The £2m limit above which commercial cases are not subject to automatic costs management is being reviewed, the judge in charge of Jackson implementation has revealed, while also hinting that pre-issue costs may come within costs management in future.
Mr Justice Ramsey also backed a review of the Damages-Based Agreement (DBA) Regulations to sort out the problem of whether hybrid DBAs are allowed under them.
Speaking to the Association of Costs Lawyers’ annual costs conference in London on Friday, the judge said the decision in February to introduce the £2m limit to the Chancery Division, Technology and Construction Court, and Mercantile Court was because of concern about “forum shopping” given that costs management is not automatic in the Commercial and Admiralty Courts.
However, this is being reviewed and “the question will be whether there are any limits to costs management in future or it is left to the judge to consider on a case-by-case basis”.
In his list of “work still to be done” were pre-action costs and case management. Though this would need primary legislation, Mr Justice Ramsey said a good deal of front-end work is now required, meaning that by the time of the first case management conference, “a lot of the cost has already been incurred”.
He acknowledged that the question of partial or hybrid DBAs is “complicated”, but refused to give an opinion because it is likely to come before a court.
He said one problem is that partial DBAs can come in various forms. He gave three examples: where the successful solicitor receives his base costs plus a percentage; where a solicitor still gets his base costs where the case is lost; and where there is base costs recovery up to certain stage and then after that a DBA kicks in.
“The model and regulation of the percentage cap of what you can recover under a DBA is quite complex,” he said. “There’s no doubt that the DBA Regulations will have to be looked at again because the marketplace is saying they’re unwilling to enter DBAs because of the uncertainty.”
While noting that while solicitors are legally restricted in the percentage they can take from a client’s damages under a DBA while third-party funders are not, Mr Justice Ramsey would also not express a view on what he described as the “residual argument” that third-party funders “might have been brought in by a sidewind to the DBA regulations”.
However, he speculated that in three years’ time “if, as has been thought, litigation has some degree of predictability about it, then third-party funders should be able to make a decent profit out of funding litigation and in effect transfer legal aid from the public sector to the private sector”.
Whether or not that will happen depends on them being left in the position they are, he said, hinting that he is comfortable with the current self-regulatory regime under which funders operate.
The judge predicted that costs lawyers would continue to play a key role in litigation, with their expertise focused more on budgeting than after-the-event assessments, which he said were likely to focus on challenges for particular items within the bill rather than “the detailed assessment that people in this room have known and loved”.
He added, that with the help of the Association of Costs Lawyers, work is continuing on a new format for the bill of costs that will match it against the costs budgeting form Precedent H. “It can’t come too quickly,” he said.