The eagerly awaited preliminary report on civil costs by Lord Justice Jackson was published on 8 May.

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1 June 2009 The eagerly awaited preliminary report on civil costs by Lord Justice Jackson was published on 8 May. In a month understandably dominated by Jackson, another key development very nearly slipped under the radar. On 19 May, the Ministry of Justice announced that it intends to introduce contingency fee arrangements into the Coroners and Justice Bill. Editor Victoria Cargill Head of costs, BLM Manchester Contributor Matt Core Costs manager, BLM Manchester The Jackson Review The initial thing to consider about the Jackson Review is the sheer scale of it, with seemingly no stone left unturned by Jackson LJ and his team of assessors. Consisting of some 64 chapters and over 1000 pages, this was perhaps the most important review of civil procedure since the Woolf Report. To provide a full and detailed analysis of all the report would not be in keeping with the brevity practiced in this publication, not to mention be something of a monumental task for the editor! The full report can be accessed at: We will, however, focus on a number of key issues arising from the report. Fixed costs Should there be an extended fast track fixed costs regime? Jackson LJ is very much in favour of this, at least in some form, and indeed, the report goes as far as producing an illustrative matrix of figures which could be used. Two particular types of fixed costs were discussed. Type 1, of which the fixed costs in CPR 45 are an example, whereby the award is a genuine attempt to meet the costs of the successful party. Type 2 is a proposed regime where fixed costs only meet part of the successful party s bill, with the client paying the difference. 1

2 Costs shifting The Type 2 proposed fixed costs regime is one variant of costs shifting, and can be termed partial costs shifting. The topic was discussed in more detail, with the issue of one way costs shifting given serious consideration. Put simply, if the claimant wins they recover costs; if the defendant wins both parties bear their own costs. Comment Whilst the response to the above has been generally positive, there are a number of concerns. Under the current system, the threat of having to pay your opponent s costs can be a useful deterrent against unreasonable behaviour and, indeed, fraud. Also, Part 36, and the costs consequences arising from it, would seemingly be redundant. Additional liabilities Another interesting proposal is that claimants be responsible for their own additional liabilities. This seems to be a long overdue recognition that, under the current system, defendants are funding both sides of the market. As well as paying claimant s costs, defendant s are paying their own solicitor s fees and also picking up the tab for additional liabilities which fund lost cases. Jackson poses three questions in respect of this topic? 1 Should additional liabilities continue to be recoverable at all? 2 If yes, should this be subject to some restrictions? 3 If no, how should a claimant s access to justice be protected (bearing in mind that a departure from the existing rules would prejudice the concept of 100% damages). Funding and access to justice This subject overlaps with some of the issues previously outlined, namely costs shifting and the recovery of additional liabilities. As regards the subject of Conditional Fee Agreements, Jackson s overall view is that following the retraction of legal aid, a system of payment by results must exist. Indeed, CFAs, or at least the principle of no win, no fee arrangements, are acknowledged to have become embedded in the civil justice system. The real issue is not whether they should exist, rather how they should be structured. A number of alternative options to CFAs are discussed. These range from contingency fee agreements (ie damages-based arrangements), to CLAFs (Contingent Legal Aid Funding) and SLASs (Supplementary Legal Aid Scheme.) Moving sideways from this point, Jackson s view on before-the-event insurance is also worth noting. It is stated that it would be in the public interest to promote a substantial extension of BTE insurance, with motorists, employers, occupiers of business premises and operators of public transport all being required to take out compulsory legal expenses insurance. Assessment of costs The merits of both summary assessment and detailed assessment of costs are discussed. The overriding view appears to be that the detailed assessment process is somewhat outdated, with costs and court fees of the same often being disproportionate to the amounts at stake in the substantive proceedings. 2

