Jackson Costs Reforms – Do we need to revisit our approach? Simon Johnson 7 th May 2013

CFA Previous Position Success fees recoverable from D if C succeeds. Maximum permitted: 100%

After 1 st April 2013 Success fees irrecoverable from losing party Success fees payable by C to solicitor, capped at 25% ( excluding future care and loss) Applies to net damages after CRU Mesothelioma claims exempted

Success fees capped at of general damages

ATE Premium Previous Position C insures against the risk of losing. If C wins, premium recoverable from D.

From 1 st April 2013 Recoverability of premiums abolished for any CFA entered into after this date But Experts fees in clinical negligence; and Mesothelioma claims exempt

Claimant Costs Schedule: Fast-Track

What should we do differently? Draw claim out to the end of the limitation period Rise in number of unrepresented Claimants – protect settlement against challenge Such Claimants often fall foul of time-table – keep paper trail of correspondence

Different Approach? Be more robust in defence – especially low-value claims. Remember Greater certainty over cost of losing. No success fee/ATE premium to pay

Increase in General Damages Simmons v Castle [2012] Increase of 10% in general damages in cases concluded after 1 st April 2013 But only where the CFA entered into after 1 st April 2013 Will also apply to non-CFA cases concluded after 1 st April 2013

Awards of general damages for PSLA to be increased by

QOCS Previous Position Losing party pays winner’s reasonable costs

QOCS From 1 st April 2013 If C wins, he or she still recovers costs If C loses or discontinues, D cannot recover their costs

Exceptions QOCS protection lost if:- Claim is found to be fraudulent C has failed to beat D’s part 36 offer Case has been struck out where:- i.No reasonable grounds for bringing claim; ii.Proceedings are an abuse of process; or iii.Conduct likely to obstruct just disposal

Our approach? Plead fraud more frequently, where reasonable Increase use of surveillance, where justified Be more aggressive with strike-out applications (e.g flagrant disregard for court orders) Do not neglect thinking about abuse of process

Examples – Please see Hand-out

Part 36 Previous Position If C makes an offer which is not accepted/not beaten at trial, D pays costs and:- Enhanced rates of interest Enhanced costs (indemnity rather than standard basis)

Previous Position If D makes an offer which is not accepted and not beaten at trial:- C pays D’s costs from 21 days after offer made to trial C pays own costs during that period

From 1 st April 2013 Claimant’s Offers D who fails to beat them at trial will pay an extra 10% of damages (up to £500k) – separate from Simmons v Castle [2012] 5% uplift on element of the award between £500k-£1m (maximum £75k uplift)

From 1 st April 2013 Defendant’s offers If C fails to beat it at trial, will be liable for D’s costs and own costs from date of part 36 to trial. But – capped at level of damages recovered. Key exception to QOCS.

Example D makes Part 36 of £10,000 on 1 st June 2013 C does not accept and goes to trial on 1 st August 2013 C is awarded £9000 damages C pays D’s costs from 22 nd June 2013 to trial, capped at £9000

Part 36 Tactics Claimant offers If liability is likely to attach and it is realistic, do not delay in accepting – avoid 10% uplift for failing to beat Do not leave quantum to one side at the outset Make early investigations as thorough and effective as possible

Part 36 Tactics Defendant offers Make as early as possible; C will be cautious in view of risk of losing QOCS protection

Costs Budgeting – Multi-Track Previous Position Retrospective detailed assessment. From 1 st April 2013 Parties exchange costs budgets within 28 days of the defence. If one or the other party objects, court intervenes.

Costs Budgeting – Multi-Track When assessing costs at conclusion, the court:- Will have regard to the receiving party’s last approved budget; and Will not depart from such approved budget unless there is good reason to do so

Our approach? Clients will need to be involved in:- Preparing D’s budget (in case QOCS exception comes into play); and Assessing C’s draft budget and preparing the challenge. Spotlight on costs at the beginning.

Our approach? Henry v News Group Ltd [2012] No good reason to depart from court- approved budget C left with a £300k shortfall (Judgment on appeal imminent)

Our approach? Safetynet Securities Ltd v Coppage [2012] Winning C came in on budget Detailed assessment “was futile” Ordered costs paid within 14 days of trial We must get used to budgeting and, getting it right