Key proposal is to abolish recoverability of success fees in conditional fee agreements

The Government has today announced the launch of its consultation on key reforms recommended by the Jackson Review.

The key proposal in the consultation Reform of Civil Litigation Funding and Costs in England and Wales is to abolish recoverability of success fees and associated costs in “no win, no fee” conditional fee agreements.

According to the Government, this proposal would mean that claimants have to pay their lawyer’s success fee and will therefore take an interest in controlling the costs being incurred on their behalf.

It is also proposed to allow damages-based agreements (also known as contingency fees) in litigation before the courts.

The consultation will also seek views on Lord Jackson’s recommendation of a 10% increase in general damages, and introducing a mechanism to protect the vast majority of personal injury claimants from paying a winning defendant’s costs through one way cost shifting.

Other proposals will look at how parties can be encouraged to make and accept reasonable offers, as well as introducing a new test to ensure that overall costs are proportionate. It is also proposed to increase the costs which can be recovered by people who win their cases without representation by lawyers.

Justice Minister Jonathan Djanogly said: “One of our key proposals is reforming the current “no win, no fee” regime. We want to reduce overall costs, ensure claimants have a financial interest in controlling legal costs incurred on their behalf and deter avoidable unnecessary or unmeritorious cases.

“Under the current arrangements claimants generally have no interest in the costs being incurred on their behalf because win or lose they do not have to pay anything towards them.

“Today’s proposals are designed to prevent the situation in which regardless of the merits of the case defendants are forced to settle for fear of prohibitive costs.

“I want to strike the balance between access to civil justice and ensuring costs are proportionate, sustainable and affordable.”

The consultation will run until February 14 2011.