Monthly Archives: April 2013

The Effect of the Jackson Reforms on Solicitor Businesses

The Jackson Reforms, brought into statute by the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) in 2012 is mainly concerned with civil law procedure. Most affected by it are Conditional Fee Agreement (CFA) cases, better known as ‘no win, no fee’ cases. Prior to LASPO, the defendant paid the solicitor’s fees and the cost of the insurance policy that was required to be taken out. From this April onwards, both of those costs will be the burden of the claimant, and solicitors would only be able to claim up to 25% of settlements in fees.

It is not known what the full impact of the reforms will be, but certain signs are being seen already, or predicted.

Firstly, disputes or concerns between solicitors and clients over fees will be increasingly common. With the former protection granted to claimants and solicitors now gone, both sides will be more determined to secure settlements and fees respectively, resulting in protracted discussions over costs.

Another factor is that legal aid is set to be reformed, meaning that many claimants for civil liability and related cases would be denied legal aid. This makes making a civil claim more risky for claimant and solicitor alike. Michael Frisby, head of litigation at Stevens & Bolton, said that the rewards have ‘effectively been removed’ for taking on personal injury cases not covered by legal aid. Many solicitors will be put off taking on complicated or risky civil claims for fear of losing and the claimant being unable to pay the fees. Not only will this be bad for their legal practice, but it will effectively deny justice to those who cannot pay (but that is another issue of the Jackson Reforms entirely).

Small to medium solicitors firms traditionally taking on CFA funded cases will be hit hard by the reforms. Unable to rely on such cases in future, in an endeavour to keep up business levels, some predict that in this instance solicitor’s fees will have to fall to attract clients. A majority of such firms in previous surveys have admitted to either considering or to be planning for diversifying into other legal areas to maintain business.  It is likely that, facing a lack of business, or losing civil cases, some small firms might go under.

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It must be noted that the majority (but by no means all) of litigation covered by LASPO focusses on personal injury, negligence, and civil liability law suits. Solicitors involved in civil disputes outside those areas will be relatively unaffected, as will large personal injury firms.

What is certain is that the issue of costs will be a major factor in subsequent civil litigation. Solicitors and their clients will be much more cost- conscious than previously. This careful approach will make a form of solicitor’s firm more cost effective- but maybe at the expense of justice as solicitors try to do things on the cheap. Further to that, costs lawyers and similar professionals are likely to be more in demand to monitor and advise on legal costs. In a survey of members of the Association of Costs Lawyers (ACA), 37% said that the demand for assistance with legal cost budgeting had risen over the last year, with 79% predicting that number to rise. This shows that the costs will probably be the centre of a future case, not necessarily the legal arguments.

It is highly likely that future CFA lawyers will be reluctant to go into court unless they have a solid case. Such reluctance will be bad for their firm, for their client- and bad for justice. From that reluctance, change will have to arise. More lawyers will probably seek arbitration, alternative dispute resolution (ADR), or out of court settlements. Many might choose to develop their skills or firms in those very areas. Their role might change slightly from that of taking matters to court to increasingly advising clients on resolution to problems due to a lack of either claimant or solicitor wanting to take a joint great financial risk.

Tellingly, that is just what the Jackson Reforms wanted to encourage in the realm of civil law.  By putting the brakes on CFA lawyers, other methods of resolution become more attractive: but at what cost to the pursuit of compensation and justice?

 

Guest Post by Amelia Jones of http://www.nowinnofeeclaims.co.