(4B) The additional conditions are that—

(a) the agreement must provide that the success fee is subject to a
maximum limit,

(b) the maximum limit must be expressed as a percentage of the
5descriptions of damages awarded in the proceedings that are
specified in the agreement,

(c) that percentage must not exceed the percentage specified by
order made by the Lord Chancellor in relation to the
proceedings or calculated in a manner so specified, and

(d) 10those descriptions of damages may only include descriptions of
damages specified by order made by the Lord Chancellor in
relation to the proceedings.”

(3) In section 58A of that Act (conditional fee agreements: supplementary), in
subsection (5) after “section 58(4)” insert “, (4A) or (4B)”.

(4) 15For subsection (6) of that section substitute—

“(6) A costs order made in proceedings may not include provision requiring
the payment by one party of all or part of a success fee payable by
another party under a conditional fee agreement.”

(5) In section 120(4) of that Act (regulations and orders subject to parliamentary
20approval) after “58(4),” insert “(4A) or (4B),”.

(6) The amendment made by subsection (4) does not apply in relation to a success
fee payable under a conditional fee agreement entered into before that
subsection comes into force.

44 Damages-based agreements

(1) 25Section 58AA of the Courts and Legal Services Act 1990 (damages-based
agreements) is amended as follows.

(2) In subsection (1) omit “relates to an employment matter and”.

(3) In subsection (2)—

(a) after “But” insert “(subject to subsection (9))”, and

(b) 30omit “relates to an employment matter and”.

(4) Omit subsection (3)(b).

(5) After subsection (4)(a) insert—

“(aa) must not relate to proceedings which by virtue of section 58A(1)
and (2) cannot be the subject of an enforceable conditional fee
35agreement or to proceedings of a description prescribed by the
Lord Chancellor;”.

(6) In subsection (4)(b), at the beginning insert “if regulations so provide,”.

(7) In subsection (4)(d) for “has provided prescribed information” substitute “has
complied with such requirements (if any) as may be prescribed as to the
40provision of information”.

(8) After subsection (6) insert—

“(6A) Rules of court may make provision with respect to the assessment of
costs in proceedings where a party in whose favour a costs order is

made has entered into a damages-based agreement in connection with
the proceedings.”

(9) After subsection (7) insert—

“(7A) In this section (and in the definitions of “advocacy services” and
5“litigation services” as they apply for the purposes of this section)
“proceedings” includes any sort of proceedings for resolving disputes
(and not just proceedings in a court), whether commenced or
contemplated.”

(10) After subsection (8) insert—

“(9) 10Where section 57 of the Solicitors Act 1974 (non-contentious business
agreements between solicitor and client) applies to a damages-based
agreement other than one relating to an employment matter,
subsections (1) and (2) of this section do not make it unenforceable.

(10) For the purposes of subsection (9) a damages-based agreement relates
15to an employment matter if the matter in relation to which the services
are provided is a matter that is, or could become, the subject of
proceedings before an employment tribunal.”

(11) In the heading of that section omit “relating to employment matters”.

(12) In section 120(4) of that Act (regulations and orders subject to parliamentary
20approval) for “58AA” substitute “58AA(4)”.

(13) The amendments made by subsections (1) to (11) do not apply in relation to an
agreement entered into before this section comes into force.

45 Recovery of insurance premiums by way of costs

(1) In the Courts and Legal Services Act 1990, after section 58B insert—

“58C 25Recovery of insurance premiums by way of costs

(1) A costs order made in favour of a party to proceedings who has taken
out a costs insurance policy may not include provision requiring the
payment of an amount in respect of all or part of the premium of the
policy, unless such provision is permitted by regulations under
30subsection (2).

(2) The Lord Chancellor may by regulations provide that a costs order may
include provision requiring the payment of such an amount where—

(a) the order is made in favour of a party to clinical negligence
proceedings of a prescribed description,

(b) 35the party has taken out a costs insurance policy insuring against
the risk of incurring a liability to pay for one or more expert
reports in respect of clinical negligence in connection with the
proceedings (or against that risk and other risks),

(c) the policy is of a prescribed description,

(d) 40the policy states how much of the premium relates to the
liability to pay for an expert report or reports in respect of
clinical negligence (“the relevant part of the premium”), and

(e) the amount is to be paid in respect of the relevant part of the
premium.

