An ‘inevitable consequence’ of the changing rules will see ‘a rush to issue claims prior to April 2023’, says partner
Insurers have been told to brace themselves for a flood of court cases before new legislation – which will see unsuccessful claimants be made liable for part of their defence costs – becomes law.
Law firm Clyde and Co has said that underwriters and the courts need to prepare for a rush of civil claims in the run up to Easter as claimants seek to pre-empt the introduction of the new rules.
These comments follow a statutory instrument being laid before parliament last week, with the new law due to come into force on 6 April 2023.
The new legislation will increase the likelihood of unsuccessful claimants having to pay a proportion of the defendant’s legal costs.
The statutory instrument makes changes to the rules on Qualified One-Way Costs Shifting (QOCS), which was introduced to civil cases in 2013.
According to Clyde and Co partner Paul Wainwright, QOCS was intended to act as a shield against excessive defence costs for genuine but unsuccessful claimants. However, subsequent appeal judgements weakened the QOCS regime in favour of claimants.
Crucial amendments
Last year, the Ministry of Justice moved to address the situation with a consultation that resulted in the new statutory instrument designed to rebalance what had been seen as a skewed system.
The new rules increase the ease with which cost orders against unsuccessful claimants can be enforced.
Wainwright explained: “These are crucial amendments and will enable defendants to manage claimants’ adverse behaviours.
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“However, one inevitable consequence is that there will likely be a rush to issue claims prior to April 2023 to ensure they are subject to the existing regime.
“Current QOCS rules are extremely beneficial to claimants – and their solicitors – so it’s highly likely that as many civil claims as possible will be issued in the next two months.
“The proposed amendments have largely fixed the problems caused by development of the jurisprudence and crucially all modes of settlement are now deemed to be QOCS compliant.
“On a practical level, though, having two sets of QOCS rules is going to prove awkward in practice and it is highly likely to lead to further satellite litigation.”
Clyde & Co added: “Defendants can also offset their costs against both the claimant’s damages and costs, giving a larger pot of money to pay applicable defence costs.
“Defendant’s costs payable by the claimant are [also] now capped at the aggregate amount of damages, interest and costs recovered by the claimant.
“In a claim funded by a conditional fee agreement (CFA), it will give both the claimant and the claimant’s solicitor ‘skin in the game’ and it is assumed that the possibility of losing legal costs will ensure robust advice is given to claimants when defendants make sensible offers to settle.”
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