The news came as the government announced a two-year moratorium on ending recoverability in insolvency cases, and that it was seeking further advice from the Civil Justice Council on the introduction of qualified one-way costs-shifting (QOCS).
In the litigation that has become known as the Liverpool ATE Test Cases, District Judge Smedley, a regional costs judge, ruled that it is not needed but it is reasonable for claimant lawyers to take out an ATE premium when they begin acting for a client in a portal case. He said a staged premium is reasonable but not necessary.
The defendants had argued that the absence of risk meant it was not reasonable to incur ATE premiums before stage three of the claims process – which deals with disputes over quantum – or before the case’s exit from the process.
Amanda Ashton, chairman of Compass Costs Consultants in Liverpool which handled many of the test cases, said the proceedings revealed that around 10,000 cases were queued up pending the ruling. She said Judge Smedley’s decision was a “massive breakthrough in ATE premium recovery… Many hundreds of law firms and all of the significant ATE insurers in the jurisdiction will now be able to clear out cases that have been waiting for this decision”.
Matthew Hoe, head of costs strategy at Peterborough firm Taylor Rose Law – which along with Keoghs acted for the defendants – said they are currently considering whether to appeal.
Meanwhile, in a written ministerial statement yesterday, justice minister Jonathan Djanogly said that the end of recoverability of success fees and ATE premiums embodied in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 – which will begin next April – will not apply to insolvency cases until April 2015. Mesothelioma cases were already outside the scheme until a review of the impact has been undertaken, following a government concession to push the legislation through Parliament.
The announcement appears to quash any hopes of a further delay in the implementation of the Jackson reforms to October 2013.
Mr Djanogly said: “Insolvency cases bring substantial revenue to the taxpayer, as well as other creditors, and encourage good business practice which can be seen as an important part of the growth agenda with wider benefits for the economy.
“These features merit a delayed implementation to allow time for those involved to adjust and implement such alternative arrangements as they consider will allow these cases to continue to be pursued.”
There was a long-running debate over whether insolvency related cases should be exempted from the Jackson reforms, given that the government sometimes benefits from conditional fee agreements in this area. However, in March justice minister Lord McNally told the House of Lords: “I do not believe it is acceptable to say that CFA reform is good for everyone else, but is not good for the government.”
Law Society chief executive Desmond Hudson welcomed the decision, but added: “Following the case made by the Law Society and others, the government has accepted that more time is needed to evaluate the effect of the new civil proceedings arrangements on insolvency cases and to allow the legal sector time to adjust.
“We would like to see this logic applied to other types of cases, where a similar implementation delay, until 2015, would help to avoid unwelcome impacts on ordinary people’s right to secure legal redress.”
Mr Djanogly revealed that the government has asked the Civil Justice Council for further advice in relation to detailed aspects of implementation of QOCS by the end of June amid continuing speculation that it is struggling to make the qualifications work. These would disapply QOCS in the event of poor conduct by the claimant or if they are “conspicuously wealthy”.
Separately, in response to a written question, Mr Djanogly said that a report on the operation of the RTA portal, conducted last year by Professor Paul Fenn, will be published in the summer. Claimant groups have argued that it should have been available before the conclusion of the government's evidence-gathering exercise on revising the costs payable under the portal, and also extending it to higher-value RTA cases and employer's and public liability claims, which closes today.
Mr Djanogly said it would be published “before any announcement is made on the final form of the extended road traffic accident personal injury scheme and its associated costs”.