Jackson Reforms on Costs

Many of our readers will not have heard about the Jackson Costs reforms specifically although you may have read about some of their effects in the press. Why should the amount us lawyers are going to receive affect you? Well you may ask but ultimately rules affecting costs and the recoverability affect anyone involved in litigation.

Whilst some of the rules are being finalised we do understand many of the new principles. Many of the new rules appear to be directed at those undertaking personal injury litigation and the desire to limit the recoverability of the costs in this field which it was felt were not reasonable. In particular this has led to the payment of referral fees in personal injury cases being banned.

However a number of the rules will impact on anyone using the courts. In particular from April of this year the small claims limit is due to rise to £10,000 and will then rise to £15,000. This will bring many more cases within that track and will mean that cases allocated to small claims will not generally recover any legal expenses. All businesses who have any involvement with the courts need to bear this in mind particularly if you often have debts which you pursue which fall below this level. It will mean that you need to think carefully how you pursue such debts and what use you make of legal advisers whose costs are likely to be irrecoverable. Perhaps the moral is look what debts you currently have outstanding and if between £5,000 and £10,000 and something you want to pursue using legal help it might be worth moving forward with these now rather than waiting until after April 2013.

We currently are awaiting various other changes to the rules. The courts will be imposing on fast track claims (those claims between £10,000 and £25,000) a fixed costs regime. Whilst talked about in the past it seems that the court will impose this upon all litigants falling within that track. This is likely to mean that not all legal costs will be recovered and so it is vital that early attempts are made to settle. To encourage this amendments are being made to the settlement regime (known as Part 36 Offers) to make it far more financially worthwhile to make a “good” offer at the outset to protect you on costs recovery.

As for multi track claims (which is the track into which many landlord and tenant matters fall) the court is going to require Costs Budgets which it will then review at the initial case management conference and supposedly everyone will then be bound by. This means all lawyers will need to provide robust estimates as their clients costs may be capped to these limits.

We await the rules but it seems there is a real desire to get a grip on costs and cap what can be recovered. This will not necessarily affect the amount a party has to spend (this will always depend on the particular case) but in deciding how to pursue a more careful consideration of the costs will need to be given.

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