Last week Lord Justice Jackson unveiled a large scale shake-up of civil litigation costs. After a year-long review into the rocketing costs of bringing legal action in England and Wales, he has made radical proposals that include accident victims paying “success fees” to lawyers out of any compensation they are awarded. The sweeping changes mostly affect the area of personal injury compensation, where, he says, “there is too much money swilling around”.

The Jackson review was set up in late 2008 by the then Master of the Rolls, Lord Clarke, because the senior judiciary were concerned about the escalating costs of civil justice. The report – the first ever fundamental review, specifically focused upon civil costs – sets out a package of interlocking reforms, designed to reduce litigation costs and promote access to justice. The reforms would also assist in allowing for some claims to be resolved earlier with greater use of mediation. He proposes that success fees and after-the-event (ATE) insurance premiums should no longer be paid by the losing party in civil court cases. Winning parties in personal injury cases would benefit from a 10% uplift in their damages award to compensate for such a move. Solicitors’ success fees would be capped at 25% of their clients’ damages award. Lawyers would not be allowed to pay referral fees for personal injury cases. Claims management companies and other intermediaries would see their income reduced if his proposals are implemented. He also proposes fixed costs in fast track litigation and the establishment of a Costs Council.

Speaking at the launch of his report, Lord Justice Jackson said that his measures will not lead to a decrease in fee income for lawyers working on civil cases. Solicitors and barristers will continue to earn a reasonable living, he said, adding that the focus in personal injury cases had shifted away from the compensation of claimants onto the remuneration of lawyers and intermediaries. “Under the current regime, personal injury solicitors are not competing on quality of service or charges to the client, but on who can pay the largest referral fee – so the beneficiaries of the regime are the referrers, like the claims management companies.” He wants solicitors to compete on the basis of offering clients the lowest success fees, rather than relying on payouts from the losing party.

Probably the headline grabbing recommendations, welcomed by the media, relate to libel cases. Libel trials should be heard by judges sitting without juries, and the cost of libel litigation should be substantially reduced. He also proposes an increase in libel damages of 10 per cent. Referring to libel claims, he said: “The main vindication is vindication by the judgment of the court or the statement in court after settlement. I see no reason why such claimants should not be prepared to pay a substantial proportion of the damages to their lawyers as success fees”. He also said that claimants in libel cases have to be protected against the risk of paying out huge costs because usually the claimant in such cases is of modest means and the defendant a well-resourced media organisation. But, he said, the present system and the way it seeks to protect claimants “is the most bizarre and expensive system that it is possible to devise.”

Law Society President, Robert Heslett, said: “We are very pleased that Lord Jackson has accepted the Law Society’s recommendation that the small claims personal injury limit remains as it is. We regard that as a litmus test of Lord Jackson’s commitment to enhancing access to justice through his review”.  Welcoming the report, Lord Judge, the lord chief justice, said the “the costs of civil litigation are disproportionate and excessive…The measures will ensure that civil justice will be more efficient and fairer”.

The final report covers 45 subject areas and runs to 557 pages, with recommendations across the whole spectrum of civil litigation. It is available from The Stationary Office, who advise that the Final Report contains extensive cross-references to the Preliminary Report and the one cannot be read without the other.