Legal expenses insurers fear £300m cost of Jackson reforms

Legal expenses insurers have slammed the Jackson Review, saying it could cost them £300m in nuisance claims.

Responding to the government consultation on its plans to implement Lord Justice Jackson’s review of civil litigation costs, legal expenses insurers argued that the suggested reform of qualified one-way cost shifting could lead to a spate of opportunistic claims, as it would remove a major disincentive for engaging in litigation.

Under the recommendation, a claimant would not be required to pay the defendant’s costs if their claim was unsuccessful, but a defendant who lost its case would still be.

Speaking to Insurance Times, DAS Legal Expenses chief executive Paul Asplin said the reforms could cost the insurance sector £300m in legal costs for battling spurious claims. “Qualified one-way cost shifting brings a lot of problems that Lord Jackson hasn’t addressed,” he said. “You will get a whole new breed of vexatious nuisance claims.”

In a report by a working group of 11 academics, headed by Ken Oliphant, professor of tort law at Bristol University, Lord Jackson is accused of preferring the evidence of the defence lobby overall.

The report, On a Slippery Slope – A Response to the Jackson Report, rejects a central tenet of the reforms: that excessive costs can be attributed largely to the use of conditional fee agreements. The proposals are lambasted as “inconsistent with the fundamental principle of civil justice” of full compensation for wrongful injury.

Under the proposals, damages would rise by 10% to cover the cost of lawyers’ success fees and legal expenses insurance. The anti-Jackson lobby argues that this uplift would not be enough to cover these costs, and would deprive claimants of their full compensation.

In its response, the Association of British Insurers urges full implementation of Jackson’s proposals.