Press office

Lord Justice Jackson’s report today on legal costs in England and Wales could see the end of the gravy train for claimant personal injury lawyers whose fees often exceed the damages awarded. The 584 page report includes recommendations to introduce fixed fees for claimant lawyers in personal injury claims up to £25,000.

In addition, success fees and after the event insurance premiums should no longer be recovered from the defendant as Lord Justice Jackson cites conditional fee agreements as the key driver of increased costs.

We can also expect to see an increase in general damages by some 10 per cent as compensation to claimants. However an increase in the small claims limit is not recommended at this stage.

Furthermore, a significant adjustment in personal injury claims to provide for ‘one way cost shifting’ is proposed. That will mean that defendants will continue to pay the costs of claimants who are successful (although those costs will now be fixed in the majority of personal injury cases) but claimants will not be expected to pay the defendant’s costs if they lose their case unless they have behaved unreasonably.

If introduced, the reforms will go some way to bring claimant lawyers legal costs in line with defendant lawyers who often work to fixed fees at half the cost. The move is also good news for insurers and for those who are self insured who would see the overall cost of personal injury claims significantly reduce.

Brendan Padfield, head of personal injury at international law firm Eversheds comments:

“What is sauce for the goose is now sauce for the gander. The truth is that claimant lawyers have been maximising the efficiencies of an inefficient costs system. The current system largely does not incentivise the claimant lawyer to be efficient. At last, we have formal recognition that fixed fees have worked for the majority of defendant personal injury lawyers, so why shouldn’t they work for claimant lawyers?

“Insurers got ahead of the game years ago and in effect imposed fixed fees on their then procrastinating lawyers. Most of us as defendant lawyers thought fixed fees would not work and quality would suffer. We were wrong on both counts. Defendant insurance solicitors have shown that fixed fees in personal injury claims do work. Their introduction forced defendant lawyers to become quicker and slicker and there is absolutely no reason why the same should not apply to claimant lawyers, despite their continuing protestations.”

Brendan added:

“The current economic climate means this report is unlikely to be ignored. The Government is a significant compensator and implementation of these recommendations will reduce public spending and no Government, whatever its political line, will ignore it. Reform will happen”.

Currently fixed costs only apply to a limited number of personal injury claims namely motor accidents worth less than £10,000.00. In his report Lord Justice Jackson recommends the introduction of fixed fees for all types of fast track claim worth up to £25,000, with the definite focus being placed on personal injury claims. Change will mean that the majority of personal insury claims will be subject to fixed costs.

Eversheds hosted a seminar during the consultation period of the review in July 2009 chaired by Lord Justice Jackson on fixed costs in the fast track and above.