Post-Implementation Review of LASPO - Civil Litigation Funding and Costs

Article

15 February, 2019

The Ministry of Justice has published its long awaited review of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).

Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) assesses the impact of five statutory reforms implemented following Sir Rupert Jackson's 2010 Review of Civil Litigation, including:

i. non-recoverability of conditional fee agreement (CFA) success fees;

ii. non-recoverability of after the event insurance (ATE) premiums;

iii. the introduction of Damages-Based Agreements (DBAs);

iv. section 55 changes to Part 36 offers; and

v. banning referral fees in personal injury (PI) cases.

The overall objectives of the Part 2 reforms were to reduce the costs of civil litigation, encourage early settlement, reduce unmeritorious claims and to rebalance the costs liabilities between claimants and defendants while ensuring that parties with a valid case could still bring or defend a claim.

The government review concludes that, on balance, the Part 2 reforms have been successful in reducing the costs of civil litigation. It cites that base costs have reduced by 8-10% in real terms for PI claims and early settlement has improved. The report also suggests there has also been a decline in unmeritorious claims based on "claims volumes data, the changes in financial incentives to CFAs, the test of fundamental dishonesty for QOCS and anecdotal stakeholder feedback".

In relation to costs protection, it is reported that QOCS is currently working well. Although the review notes that defendants are concerned about the frequent late withdrawal of claims by claimants prior to trial and claimants are concerned about the perceived excessive use of 'fundamental dishonesty' allegations by defendants.

The government also recognises that there has been a poor take up of DBAs and that the regulations require amendment but points to the independent review of DBAs which is currently being undertaken and is expected later in 2019.

Forbes comment

The government maintains that the Part 2 reforms, as a package, have "met their objectives and are functioning effectively". From a defendant's point of view, we have concerns about persistent late withdrawal of claims, the front loading of costs in the cost budgeting process and the charging of the maximum success fee. The government concedes in the report that some issues may be revisited at a later stage but noted that most lawyers would support "a period of relative stability".

To read the Review in full follow this link.

Source: Ministry of Justice "Post-Implementation Review of Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO)"

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