Nearly ten years ago the Woolf reforms were to herald in a civil litigation system in which part of the over-riding objective was “saving expense”. In fact, since then the costs of litigation have grown year on year and in November 2008, Lord Justice Jackson was appointed to conduct a thorough review of the way litigation is funded.
The report is very long, some 584 pages, and it is out of the scope of this article to go into the recommendations in detail but among the proposals which have caused most comment are those relating to success fees and the ATE “after the event” insurance premium.
If you are unfortunate enough to suffer an injury in an accident, you can fund your claim either by a ‘before the event’ legal expenses insurance policy or a conditional fee agreement “CFA” popularly known as “no win, no fee”.
CFA’s frequently carry a success fee which allows your solicitor to apply a percentage uplift (up to 100%) to their basic charges which the Defendants pay, if the case is successful. The exact percentage is calculated according to the risk of the case; a success fee in a straightforward road traffic accident being lower than that in a medical negligence case.
Alongside the CFA, you will probably also be advised to take out an ‘after the event’ insurance policy “ATE” to protect you in case you lose your case at Court and a Judge orders you to pay the Defendant’s costs.
At present if you are successful both the success fee and the ATE premium are recoverable from the Defendants. Lord Justice Jackson proposes to change this, making them the responsibility of the Claimant.
The reason for this change is that Lord Justice Jackson believes because Claimants are insured, win or lose, this encourages spurious claims, pushing up the costs of litigation.
If a change is made Lord Justice Jackson proposes to assist Claimants by increasing compensation for injuries across the board by 10% and capping success fees at 25%.
Perhaps this all sounds very reasonable until you apply it to the real world and here I have a real sense of déjà vu.
I have been in practice since 2000 and remember the bad publicity associated with Claims Direct and The Accident Group which arose when referral fees and interest on insurance premiums were deducted from Claimants’ compensation.
Now imagine a scenario in the future when the Jackson reforms have been introduced. A Claimant, possibly an elderly lady struggling on a state pension, slips on a grape in a supermarket, fracturing her leg. She is awarded £8000 for her injury by a sympathetic District Judge. From her compensation she might have £850 deducted for the ATE premium and up to 25% for her lawyers success fee. Instead of receiving £8000 she actually receives £5150. I suspect the press may be critical of such an outcome and on a personal level, I think it is fairer for large insurance companies to bear this cost.
It remains to be seen whether or not the Jackson reforms are implemented, but whatever the future of funding a claim, you can be reassured that the team at Wright Hassall will guide you through a sometimes daunting process, and obtain the best level of compensation for you.
For a no-obligation chat about how we can help you with your personal injury claim, please contact
Jeanette Whyman on 0800 043 4035.
