Law Review: Don’t look now! The Jackson reforms are coming

‘Don’t look now! The Jackson Reforms are coming’

By Stephen Higham, solicitor

September 11 2001 is a date Jo Moore will never forget. As Special Adviser to Stephen Byers, then the Transport, Local Government and Regions Secretary, she sensed an opportunity to use the terrorist attacks on New York and Washington to her advantage. Her e-mail to the Labour Party press office saying ‘It’s now a good day to get out anything we want to bury. Councillors’ expenses?’ was rightly criticized for showing the cynical nature of political spin. After being made to publicly apologise her career stalled. Jo Moore became a teacher in 2003.

This story ought to serve as a salutary lesson to all of us to watch how information is presented and what happens while we’re looking the other way. As events this week unfolded, it appears that we still have a lot to learn.

On Wednesday afternoon, while the world was watching the events of the London Conference on Libya, Lord Chancellor and Secretary of State for Justice Ken Clarke QC announced in Parliament that most of the headline Jackson Reforms will be implemented in full throughout courts in England and Wales as soon as possible.

Lord Justice Rupert Jackson’s 2010 review of civil litigation costs has been seen as an attack on personal injury claimants and their advisers. In it he recommended that success fees on conditional fee (‘no win no fee’) agreements and after the event insurance should no longer be paid by losing defendants. As an alternative, he suggested contingency fee arrangements which allow the successful claimant to contribute towards their own legal fees by paying their solicitor up to 25% of their ‘general damages’ only (i.e. a share of the compensation for Pain, Suffering, Loss of Amenity but not including special damages such as lost earnings). To assist the claimant, who is likely to be worse off under the Reforms, the Lord Chancellor intends to increase general damages by 10%, implementing long- overdue proposals made by the Law Commission in 1999.

The Lord Chancellor also intends to extend the online ‘portal’ scheme for road traffic accidents, which has been running for a year amid considerable teething problems, to other areas of personal injury claims. There is also to be an increased emphasis on mediation and, in a separate consultation he announced on Wednesday, a proposed increase in the small claims limit for non-personal injury cases from £5,000 to £15,000.

The questions most solicitors will be asking are ‘why’ and ‘why now’? There can be no doubt that the Reforms are good for insurers and their shareholders but bad for the rest of us. The so-called ‘compensation culture’, mentioned by the Secretary of State for Justice only six sentences into his speech has been shown by the government’s own Compensation Recovery Unit to be a myth. The number of personal injury claims is falling. Also, while implementing the Reforms will make it more difficult to litigate clinical negligence claims against the NHS, they have the unfortunate knock- on effect of making it harder for accident victims in all accident cases to claim NHS treatment costs or state benefits back from insurers.

It should also be noted that 75% of personal injury claims are low value road traffic accident cases where costs are already fixed. To use the personal injury arena as an example of a broken system is disingenuous when you consider how differently costs are dealt with, and how much they have already been reduced, compared to other areas of civil litigation.

The more cynical may be interested to note that despite LJ Jackson’s plea to implement all 109 of his recommendations in full, the government has instead taken a piecemeal approach. This is most evident in it’s decision to withhold reform of referral fee payments until after the Legal Services Board have finished their own consultation. Jackson’s view was that the abolition of referral fees (or limiting them to a maximum of £200) was essential to make the system work for innocent accident victims and their lawyers. It cannot be a co-incidence that many of the insurers who lobbied hard for the Reforms during the consultation process receive referral fee payments from their panel solicitors via ‘third party capture’ schemes. Under these arrangements insurers for responsible parties contact potential claimants and encourage them to make claims. They then sell these details on to solicitors on their select panels for fees far in excess of LJ Jackson’s proposed maximum. Knowing this, it is no surprise that referral fees have been excluded. It is churlish of insurers to criticise the number of claims and associated legal costs when they are contributing to both elements by third party capture.

There is no doubt that implementation of the Reforms will have unintended consequences in many areas of litigation, business and society. Small businesses will find it more difficult to get a solicitor to assist them to pursue debtors putting them out of business; multi-national companies may indulge in ‘forum shopping’, litigating in a more favourable jurisdiction abroad and taking their legal fees with them; and the court service, which relies heavily on the income derived from personal injury court fees, may need to consider even more swingeing cuts.

Above all, these Reforms put a fundamental principle of law under threat. The idea that a victim of a tort should, as far as is possible, be put in the same position as if the wrong had not occurred, will no longer apply.

Hopefully Parliament, and in particular the eminent lawyer Ken Clarke QC, will consider these issues and the impact on innocent accident victims before implementing the Reforms he revealed while no one was watching.

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