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Jackson Changes FAQ

Jackson Changes FAQ

How has the Jackson Report affected the use of After The Event Insurance? Your questions answered...

What is Qualified One Way Costs Shifting?
Qualified One Way Costs Shifting (QOWCS) is the term used to describe how, following the rule changes, a claimant will not be exposed to the risk of having to pay the defendant costs if they lose, but will still have to pay costs in certain circumstances (hence the Qualified bit).

These circumstances include where the defendant makes a Part 36 offer to settle the claim and the claimant fails to beat the offer and also if the court thinks the claimant has acted ‘unreasonably’. The exact definition of what would be considered ‘unreasonable’, in these circumstances is still to be clarified however.

The claimant will still have to pay their solicitor's own expenses (e.g. for a medical report or court issue fees) when they lose.
Will Claimants still need After the Event Insurance?
The simple answer is 'yes' but that premiums will be lower because many (but not all) of the risks of paying the defendant's legal costs will have been removed. See 'What is Qualified One Way Costs Shifting'. A policy will also need to cover the claimant's own disbursements such as the cost of a barrister (who aren't cheap), court fees (nor are these), medical reports and notes, police reports, engineer reports, interpreter fees etc.
Will After the Event Insurance premiums be recoverable from Defendants?
Under the Jackson reforms, the ATE Insurance premium will have to be paid for by the claimant (just like any other insurance policy) although only at the end and only if they win their claim. They will have then received an additional 10% uplift on their damages to pay for the premium.
How much will After the Event Insurance premiums cost after the changes?
This is difficult to say without knowing the rules in detail (they have yet to be published) or the volume of policies to be purchased, but they will be cheaper than at the present time as the costs risks will be lower.
Will Barristers continue to offer to act under a Conditional Fee Agreement?
We think the answer to this will be 'No'. The reason is, any success fee will have to be paid for by the client and this would be very unpopular with claimants. This will of course require a claimant to take out an After the Event Insurance policy to cover the barrister's charges if they lose their claim.
Can a Solicitor still act under a Conditional Fee Agreement and charge a success fee?
Yes. CFAs are not being changed, but any success fee charged, will no longer be recoverable from the defendant. The claimant will receive a 10% uplift in their damages to enable them to pay success fees and After the Event Insurance premiums, but we believe competition will drive both of these down.
When will the Jackson changes become law?
The Jackson reforms were incorporated into the Legal Aid, Sentencing and Punishment of Offenders Bill and this was passed by parliament earlier this year. It is planned that the Act will take effect from 1st April 2013 but this date may change if the detailed Civil Procedure Rules are not ready by then.
Under what circumstances will Claimants have to pay legal costs after the Jackson Reforms come into force?
After the changes come into effect, people making civil claims will still be responsible for their own solicitor's disbursements and they may have to pay the defendant's legal costs if they fail to beat an offer made by the defendant. The defendant costs will be limited to the damages they obtain. Combined, this could still result in the claimant having to pay over £10,000 in costs. We would therefore recommend clients take out After the Event insurance to cover them against this risk.
Will Qualified One Way Costs Shifting Apply to Part 36 Offers?
A part 36 offer is a formal offer to settle liability or quantum by either party (although offers are normally made by the defendant). If you fail to beat a Part 36 offer, currently you may have to pay some of your opponents costs. This liability is set to continue after the Jackson changes come into force. Therefore, if you did not have After the Event Insurance and failed to beat an offer, you would have to pay your opponent's legal costs up to the value of your damages. There are also proposals to add on your own solicitor's costs to this total and so you could be forced to pay all of your damages and your solicitors costs to the defendant. One way Qualified Costs Shifting would NOT protect you from this liability
Will the Jackson Changes Apply to all Court Cases?
The ability to charge a success fee to your opponent and recover an After The Event Insurance Policy (ATE policy) from them is being removed for all litigation cases. Qualified One Way Costs Shifting (QOWCS) will only apply however to personal injury claims. This means that all other claims including financial miss-selling will not have the limited protection of QOWCS. Part 36 liabilities will remain for all types of cases.
Is the Claims Portal being Extended in April at the same time as the Jackson Changes?
No. This was the plan but it has now been shelved. This is because the software company who is working to include all other personal injury claims within the portal has said that they will not be ready in time.
What are Damages Based Agreements?
A Damages Based Agreement (DBA) is a new type of agreement which is being allowed in the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) which will become law on 1st April 2013. DBAs will allow a solicitor to take a share of a claimant's winnings instead of charging legal fees based upon time or a fixed amount of money. DBAs are similar to contingency agreements in America although the losing party will still have to pay legal costs. The maximum percentage a solicitor can take will be limited by the Solicitor's Regulation Authority (and is expected to be set at 25%).
Will Qualified One Way Shifting apply to all litigation cases?
The answer is no. QOWCS will only apply to claims for personal injury and may not even apply where a claim is for a non-personal injury element such as a vehicle hire claim. QOWCS will not protect claimants in all other areas of litigation including Payment Protection Insurance compensation.
Will any After the Event Insurance be payable by Defendants?
Generally, after the changes take effect, ATE Insurance will be a client expense however, a policy will be allowed where it covers the investigation disbursements for Clinical Negligence claims. This is because the cost of medical experts would otherwise result in very few people being able to afford to make a clinical negligence claim. The part of the policy protecting against later disbursements (court fees, barrister costs etc) and adverse costs risks would not be recoverable.

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