Civil Litigation Reforms. March 2013

Civil Litigation Reforms March 2013 1

contents Introduction... 2 The Jackson Report... 4 Implementation...5 Referral fees... 6 Conditional Fee Agreements... 8 After the Event Insurance... 10 Damages Based Agreements... 11 Other litigation funding... 13 Part 36... 15 Qualified One Way Costs Shifting... 17 Fast track fixed costs... 21 Costs budgeting... 24 Proportionality... 27 Small claims... 28 Low value claims process... 29 Damages for non-pecuniary loss... 32 Case management... 33 Assessment of costs... 35 Appendices 1. Glossary of abbreviations 2. Key contacts Birmingham Exeter London Manchester Nottingham 0121 237 3900 01392 458 800 020 7337 1000 0161 242 1301 0115 976 6000 www.brownejacobson.com

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 http://www.legislation.gov.uk/uksi/2013/262/contents/made Please do contact us if you have any questions or thoughts on the reforms. Best wishes talk to us Nichola Evans 0161 242 1306 nichola.evans@brownejacobson.com James Arrowsmith 0121 237 3981 james.arrowsmith@brownejacobson.com 3

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 2013. 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

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 2012. 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

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

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 2013. 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

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

Alternatively assume that for the same case the lawyer s fees are 8,000. 25% 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

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

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 2013. 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 5000. 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

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

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

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

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

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 36.13 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

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 2013. 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

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

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

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

fast track fixed costs Fixed costs determine on a tariff or sliding scale basis the level of costs one party is entitled to recover from their opponent in respect of solicitor costs. Disbursements, costs of counsel and VAT are generally excluded, as are success fees and additional costs under DBAs. Fixed recoverable costs already apply to some classes of case, and some stages of litigation. For example, the small claims track, pre action protocol for low value RTA claims and fast track trials attract banded fixed costs. A more sophisticated costs model is predictable costs whereby costs are calculated by reference to the value of the claim. A predictable costs scheme has been in pace for a number of years in relation to low value motor claims settled pre-action. However, when the CPR were introduced a comprehensive scheme of fixed costs across the fast track was envisaged, and this has not been introduced to date. Jackson identified this as a key aspect to controlling costs of litigation and had his assessor Professor Fenn prepare a scheme demonstrating what fixed costs across the fast track might look like. Working from data relating to 2008/09 claims costs, Fenn proposed a predictable costs model, which would provide for a calculation of costs based on the value of a claim and the stage at which it is resolved. The Government has now confirmed that a modified version of Fenn s costs model will apply to RTA, EL and Public Liability (PL) claims from the end of July 2013. Rules are still awaited and so it is not yet clear what event will determine whether a claim falls within or outside the scheme (e.g. will it apply to claims where the accident was after July, or claims issued after July). The Government s announcement suggests that the incident date may be adopted. 21