(3) Regulations under subsection (2) may include provision about the
amount that may be required to be paid by the costs order, including
provision that the amount must not exceed a prescribed maximum
amount.

(4) 5The regulations may prescribe a maximum amount, in particular, by
specifying—

(a) a percentage of the relevant part of the premium;

(b) an amount calculated in a prescribed manner.

(5) In this section—

• 10“clinical negligence” means breach of a duty of care or trespass to
  the person committed in the course of the provision of clinical
  or medical services (including dental or nursing services);

• “clinical negligence proceedings” means proceedings which
  include a claim for damages in respect of clinical negligence;

• 15“costs insurance policy”, in relation to a party to proceedings,
  means a policy insuring against the risk of the party incurring a
  liability in those proceedings;

• “expert report” means a report by a person qualified to give expert
  advice on all or most of the matters that are the subject of the
  20report;

• “proceedings” includes any sort of proceedings for resolving
  disputes (and not just proceedings in court), whether
  commenced or contemplated.”

(2) In the Access to Justice Act 1999, omit section 29 (recovery of insurance
25premiums by way of costs).

(3) The amendments made by this section do not apply in relation to a costs order
made in favour of a party to proceedings who took out a costs insurance policy
in relation to the proceedings before the day on which this section comes into
force.

46 30Recovery where body undertakes to meet costs liabilities

(1) In the Access to Justice Act 1999, omit section 30 (recovery where body
undertakes to meet costs liabilities).

(2) The repeal made by subsection (1) does not apply in relation to a costs order
made in favour of a party to proceedings to whom a body gave an undertaking
35in respect of the costs of other parties to the proceedings before the day on
which this section comes into force.

47 Divorce etc proceedings: orders for payment in respect of legal services

(1) In section 22 of the Matrimonial Causes Act 1973 (maintenance pending suit)—

(a) number the existing provision subsection (1), and

(b) 40after that subsection insert—

“(2) An order under this section may not require a party to a
marriage to pay to the other party any amount in respect of legal
services for the purposes of the proceedings.

(3) In subsection (2) “legal services” has the same meaning as in
45section 22ZA.”

(2) After that section insert—

“22ZA Orders for payment in respect of legal services

(1) In proceedings for divorce, nullity of marriage or judicial separation,
the court may make an order or orders requiring one party to the
5marriage to pay to the other (“the applicant”) an amount for the
purpose of enabling the applicant to obtain legal services for the
purposes of the proceedings.

(2) The court may also make such an order or orders in proceedings under
this Part for financial relief in connection with proceedings for divorce,
10nullity of marriage or judicial separation.

(3) The court must not make an order under this section unless it is
satisfied that, without the amount, the applicant would not reasonably
be able to obtain appropriate legal services for the purposes of the
proceedings or any part of the proceedings.

(4) 15For the purposes of subsection (3), the court must be satisfied, in
particular, that—

(a) the applicant is not reasonably able to secure a loan to pay for
the services, and

(b) the applicant is unlikely to be able to obtain the services by
20granting a charge over any assets recovered in the proceedings.

(5) An order under this section may be made for the purpose of enabling
the applicant to obtain legal services of a specified description,
including legal services provided in a specified period or for the
purposes of a specified part of the proceedings.

(6) 25An order under this section may—

(a) provide for the payment of all or part of the amount by
instalments of specified amounts, and

(b) require the instalments to be secured to the satisfaction of the
court.

(7) 30An order under this section may direct that payment of all or part of the
amount is to be deferred.

(8) The court may at any time in the proceedings vary an order made
under this section if it considers that there has been a material change
of circumstances since the order was made.

(9) 35For the purposes of the assessment of costs in the proceedings, the
applicant’s costs are to be treated as reduced by any amount paid to the
applicant pursuant to an order under this section for the purposes of
those proceedings.

