Press release
Improved Access to Justice - Funding Options & Proportionate Costs
September 2005
Background note
Improved Access to Justice - Funding Options and Proportionate Costs is the product of three years worth of investigation by the Civil Justice Council. A list of all those who the Council have spoken to is annexed to the paper.
One of Lord Woolf's main considerations in Access to Justice was proportionate costs. Although costs was covered costs to some degree in Access to Justice, the funding of litigation was not. At the time of the Civil Justice Reforms, parallel reforms in funding such as the introduction of Conditional Funding Agreements and the removal of legal aid for personal injury caused satellite litigation. This has been known as the costs war where there have been 150,000+ Part 8 claims. In addition, questions have arisen over the sustainability of the After The Event market, considered to be essential to support the effective operation of CFAs. The CJC was invited by the principal stakeholders (ie those who undertook legal services, those who funded it, and the judiciary) to identify and attempt to resolve funding and costs issues, with the intention to make costs more predictable and more proportionate.
It is important to recognise that costs problems appear at both ends of the litigation process, not only how much should lawyers be paid (in terms of proportionality to what is at stake), but what can be achieved to improve funding mechanisms to ensure that the injured or aggrieved citizen is able to obtain effective access to justice (this would also include issues of sustainability in the funding market). Most stakeholders accept that CFA's are here to stay, and would rather improve the present system, than attempt to start again from afresh. These views have been considered by the CJC in the framing of the recommendations.
In the midst of our considerations, the compensation culture debate emerged, and it became apparent that the CJC could not merely make recommendations for the reform of funding and costs, but had to consider the efficiency and proportionality of the mechanisms that delivered compensation.
Detailed inter-jurisdictional comparison revealed that to a greater extent, all comparable jurisdictions were experiencing similar costs, funding, and structural issues. For example most were existing in a climate of reducing legal aid, and all were experiencing the advent of the unregulated claims manager (known by various titles). Many of the common law jurisdictions analysed either grew from the civil justice reforms, or operated a hybrid system with the civil justice reforms. The reforms are keenly observed, and their strengths and deficiencies analysed. Everybody accepted that there was no universal solution. It is interesting to note that no other jurisdiction analysed, that permitted contingency or conditional fee type agreements, sort recoverability of any success fee or premium from the losing party (instead they came from the winner's damages which is generally strictly regulated by the court or regulatory body).
The essence of the recommendations reinforce and seek to extend the success of the predictable costs agreements in place, but to also introduce a reduced transactional cost scheme for the less complex, lower value injury claims, where the vast majority of claims are likely to succeed (95% are settled before court proceedings are issued). Some recommendations are focussed on areas where there are greater difficulties in obtaining funding to start legitimate claims. In these areas the CJC suggests a number of more imaginative, perhaps radical, solutions, based on a principle of "funding of last resort".
The Civil Justice Council has made these recommendations to the Lord Chancellor and eagerly await his considered response. The recommendations will also be offered in response to the Better Regulation Task Force paper "Better Paths to Redress", and in cross-ministerial consideration of ways to tackle the perception of a compensation culture.