Construction Disputes: The Rollout Of The Jackson Reforms

Lord Justice Jackson delivered his Final Report on Civil Litigation Costs in early 2010. The Final Report was the culmination of a year-long review of the civil litigation system. Lord Justice Jackson's remit was very broad, in that he was required to look at how cost savings could be made in all aspects of civil litigation.

The Final Report made 109 recommendations for law reform. Some of those recommended reforms could have been (and now have been, or will be) implemented by changes to the rules of court. Others require primary legislation.

The most significant recommendations coming out of the Jackson costs review related to legal funding, and in particular Conditional Fee Agreements ("CFAs"), usually referred to as "no win / no fee" agreements. Lord Justice Jackson recommended that the law be changed so that success fees and After-the-Event ("ATE") insurance premiums (which are usually a necessary part of a CFA) cease to be recoverable by successful claimants.

Implementation of the Jackson Reforms

The Jackson report was released in the period leading up to the 2010 general election, during which the issue of civil litigation costs was very much on the back burner (for political purposes). After a period of consideration, the Conservative / Liberal Democrat government made noises to the effect that they would accept the primary recommendations and implement them. In 2011 the wheels have now been put in motion to do so.

The Legal Aid, Sentencing and Punishment of Offenders Bill was introduced into the Parliament in June 2011. If enacted, the Bill will (among other things) render success fees and ATE premiums irrecoverable from unsuccessful litigants in most cases (including construction cases). CFAs will not be banned, but their economic justification (for some lawyers, at least) will be severely emasculated.

On the other hand, the Bill also contemplates (as recommended by Lord Justice Jackson) legal practitioners being able to enter into "damages-based agreements", otherwise known as "contingency fee" agreements. Contingency fee agreements are those under which a lawyer is paid his fee out of the damages awarded to his client – often as a percentage of the damages. Lord Justice Jackson concluded that contingency fee agreements, which are used widely in the United States and Canada, should be available in England and Wales as a form of litigation funding to improve access to justice. His recommendation (which is to be implemented) is that...