The full fixed costs matrix is set out below Pre issue 1,000-5,000 Pre Issue 5,001-10,000 Pre Issue 10,001-25,000 Issued Post issue Pre Allocation Issued Post allocation pre listing Issued Post listing pre trial Trial - Advocacy Fee Case Settles before Issue Road Traffic Accident Fixed Greater of Costs 550 or 100 + 20% of Damages Case Settles before Issue 1,100 +15% of Damages over 5k Case Settles before Issue 1,930 + 10% of Damages over 10k 1,160 + 20% of Damages 1,880 + 20% of Damages 2,655 + 20% of Damages Escape + 20% + 20% + 20% + 20% + 20% + 20% na Employers Liability Fixed Costs 950 + 17.5% of Damages 1,855 +12.5% of Damages over 5k 2,500 + 10% of Damages over 10k 2,630 + 20% of Damages 3,350 + 25% of Damages 4,280 + 30% of Damages Escape + 20% + 20% + 20% + 20% + 20% + 20% na Public Liability Fixed Costs 950 + 17.5% of Damages 1,855 +10% of Damages over 5k 2.370 + 10% of Damages over 10k 2,450 + 17.5% of Damages 3,065 + 22.5% of Damages 3,790 + 27.5% of Damages Escape + 20% + 20% + 20% + 20% + 20% + 20% na 485 (to 3,000) 690 ( 3-10,000) 1,035 ( 10-15,000) 1,650 ( 15,000+) 485 (to 3,000) 690 ( 3-10,000) 1,035 ( 10-15,000) 1,650 ( 15,000+) 485 (to 3,000) 690 ( 3-10,000) 1,035 ( 10-15,000) 1,650 ( 15,000+) The matrix results in fixed costs typically much lower than are currently recoverable in claims. Going forwards costs could range from 550 for a pre-litigation settlement of a 1,000 RTA claim to around 14,000 for an EL or PL claim worth 25,000 which proceeds all the way to trial. Many claimant firms in particular are likely to have to streamline their claims handling models in order to adapt. This may result in changes to litigation behaviors from some. New behaviours will vary from one practice to another, depending on the approach adopted, but based on similar schemes trialled previously they could include: more interim applications (with associated requests for costs orders) earlier settlements (where the amount of time budgeted to meet the fixed costs has been used up delayed settlements in order to push a claim into the next bracket of fixed costs more reliance on lower grade or unqualified handlers outsourcing including use of investigators to save the cost of a solicitor, or use of medico legal agencies/counsel if these can be recovered as a disbursement (which will depend on the final rules) The 20% escape allows a party who has incurred more than 20% above the fixed fee to seek an order permitting recovery at an increased level, on the basis this was justified by the particular circumstances of the case. A similar provision exists in relation to existing fixed fees for motor claims, but is rarely used. The 22

reduced level of the new fixed fees may mean that it is more commonly raised going forward. However, it is likely that additional costs will be permitted only rarely as the revised rules include an increased emphasis on proportionality of costs against the value of a claim. This is exactly what is intended to be achieved by fixing costs based on the level of damages. Disbursements such as court fees and medical reports would be in addition to these costs however, it is likely that the list of recoverable disbursements will be limited, as under the existing scheme. It is unclear whether counsel s fees (aside from trial costs) will be recoverable in addition. As discussed above, this could create a loophole by which solicitors could outsource work they would normally undertake, allowing increased profitability. 23

costs budgeting Currently, the main way in which the courts exercise control over costs in the multi track is by assessment on conclusion of a case. However that was not what was intended when the Civil Procedure Rules were first implemented. CPR 1 looks at the duties of both the court and the parties in terms of the overriding objective so that: case management includes cost management (CPR 1.1) the court has a duty to give effect to that (CPR 1.2) the parties have a duty to help the court in that regard (CPR 1.3) it is the duty of the court to actively manage claims (CPR 1.4) When Lord Justice Jackson looked at costs he noted that litigation was a project, like any other project and that in any other project the parties would know the costs of that project. He said that litigation should also work in that way. He therefore suggested that litigation should be subject to a budget with each stage of the proceedings mapped out. Two pilot programmes have been run; one in defamation proceedings and one in the Mercantile and Technology and Construction Courts. This cost budgeting will be rolled out across the board for all multi track claims commenced after 1 April 2013, save for those commenced in the Commercial and Admiralty Courts, and those in the Technology and Construction Courts (TCC) or Mercantile Court with a value exceeding 2 million. There are new Rules (CPR 3.11 to 3.18) and a new Practice Direction (PD3E) together with the new form of Precedent H for producing the cost budgets. Under CPR 3.13 all parties, except litigants in person must file and exchange budgets as required by the rules or as the court otherwise directs Each party must do so by the time specified in the [notice of proposed allocation] or if no such date is specified, seven days before the first case management conference. This means the completion of form H and PD3E states that it must be in landscape format with at least 12 point typeface. Further the...budget must be dated and verified by a statement of truth signed by a senior legal representative of the party. (paragraph 1, PD3E). The statement of truth confirms not only that the budget is a genuine estimate of costs to be incurred but also that the costs it sets out are reasonable. It seems parties are expected to cast a critical eye over their own budgets and consider whether they are justified against the nature, complexity and value of the claim. 24