3 Comment As expected, all of these issues warrant further discussion. What is clear, however, is that we have a balanced, impressive and most pertinently, a comprehensive report from Jackson LJ, which should allow all parties to engage in phase 2 of the process. Phase 2 Four seminars have been organised by the Master of the Rolls staff for the purpose of discussing the issues raised by the report. The seminars will be held on the following dates: 19 June 2009 Cardiff 26 June 2009 Birmingham 3 July 2009 Manchester 10 July 2009 London Contingency fees It was announced on May 19 that the government intends to introduce provisions into the present Coroners and Justice Bill to enable proper regulation of contingency fee agreements. Contingency fee agreements are most common in employment tribunal proceedings. Unlike conditional fee agreements, such arrangements have been without statutory regulation as employment tribunals have been interpreted as non-contentious. It is intended that the regulations will include the following: - A limit on the percentage of damages that can be recovered by the solicitor. - A requirement that the solicitor provide clients with transparent information on costs. - A requirement that information is provided on alternative methods of funding. - A requirement that the solicitor clarifies the deductions made from the claimant s award. Comment On the face of it, it appears that the regime would be capable of applying to other areas of civil litigation. Interestingly, the Jackson Review covers contingency fees at some length. The overriding opinion from Jackson seems to be that if such arrangements are introduced, there is need for heavy regulation of the same. Accordingly, the timing of the MoJ s announcement, if not the content of it, comes as something of a surprise. Case law Oliver v (1) Whipps Cross University Hospital NHS Trust (2) Waltham Forest Primary Care Trust [2009] EWHC 1104 (QB) The claimant had died of septicaemia in a hospital run by the primary care trust. Previously, he had been a patient in a NHS Trust hospital where it was thought he contracted MRSA. The claim was accepted under a CFA, with a success fee of 100%, indicating a 50% prospect of success. At the time the risk assessment was carried out, the solicitors had not had chance to assess the evidence. The costs judge reduced the success fee to 67%, stating that the solicitors must have thought that the claim had a better than 50% chance of success given that they had accepted the instructions. The decision was appealed. 3

4 Held: The solicitors were entitled to accept a claim as having a 50% chance of success. The claim was potentially problematic with uncertain prospects. Accordingly, the costs judge was incorrect in his assessment of the success fee, which was correctly claimed at 100%. Brewer v Supreme Court Costs Office [2009] EWHC 986 (QB) The claimant had been investigated by the serious fraud office and had instructed a solicitor in the UK and a US Attorney. After being charged with the offence of money laundering, the subsequent trial was stopped with the claimant being acquitted. On the assessment of the claimant s costs, the costs officer disallowed all sums in respect of payments to the US Attorney. The claimant applied for the matter to be heard again. The request was declined by another costs judge, who after considering various documentary evidence, gave a written decision disallowing the costs in issue. The costs judge had, mistakenly, not listed the matter for a further oral hearing. The claimant therefore issued part 8, proceedings against the Supreme Court Costs Office, stating that the decision in regard of his outstanding costs should be quashed as he had been deprived of a hearing to which he was entitled. Held: The court quashed the relevant parts of the decision, with the claim to be considered again by a different costs judge. The court was able to exercise its inherent jurisdiction to prevent a real injustice, as would have been the case here. Welcome We are pleased to announce that Kelly Matthews has joined Berrymans Lace Mawer as head of costs in Southampton. BLM costs teams BLM has costs teams in Birmingham, Manchester, Liverpool, London and Southampton. If you have any queries about costs please contact your local department who will be happy to help. If you have any further questions on the content, please contact the editor(s) Disclaimer You have been sent this material because you have previously registered your interest in receiving information from Berrymans Lace Mawer LLP. If you no longer wish to receive the mailing, please unsubscribe. This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to clients of Berrymans Lace Mawer. Specialist legal advice should always be sought in any particular case. Costs review is published by the marketing department of Berrymans Lace Mawer (Castle Chambers, 43 Castle Street, Liverpool L2 9SU) on behalf of Berrymans Lace Mawer LLP. Berrymans Lace Mawer LLP Solicitors with offices in Birmingham, Cardiff, Leeds, Liverpool, London, Manchester, Southampton, Stockton-on-Tees. Berrymans Lace Mawer is a trading name of Berrymans Lace Mawer LLP, a limited liability partnership registered in England under number OC340981, which is regulated by the Solicitors Regulation Authority and accredited to quality standards ISO 9001 and Lexcel. The registered office is at King s House, 42 King Street West, Manchester M3 2NU where a list of members is available for inspection. 4

5 Information is correct at the time of release. Birmingham Cardiff Leeds Liverpool Tel: Fax: Tel: Fax: Tel: Fax: Tel: Fax: London Manchester Southampton Stockton-on-Tees Tel: Fax: Tel: Fax: Tel: Fax Tel: Fax: O:\PUBLICATIONS\7 BLM PUBLICATIONS\BLM E-BULLETINS AND BACK ISSUES\COSTS REVIEW E-BULLETIN\COSTS REVIEW JUNE 09\COSTS BULLETIN JUNE 09.DOC 5

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