Draft Bank of England Act 1998 (Macro-prudential Measures) Order 2013 and 2 associated instruments - Secondary Legislation Scrutiny Committee Contents



18.  These Regulations all amend different aspects of legal costs in civil law cases to implement provisions of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and the recommendations made by Lord Justice Jackson in his Review of Civil Litigation Costs.[5]

19.  The draft Civil Legal Aid (Costs) Regulations 2013 make provision about costs orders in civil proceedings in favour of or against a legally aided party and, in certain circumstances, against the Lord Chancellor. To improve the assessment of means-testing the draft Legal Aid (Information about Financial Resources) Regulations 2013 give the Director of Legal Aid Casework the power to request information from Department for Work and Pensions, Her Majesty's Revenue & Customs and Northern Ireland Departments about an applicant's income and from other Departments about any benefits that the person may be receiving.

20.  Further instruments reform the way in which conditional fee agreements (CFA) and "after the event" insurance operate.[6] In his Review, Lord Justice Jackson recommended that "after the event" insurance premiums should not continue to be recoverable under costs orders in any area of civil litigation - however the Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings Regulations 2013 (SI 2013/92) make a limited exception for expert reports establishing liability and causation in clinical negligence cases only. Lord Justice Jackson further argued that the current "no win, no fee" CFA regime had led to excessive costs in civil litigation with risk—free litigation for claimants and additional costs being paid by defendants, including a "success fee" of up to 100% on top of the claimant's lawyer's base costs. He therefore recommended that recoverability of the success fee from the losing side should be abolished in all categories of civil litigation, and that, in personal injury claims, the success fee should be limited to 25% of damages awarded (excluding damages awarded for future care and loss). The draft Conditional Fee Agreements Order 2013 implements this cap. The draft Damages-Based Agreements Regulations 2013 set a similar cap so that the lawyers' fee is limited to 25% in personal injury claims (excluding damages awarded for future care and loss) and 50% of the damages for other civil litigation. The employment provisions - a cap of 35% of the damages recovered by the claimant - have been replicated from previous regulations.

21.  Lord Justice Jackson also considered that the current regime did not provide sufficient incentive for defendants to settle claims. The Offers to Settle in Civil Proceedings Order 2013 (SI 2013/93) makes provision for the court to order a defendant to pay an additional sanction of up to 10% of the award in cases where the defendant has refused a claimant's offer to settle the claim and the court subsequently gives judgement in favour of the claimant which is at least as advantageous as the claimant's offer.

5   Reforming Civil Litigation Funding and Costs in England and Wales - Implementation of Lord Justice Jackson's Recommendations: The Government Response March 2011 (Cmd 8041) Back

6   After the Event (ATE) insurance is taken out after an actionable event has occurred to protect the claimant from having to pay certain legal costs. It has often been used in conjunction with "no win, no fee" agreements.


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