(10) In this section “legal services”, in relation to proceedings, means the
40following types of services—

(a) providing advice as to how the law applies in the particular
circumstances,

(b) providing advice and assistance in relation to the proceedings,

(c) providing other advice and assistance in relation to the
45settlement or other resolution of the dispute that is the subject
of the proceedings, and

(d) providing advice and assistance in relation to the enforcement
of decisions in the proceedings or as part of the settlement or
resolution of the dispute,

and they include, in particular, advice and assistance in the form of
5representation and any form of dispute resolution, including
mediation.

(11) In subsections (5) and (6) “specified” means specified in the order
concerned.”

48 Divorce etc proceedings: matters to be considered by court making legal
10services order

After section 22ZA of the Matrimonial Causes Act 1973 insert—

“22ZB Matters to which court is to have regard in deciding how to exercise
power under section 22ZA

(1) When considering whether to make or vary an order under section
1522ZA, the court must have regard to—

(a) the income, earning capacity, property and other financial
resources which each of the applicant and the paying party has
or is likely to have in the foreseeable future,

(b) the financial needs, obligations and responsibilities which each
20of the applicant and the paying party has or is likely to have in
the foreseeable future,

(c) the subject matter of the proceedings, including the matters in
issue in them,

(d) whether the paying party is legally represented in the
25proceedings,

(e) any steps taken by the applicant to avoid all or part of the
proceedings, whether by proposing or considering mediation
or otherwise,

(f) the applicant’s conduct in relation to the proceedings,

(g) 30any amount owed by the applicant to the paying party in
respect of costs in the proceedings or other proceedings to
which both the applicant and the paying party are or were
party, and

(h) the effect of the order or variation on the paying party.

(2) 35In subsection (1)(a) “earning capacity”, in relation to the applicant or
the paying party, includes any increase in earning capacity which, in
the opinion of the court, it would be reasonable to expect the applicant
or the paying party to take steps to acquire.

(3) For the purposes of subsection (1)(h), the court must have regard, in
40particular, to whether the making or variation of the order is likely to—

(a) cause undue hardship to the paying party, or

(b) prevent the paying party from obtaining legal services for the
purposes of the proceedings.

(4) The Lord Chancellor may by order amend this section by adding to,
45omitting or varying the matters mentioned in subsections (1) to (3).

(5) An order under subsection (4) must be made by statutory instrument.

(6) A statutory instrument containing an order under subsection (4) may
not be made unless a draft of the instrument has been laid before, and
approved by a resolution of, each House of Parliament.

(7) In this section “legal services” has the same meaning as in section
522ZA.”

49 Divorce etc proceedings: orders for sale of property

In section 24A(1) of the Matrimonial Causes Act 1973 (orders for sale of
property), after “makes” insert “an order under section 22ZA or makes”.

50 Dissolution etc proceedings: orders for payment in respect of legal services

(1) 10Part 8 of Schedule 5 to the Civil Partnership Act 2004 (maintenance pending
outcome of dissolution etc proceedings) is amended as follows.

(2) In the heading of that Part after “Maintenance” insert “and other payments”.

(3) Before paragraph 38 insert—

“Maintenance orders”.

(4) 15In that paragraph—

(a) number the existing provision sub-paragraph (1), and

(b) after that sub-paragraph insert—

“(2) An order under this paragraph may not require one civil
partner to pay to the other any amount in respect of legal
20services for the purposes of the proceedings.

(3) In sub-paragraph (2) “legal services” has the same meaning as
in paragraph 38A.”

(5) After that paragraph insert—

“Orders in respect of legal services

38A (1) 25In proceedings for a dissolution, nullity or separation order, the
court may make an order or orders requiring one civil partner to pay
to the other (“the applicant”) an amount for the purpose of enabling
the applicant to obtain legal services for the purposes of the
proceedings.

(2) 30The court may also make such an order or orders in proceedings
under this Schedule for financial relief in connection with
proceedings for a dissolution, nullity or separation order.

(3) The court must not make an order under this paragraph unless it is
satisfied that, without the amount, the applicant would not
35reasonably be able to obtain appropriate legal services for the
purposes of the proceedings or any part of the proceedings.