In smaller cases where a party s budgeted costs are not projected at more than 25,000, only the first page of Precedent H needs to be completed. The consequences of not filing a cost budget or filing late are draconian! The general rule is any party which fails to file a budget despite being required to do so shall be treated as having filed a budget comprising only the applicable court fees. (CPR 3.14). The court may otherwise order but this is unlikely without an extremely good excuse. CPR 1.15 states the court may manage the costs to be incurred by any party. Whilst this is phrased as may manage, it seems that the norm will be for the courts to manage the case in this way, as was made clear by Mr Justice Ramsey at the Sixteenth Lecture in the Implementation Programme at the Law Society Conference on 29 May 2012. The court can do this by making a costs management order. This is defined at CPR 3.15(2) so that the court will: (a) record the extent to which the budgets are agreed between the parties. (b) In respect of budgets or parts of budgets which are not agreed, record the court s approval after making appropriate revisions The court will have regard to any available budgets of the parties and take into account the costs involved in each procedural step (CPR 3.17 (1)). If such an order is made then the court will thereafter control the parties budgets in respect of recoverable costs (CPR 3.15 (3)). Limited costs are available for the preparation of cost budgets and the recoverable costs will be: for the initial budget, the higher of 1,000 or 1% of the approved budget no more than 2% of the approved budget for other cost budgeting and costs of the costs management process Going forward there will be a new type of interlocutory hearing the costs management conference which will deal with costs during the case (CPR 3.16 (1)). Where practicable these should be held by telephone or in writing (CPR 3.16 (2)). 25

However, revisions to the budget will only take place if significant developments in the litigant warrant such revisions (PD3E paragraph 7). It can therefore be seen how important it is to get the budget right from the outset. It cannot be assumed that the court will simply allow revisions during the case. CPR 3.18 makes it clear that when assessing costs the court must have regard to the budgets filed and not depart from such approved or agreed budget unless satisfied that there is good reason to do so (CPR 3.18 (b)). The Court of Appeal recently looked at this issue in the case of Sylvia Henry v News Group Newspapers Limited [2013] EWCA Civ 19. Whilst in that case permission was given to depart from the budget, it was made very clear from paragraph 28 onwards of the judgment that compliance with the budget would be expected from 1 April 2013 and that it would be much harder to argue that permission ought to be granted to depart from budget. So what will this mean for case management? Whilst there has only been a limited budget to train judges in cost budgeting, we do believe that going forward that we ought to see more active case management. This goes hand in hand with cost management. We expect to see judges delving more into cases at the first case management conference (CMC) and investigating what work is needed to be done on files and the cost of that work. It may be that judges will look to hold more issue based trials. If there is one issue that would effectively determine matters, we would expect judges to order that course of action and extract the cost saving. This should work extremely well in personal injury claims where for instance issues of causation can be separated out from quantum. We expect to see a closer interest being taken in key steps such as disclosure, expert reports and witness statements. Additional rules in relation to the information to be provided by parties in respect of these steps will facilitate this (see below). It may well be, for instance, in larger cases that disclosure takes place in two stages with the hot docs, that is the key documents being disclosed first. On witness statements we could see judges make orders as to the number of witness statements to be exchanged and specify the issues that need to be covered in them and also the length of the witness statements. We also now expect judges to take a keener interest in the experts being appointed to cases, the issues they will address and the cost of that. 26

