Civil Litigation Costs - Lord Justice Jackson's Preliminary Report

A decade on from Lord Woolf's ground-breaking reforms

implemented by the Civil Procedure Rules 1998, there is no escaping

the harsh fact that civil litigation is more expensive than

ever.

Claimants are deterred from pursuing disputes by the high costs

involved. Both they and defendants face a potentially huge

financial exposure under our "loser pays" system.

This problem has been compounded, following the retraction of

Legal Aid in recent years, by the introduction of alternative means

of funding litigation. In particular, Conditional Fee Agreements

("CFAs") and After the Event ("ATE") insurance

have spawned a "costs war" of their own over the

recoverability of CFA success fees and ATE premiums from the losing

party.

This was the context in which the Master of the Rolls asked Lord

Justice Jackson to commence a fundamental review into civil costs

in January this year and to make recommendations in order to

promote access to justice at proportionate cost.

The Judge's recommendations will not be presented until

December 2009 but, on 8 May, Lord Justice Jackson produced a

preliminary report of his findings which runs to 653 pages plus

appendices.

The report is clearly written and impressively comprehensive,

encompassing all civil courts, including the Commercial Court,

while recognising that there can be no 'one size fits all':

different solutions will be necessary for different situations.

The report identifies and addresses the key questions and issues

impacting upon the current costs of civil litigation:

In what circumstances should the losing party be required to

pay costs to the winning party? This raises the key issue of

so-called cost shifting.

How and in what circumstances should the amount of any costs

payable by the losing party be reduced or limited? This raises

issues of fixed costs, costs capping and costs management.

How can the procedural rules be improved so as to reduce the

time lawyers need to spend in the conduct of litigation and its

associated cost?

This note briefly summarises the main points emerging from Lord

Justice Jackson's report under each of these headings.

Although the Judge expresses a number of tentative opinions in

his report, he has been at pains to stress that his mind remains

entirely open pending extensive further consultation in which he

will now be engaged until the end of July.

Lord Justice Jackson will be talking about his proposals at a

special seminar at BLG's offices on 11 June.

When Should Costs Be Recoverable?

Lord Justice Jackson's tentative view, based on feedback to

date, is that cost shifting (that is the rule that loser pays) must

remain in some form for litigation generally.

However the Judge observes that a number of areas of litigation,

for example many tribunals, function perfectly smoothly without

cost shifting and concludes that a 'no costs' regime may

well be beneficial to both claimants and defendants in collective

actions provided that appropriate incentives can be built into the

rules to defer unmeritorious claims.

If there is not to be costs shifting in collective litigation

then claimants' lawyers would have to take their fee out of the

damages recovered, i.e. on what is called a contingency fee basis,

which has not been...