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12 July 2011
The government's plan for reducing legal aid was recently confirmed with the publication of the Legal Aid, Sentencing and Punishment of Offenders Bill. The bill has now passed its second reading and will progress through the committee stage during Summer 2011. The government has also made clear that it will implement Lord Justice Jackson's recommendations to cut civil litigation costs, with legislation due to come into force in Autumn 2012.
As drafted, the bill contains few surprises. It includes most of the proposals in the Jackson Report (other than those relating to one-way costs shifting in personal injury matters, which will be considered separately at a later date).
The key sections of the bill provide for:
Further measures affecting the Part 36 regime are expected to be introduced soon. These are likely to provide that when a claimant beats a Part 36 offer, by however small a margin, the full Part 36 costs consequences should be applied.
Most parties to the government's 2010 consultation agreed that the litigation funding regime could be improved. Despite attempts in recent years to reduce the costs of litigation, bringing a claim is still a considerable (and often protracted) financial risk for litigants. Accordingly, conditional fee arrangements, particularly when combined with after-the-event insurance cover, have been an attractive funding solution and have done much to assist those who have viable cases, but no means to pursue them. Nonetheless, the recoverability of success fees and claimants' after-the-event premiums has brought about a situation where claims can quickly become practically impossible to settle. Defendants often complain of being 'held to ransom' by the level of costs being incurred to bring a claim.
The bill does much in principle to address the situation and seeks to incentivise claimants to control their costs by adopting most of the Jackson Report's proposals. However, much will depend on the detail. Although the bill is a significant statement of intent, litigators will be watching carefully to see how the bill evolves as it passes through the legislative process. In particular, more clarity would be welcome on the consequences of Part 36 offers, as the existing provisions leave much to the discretion of the lord chancellor, with little indication of how this discretion may be exercised.
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