Claims: Jackson’s back on track

If the insurance industry wanted any reassurance about the government’s commitment to the Jackson Review agenda, the timing of last week’s announcement on civil litigation costs provided it.

Ministry of Justice officials admitted they had to sift through more than 600 announcements en route to the publication of last week’s Jackson Review ‘next steps’ document.

But barely six weeks after the conclusion of the consultation exercise, justice secretary Ken Clarke was in the House of Commons presenting the government’s thinking on how it will implement Lord Justice Jackson’s recommendations.

Outlining the reforms, junior justice minister Jonathan Djanogoly put the issue of litigation costs in a wider economic context by arguing that the resulting higher premiums fed into higher prices in the shops.

Head of the costs team at law firm Weightmans, Rob Williams says: “The government appears to be almost completely sold on Jackson, despite a claimant lobby furore at the proposals.”

Moving too fast?

For opponents, the quick pace feels more like a rush. Consumer Justice Alliance (CJA) chairman Nigel Muers-Raby says: “While we recognise that new governments want to make an impact, have they really had enough time to review all the submissions they’ve received? Or is this simply a case of pushing ahead with their own agenda?”

The government’s reform package, unveiled last November, has survived almost entirely unscathed from the subsequent consultation, despite deep hostility from the likes of the CJA. The proposals outlined this week will be taken forward to a fresh round of consultation later this year.

The only major concession to opponents relates to after-the-event (ATE) insurance. Under the government’s proposals, claimants will generally not be able to recoup the costs of ATE insurance premiums from defendants if they win a case. But the MoJ has decided to make an exception for the costs of expert witnesses in clinical negligence cases, which it has accepted would be hard to fund without the safety net offered by ATE insurance.

For insurers, of wider importance is the government’s decision to raise the cap to £50,000 on claims that can be handled by its recently introduced online portal for handling low-value road accident litigation. The government has also said the system handle all types of claims, not just those stemming from motor crashes.

Djanogoly defended the reform package on the grounds that, under the existing set-up, claimants have no incentive to control their legal costs. “We have a system where the claimant can’t lose in any circumstances.”

Referrals hold-off

The fly in the ointment for many is the government’s decision to defer a ban on referral fees while new business structures for law firms take shape.

Djanogoly explained that the government is holding off on referral fee reform pending the introduction of deregulation of ownership structures for the legal sector. This could lead to law practices being snapped up by the companies from which they currently receive referral fees.

In any case, he predicted that referral fees would fall if the government’s other reforms were enacted, because it will become less lucrative for lawyers to chase cases.

To back up his argument, the junior minister pointed to figures showing that average ATE insurance premiums for low-value road accident claims have fallen from £400 to around £100 following the introduction of the MoJ’s fast-track, fixed- costs system for handling such cases.

Djanogoly said: “Referral fees are the symptom, not the cause. The cause is the way that the current legal system enables costs to be ratcheted up.”

Further reading: ‘Reforming Civil Litigation Funding and Costs’: goo.gl/mgZf9