In 2009 Lord Justice Jackson was tasked with conducting a review of civil litigation costs and the majority of his recommendations are due to be implemented in April this year.

One of the major changes concerns the use of Conditional Fee Agreements (otherwise known as “No Win No Fee Agreements”). Currently a claimant can enter into a Conditional Fee Agreement with their solicitor as a means of funding their claim.  The solicitor charges base costs together with a “success fee” which is an additional fee to reflect the risk the solicitor takes in taking the claim on, and the delay in the payment of their costs (costs are not recovered until the end of a claim which can mean a wait of several years).  If the claimant is successful in their claim, the defendant is usually ordered to pay the claimant’s solicitor’s costs and success fee.

To protect against the possibility of losing their claim, claimants are advised to take out a policy of after the event insurance when they enter into a Conditional Fee Agreement.  Should the claimant lose their case, the policy will meet the defendant’s costs.  If the claim is successful, the defendant is usually ordered to pay the after the event insurance premium.

All of this will change on 1 April 2013

While claimants will still be able to enter into a Conditional Fee Agreement with their solicitor, they will no longer be able to recover their solicitor’s success fee, nor the after the event insurance premium, from the defendant.  If their claim is successful they will be forced to pay their solicitor’s success fee and the insurance premium from their award of compensation.  Often the Conditional Fee Agreement is the only way a Claimant has to fund their case and therefore the changes are heavily criticised as representing yet another assault on access to justice.

In an attempt to soften the blow, general damages in personal injury and clinical negligence cases will increase by 10% for cases decided after 1 April 2013, but only if the claimant entered into a Conditional Fee Agreement after 1 April 2013.  The Court decided in Simmons v Castle (2012) that those claimants who enter into a Conditional Fee Agreement before 1 April 2013 will not be awarded increased damages because they will still be able to recover the success fee and insurance premium from the defendant (despite the fact that their case may not be decided until after 1 April 2013).

It is therefore very important that the funding of all new personal injury and clinical negligence claims is established before 1 April 2013 in order that claimants are not bound by the new rules coming in on that date.  The changes will also have impact on civil litigation generally and therefore where contemplating a claim it may be prudent to review the position on funding sooner rather then later.

Please contact Sonia Adlem on telephone number 01264 721706 or via email sadlem@staging.talbotwalker.co.uk if you would like to discuss a potential claim.