proportionality Proportionality has its own legal definition in relation to costs. At present, as a rule of thumb, costs will not be disproportionate unless they are more than three times the award of damages. Even where costs are disproportionate, at present they may be awarded if it is found to have been necessary to incur them in order to progress the case. The outcome is that under the current approach it is not uncommon for costs awarded in relation to a claim to be worth many times the damages. As set out above, Jackson was keen that litigation be seen more like any other project in the future. Few projects would be pursued if the costs involved were disproportionate to the benefits, and Jackson felt that a new test of proportionality was therefore needed. Proportionality will gain a new emphasis in the revised Civil Procedure Rules, with new prominence within the overriding objective and an increased focus upon ongoing control of a case so that the only steps taken are those that are proportionate. The new approach to case management and costs budgeting will provide opportunities for proportionality to be applied. The amended rules specifically state that costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred (CPR 44.3(2)). That is a significant departure from the current bases of assessment. It is reinforced by a revised test of proportionality under which: Costs incurred are proportionate if they bear a reasonable relationship to: (a) the sums in issue in the proceedings; (b) the value of any non-monetary relief in issue in the proceedings; (c) the complexity of the litigation; (d) any additional work generated by the conduct of the paying party; and (e) any wider factors involved in the proceedings, such as reputation or public importance (CPR 44.3(5)). There is substantial scope for satellite litigation and this may be particularly prevalent where non monetary factors (such as behaviour or reputation) are brought into play. However it is clear that proportionality will, first and foremost, be judged on how favourably costs compare to damages. 27

small claims The small claims track offers a simple legal process designed to bring civil claims before a court quickly and with limited cost. Recoverable costs are fixed at low levels and as a result parties are often unrepresented in small claims cases. Currently the track applies to claims worth up to 5,000, with a lower limit of 1,000 for personal injury and housing disrepair cases. These limits were set in 1999. For claims commenced after 1 April 2013 the nonpersonal injury limit will be increased to 10,000, bringing many more modest recovery claims and commercial disputes within scope of the track. While there will be an additional costs band to allow for the new claims falling within the track, these will not be substantially higher than under the existing process. For example, fixed commencement costs for a 5,000 claim will remain at 80, while for a claim valued at up to 10,000 a claimant will be able to recover 100 for commencement. The Government is currently consulting on an increase to the small claims track limit for injury claims involving whiplash or arising from RTAs to 5,000. The consultation closed on 8 March 2013. The most substantial impact of the change to the small claims track limit is its effect on costs. Many cases in which parties could have expected previously to recover their assessed costs from the loosing party will now have to bear their own costs, subject to the minimal recovery permitted for commencement costs etc. That may deter some claimant s from bringing claims at all. For others it may mean litigating without representation. In our experience that can be a mixed blessing for the opposing party. While there may be no prospect of paying substantial costs to an opponent, a litigant in person with limited legal knowledge may take a less pragmatic, less progressive approach to litigation resulting in increased numbers of claims being issued and coming to trial, and an increase in own solicitor costs. 28

low value claims process Since May 2010, injury claims arising from road traffic accidents and valued between 1,000 and 10,000 have been subject to their own pre action protocol which encourages prompt exchange of standard information intended to resolve claims quickly and cost effectively. The process relies on electronic exchange of forms and evidence packs via an online portal. Costs are fixed This process has handled around 2 million claims since it was introduced, and many have settled within the scheme, though recent research indicates drop out rates in the region of 50%. Nonetheless, anecdotal evidence is that the process works well for many claims. For claimants, the process promises rapid responses on liability and quantum while insurers have benefitted from a fixed fee of 1,200 (+ VAT, success fee and disbursements) for a typical claim settled within the process, which is considerably lower than the fees for most claims settled outside it. Jackson did not express a view on the process, which had not come into effect at the time of his report. However, following consultation the Government has confirmed that it will extend the process to include RTA, EL and PL injury claims valued between 1,000 and 25,000 from the end of July 2013. Protocols have been published in draft, but final versions and amendments to Part 45 which will introduce the new fixed costs have yet to be prepared. It is not expected that there will be significant changes to the draft rules. We can expect to see two pre action protocols to cover these claims, the RTA protocol for motor claims and the EL/ PL protocol for employers and public liability. There will be a series of exceptions to the expanded processes. A number of these already exist under the RTA protocol, such as where either party is personal representative of a deceased person, or is a protected party. Specific EL and PL exclusions include clinical negligence and mesothelioma claims, disease claims with multiple defendants, and PL claims against individuals. Alongside expansion of the process, the Government will introduce a new set of fixed costs, as follows: RTA claims RTA claims EL/PL claims EL/PL claims Claim value 1k- 10k 10k- 25k 1k- 10k 10k- 25k Stage 1 200 200 300 300 Stage 2 300 600 600 1,300 Stage 3 Paper hearing 250 250 250 250 Oral hearing 500 500 500 500 29

