Changes in Costs Law after April 2013

The Justice Act of 2012 has recently been passed in the United Kingdom and will take effect on April 2013. It incorporates the Jackson Report of 2010 which is about rationalizing costs in civil suits. The Jackson Report suggested various changes which concern costs draftsmen.

Based on my readings, the following are some of the changes introduced in the Justice Act of 2012 which costs draftsmen must know.

Notwithstanding the existence of a Conditional Fee Agreement (CFA), success fees cannot be collected from the losing party. Hence, even if I won a civil case, I am obliged to pay my solicitor’s legal fees. This is in contrast to the law before this amendment wherein the losing party is liable for the solicitor’s fees. Contingency fees replaced the CFA.

The After-the-Event (ATE) Insurance was also scrapped. This kind of insurance covers the liability of the losing claimant with respect to the cost of suit. The abolition of success fees collection and the ATE insurance are deterrents to bringing baseless claims for litigation.

Fees that can be collected as general damages are up by ten percent. These are paid for non-quantifiable injuries such as suffering, pain and the likes.

The award to a winning personal injury claimant cannot be given in its entirety. The solicitor’s fees will be deducted from it. This is unlike the previous law, wherein, the cost of suit, including barrister’s fees, is paid by the losing litigant. On the other side, a losing personal injury claimant is not obliged to pay the fees of the defendant’s solicitor.

There are other changes to Costs Law brought about by the Justice Act of 2012. So, cost draftsmen, read up on these so that the bills that you will prepare will not be a source of great conflict between the client and the solicitor. Another reason why you should brush up on the new schedule of legal fees is for the losing party to pay up the soonest time possible and not argue on many points in the cost of bill.

At this moment, the law is being challenged by many quarters. But until it is amended or repealed it remains to be enforced. And costs draftsmen should master it for a clean bill of costs.

Challenges of the Jackson Report to the Cost Draftsmen

The Jackson Report aimed to minimize legal costs in personal injury cases and recommended the abolition of legal fees such as those arising from Conditional Fee Agreement (CFA) and After-the-Event (ATE) Insurance.  It also suggested that referral fees be done away with.  These suggestions have been incorporated into a law and this enactment is nearing implementation. Many are saying that these changes may cause the death of the cost draftsman.

However, as I see it, he is still necessary in the post Jackson Report era. The law does not eliminate legal cost altogether.  It just tries to reduce it to a reasonable level.  Since legal costs are still incurred in litigating cases, a cost draftsman still has a job.

When the law is implemented, success fees of solicitors will generally be collected from the client.  In the cost shifting scheme, the losing claimant is not obliged to pay the defendant’s cost.  Each of the parties will answer for his expenses arising from the suit.    Success fees arising from contingency arrangements also require bills of cost since each pound charged by the lawyer will be obtained from the award.  If the litigants question the bill from their lawyers, the services of a skilled cost draftsman will be required.

However, preparing the bill of costs is costly and time-consuming.  The Jackson Report suggested that its preparation must make use of technology.  The time when an activity was done for a case must be entered electronically.  Even a new cost of bills format was suggested in the report.  The cost professionals’ organization responded to the recommendation by developing new software which will minimize the time to prepare the bill of costs.  However, this will entail the cooperation of the solicitors.  The time frame of each activity done in a case must be captured in the software.  The cost professional will then prepare the bill of costs not from the paper files provided by the solicitor but from the database entered into the software.

The reduced time in preparing a bill of costs will also minimize the fees that can be collected by the cost draftsman.  However, it increases his turnaround time to look for new clients.