I am acting for a client who is thinking about bringing a claim under a CFA supported by ATE insurance. The company has never been involved in litigation before, except for small debt actions. Apart from trying to understand the litigation process, the whole system of recoverability of premiums and success fees is quite a lot to take on board, particularly with a risk that the other side could go bust, which means my client may end up paying for these, even if it wins.
Today the whole picture became more complex. (Luckily I had told my client a while back that the system of CFA and ATE was subject to political “interference”).
Government response to Jackson consultation
The outline proposals for reforms relating to the recoverability from defendants of “success fees” and ATE premiums, foreshadowed in the 2011 Budget, have been announced to the House of Commons.
I have yet to read the detail of the government’s proposals, but the Jackson Report last year recommended that success fees and ATE premiums should not be recoverable. Instead, the existing system should be replaced by something similar to the position in Ontario, Canada, where the claimant’s lawyer takes a percentage of the amount recovered. This seems to be what Mr Clarke has in store for us.
Timing and retrospective effect?
It is difficult to predict the timescales involved. The Jackson Report was published over a year ago – albeit there has been a change in government since then which may account for some delay. It is unlikely that the rules will change quickly and it is rare that this type of change is retrospective. However, we do need to factor in the possibility of retrospective change in the law, particularly after the Huitson case, which is also little more than a year old (and see the article by Professor Anne Redston of King’s College, London).
It can easily be said that we all knew that change was coming (because of the Jackson Report) so should we be warning our clients that it is not 100% certain that we will not see retrospective legislation?
I accept that it’s unlikely, but the timing of when proceedings are started should definitely be at the forefront of our minds when we are advising our clients. If there is plenty of time left from a limitation point of view, should our client wait until the rules change? Or should it start proceedings sooner rather than later so as not to lose the opportunity of using the current CFA and ATE system?
The secret of great comedy is … timing. Maybe that also applies to litigation now, even more than ever.
Edward, as you say timing is everything.
With the consultation process ending in June, it is envisaged that there will then be a further period to allow for any primary legislation to proceed and any required CPR rule changes to be implemented. I think you are looking at autumn 2012 when the new rules will be implemented. I may be wrong and the government may wish to bring it in earlier. In any event, I do not consider that any party entering into litigation on existing funding terms can then, part-way through, be deprived of the benefit of those terms subject to a backstop position. So that still takes us well into 2012 in any event.
Get your skates on before the drawbridge comes down as inevitably it will.
It can easily be said that they all knew that change was coming (because of the Jackson Report) so should they be warning our clients that it is not 100% certain that they will not see retrospective legislation?