A new costs war looms as the Jackson reforms are being given the thumbs down by specialists, a leading costs firm has warned.
The prediction was based on a poll Kain Knight conducted at last week’s IBC conference on the Jackson reforms.
Nearly three-quarters (73%) of the 40-plus delegates felt the Jackson reforms could trigger a new costs war, and that this would be on a much larger scale than when the industry first did battle.
Some 61% said that budgeting was not going to be an effective way of controlling costs. Other findings included:
- 80% said the indemnity principle was still relevant, despite Jackson LJ’s strong representations in his report for this to be abandoned. The respondents felt the indemnity principle remained the fundamental starting point of any detailed cost assessment;
- 80% said the Jackson reforms, and particularly budgeting, would not spell an end to detailed assessments;
- 97% said that a new bill format would not solve all the problems. Most cost lawyers were against the enforced major overhaul of their computer systems that this new procedure involved, and resented the changes to familiar practices;
- Respondents were split on the topic of proportionate costs – 51% said the reforms would deliver proportionate costs, although they are still awaiting guidelines on how this would operate in practice;
- 57% said they could see an end to hourly billing, with fixed cost litigation coming in as the alternative;
- 90% felt the courts would not be able to cope with the likely increase in small claims and litigants; and
- 57% felt judges would have the courage to implement a strict approach to budgeting.
Kain Knight director Matt Kain said: “When the government accepted the Jackson recommendations, the clear intent was to reduce legal costs for litigants. It must be doubtful whether their agenda also included having the court system overrun with small claims and legions of litigants in person, just as the latest spending review has imposed further significant cuts on the Ministry of Justice.
“Evidence is growing that the changes are causing carnage among both smaller law firms and their bigger brethren…
“Another message from our research is that while over half of those surveyed felt the jury was still out on whether the judiciary would have the will or the resources to implement these strict new regulations, we have detected clear signals that tactics to delay settlements will be outlawed and that no costs lawyers will be exempt.”