The reduced fixed costs for motor claims will come into effect from 1 April, while other fixed costs will apply from the introduction of the extended scheme at on 31 July. The list of allowable disbursements is limited, meaning that aside from necessary database searches and expert evidence there is little scope for these to drive up costs. Counsel s advice is anticipated only in exceptional cases, or those where infant approval is necessary. The expansion of the process to encompass EL and PL claims creates new challenges for claimants and defendants. In relation to motor accidents, defendant and insurance details ought to be confirmed at the accident scene and can be verified via the motor insurance database. This means that defendants are generally easy to identify and claims can readily be submitted via the electronic portal which supports the RTA protocol to the relevant insurer. In contrast within EL and PL claims, insurers and even defendants may not be so readily identifiable, though in relation to EL claims the Employers Liability Tracing Office (ELTO) is likely to provide this information in most cases. The EL/ PL protocol will therefore include an exclusion to the usual processes of electronic exchange of documents, which will permit claimants to print and post a Claim Notification Form (CNF), which is the first step in the process, to a defendant. Following receipt of a CNF, the defendant then has a strict limit on the time in which to investigate the claim and make a decision on liability. These will vary depending on the type of claim, as follows: RTA EL PL 15 days 30 days 40 days All periods within the process are expressed as working days, so the periods above range from 3 to 8 weeks. The general rule is that response times under the protocols start to run on the business day after the other party sent the information to which the response is required If a defendant fails to respond in this period, denies liability or pleads contributory negligence (other than contributory relating to failure to use a seatbelt in an RTA claim), the claim will exit the RTA or EL/PL protocols. It will then proceed under the general protocol for injury claims (the one in place at present), with the CNF taking the place of the Letter of Claim. At Stage 2 of the protocols the claimant sends the defendant a Settlement Pack which includes medical evidence, details of pecuniary loss and an offer, with disclosure in support. Necessary witness evidence may be included here to support the claim. The defendant has 15 days in which to accept the claimant s offer or make a counter offer and there is a total of 35 days for the response and subsequent negotiations. 30

Where a claim does not settle by negotiation, Stage 3 allows for documents exchanged between the parties to be referred to the Court for a judicial determination either on the papers or at an oral hearing. Work on the electronic portal underpinning the process is already well underway. Based on previous draft rules, it is expected to be sufficiently advanced by July to provide the necessary functionality to manage RTA, EL and PL claims. However the A2A functionality which allows the EL/PL portal to integrate with a user s own case management system is not expected to be in place until later this year, meaning these claims will have to be handled via the web interface to the portal at the outset. 31

