). In that case a firm of solicitors had acted for two impecunious claimants bringing personal injury claims. No ATE was taken out on behalf of either claimant and the solicitor paid for the claimants disbursements. The claimants lost their cases. An application was made to the court for disclosure of the relevant retainer documentation. The argument being put forward by the defendant was to the effect that without the solicitor paying for the disbursements, the claimants would not have been in a financial position to bring their claims. The court ordered disclosure and obiter indicated that it would be prepared to make an order that the solicitor meet the costs of the defendant. This case is now being reviewed in the Court of Appeal and the decision is expected soon. However the courts do not seem to have a consistent approach on this. In the case of Tinseltime v Eryl Roberts and Others [2012] EWHC 2628 (TCC) the court rejected a similar application for costs in a property litigation case. If more and more solicitors do fund their client s cases then we would expect there to be litigation in the courts to determine how far, if at all, solicitors need to pick up the tab when their client is unsuccessful. 14

15 Part 36 Under the Civil Procedure Rules, Part 36 is the main mechanism for making offers in relation to a claim, and governs the form, content and costs outcomes of offers. Under current rules, a Part 36 offer cannot be time limited, but can carry costs penalties for late acceptance or where judgment is less favourable to the receiving party than an offer. Where defendants settle on a more advantageous basis than their offer, they can typically recover their costs from the date 21 days after the offer was served. This will be preserved under the revised rules. Where QOCS applies, recovery will remain available without permission of the court, though this will be limited to the value of damages and interest awarded to a claimant. Where a claimant secures a judgment that is at least as advantageous to them as their offer, they can secure penalty interest on costs and damages, at up to 10%, and costs will be assessed on the more favourable indemnity basis. Prior to Jackson s report, Carver v BAA [2008] EWCA Civ. 412 had applied an interpretation to the word advantageous which meant that pursuing litigation for a marginal financial gain compared to the offer would not be more advantageous. However, following Jackson s recommendations the rules were amended so that in claims for damages the test is a purely financial one (i.e., one penny more would be seen as more advantageous to a claimant), which has removed a significant area of uncertainty under Part 36, and the potential for satellite litigation. When Jackson reported, he took the view that the advantages to defendants arising from a good Part 36 offer were significantly greater than those available to claimants. The latest rules update introduces increased incentives for claimants to make strong Part 36 offers. For offers made by claimants after 1 April 2013, where a claimant manages to secure a judgment which is at least as advantageous as his offer, he will be entitled to the following additional sum on damages (or where a non-pecuniary remedy is sought, on costs): 10% of damages up to 500,000, and 5 % of damages between 500,000 and 1,000,000 At the top end of that scale, a claimant who recovers 1,000,000 in damages might therefore receive a bonus of 75,000. This may encourage more reasonable and earlier offers from claimants. 15

16 There appears to be a minor error in the rules, as the drafting does not actually set out how an additional sum would be calculated for claims over 1,000,000. The intention appears to be that claimants in that category should receive an additional sum of 75,000 calculated in accordance with the approach above. Whether common sense will prevail or there will be satellite litigation on the point remains to be seen. In the context of the revised rules in respect of case management, and the encouragement of more effective costs control, split trials and the use of preliminary issues appear likely to become more common. Part 36 does not adequately deal with these as it states that the existence of a Part 36 should not be communicated to a trial judge until a case is decided. In Browne Jacobson s case of Ted Baker Plc v Axa Insurance UK Plc [2012] EWHC 1779 (Comm), Eder J commented that there was an urgent need for CPR to be reviewed and possibly reformulated in order to deal in particular with the question of split trials. To date no amendment has been made. 16

17 qualified one way costs shifting Qualified one way costs shifting will apply in relation to personal injury claims and claims by dependants or an estate in relation to damages arising from a death, where the claimant had not entered into a CFA prior to 1 April It will not extend to pre-action disclosure applications in relation to such claims. The normal rule in litigation is that costs follow the event. In other words the unsuccessful party pays the costs of the successful party, as well as bearing their own costs. That rule may be applied both in relation to a claim, but also in respect of a particular application. For example, in the course of a claim in which the claimant succeeds in recovering damages, a defendant may make a successful application to obtain its own expert evidence. On a costs follow the event approach the defendant would recover their costs of making the application from the claimant (as it was successful) but the claimant would recover costs in relation to all other aspects of the claim. As explained above, Part 36 offers may result in a departure from the costs follow the event rule. A pure one way costs shifting regime means a defendant will not recover their costs in any circumstance, so: if the claimant wins, the claimant recovers their costs and the defendant bears their own costs if the defendant wins both they and the claimant bear their own costs The new rules actually put this into effect by restricting enforcement of a costs order. The headline rules are that: 1. Orders for costs against a claimant can only be enforced after proceedings have been concluded and costs have been assessed 2. In those circumstances, enforcement will be limited to the total value of damages and interest ordered to be paid to the claimant That has two significant implications when compared with a pure one way costs shifting regime. Firstly, it means that a defendant will still be able to recover costs awarded against the claimant in relation to any successful application in the course of a claim, so long as those costs do not exceed the total value of damages. 17

