The Jackson Report: Costs of Civil Litigation in England and Wales

Major reforms of the English civil procedure rules may be in store following the recent publication of the Jackson report on the costs of civil litigation in England and Wales.  Lord Justice Sir Rupert Jackson, a Court of Appeal judge, was tasked in November 2008 to review  the rules and principles governing the costs of civil litigation and to make recommendations to promote access to justice at proportionate cost.

The resulting report, published on 14 January 2010, is more than 500 pages long and proposes widespread changes.  Some would have a significant impact on commercial litigation, in particular the proposed abolition of costs shifting in certain cases and the proposed introduction of contingency fee arrangements (which have previously been prohibited).

The key proposals are summarised below (with hyperlinks to more detailed discussions).

Recommendations Regarding Costs

• New rules on costs shifting: two-way costs shifting (whereby the unsuccessful party is ordered to pay the other side's costs) to remain in place for general litigation, but qualified one-way costs shifting should be introduced for certain categories of litigation including personal injury, clinical negligence, judicial review and defamation claims (where applicable, a losing claimant will not pay a defendant's costs but a losing defendant will pay the claimant's costs).
• The introduction of contingency fee arrangements (subject to certain conditions and the provision of independent advice).
• Success fees and after-the-event (ATE) insurance premiums under conditional fee arrangements (CFAs) should cease to be recoverable.  ATE premiums found to be unfair and unsatisfactory, often being more expensive to a defendant than one-way costs shifting.
• A consequential 10% increase in general damages in specific categories of cases and a 25% cap on the level of success fees. Justice Minister Jack Straw has subsequently suggested that in defamation cases the cap on success fees should be reduced to 10%.
• A fixed costs regime to apply in fast track (medium value) litigation and new guidance on costs in collective (class) actions.
• Costs of appeals to be reviewed separately, with judicial discretion to order capped costs or no ability to recover costs.
• Clarification of the concept of "proportionality" in assessing recoverable costs and of the law in relation to claimant Part 36 offers.
• More effective costs management procedures to be developed, including establishment of a Costs Council.
• Legal aid to be preserved in its current form with a caution against further erosion of availability and eligibility.

Recommendations Regarding Case Management by the Courts

• Large commercial claims: docketing (assigning cases to a named judge) to be encouraged.
• Disclosure: a "menu option" to replace standard disclosure in certain cases, the approval of the draft practice direction on electronically stored information and further training for judges and lawyers on how to conduct e-disclosure more efficiently.
• More rigorous and effective use by courts of case management powers, with less tolerance for unjustified delays and breaches of orders.
• Ambit and costs of witness evidence to be contained, with costs sanctions to prevent irrelevant evidence being adduced and the provision of witness summaries at an early stage, which should identify which pleaded points each witness will cover (not dissimilar to the German civil procedure principle of "Relationsmethode").
• The use of expert evidence to be more rigorously controlled, including a requirement for prior consideration of the likely costs of any expert evidence and the possibility of concurrent evidence (multiple expert witnesses giving evidence together).

Other Recommendations