6 Things That Have Changed in the Legal Industry Post-Jackson Reform

On 1st of April 2013, the Jackson Reforms came into effect. These changes created a new funding regime for all court proceedings and also made several changes to the litigation process as a whole. These reforms were brought about as a result of Lord Justice Jackson’s wide ranging review of the costs of civil litigation.

Jackson wanted to make recommendations that would promote justice at a proportionate cost. His terms of reference for carrying out these reviews extended to the establishment of effective case management procedures.

The changes broadly fall into three categories; litigation funding, the costs regime in civil proceedings, and general procedural streamlining. They are significant changes that all who work in the legal industry should be aware of.

Who is Lord Justice Jackson?

Sir Rupert Jackson currently works as an arbitrator, mediator, and adjudicator. He was previously a commercial barrister before he became a judge.

In 1972 he was called to the bar and he specialised in insurance, professional negligence, and construction work. He was part of the Queen’s counsel from the year 1987 and he was also a recorder from 1990-1998.

In 1999, Sir Rupert Jackson was made a High Court Judge in the Technology and Construction courtroom, until the year 2007. This is when he was appointed as the Lord Justice of Appeal in 2008.

He was therefore highly qualified to make the changes he made.

Why were the reforms introduced?

In his report, Lord Justice Jackson explained that, despite the new laws introduced by the Woolf reforms, the cost of litigation was still too high, and continuing to rise. In his review Lord Justice Jackson found that the introduction of Conditional Fee Agreements (CFAs) brought about by the Access to Justice Act of 1999 had unintentionally led to a rise in costs, with risk-free litigation for claimants and additional costs being born unfairly by defendants. Due to these changes people couldn’t obtain the finance. He, therefore, recommended some changes to what can be recovered from the losing party when a case is funded by a CFA and introduced Damages Based Agreements (DBAs).

The 6 main Jackson reforms;

Funding litigation;

He stated that;

  1. Parties were still free to enter into conditional fee agreements (CFAs)  with their solicitors,however if you entered into such agreements after the 1st of April 2013, any success fee that was payable under the CFA will no longer be recovered by the lawyer, whether the case is won or lost.

This rule is exempt where damages are being claimed due to diffuse mesothelioma, privacy and publication proceedings, and during insolvency proceedings.

  1. Recovering after the event insurance (ATE) insurance premiums from the losing party had resulted in excessive costs being shouldered by those defendants who had chosen to take a case to trial and lost. Parties are still free to take out ATE but if the policy is after the 1st of April date, then the premium of ATE will not be recovered by the lawyers irrespective of whether they win the case or not.
  2. From the date of 1st April 2013, all parties are entitled to enter into a new type of fee agreement with all of their legal representatives, called Damages Based Agreements (DBAs), although these types of agreements have been on the low take up. Under a DBA a lawyer can agree with a client to take a case up in return for a share of the damages awarded to the client in cases where they win. Under a DBA, a lawyer’s agreed fee is contingent on the success of the case and is capped at a maximum percentage amount of the total amount of damages awarded. In personal injury cases, this figure is 25%, in employment tribunals it is 35%, and in general commercial litigation, at 50%.

Recovering the cost of Litigation:

The principal changes brought about in the Jackson Reforms relate to the costs a losing party has to pay:

  1. Proportionality – From the 1st of April 2013, no parties would be able to recover any costs, even if they were necessary and reasonably incurred. Any costs that were incurred from this date in April were required to be proportionate to the matters in the claim.

This meant that all courts would be required to deal with the cases justly and at a proportionate cost. i.e. in ways that are fair in regards to the amount of money involved in the case and also in relation to the party’s financial position.

  1. Costs budgeting – Part 7 of the new laws had a strict requirement for multi-track proceedings, for all cases that commenced on or after the 22nd of April. They were required to submit a cost budget, and although the cases were exempt from the automation proceedings, the courts still retained discretion, especially for cases that were worth over 10 million GBP. The basic idea behind costs budgeting was that costs budgets detailing a party’s costs for the entire litigation must be filed and exchanged prior to the first Case Management Conference. Parties are encouraged to seek to agree costs budgets, in whole or in part, after they have been exchanged and the court will record any such agreed budget.
  2. Cost management orders – Irrespective of when the case started, either before or after the 22nd April, where the costs and budgets had already been filed and exchanged, the courts would still make a cost management order, except where they were satisfied that the case could continue justly at the cost allocated.

Conclusion:

The Jackson Reforms were the greatest shake up in civil procedure in very many years and their effects are still being felt. Sir Jackson was well respected and all of his reforms were geared towards making the Justice system better and more conscious of the needs of everyone. They were also aimed at making litigation more efficient and fair, with parties incentivised to settle their cases earlier. This may have indeed had some effect but those claims that it would see an end to the ‘compensation culture’ seem to have been a little premature.

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