Policy paper

2010 to 2015 government policy: civil justice reform

Updated 8 May 2015

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

This is a copy of a document that stated a policy of the 2010 to 2015 Conservative and Liberal Democrat coalition government. The previous URL of this page was https://www.gov.uk/government/policies/reducing-the-costs-of-civil-litigation-to-provide-access-to-justice-at-proportionate-cost. Current policies can be found at the GOV.UK policies list.

Issue

The costs of civil litigation are too high, and are fuelled by no win no fee conditional fee agreements (CFAs).

Claimants are at no financial risk when they bring personal injury claims as the risk is borne by the claimant’s lawyer and the defendant.

Actions

We’re reducing the costs of civil litigation by:

• making any ‘success fee’ payable by the winning party
• limiting the success fee to 25% of the damages in personal injury cases
• introducing damage-based agreements (DBAs) into civil litigation
• banning referral fees and inducements in personal injury cases
• fixing the costs of getting medical reports in whiplash claims
• creating a compulsory payment scheme for victims of mesothelioma
• reducing the fixed recoverable costs in road traffic accident (RTA) claims up to £10,000 and extending the scheme to £25,000 and to include employer’s liability and public liability claims

Background

A number of reforms have been implemented following Lord Justice Jackson’s Report in 2010. Some of these were included in Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

Who we’ve consulted

The government carried out a full consultation between November 2010 and February 2011 on implementing Lord Justice Jackson’s main recommendations for the reform of funding arrangements. The response was published in March 2011.

In 2012, we consulted further on changes to the low-value RTA personal injury scheme.

Since early 2014 we’ve been working with a number of cross industry working groups on the implementation of the government’s whiplash reform programme.

In October 2014, we asked the Civil Justice Council (CJC) to consider how the Damages-based Agreement (DBA) Regulations 2012 could be improved without encouraging more litigation.

Bills and legislation

The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) became law in May 2012 and came into effect in April 2013. In addition to LASPO, changes have been included in secondary legislation including the Civil Procedure Rules 1998 and the Referral Fees (Regulators and Regulated Persons) Regulations 2014.

The government has amended the Criminal Justice and Courts Bill to introduce a ban on the offer of inducements in personal injury claims and to prevent inducements being offered via third parties.

Appendix 1: controlling costs in no-win no-fee cases

This was a supporting detail page of the main policy document.

There are 2 types of no-win no-fee cases:

• conditional fee agreements (CFAs)
• damages-based agreements (DBAs, sometimes called contingency fees)

The general position is that, if the case is lost, the lawyer is not paid. If the case is won, the lawyer is paid the normal fee plus a ‘success fee’ of up to 100% of the normal fee (CFAs) or a percentage of the damages recovered (DBAs).

Conditional fee agreements (CFAs)

Before 1 April 2013 the losing party had to pay the winning party’s success fee, as well as their ordinary legal costs. This added substantially to costs for defendants.

Under Section 44 of the LASPO Act, since 1 April 2013 the winning party has to pay if a success fee is charged, typically out of damages recovered.

In personal injury cases, we’ve limited the success fee to 25% of the damages, excluding damages for future care and loss. This protects claimants’ damages in these cases, and ensures that any damages for future care and loss are protected in their entirety.

Damages-based agreements (DBAs)

Before 1 April 2013, DBAs could not be used in civil litigation but could be used in other areas, for example employment tribunals.

Section 45 of the LASPO Act and the Damages-Based Agreements Regulations 2013 allow DBAs to be used in civil litigation from 1 April 2013.

We’ve capped the maximum payment that the lawyer can recover from the claimant’s damages:

• 25% of damages (excluding damages for future care and loss) in personal injury cases
• 35% of damages on employment tribunal cases (which has existed since 2010)
• 50% of damages in all other cases

In October 2014, we asked the Civil Justice Council (CJC) to review the DBA Regulations 2013.

More information is available in the Civil Procedure Rules 1998.

Appendix 2: banning referral fees and inducements in personal injury claims

This was a supporting detail page of the main policy document.

Referral fees

We introduced a ban on the payment and receipt of referral fees in personal injury cases on 1 April 2013.

The relevant regulators (the Solicitors Regulation Authority, the Bar Standards Board, the Chartered Institute of Legal Executives, the Claims Management Regulator and the Financial Conduct Authority monitor and enforce the ban. This was extended to cover those regulated by the Chartered Institute of Legal Executives (CILEx) under the Referral Fees (Regulators and Regulated Persons) Regulations 2014.

The ban helps to remove the perception of a compensation culture, as lawyers and claim management companies can not pay for details of potential claimants.

We’ve been working with all the relevant regulators to ensure a consistent approach to enforcing the ban.

See in particular sections 56-60 of the LASPO Act.

Inducements

We’ve introduced a ban on the offer of inducements by legal services providers in personal injury claims, including offers via third parties (see clauses 57-60 of the Criminal Justice and Courts Bill).

Unjustified personal injury claims factsheet (PDF)

Appendix 3: speeding up mesothelioma claims

This was a supporting detail page of the main policy document.

Mesothelioma is an aggressive and terminal occupational disease caused by exposure to asbestos, with an average life expectancy of 7 to 9 months from diagnosis.

The government is determined to do what it can to help mesothelioma sufferers and their families. Significant changes have been made through the Mesothelioma Act 2014 and we continue to work with stakeholders to improve the compensation claims process.

• We’ve added a provision in the Deregulation Bill which will enable HM Revenue and Customs to disclose the work records of deceased victims to their legal representatives and families without the need for a court order.

• We’re working with the National Cancer Registration Service and others to speed up receipt of hospital medical notes (pathology records and imaging reports) to reduce delays in the claims process.

Following a judgment of the High Court in October 2014, the government announced in December 2014 that any future decision whether or not to apply the no win no fee reforms in the LASPO Act to mesothelioma cases would be subject to a review under Section 48 of that Act.

The Mesothelioma Act 2014 created a payment scheme for mesothelioma victims who can’t trace their liable employer, or employer liability insurer, to claim the damages they are due. The untraced scheme started making payments from 1 July 2014.