damages for non-pecuniary loss Courts award damages for financial losses but also for other non pecuniary loss or damage including pain suffering and loss of amenity (in injury cases, also known as general damages ); physical inconvenience and discomfort; social discredit and mental distress. The levels of damages awards are established through case law, though there are also a variety of tools available to assist practitioners, particularly in relation to general damages in personal injury claims which are the most commonly encountered award for non-pecuniary loss. Many insurers use electronic assessment tools, also based on caselaw, to value claims. These tools allow users to answer a series of questions in relation to the injuries sustained and output details of the award a court is likely to make. To arrive at a balanced package of recommendations, Jackson proposed that claimants in injury claims should be able to recover an additional 10% in general damages, which would help them meet the additional cost of their own success fee and ATE insurance (if taken). Jackson also favoured increased use of tools for assessment of general damages which, he suggested, might allow more effective negotiations and more predictable outcomes to claims. In July the Court of Appeal took control of the issue, through its judgment in Simmons v Castle [2012] EWCA Civ 1288, at which it announced that damages for pain suffering and loss of amenity would increase by 10% from April 2013. This produced a backlash from the insurance industry, which pointed out that it would allow many claimants to both recover their success fee and ATE premiums (entered into prior to April 2013) while at the same time receiving a 10% increase in general damages. In October 2012 the Court of Appeal revisited its earlier judgment and arrived at a revised ruling in which the 10% increase was extended to all damages for non pecuniary loss, except where a claim is funded by a CFA entered into prior to 1 April 2013. This is the basis on which claims will be dealt with after April 2013. The outcome means that many cases already underway where damages are to be decided after April 2013 will include a 10% uplift on damages for non-pecuniary loss. No significant progress has been made in relation to a tariff of damages. However the issue has gained increased relevance in relation to the Government consultation on expanding the small claims track for whiplash or RTA claims. A general damages tariff may assist in achieving early, fair resolution of such cases or, for those that proceed to trial, help a claimant arrive at a reliable assessment of the value of their injury. 32

case management The new Rules envisage that judges will become much more involved in the case management on a day to day basis. A number of new provisions are being introduced which will make for the more efficient running of cases. In multi track cases going forward there is a duty for the parties to try and agree directions in advance of the case management conference (Rule 29.4). If directions are agreed they are to be filed with the court. If they are not agreed the parties are under a duty to file their respective proposals at the court at least seven days before the case management conference. Parties to multi track litigation (excluding personal injury claims) are also subject to further obligations in terms of disclosure in advance of the first case management conference. The new Rule 31.5 specifies that not less than 14 days before the first case management conference each party must file and serve a report verified by a statement of truth stating: what documents exist or might exist and which are or may be relevant to the matters in issue in the case where those documents are where they are stored in the case of electronic disclosure the estimate of costs involved in giving standard disclosure in the case including the costs of searching for and disclosing electronically stored documents In addition to this, not less than seven days before the first case management conference the parties must seek to agree what ought to be disclosed and that needs to be in accordance with the overriding objective. The court can then make a variety of orders including: an order dispensing with disclosure standard disclosure issue based disclosure limiting disclosure to certain categories of documents depending on reliance or the way the document(s) may affect a party s case The court will also get involved in the practical nature of disclosure giving directions as to how that disclosure ought to be given. 33

We should therefore see a more streamlined approach to disclosure with the emphasis on finding the key or core documents relating to a case. Similarly it looks as if the court will become more involved in the instruction of experts. There are amendments to Part 35 which mean that going forward parties will have to provide an estimate of the costs for the proposed expert evidence and give details of the issues which the expert evidence should address. There is a new Rule 3.1(8) which provides The court may contact the parties from time to time in order to monitor compliance with directions. The parties must respond promptly to any such enquiries from the court. Will we see a system of docketed judges diarising cases and chasing the parties for progress reports? Interestingly there is no time limit set for the response. What will respond promptly mean in practice? It also looks as if the courts will enforce orders a lot more strictly. On applications for relief from sanction under Rule 3.9(1), where for instance a party has missed the date for complying with a court order, in addition to considering the circumstances of the case, the courts are also directed to look at two specific points namely the need: for litigation to be conducted efficiently and at proportionate cost; and to enforce compliance with rules, practice directions and orders (CPR 3.9(1)). Going forward we should see judges more actively managing cases both in terms of the work to be completed but also at what cost (see the cost budgeting section). 34

