Thursday, April 7, 2011

LORD JUSTICE JACKSON’S CFA PROPOSALS TO PROCEED

The Government has announced its intention to follow Lord Justice Jackson’s proposed reforms to Conditional Fee Agreements (CFA), otherwise known as “no win, no fee”, for Clinical Negligence Claims.

Read the Government’s full response here.

The reforms to the CFA and After the Event insurance (ATE) regimes will no doubt affect how Claimants proceed with their Clinical Negligence claims, as lawyers will need to re-evaluate best practice for funding and running such cases.

Over 600 formal responses were received by the Ministry of Justice in reply to the consultation.  AvMA’s response can be found here.

As a result, the Government intends to implement all of Lord Justice Jackson’s major proposals and anticipates this to be in or around autumn 2012 after receiving assent.

The main changes to the present ‘no win, no fee’ arrangements are:

  1. When successful in their claim, Claimants will pay their solicitors a success fee, which is a percentage mark-up on the solicitor’s basic charges.  The solicitor’s success fee will be taken out of the Claimant’s damages.  At present the success fee is paid by the losing party.

  1. Premiums for ATE insurance policies, which are taken out to protect the Claimant against paying the Defendant’s costs should they lose their case, will no longer be paid by the loser (the Defendant) at the end of the case.

  1. General damages (that is money for pain and suffering endured, which does not include any pecuniary loss flowing from the injury) will be increased by 10% to help Claimants cover the cost of their success fees and insurance premiums mentioned above.

  1. No more than 25% of a Claimant’s general damages and past losses can be used to pay the Claimant’s solicitor’s success fee and the Claimant’s insurance policy premium.  This does not include future losses, which are protected from such a deduction.

  1. Qualified One Way Costs Shifting (QOCS) is to be introduced.  This means that if a Claimant loses a case brought against a doctor or hospital, under certain (qualified) circumstances, the usual rule that the loser pays the winner’s costs will not apply.  The Claimant will not have to pay the Defendant’s costs.  It is not entirely clear when a Claimant will not have the benefit of this protection, although the government has said it would be when a Claimant was conspicuously wealthy or when there is some misconduct on the Claimant’s part.

  1. There will be a new test of proportionality in costs assessment.  Only reasonable and proportionate cost may be recovered from the losing party.

  1. There will be a change to the prescribed rates of which successful litigants in person can recover.

  1. There will be a change to the rules governing offers to settle (called Part 36 offers).  The aim is to have equally effective incentives for Claimants and Defendants to make and accept reasonable offers to settle.  The changes aim to make it very clear whether the damages finally awarded to a Claimant at Court are better or worse than the previous offer to settle made.  There will be financial penalties imposed on the party by the Court if it sees one party as having unreasonably prolonged the litigation by not accepting an earlier offer.
The Government’s response was announced alongside a new consultation to streamline the current Civil Justice system in England and Wales.  Read the consultation document here.  Seemingly focusing on lower value claims, the key aims identified by this new consultation are raised to address and encourage:

1.      Proportionality – disputes be resolved in the most appropriate forum to drive down costs in non-complex issues
2.      Personal responsibility – the general public to take responsibility for resolving their own disputes in non-complex issues
3.      Streamlined procedure – timely justice provided in a “user” friendly manner
4.      Transparency – clear information provided on dispute resolution options available

This consultation is open until 30 June 2011.

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