This article is designed to give a brief update on where Government are up to in terms of consulting upon and then implementing the civil justice reforms recommended by Lord Justice Jackson in his final report of December 2009.
We have broken down the key component parts of the Jackson package to give an overview as to progress and then conclude with a view of the landscape post April 2013 – the date when the Government envisage that the package of reforms will become active and start to affect how we, as claims handlers, do the “day job”.
The Legal Aid, Sentencing and Punishment of Offenders Act 2012
This Act has just received Royal Assent (2 May 2012) and contains those aspects of Jackson’s recommendations that require primary legislation. Those were:
• The non recoverability of the ATE premium
• The non recoverability of the success fee
• The non recoverability of notional premiums (union lawyers)
• Allows for new “Damages Based Agreements”
• New rules around Part 36 to make that tool more punitive and “hard edged”
• The banning of receipt or payment of referral fees
The LASPO Act, having been granted Royal Assent, means that all these key aspects of Jackson are now to be implemented in April 2013. The key points to note are that the success fee and the ATE premium will no longer be recoverable from the defendant and that, in certain circumstances, it will not be allowed to pay for or receive money for a personal injury referral. An important late revision to LASPO has placed mesothelioma claims out of the scope of non-recoverability of both the success fee and ATE premium. However, this will be reviewed after an impact assessment.
The introduction of an extended fixed costs regime
Lord Justice Jackson recommended that fixed costs be extended to all personal injury claims both pre and post litigation up to a value of £25,000.
The Government is currently consulting on this – that consultation closes on 25 May 2012. Whilst this is positive news, we are concerned that the output from the consultation may be limited to fixed costs for “liability admitted cases only”. Dependent upon what costs regime exists outside of any new portal / process, this outcome may drive the wrong behaviours as claimant lawyers seek to exit as many claims as they can from the portal. With our Jackson Working Group, Keoghs have been lobbying the Government to deliver fixed costs both in and outside of any portal process in RTA, EL, PL and disease claims.
A very recent twist on this work is the Government’s stated intention to also now consult on the level of the Small Claims Track (SCT). They will consult with stakeholders over the summer months as to whether the limit for personal injury claims should be increased to £5000. This would place most personal injury claims into that process and mean that claimants would not be able to recover their costs from the defendant. We are tracking this development closely and will be responding to the Government on this point.
Extension of the portal / amendments to the claims process
The Government is also currently consulting on extending the existing RTA portal. This includes vertical expansion to £25,000 and also horizontal expansion to embrace EL and PL claims, also to £25,000. The Government are keen to see the portal expanded as they believe that it has been a success and has driven efficiencies and reduced lifecycle. Insurers are highly engaged in this debate as are the Portal Co Ltd who have oversight of the IT process. This consultation also closes on 25 May and we expect a response from the Government in the Autumn.
The Government are also to consult on the obtaining and content of medical reports specifically with regard to whiplash claims. This paper is awaited.
The other key components to Jackson
As well as LASPO and costs / process there are some other key aspects of Jackson’s recommendations that need to be delivered for April 2013.
To balance the non recoverability of the success fee, Jackson proposed a 10% uplift in awards for general damages. We now know that this will be an across the board uplift to JSB in April 2013 subsequently to be policed by the Courts.
Part 36: Whilst LASPO delivers the high level ambitions, we still await the detailed rules. This is an important tool for insurers and so it is important that we engage and ensure that the final rules are “fit for purpose”.
Qualified One Way Costs Shifting (QOCS): This is the counter balance to the non recoverability of the ATE premium. It will mean that even when the defendant wins, they will not be able to recover their costs except in certain “qualified” circumstances – Jackson suggested that this would mean fraudulent or frivolous claims. Again, it is important that we see the rules that will govern QOCS. The concern is that if poorly drafted, QOCS could exacerbate a “have a go” culture as claimants see no risk to bringing what are, perhaps, spurious claims.
Finally, we await detail on proportionality. This should underpin the whole claims process. It was never successfully delivered by the Woolf reforms in 2000 and so we wait to see whether Jackson has more success.
Change is coming. The claims process, portal, costs regime and many rules will alter for April 2013. We expect that all personal injury claims up to £25,000 will go through a portal and will be subject to a new claims process. We expect fixed costs to apply to all claims that remain in and settle in that process. We remain concerned, however, as to the costs regime outside of the portal and continue to lobby Government on this important point. We also need more detail around Part 36, QOCS and proportionality.
Reform is now moving at some considerable pace with announcements from the Government coming rapidly. It will be of key importance to see how the debate around the Small Claims Track develops.
Keoghs is working closely with clients and the ABI to lobby for and influence positive change for your business and your customers. We will continue to update over the coming months as we approach the key date of April 2013.
For more information please contact:
Director of Market Affairs
M: 07702 373647
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