(4) For the purposes of sub-paragraph (3), the court must be satisfied, in
particular, that—

(a) the applicant is not reasonably able to secure a loan to pay for
40the services, and

(b) the applicant is unlikely to be able to obtain the services by
granting a charge over any assets recovered in the
proceedings.

(5) An order under this paragraph may be made for the purpose of
5enabling the applicant to obtain legal services of a specified
description, including legal services provided in a specified period
or for the purposes of a specified part of the proceedings.

(6) An order under this paragraph may—

(a) provide for the payment of all or part of the amount by
10instalments of specified amounts, and

(b) require the instalments to be secured to the satisfaction of the
court.

(7) An order under this paragraph may direct that payment of all or part
of the amount is to be deferred.

(8) 15The court may at any time in the proceedings vary an order made
under this paragraph if it considers that there has been a material
change of circumstances since the order was made.

(9) For the purposes of the assessment of costs in the proceedings, the
applicant’s costs are to be treated as reduced by any amount paid to
20the applicant pursuant to an order under this section for the
purposes of those proceedings.

(10) In this paragraph “legal services”, in relation to proceedings, means
the following types of services—

(a) providing advice as to how the law applies in the particular
25circumstances,

(b) providing advice and assistance in relation to the
proceedings,

(c) providing other advice and assistance in relation to the
settlement or other resolution of the dispute that is the subject
30of the proceedings, and

(d) providing advice and assistance in relation to the
enforcement of decisions in the proceedings or as part of the
settlement or resolution of the dispute,

and they include, in particular, advice and assistance in the form of
35representation and any form of dispute resolution, including
mediation.

(11) In sub-paragraphs (5) and (6) “specified” means specified in the
order concerned.”

51 Dissolution etc proceedings: matters to be considered by court making legal
40services order

After paragraph 38A of Schedule 5 to the Civil Partnership Act 2004 insert—

“38B (1) When considering whether to make or vary an order under
paragraph 38A, the court must have regard to—

(a) the income, earning capacity, property and other financial
45resources which each of the applicant and the paying party
has or is likely to have in the foreseeable future,

(b) the financial needs, obligations and responsibilities which
each of the applicant and the paying party has or is likely to
have in the foreseeable future,

(c) the subject matter of the proceedings, including the matters
5in issue in them,

(d) whether the paying party is legally represented in the
proceedings,

(e) any steps taken by the applicant to avoid all or part of the
proceedings, whether by proposing or considering
10mediation or otherwise,

(f) the applicant’s conduct in relation to the proceedings,

(g) any amount owed by the applicant to the paying party in
respect of costs in the proceedings or other proceedings to
which both the applicant and the paying party are or were
15party, and

(h) the effect of the order or variation on the paying party.

(2) In sub-paragraph (1)(a) “earning capacity”, in relation to the
applicant or the paying party, includes any increase in earning
capacity which, in the opinion of the court, it would be reasonable to
20expect the applicant or the paying party to take steps to acquire.

(3) For the purposes of sub-paragraph (1)(h), the court must have
regard, in particular, to whether the making or variation of the order
is likely to—

(a) cause undue hardship to the paying party, or

(b) 25prevent the paying party from obtaining legal services for the
purposes of the proceedings.

(4) The Lord Chancellor may by order amend this paragraph by adding
to, omitting or varying the matters mentioned in sub-paragraphs (1)
to (3).

(5) 30An order under sub-paragraph (4) must be made by statutory
instrument.

(6) A statutory instrument containing an order under sub-paragraph (4)
may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, each House of Parliament.

(7) 35In this paragraph “legal services” has the same meaning as in
paragraph 38A.”

52 Dissolution etc proceedings: orders for sale of property

(1) Paragraph 10(1)(a) of Schedule 5 to the Civil Partnership Act 2004 (sale of
property orders) is amended as follows.

(2) 40Omit the “or” at the end of sub-paragraph (i).

(3) After sub-paragraph (ii) insert—

“(iii) an order under paragraph 38A for a payment in
respect of legal services, or”.

