Part 2 of LASPO has “on balance” succeeded in the government’s aims of reducing the cost of litigation, discouraging unmeritorious cases and promoting access to justice at proportionate cost, the Ministry of Justice declared today.
As a result, it is not proposing any amendments to the primary legislation, or immediate changes to the underlying rules and regulations, although it identified reform of the damages-based agreement (DBA) regime and extending qualified one-way costs shifting (QOCS) beyond personal injury (PI) as the areas it was most likely to address in the future.
The post-implementation review of LASPO included a data analysis from Professor Fenn and Rickman – whose work has underpinned much of the civil justice reform of the past 15 years – and this indicated lower base costs and damages, and reductions in the length of proceedings, in PI and clinical negligence cases following LASPO.
The MoJ said: “Based on the evidence received as part of the PIR, the government considers the part 2 reforms to have been successful in achieving the principal aim of reducing the costs of civil litigation.
“The evidence shows that, in a range of personal injury claims (including clinical negligence claims), costs have reduced significantly (c. 8-10%) and early settlement has also improved [by 9%].
“A definitive judgement on the impact on unmeritorious claims cannot be made at this time but the claims volumes data, the changes in financial incentives to CFAs, the test of fundamental dishonesty for QOCS and anecdotal stakeholder feedback suggest there has been an overall decline in unmeritorious claims.
“The government considers that, on balance, the evidence suggests the Part 2 reforms have successfully met their objectives.”
The MoJ said it accepted the argument that the DBA regulations would benefit from “additional clarity and certainty”.
However, it also needed to exercise caution “to avoid creating unintended consequences”.
The review explained: “While it may be an advantage for lawyers to have different funding options available, there may also be disadvantages in having to advise their clients between different options, especially where – as with CFAs and DBAs – the better option financially for the client will be the worse for the lawyer, and vice versa.”
It said it would give “careful consideration” to the way forward following an independent review of the drafting of the regulations, which is being undertaken by Professor Rachael Mulheron – who chaired the Civil Justice Council committee on DBAs – and leading costs counsel Nicholas Bacon QC.
On extending QOCS, the MoJ said there were “clear attractions” for claimants and their lawyers in being able to litigate at no or reduced costs risk.
But it continued: “There is also a clear risk that by extending costs protection that some of the benefits of the part 2 reforms would be undermined: the shifting of costs back to defendants, an overall increase in costs and the potential for prolonging rather than settling litigation.
“The government would wish to be satisfied that these risks have been addressed before considering the case for extending costs protection further.”
Respondents to the review made other suggestions for changes to the rules and regulations, and the MoJ said “it may be that some of these issues are revisited at a later stage” – but it did not identify which or when.
The Fenn and Rickman research received feedback that suggested costs in other categories of law have generally also fallen, but there was not sufficient data available to make a quantitative judgement outside of PI and clinical negligence.
The review acknowledged that many claimant lawyers felt that it has become more difficult and challenging to bring some claims, in part due to the part 2 reforms.
“Although general concern was expressed about the consistency of the court’s approach to proportionality, most respondents agreed that the proportionality test was an effective way of ensuring that costs and damages were aligned.
“That said, concern among some correspondents remains in some areas of litigation where costs to damages ratio are high, although claimant representatives in these areas argue that relatively high costs are necessary to maintain access to justice due to the complexity of these cases, the amount and quality of evidence required and the holistic value of a case beyond the monetary damages themselves.
The MoJ also noted concerns from liability insurers and defendants that QOCS may encourage more (and weaker) claims, but said it has not seen “any reliable or conclusive evidence that supports that theory”.
It continued: “There are stronger measures in place to deter unmeritorious claims such as the qualification of fundamental dishonesty for QOCS, the ban on referral fees for PI and there is also anecdotal evidence of claimant lawyers looking for higher prospects of success before taking on a case.
“The volumes of claims also supports this view – generally the volumes of claims indicate a slight decrease.”