Litigation rules shake-up will hit the victims, warn lawyers

NEW civil litigation rules are set to create bigger compensation awards but smaller payouts for victims, according to a leading Yorkshire commercial litigation lawyer.

While general damages awards in ‘tortious cases’ – covering anything from nuisance or negligence to defamation or harassment – will increase by 10 per cent in a civil litigation shake up which takes effect next April, the only real winners are likely to be insurance businesses, according to Michael Doherty of Lupton Fawcett.

The changes are part of The Jackson Reforms in which higher payouts are aimed at compensating clients for no longer being able to enter no-win, no-fee agreements with lawyers or recover insurance premiums to cover adverse costs, even if they win their case. Under the reforms, the success fees applied with no-win, no-fee agreements and the premiums for after-the-event insurance policies to cover adverse costs will no longer be recoverable from the other side.

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Mr Doherty, a senior associate, said this meant that solicitors will no longer offer no-win, no-fee agreements to clients, because there will be no incentive for them to do so. Also, in many cases, claimants unable to recover insurance premiums will feel it is uneconomic to pursue smaller claims, he argued. Under the reforms, no-win, no-fee agreements are likely to be replaced with contingency fee agreements where solicitors will gain a set percentage of compensation awarded to their client.

Mr Doherty said: “It seems that the public has not been adequately forewarned of these changes which are a major departure from the current system. They will have a great impact on access to justice. Many potential claimants will be reluctant to bring cases if they risk paying an opponent’s costs, which might be far more than the value of their claim if they lose, and don’t have an insurance policy.

“Contingency fee agreements were tried before and created animosity between claimants and their solicitors. There were horror stories of clients being effectively left with nothing from their damages awards after legal costs were deducted. This was said to have brought the legal profession into disrepute so it seems odd that it’s making a comeback.”

Stuart Henderson, managing partner of personal injury at Irwin Mitchell in Sheffield, said his firm had “grave concerns” over the changes coming in through the Government’s civil justice reforms. “That’s why we opposed them on behalf of our clients and numerous charities and victims’ groups who all shared our view that this would have a serious impact on injured people, including some of the most vulnerable in our society.

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“Our fundamental view has always been that innocent victims of injury should be entitled to keep all of their damages.”

However Stephen Inglis, a partner in Leeds-based Clarion’s dispute resolution and litigation team, said the main reason for the changes was to curb the trend for the costs of litigation to become massively disproportionate to the sums in dispute, particularly in personal injury cases. The changes also aimed to screen out “speculative and unmeritorious claims” at an early stage, he said.