Abstract
The last fifteen years have been a remarkable period in the reform of civil litigation costs in England and Wales. This short essay traces some of that history to give international readers a sense of why and how our system has developed in the way it has and where it is currently headed. It is a story which begins with problems with, and then the abandonment of, a legal aid system for personal injury cases. It takes in the acceptance of contingency fees albeit via a hybrid of hourly rates and contingency fees (known as the conditional fee agreement; CFAs) and subsequent attempts to square that acceptance with the twin principles of full compensation and the loser pays costs rule. This led to a peculiarly expensive costs and insurance system which sought to maintain the loser pays costs rule whilst sidestepping its reality. At the same time, the solicitors’ profession relaxed rules on referral fees which have enabled non-lawyers, or claims managers, to flourish. Sustained attack from the insurance industry in relation to personal injury claims and the media (partly because of the particular costs and dynamics of libel litigation), has been met with a review by a Court of Appeal judge. Lord Justice Jackson’s resulting Report, largely endorsed by the Government, is set to return the broad position to that which pertained in the mid-90s albeit with quite a few new, and potentially significant, wrinkles. In the meantime, though, the legal services market has moved on.
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Notes
- 1.
R. Moorhead, ‘CFAs: A Weightless Reform of Legal Aid?’, Northern Ireland Law Quarterly, 53 (2) (2002) 153–166.
- 2.
Some support for the proposition was found here: G. Bevan, ‘Has There Been Supplier-Induced Demand for Legal Aid?’, Civil Justice Quarterly, 5 (1996) 98.
- 3.
See, R. Moorhead, ‘An American Future? Contingency Fees, Claims Explosions and Evidence from Employment Tribunals’, Modern Law Review, 73 (5) (2010) 752–784.
- 4.
The costs savings to the Legal Aid Fund of removing all personal injury cases from the legal aid scheme were originally estimated as being in the region of £37 million. Parliamentary answer, Geoff Hoon MP, Minister of State LCD (2nd February 1999). See, (1999) 1 Litigation Funding 12.
- 5.
There are possibly apocryphal stories about a senior Minister agreeing the idea in the back of a taxi cab.
- 6.
S. Yarrow and P. Abrams, ‘Nothing to Lose: Clients’ Experiences of Using Conditional Fees’ (London: University of Westminster, 1999); S. Yarrow, ‘Just Rewards: The Outcome of Conditional Fee Cases’ (London: University of Westminster, 2000).
- 7.
Claimant lawyers that lose cases invest their time and, not uncommonly, the cost of the disbursements (expenses) on their cases.
- 8.
A. Morris, ‘Spiralling or Stabilising? The “Compensation Culture” and our Propensity to Claim Damages for Personal Injury’, Modern Law Review, 70 (3) (2007) 349–378; R. Lewis, A. Morris and K. Oliphant, ‘Tort Personal Injury Claims Statistics: Is There a Compensation Culture in the United Kingdom?’, Journal of Insurance Research and Practice, 21 (2) (2006) 5–12.
- 9.
See, Department of Constitutional Affairs (2004) ‘Tackling the “Compensation Culture” Government Response to the Better Regulation Task Force Report: “Better Routes to Redress”’ (London: DCA); Young (2011) ‘Common Sense Common Safety: A report by Lord Young of Graffham to the Prime Minister following a Whitehall‑wide review of the operation of health and safety laws and the growth of the compensation culture’ (London: HM Government) http://www.number10.gov.uk/wp-content/uploads/402906_CommonSense_acc.pdf, last downloaded 24th May 2011.
- 10.
Established under the Compensation Act of 2006.
- 11.
H. Genn (1988) ‘Hard Bargaining: Out of Court Settlement in Personal Injury Actions’ (Oxford: Clarendon).
- 12.
Lord Hoffman recognised the essential problem in Callery v Gray [2002] UKHL 28.
- 13.
The indemnity principle is the rule that a solicitor may not recover from an opponent any costs that he could not recover from the client; this retained some purchase in spite of the fundamental nature of CFAs.
- 14.
The author is a former member.
- 15.
The rules can be found at http://www.justice.gov.uk/guidance/courts-and-tribunals/courts/procedure-rules/civil/contents/parts/part45.htm#IDAE5SIC, last downloaded 24th May 2011. For a fuller discussion see, C. McIvor (2011) Jackson and Access to Justice in Oliphant et al (2011) On A Slippery Slope – A Response To The Jackson Report (London: Thomsons Solicitors).
- 16.
P. Fenn and N. Rickman (2003), P. Fenn (2003), ‘Calculating “Reasonable” Success Fees for RTA Claims’, (London: Civil Justice Council) and (2004) ‘Calculating “Reasonable” Success Fees for Employers’ Liability Claims’ (London: Civil Justice Council).
- 17.
Taken from the portal’s website: (http://www.rtapiclaimsprocess.org.uk/how_portal_works.html), 24th May 2011.
- 18.
R. Jackson LJ, ‘Review of Civil Litigation Costs: Final Report’ (London: Judiciary of England and Wales, 2010) and R. Jackson LJ, ‘Civil Litigation Costs Review – Preliminary Report by Lord Justice Jackson’ (London: Judiciary of England and Wales, 2009).
- 19.
Ministry of Justice (2011) ‘Proposals for Reform of Civil Litigation Funding and Costs in England and Wales Implementation of Lord Justice Jackson’s Recommendations’ (London: Ministry of Justice).
- 20.
Jackson, n 18 above, p. 131 of the Final Report.
- 21.
See, R. Moorhead (2011) ‘Paradigm Shifts: Better by Design?’ http://lawyerwatch.wordpress.com/2011/04/07/paradigm-shifts-better-by-design/, last downloaded 24th May 2011.
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Moorhead, R. (2012). Cost Wars in England and Wales: The Insurers Strike Back. In: Reimann, M. (eds) Cost and Fee Allocation in Civil Procedure. Ius Gentium: Comparative Perspectives on Law and Justice, vol 11. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-2263-7_8
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