Offers to settle

53 Payment of additional amount to successful claimant

(1) Rules of court may make provision for a court to order a defendant in civil
proceedings to pay an additional amount to a claimant in those proceedings
5where—

(a) the claim is a claim for (and only for) an amount of money,

(b) judgment is given in favour of the claimant,

(c) the judgment in respect of the claim is at least as advantageous as an
offer to settle the claim which the claimant made in accordance with
10rules of court and has not withdrawn in accordance with those rules,
and

(d) any prescribed conditions are satisfied.

(2) Rules made under subsection (1) may include provision as to the assessment of
whether a judgment is at least as advantageous as an offer to settle.

(3) 15In subsection (1) “additional amount” means an amount not exceeding a
prescribed percentage of the amount awarded to the claimant by the court
(excluding any amount awarded in respect of the claimant’s costs).

(4) The Lord Chancellor may by order provide that rules of court may make
provision for a court to order a defendant in civil proceedings to pay an
20amount calculated in a prescribed manner to a claimant in those proceedings
where—

(a) the claim is or includes a non-monetary claim,

(b) judgment is given in favour of the claimant,

(c) the judgment in respect of the claim is at least as advantageous as an
25offer to settle the claim which the claimant made in accordance with
rules of court and has not withdrawn in accordance with those rules,
and

(d) any prescribed conditions are satisfied.

(5) An order under subsection (4) must provide for the amount to be calculated by
30reference to one or more of the following—

(a) any costs ordered by the court to be paid to the claimant by the
defendant in the proceedings;

(b) any amount awarded to the claimant by the court in respect of so much
of the claim as is for an amount of money (excluding any amount
35awarded in respect of the claimant’s costs);

(c) the value of any non-monetary benefit awarded to the claimant.

(6) An order under subsection (4)—

(a) must provide that rules made under the order may include provision
as to the assessment of whether a judgment is at least as advantageous
40as an offer to settle, and

(b) may provide that such rules may make provision as to the calculation
of the value of a non-monetary benefit awarded to a claimant.

(7) Conditions prescribed under subsection (1)(d) or (4)(d) may, in particular,
include conditions relating to—

(a) 45the nature of the claim;

(b) the amount of money awarded to the claimant;

(c) the value of the non-monetary benefit awarded to the claimant.

(8) Orders under this section are to be made by the Lord Chancellor by statutory
instrument.

(9) A statutory instrument containing an order under this section is subject to
5annulment in pursuance of a resolution of either House of Parliament.

(10) Rules of court and orders made under this section may make different
provision in relation to different cases.

(11) In this section—

• “civil proceedings” means proceedings to which rules of court made
  10under the Civil Procedure Act 1997 apply;

• “non-monetary claim” means a claim for a benefit other than an amount
  of money;

• “prescribed” means prescribed by order made by the Lord Chancellor.

Referral fees

54 15Rules against referral fees

(1) A regulated person is in breach of this section if—

(a) the regulated person refers prescribed legal business to another person
and is paid or has been paid for the referral, or

(b) prescribed legal business is referred to the regulated person, and the
20regulated person pays or has paid for the referral.

(2) A regulated person is also in breach of this section if in providing legal services
in the course of prescribed legal business the regulated person—

(a) arranges for another person to provide services to the client, and

(b) is paid or has been paid for making the arrangement.

(3) 25Section 57 defines “regulated person”.

(4) “Prescribed legal business” means business that involves the provision of legal
services to a client, where—

(a) the legal services relate to a claim or potential claim for damages for
personal injury or death, or

(b) 30the business is of a description specified in regulations made by the
Lord Chancellor.

(5) There is a referral of prescribed legal business if—

(a) a person provides information to another,

(b) it is information that a provider of legal services would need to make
35an offer to the client to provide relevant services, and

(c) the person providing the information is not the client;

and “relevant services” means any of the legal services that the business
involves.

(6) “Legal services” means services provided by a person which consist of or
40include legal activities (within the meaning of the Legal Services Act 2007)
carried on by or on behalf of that person; and a provider of legal services is a
person authorised to carry on a reserved legal activity within the meaning of
that Act.