Posted: Monday, 25 March 2013 @ 13:46
Non lawyers are unlikely to have head of the so-called Jackson reforms which will come into force on 1 April, but they will certainly have an impact on you if you become involved in litigation in England and Wales after that date.
So what is the fuss all about and how will it affect you?
This is all about costs.
The first thing all must understand, whether individuals or companies, is that there will usually be a difference between what a solicitor will charge you and what you can recover from your opponent if you win. This has always been the case. It is a result of a deliberate public policy, to deter people from litigation. Litigation is meant to be a last resort, a place not for the feint hearted.
The Jackson reforms are very likely to make the gap between your solicitor’s charges and the amount of costs you can recover significantly wider. The difference will have a big influence on your decision making. Do you employ a solicitor? If so, when? And this may depend on what you can afford to pay and what you can afford to lose.
In simple terms the need to know changes are as follows:
1. The small claims track limit is increased to £10,000. So if you have a claim valued under this limit, even if you win it is the normal rule that costs (other than certain fixed costs such as court fees) cannot be recovered.
2. For the fast track (£10k-£25K) and multi track (over £25K) only costs which are proportional to the value and complexity of the claim may be recovered. And remember that fast track costs recoverable are already capped under existing regulations.
3. For multi-track cases-generally those with a value of over £25K, there will be tighter cost controls, further limiting the amount of costs recoverable from the losing party.
4. Lawyers can enter into a contingency fee arrangement with their clients (known as damages-based agreements –DBAs), where they can carry out litigation in return for a percentage share of the damages, but this cannot all be recovered from the losing party.
5. Where a lawyer enters into a conditional fee agreement with their client, providing for a success fee to be paid in addition to the lawyer’s standard fees, or the litigation is funded by an after the event insurance arrangement, if the arrangement is made on or after 1 April, the success fees and premiums cannot be recovered from the losing party.
The overall effect is likely to be a significant increase in those conducting their own litigation, so called Litigants In Person (LIPs). These LIPs will have to negotiate a minefield of rules and regulations governing court proceedings. It may be a luxury they cannot afford: to have a solicitor conduct the whole litigation for them, advising on every step and communicating with the court and other party, and providing the advocacy at hearings and at trial.
But this does not mean that they cannot purchase advice on specific parts of the process, without the solicitor going on the court record.
You could consider getting advice on:
1. Evidence - do you have a good case and what are your chances of success?
2. The Letter of Claim and the pre-action protocols.
3. Mediation and other methods of dispute resolution.
4. Procedure - how do you make or defend a claim? What is likely to happen and when?
5. Documents - which documents must you produce?
6. Drafting letters for you.
7. Witness statements - who should make them, how should they be prepared and what should they say?
8. Preparation for trial - what must you do and when?
9. Court hearings and the trial itself.
My advice is to consult a solicitor at the earliest possible stage. Explore the costs in detail and then decide exactly what advice you want and when. Early action will almost always save costs in the long run.
Business and Litigation Solicitor
Tel: 0845 003 5639
Blog by Nigel Musgrove
Nigel has been providing dispute resolution advice as a solicitor for over 35 years. As well as advising SMEs and business owners on disputes he also offers a specialist licensing law service. View profile
This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation
to discuss your particular circumstances.