25 July 2012Print This Post

MoJ plans three-year review of Jackson reforms

Downward pressure: Jackson reforms to reduce work and income for lawyers

The Jackson reforms will be reviewed after three years of operation, the Ministry of Justice (MoJ) has confirmed.

Publishing the final version of the impact assessment that was first made public in draft form in March 2011, the MoJ said the objective of the April 2016 review will be to assess the impact on civil litigation costs of implementing the reforms.

The policy, which will be introduced in April 2013, will be deemed successful “if the costs of necessary civil litigation become more proportionate and necessary claims can still be bought”.

Apart from taking account of the delays in ending recoverability for mesothelioma and insolvency cases, the impact assessment has barely changed since its original publication. The same is true of other impact assessments which have recently been finalised, such as the one relating to referral fees.

The Jackson assessment predicts that the reforms “are expected to lead to reduced overall net levels of legal services business and income, especially for CFA lawyers”, driven largely by claimants having to pay success fees and after-the-event insurance premiums themselves, and by the cap on success fees.

“This might lead to lower success fees, to claimants pursuing fewer cases, to CFA lawyers taking on fewer higher risk cases, and to more competition in relation to success fees. The level of resource devoted to each case might also be lower. In addition, the reforms to proportionality and the increase in litigant in person rates might place downward pressure on legal services business.”

This may in turn lead to legal services providers incurring “adjustment costs” as they move to other areas of law. After-the-event insurers are likely to face a similar outcome, it said, while competition in the market will also be increased.

The assessment acknowledged that claimants funded under a CFA should be worse off overall as a result of the reforms, which it notes that “in line with the policy objective”. The 10% uplift in general damages and introduction of qualified one-way costs-shifting will offset this, “although it’s not clear to what extent”; in general the assessment is unable to quantify the impact of the reforms.

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