18 Secondly, it preserves the costs outcomes under Part 36 where a defendant has made a Part 36 offer and then gone on to achieve a more advantageous outcome in a claim. Again defendant costs recovery will be limited to the value of damages. It is important to note that under these rules, there are not provisions to restrict the categories of damages against which costs can be enforced, so that it would seem to include future losses (c.f. the provisions in relation to calculation of success fees and DBA fees). Nor does it take into account the fact that claimants may have other liabilities to meet out of their damages, such as financial liabilities forming part of their claim or costs due to their own solicitor under a funding agreement. Qualifications The rules also set out specific situations in which one way costs shifting will not be applied, because the claimant is deemed not to deserve that protection. The first of the qualifications is where a claimant s claim is struck out for disclosing no reasonable grounds, for abuse of process, or due to conduct by the claimant or his representative which obstructs just disposal of proceedings. If the defendant obtains strike out on any of these grounds then enforcement to the full extent of any costs order is available, without permission of the court. These provisions give defendants an increased incentive to make strike out applications against weak claims, though a shrewd claimant with a weak case may respond by discontinuing before the application is heard which would seem to preserve the protection of QOCS. It will be interesting to see whether the courts will entertain a defendant who attempts to press on with an application in those circumstances, in order to secure a strike out order and so an exception from QOCS. The second of the qualifications is in relation to claims that are deemed to be fundamentally dishonest on a balance of probabilities, which will allow enforcement to the full extent of the costs order, though only where permission of the court is obtained. It has been expected since Jackson s report that an exception for fraud would be included in the rules. The fundamentally dishonest exception would appear to go beyond this, though with no established legal definition of the term, it s ambit will need to be established through litigation, which will lead to an unappealing period of uncertainty. It seems likely that the test is intended to be less onerous than that for fraud, and it may be designed to include dishonestly exaggerated claims in particular. The Practice Direction accompanying the rules anticipates that the question of fundamental dishonesty will generally be resolved at trial. However it also permits defendants to pursue a finding of fundamental dishonesty where a claimant has already discontinued or even (exceptionally) where a claim has already settled, leading to the potential for satellite litigation. 18

19 However, it is unclear how attractive satellite litigation around this subject will be, given that many claimants bringing fundamentally dishonest claims may not have accessible assets against which to enforce a judgement in any event. While defendants may be keen to pursue fraudulent claims under this provision, cases pushing the boundaries of the test may be more limited. Judges may also be reluctant to have court time occupied in examining dishonesty in relation to claims that have otherwise concluded. Where defendants are seeking to prove a point against a fraudulent or dishonest individual, a private prosecution may prove more effective. Interested third parties There will be many cases where parties other than the claimant have a financial interest in the success of his personal injury claim. These may include insurers seeking to recover outlay, credit hire vehicle providers and employers entitled to recover sick pay. In some cases, the value of these claims may far outweigh the value of the claimant s injury and losses. The rules allow for enforcement of costs orders against a claimant in these circumstances, either to the full extent of the order or to the extent the court considers just. Alternatively, the court when making its costs order (i.e., before enforcement) may make an order against the person for whose financial benefit the claim has been pursued in relation to all or part of the costs. The Practice Direction suggests that enforcement against the claimant in these circumstances will be granted only exceptionally. The more appropriate approach will be for defendants to secure a third party costs order against the party (or presumably where there are multiple interests, parties) with an interest in the case. Therefore defendants seeking to take advantage of these rules will need to ensure that they seek their third party costs order at the point of settlement or trial they will rarely have the opportunity to rely on enforcement at a later date. Currently third party costs orders in personal injury proceedings are few and far between. These rules suggest they may become more common in the future. How the courts will approach the making of such orders is unclear. They may prefer to look at who took the greatest benefit and/or who initiated the claim in order to make a costs order against that party alone. For example, if a claim is first notified as an insurance recovery, by the insurer, and their panel lawyers pursue it subsequently then the inclusion of a small sum in relation to injury may not be seen as justifying the protection of QOCS. Alternatively, the courts may try to apportion costs liabilities, either according to the value of different parts of the claim or an assessment of the amount of work incurred as a result of different aspects. 19

20 Either way, personal injury claimants and interested third parties will need to give careful consideration as to the risks of a costs order, despite QOCS, in the event a claim is unsuccessful, and reach agreement as to who will bear such costs if they do arise. There is a risk of third parties such as employers or insurers finding themselves faced with a costs liability in relation to a case in which they have had very little involvement. 20

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