The Association of Personal Injury Lawyers (APIL) has called for qualified one-way costs shifting (QOCS) to be extended beyond personal injury and the cap on damages-based agreements (DBAs) to be doubled to 50% for fast-track cases with fixed costs.
Meanwhile the Law Society, in its response to the Ministry of Justice’s (MoJ) review of part 2 of LASPO, said the Act had shifted the balance “too far” in favour of defendants “at the expense of injured victims”.
APIL told the MoJ that it believed QOCs was “working well” and should be extended to cases where there was “an imbalance of power between the parties”, including professional negligence, actions against the police and judicial reviews.
The Law Society said it too supported the extension of QOCS, particularly to actions against the police, housing disrepair cases and private nuisance proceedings.
“The absence of QOCS is also an issue in non-clinical professional negligence,” the society said. “In these cases, legal expenses insurance premiums and IPT [insurance premium tax] can be so high as to make the claim almost not worth bringing at all despite success in its pursuit.”
However, the society said that it did not consider that QOCS was an “adequate replacement” for after-the-event insurance.
“QOCS has not materially altered the way cases are conducted. We do not see any evidence that it has increased the likelihood of defendants agreeing to out-of-court settlements, particularly in higher-value claims.
“Rather, there has been a rise in the number of defended claims, according to national statistics on civil justice.”
APIL called for root-and-branch reform of DBAs, and an increase in the cap on fees as a percentage of damages from 25% to 50% in fast-track cases where fixed costs applied.
It explained: “Because fixed costs apply, even if there is a success fee model, the recoverable costs are often not commensurate to the amount or complexity of work that is carried out.
“DBAs are designed to assist with access to justice where otherwise a case would not be brought. If DBAs are to be a workable alternative model, they must be viable in cases where CFAs are not, to provide a solution where a case would otherwise not be taken on.
“This may mean that a higher percentage of the damages will need to be taken by the solicitor to make it attractive to run the case.”
For cases worth more than £25,000, APIL said there should be a ‘tapered approach’, with a cap of 20% for the first £100,000, 10% for the next £400,000 and 2.5% for the rest.
A 50% cap should also be applied to cases in the small claims track, where there is no costs shifting – this presages the planned increase in the small claims limit for personal injury cases. Such a change could make DBAs “viable” in such cases.
However, APIL said it was “doubtful” whether hybrid DBAs would be attractive as a funding mechanism, apart from in fixed costs cases.
The Law Society said the draft regulations on DBAs had caused “uncertainty” leading to low take-up and agreed with APIL that “fundamental reform” was needed.
In general, the society said part 2 of LASPO had made it harder for claimants with higher-value claims and “more difficult issues” to obtain legal representation.
“In introducing the reforms in LASPO part 2, government felt that the balance between claimants (and their lawyers) and defendants (and their insurers) had shifted too far in favour of claimants.
“However, the reforms have tilted the balance too far in the other direction at the expense of injured victims and their ability to enforce their rights.
“We call for the imbalance between claimants and defendants created by LASPO to be addressed and would welcome further discussions with government to explore measures to achieve this.”
APIL called for a review of fixed costs: “The costs of running cases has increased, but the amount of costs paid to the claimant solicitors in successful cases has remained the same since they were first introduced in July 2013.
“If fixed costs are not regularly reviewed and increased, the ability of solicitors to take on more complex and borderline cases will be further impeded. When fixed costs were introduced as part of the original RTA protocol in 2010, it was agreed there would be such reviews.”