assessment of costs At present, there are two processes by which the courts deal with costs in most cases. In a fast track trial or application hearing, summary assessment is applied. This involves parties submitting a costs summary (around 2 pages of costs information) prior to the hearing, which the judge reviews after dealing with the substantive issues. Having heard representations, the judge will decide on the sum the receiving party should recover there and then. In other cases, detailed assessment is used. Under this process, the receiving party prepares a detailed breakdown of all costs incurred, and serves this on the paying party. The paying party responds to each end every point in another lengthy document and there may be further documents exchanged. Eventually, the matter may come before a costs judge who will review costs on an item by item basis with parties present. In practice, not least because of the time and cost of this process, costs are often settled before detailed assessment has run its course. Under the revised rules, there ought to be less call for either summary or detailed assessment along the lines set out above. An increased small claims track and fixed fast track costs will mean that the sum due in lower value claims is generally specified by rules, with no need for anything more than a brief calculation and possibly some submissions in relation to the appropriateness of disbursements. Defendants in injury cases may not be able to enforce a costs order due to QOCS (though in principle it seems they can still obtain them) and so may not trouble to have costs assessed at all. In higher value cases, costs budgeting may make it easier for parties to agree costs and might result in the court being willing to undertake a summary assessment on conclusion of a multi track claim, as the appropriate level of costs will already have been considered at the outset. Though there is no published case law, we are aware that this approach has been applied under the costs budgeting pilot in the TCC. In other cases, the new rules provide for the court to undertake a provisional assessment of costs in the course of detailed assessment. This is a paper based exercise in which the court undertakes a desktop review of the documents setting out the parties respective position on costs, and amends the receiving party s bill to reflect the sums allowed and those excluded. Parties will not be awarded more than 1,500 in respect of the costs of provisional assessment. The decision at this stage is not binding, and either party may challenge the assessment. If they do then a hearing date will be set. However, unless it achieved a 20% improvement on the provisional assessment (or the court orders otherwise) then the party challenging the provisional assessment will have to bear the other party s costs of the hearing. 35

glossary of terms ABI Association of British Insurers. A lobbying and representative group representing insurers. ABS Alternative Business Structure. Traditionally solicitors practices have been required to be owned and run by solicitors. An Alternative Business Structure is a licensed business arrangement which permits solicitors to seek inward investment into their businesses, and to diversify the management structure. It creates an opportunity for new business arrangements between solicitors and other service providers. ADR Alternative Dispute Resolution. A collective description of methods of resolving disputes such as negotiation, mediation or adjudication (short of trial). APIL Association of Personal Injury Lawyers. A lobbying and representative group representing claimant personal injury lawyers. ATE After the Event (insurance). Insurance taken out in relation to the costs of litigation after the events giving rise to the litigation have taken place. BTE Before the Event (insurance). Insurance taken out in relation to the costs of litigation or other legal costs before the events giving rise to the litigation or need for legal services has arisen. CCFA Collective Conditional Fee Agreement. A standardised CFA agreement, which is applied to subsequent matters as and when they arrive. For example, unions may enter into a CCFA with a firm of solicitors in relation to claims by their members. When a new claim arises there is no need to agree a separate set of terms with the member. CFA Conditional Fee Agreement. An agreement with a person providing advocacy or litigation services which provides for his fees and expenses, or part of them, to be payable only in specified circumstances, generally with a success fee charged on top of costs, when they are payable. /For example, a solicitor may enter into an agreement whereby he will not charge his client any costs if the case is unsuccessful, but there will be a percentage uplift on costs if the claim succeeds. CMC Case Management Conference. A court hearing in the course of litigation during which the court will make decisions as to how best to progress and resolve a claim. The reforms discussed in this guide will introduce Costs Management Conferences, and so the terminology may become confused going forward. 36

