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This article was first published on LexisPSL Dispute Resolution on 1 April 2014. Click here for a free 24h trial of LexisPSL.

Jackson reforms one year on--counting the costs

01/04/2014 Dispute Resolution analysis: Following Lord Jackson's review of civil legal costs, new measures were brought into force on 1 April 2013. On the first anniversary of the reforms, Paul Edwards, head of costs at Hill Dickinson, explains how litigation has changed under the Jackson regime

What has been your experience of the first year after the Jackson reforms?
The new processes, including the portal extensions, seem to be working positively so far. We have seen some behaviour issues from claimants trying to take tactical advantage but these are essentially the same as those we encountered during the early days of the motor portal and we are therefore able to easily identify and counter them. Issues we have seen include: o o o o information on claims notification forms (CNF) being drip-fed so our clients don't have enough information to make a swift liability decision opponents writing to our clients direct in the hope they may fail to acknowledge the claim so that it falls outside of the portal--additional costs may then be recovered a small number of those who do locate the compensator correctly in the first place deliberately backdating CNFs to give the compensator less time to respond some clear cut public liability cases are being submitted as employers' liability claims--in an attempt to reduce a defendant's investigation time and to recover enhanced costs

In financial terms, the initial signs are positive. In motor claims, for example, the end of recoverability of after the event (ATE) premiums is saving in the region of 40,000 per 100 claims and the reduced fixed costs effectively halve the costs in many claims. In issued matters, the effects of Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, [2013] All ER (D) 314 (Nov) are having the most obvious impact. We are seeing many claimant solicitors less willing to co-operate and agree extensions of time for procedural steps where previously they may have done so. They are also having to be wary of tactical applications being made against our clients. That said, we are able to take advantage ourselves of the focus on compliance and press our opponents to comply with deadlines and move matters forward to a conclusion. This is obviously in our clients' best interests. In the lower courts, while most full-time judges are being robust on compliance issues, we are finding that some inconsistent decisions are being made. Some courts have been less willing to engage with costs budgeting for example--some on a regional basis. Some district judges and deputy district judges are making inconsistent decisions and are not all completely conversant with the decisions of the higher courts. This is throwing up some harsh decisions which we are not convinced were intended by the more senior judiciary (such as what might have been deemed 'trivial' defaults by the Court of Appeal resulting in strike out of claims). Hopefully this position will improve as more guidance is provided by the Court of Appeal and more

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judicial training rolled out. We understand that until recently deputy district judges had not received training on the reforms. At a recent seminar our clients told us 25% of them are defending more claims as a result of the reforms. The reasons behind this statistic bear further investigation, as it may mean early investigation is leading to more settlements at an early stage and only the right claims being defended. Without doubt some clients feel empowered by the introduction of fixed or predictable costs in that they now don't feel obliged to settle cases simply because of commercial unknowns (that is the likely costs of the claimant if successful).

How has Jackson affected your practice and the running of cases?
Some specific aspects of running lower value cases through the portal have needed reflection. Whereas before the reforms we may have been tempted to raise more borderline contributory negligence arguments as bargaining tools, it is not always economical to do so with fixed costs. There is a greater overall saving to be had by settling early on a full liability basis rather than raising contributory negligence arguments, which lead to settlement at a later stage attracting higher costs. In fast-track cases generally the fixed costs provide our clients with much greater certainty in terms of how much fighting a case will cost them. We are able to make much more informed decisions on the sort of case we want to settle based on the merits. Our clients and (where they are insurers) their policyholders, are also very aware of the need to provide full information and carry out a full investigation at an early stage, and the impact that not doing so will have on the overall cost of a case. This means we are now even more able to take liability decisions at a much earlier stage. The impact of the Mitchell case has also been felt in the early months of the reforms. While we did of course always look to comply with deadlines, or seek an extension in advance if there was a good reason for not being able to comply, the need to do so has been highlighted firmly by some of the early cases. Solicitors who do not comply could face negligence claims from their clients.

What aspects of Jackson would you like to see reviewed?

Without wishing to be too non-committal, it is clear that before any major changes are made, the reforms do need time to properly bed in. There was a spike of claims issued just before the reforms went live last year, as claimants took advantage of the more favourable costs recovery and these will need to work their way through the system before the full effects of the reforms can be seen. Once they have, everyone will be better placed to stand back and see properly which elements of the reforms are working and which are not. For the time being, there are a few areas which might benefit from 'tinkering' rather than wholesale change. For example we are seeing a lot of applications being made for extensions of time where previously parties would have simply agreed between themselves. These are happening because parties are afraid of harsh penalties being imposed or of their opponents making tactical strike out applications the minute a deadline is missed. This is not ideal as the applications push up costs and reduce trust and co-operation between the parties. It looks like there will be an amendment to the Civil Procedure Rules 1998, SI 1998/3132 (CPR) to allow one extension of time to be agreed without the court's approval. This would be welcome. It would also be good to see an end to inconsistent decisions being made in the lower court in terms of what is a trivial failure to comply and what is more serious and deserving of punishment. Without this there is a slight atmosphere of fear developing which is not helpful in terms of engendering co-operation between the parties. There are cases in the higher courts which seem to be trying to lay down some guidance in terms of what is acceptable and what is not (such as what constitutes a party playing the game too tactically and taking advantage, and what really is unacceptable and needs to be stamped out).

How do you see Jackson developing over the next year?

Steps are being taken to create panels of accredited medical experts to examine and report on whiplash claimants. We have been involved in initial discussions with the Ministry of Justice about how these panels will operate and, we understand, the aim is to have them operational towards the end of the year. We are

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also likely to see moves towards more emphasis on data sharing to combat fraudulent claims, although how this will happen is less clear. The limit past which costs budgeting does not apply is set to be raised shortly with a CPR rule change, to most cases up to a value of 10m with just a few remaining exceptions. This is an aspect of the reforms which has been in place in many courts as a pilot for a lot longer than other areas of reform and has therefore had a chance to be tested. We anticipate judges will apply budgeting more consistently as more are trained in doing so. We would also expect the case law on relief from sanctions to develop so it is clearer which side of the 'trivial' line any individual default may lie, and when a party may be justified in making an application to have his opponent's claim struck out-what the court tolerances will in fact be. Already after some initially harsh results, we are starting to see the courts emphasising that a firm but fair attitude is what is required. One judgment has recently emphasised that a party which unreasonably opposes an application for relief can expect to be punished in costs. Finally, at a recent Hill Dickinson seminar, Mr Justice Ramsey noted that Lord Justice Jackson is keen to see fixed costs extended to more cases and that this change could happen imminently. Interviewed by Rachel Moloney. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.