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Government stands firm on ending LASPO exemption for insolvency proceedings


Vara: no new impact assessment

The government has indicated that it will not rethink the end of the LASPO exemption currently applied to insolvency proceedings, which is due to expire next year.

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 gave insolvency proceedings a two-year grace period from the end of recoverability, but it will kick in from 1 April 2015.

Earlier this year, the Association of Business Recovery Specialists, known as R3, claimed that creditors face losing more than £150m per year [2] if the exemption comes to an end, and called for it to continue.

In a written exchange in Parliament, shadow justice minister Andy Slaughter asked whether an impact assessment had been carried out on the amount of reduced income that creditors will receive once the exemption ends.

Justice minister Shailesh Vara said an impact assessment on the LASPO reforms was originally published in April 2011.

He said: “It explained that while there may be a reduction in the number of cases brought where no-win, no-fee conditional fee agreements are used, overall the LASPO reforms will tackle excessive costs. The government does not propose to update the impact assessment in relation to insolvency proceedings.

“The LASPO reforms will apply to insolvency proceedings from April 2015.”

The R3 report also acknowledged that success fees and after-the-event insurance premiums are “rarely paid in full and often not paid at all” at the moment.

Meanwhile, Sir Vivian Ramsey, the High Court judge who has led implementation of the Jackson reforms, is retiring from the bench on 1 November. It is not yet known who will replace him in the latter role.