CMC Claims Management Company. A company which does not provide reserved legal activities (which are generally the province of solicitors) but which provides services related to claims. Many injury claims are identified by claims management companies, though advertising, and the details are then passed on to solicitors, for a fee. CPR Civil Procedure Rules. The rules which define the claims process. Many of the reforms discussed in this guide will be implemented by changes to these rules CRU Compensation Recovery Unit. A section of the Department for Work and Pensions which recovers from insurers and other defendants to injury claims the sums paid by way of benefits and/or the cost of NHS treatments arising from injuries giving rise to the claims. DBA Damages Based Agreement. An agreement with a person providing advocacy or litigation services which provides for his fees and expenses, to be calculated as a percentage of the value of the damages or other assets obtained as a result of the services. For example, a solicitor may enter into an agreement with a client to conduct litigation on the basis that he will be remunerated by taking 25% of any damages recovered. EL Employers Liability. Used to refer to claims in relation to injuries to employees for which their employers may be liable. ELTO Employers Liability Tracing Office. A tracing service for Employers Liability insurers policies, which holds a database of policies entered into since April 2011, as well as information on policies predating that, where tracing services have previously been used to identify the insurer FOIL Forum of Insurance Lawyers. A lobbying and representative group representing lawyers who act for insurers. FRC Fixed Recoverable Costs. Where costs recoverable in relation to litigation are determined on an imposed tariff system, rather than being calculated by the hour, for example. FSA Financial Services Authority. The body which regulates financial service providers, including insurers. They will be responsible for implementing the ban on referral fees discussed in this guise in relation to insurers. GD General Damages (in injury claims). Sums awarded in injury claims for the experience of the injury itself, rather that for actual financial loss. LASPO Legal Aid, Sentencing and Punishment of Offenders (Bill/Act 2012). The name of the bill introduced to Parliament in 2011 which became an Act in 2012, which implements many of the 37

reforms dealt with in this guide. MASS Motor Accident Solicitors Association. A lobbying and representative group representing claimant motor claims lawyers. MOJ Ministry of Justice. The Ministry responsible for implementation of the reforms. MOJ is also sometimes used to refer to the package of reforms or to refer to the pre action process for low value injury claims (which was implemented for a limited class of claims via the Ministry of Justice in 2010 and which is expected to be extended). Part 36 Used to refer to formal offers made in the course of litigation. Part 36 of the Civil Procedure Rules sets out the process for making formal offers and the implications of those offers. Part 36 is now often used to refer to the offers themselves. PD Practice Direction. Additional guidance which accompanies the Civil Procedure Rules and sets out in more detail the procedural steps required when dealing with a claim. PL Public Liability. Used to refer to a wide variety of claims in relation to injuries where there is no relevant pre-existing relationship (such as employment) between the claimant and defendant, and which do not relate to a road accident. Typical cases in this category would include a tripping or slipping involving a member of public walking on the highway. PSLA Pain, Suffering and Loss of Amenity. A category of damages awarded in injury claims in relation to non-pecuniary loss. Also often referred to as general damages QOCS Qualified One Way Costs Shifting. While a defendant may be ordered to pay the claimants costs of litigation, where the claimant succeeds, a defendant will only recover costs from a claimant in prescribed circumstances, even if successful in defending the claim. RTA Road Traffic Accident. Used to refer to claims arising from incidents involving motor vehicles. SRA Solicitors Regulation Authority. The body which regulates solicitors. They will be responsible for implementing the ban on referral fees discussed in this guise in relation to solicitors. TCC Technology and Construction Court. 38

key contacts team sheet Our team Derek Bambury 0115 976 6204 / 07836 683 092 derek.bambury@brownejacobson.com Nick Parsons 0115 976 6255 / 07836 683 236 nick.parsons@brownejacobson.com Susan Mabbott 0115 976 6193 / 07801 398 516 susan.mabbott@brownejacobson.com Simon Robinson 0121 237 3923 / 07979 536 992 simon.robinson@brownejacobson.com Jonathan Cook 0115 976 6150 / 07836 683 079 aonothan.cook@brownejacobson.com Mark Fowles 01392 288328 / 07971 192 964 mark.fowles@brownejacobson.com 39