The Gazette (click link) reports that the Association of Personal Injury Lawyers (APIL) has walked out of talks on extending fixed costs in personal injury cases. This mediation was put together at the request of Lord Justice Jackson as part of his Costs Review. It seems inevitable that his final report will include a recommendation that fixed fees are introduced for all stages of the fast-track in personal injury claims and this mediation was intended to lead to an agreement as to the appropriate figures.

It is somewhat hard to interpret this new development. It may simply be initial posturing on the part of APIL. It is no secret that APIL opposes the extension of fixed fees; they said as much in their response to the Jackson Preliminary Report. If they simply wished to scupper the mediation, it would have made more sense to continue to play along and undermine the process from within. Without APIL’s involvement what will happen? It seems very unlikely that Jackson LJ will abandon this central part of his reform program simply because one interest group does not want to cooperate. On the other hand, will any figures now produced lack credibility? APIL runs the risk that the process will move forward regardless but they will lose the opportunity to influence the final figures.

Watch this space.

Any remaining doubt as to whether Jackson LJ’s costs review will recommend fixed legal costs for all fast-track matters has been removed by the recent report in the Law Gazette that he has asked the Civil Justice Council to start work on setting the appropriate level of fees for this work. He has asked the Council to try to agree the figures by 12 November 2009 for inclusion in his final report.

At last week’s Costs Review Seminar held by the Costs Practitioners Group, chaired by Jackson LJ, the discussions proceeded on the basis that it was a foregone conclusion that fixed costs for fast-track cases would form part of the final recommendations.

All the madder then that others are pressing ahead with the new Claims Process (see previous post) with its own fixed fee regime. A lot of time and effort is going to have been wasted by one group.

Details are now starting to emerge as to the shape of the new Claims Process for RTA claims with a value of up to £10,000. Crucially, as reported in an article in the latest edition of New Law Journal, “three aspects remain confidential pending final consideration by stakeholders with the MoJ [including] the final cost matrix for the new work flow”.

The article confirms that fixed costs will be payable at the end of each of the three stages of the process. Nice and simple then? Not quite. The article states: “New timelines for responses at each stage will govern the process. Failure to keep up with the timetable will result in the claim exiting from the fixed-cost process”. Further: “Any other type of contributory negligence claim [except seatbelt issues] will be required to exit the system into the predictable costs regime”. Yes, the predictable costs regime really has survived the new Claims Process.

So it now appears we will have three different costs regimes applying to low value RTAs: fixed fees for cases within the new Claims Process, different fixed fees (ie predictable costs) for cases that fall outside the Claims Process but settle pre-proceedings and standard basis costs (presumably covering those cases where liability is not agreed and proceedings are issued. Costs in low value RTA claims appear to be about to become more complex. How will these various regime’s interrelate? (This is the question I raised in this post almost exactly one year ago.) We’ll hopefully discover very shortly.

A further oddity is that “when estimating the value of a claim no account is to be taken of credit hire or vehicle damage costs”. No doubt very sensible and this is clearly designed to avoid some of the excessive fees currently generated by “bent metal” claims. However, the predictable fee regime survives where these factors can be taken into account when valuing a claim. So credit hire and vehicle damage will count for one scheme but not the other. Are you keeping up so far?

To add to the fun we are told that “new Pt 36 sanctions are still being considered”.

Existing methods of funding the claim such as BTE, CFA and ATE will continue to be available.

The new Claims Process contains a streamlined court assessment of damages and the presumption is that this will be a paper hearing. To “preserve the claimant’s human rights” they can opt for an oral hearing. “Separate fixed costs have been agreed between stakeholders for either the paper or oral hearing”. If the costs for the oral hearing have been fixed sufficiently high to cover the additional work that is required can we expect to see a surprising number of claimants opting for the oral hearing?

My prediction based on the information available to date: two years of costs chaos.

I’ll comment further once more details become available.

Lord Justice Jackson’s Civil Litigation Costs Review (see previous posts) raises the possibility of radical changes to the current system. However, how likely is it that his eventual proposals will ever see the light of day?

One of the most likely proposals he will put forward is a fixed fee regime for all stages of fast track cases. This, of course, is something very similar to the Ministry of Justice’s previous proposals, in the consultation paper Case track limits and the claims process for personal injury claims, to introduce a new claims process for all personal injury claims, except clinical negligence, and introduce a fixed costs regime to cover such cases. In the event, that was largely abandoned with no more than a limited new scheme for lower value RTA claims proposed.

Why did the Ministry of Justice back-down on its own initial recommendations? At the time, Stephen Haddrill, the Association of British Insurer’s Director General, commented: “And the exclusion of workplace-related claims, which take on average three years to settle, is illogical and bizarre. Trade union pressure must not be allowed to block change.” What is the interrelationship between trade unions and government policy? One theory is that the introduction of fixed fees to a wider category of claim and, in particular, EL claims would have had a downward impact on the fees that claimant solicitors were able to recover. If one accepts that a large proportion of trade union backed cases are “bought” by trade union panel solicitors, through referral fees paid to the trade union, any reduction in fee income would reduce the amount that solicitors could pay in referral fees. The trade union income generated by referral fees, and there is no reason to suppose this is not significant, enables trade unions to make political donations. These have traditionally been to the Labour Party. The (conspiracy) theory is that trade union pressure on the Government led to the change in policy. It would have been suggested that a move to fixed fees for EL cases would lead, indirectly, to a reduction in political donations to the Labour Party. The Legal Costs Blog is unable to comment on whether there is any truth in these allegations.

Is there any reason to suppose that the Ministry of Justice will change its mind, again, if Jackson LJ comes out firmly in favour of fixed fees for fast track claims when he publishes his final report in December? It seems unlikely. However, matters do not stop there. Jackson LJ’s final report is likely to be published shortly before the next general election. All the signs are that the new government will be a Conservative one. How willing will the Conservatives be to implement fixed fees?

There are three possible factors that will be at work. Firstly, a Conservative government is unlikely to have any reservations about introducing changes that might reduce a source of income to the Labour Party. Quite the reverse. Secondly, a Conservative government is likely to have some sympathy for insurers, and businesses that pay insurance premiums, who have previously been faced with disproportionate legal costs. Thirdly, any new government is going to face a serious public sector deficit and be looking for any areas where savings can be made. Any fixed fee regime is likely to reduce the total amounts paid out in terms of legal costs. This would have a positive impact on the budgets of the NHSLA, government departments and local authorities, all of which are funded directly or indirectly by the public purse. Jackson LJ’s final proposals, assuming they do include fixed fees, are likely to have a number of attractions to a new Conservative administration. The timing of the final report may be fortuitous for Jackson LJ.

Lord Justice Jackson’s Preliminary Report on Civil Litigation Costs revisits the thorny issue of whether the small claims track limit for personal injury claims should be raised from £1,000 to £5,000 (or somewhere in between). APIL, not surprisingly, expressed concern to Jackson LJ if this was introduced: “APIL’s membership survey suggests that almost 70% of all personal injury work consist of claims with general damages of less than £5,000. Solicitors firms that currently specialise in low value personal injury claims (i.e. below £5,000) would face a significant loss of business if the upper limit for small claims was increased. APIL suggests that the effect of the increase in the small claims limit in terms of lost business would be particularly acute in firms that specialise in Road Traffic Accident claims. APIL maintains that such firms would be ‘decimated due to the loss of a significant amount of business’. The reduction in the number of personal injury firms would create access to justice problems”.

FOIL were reported as believing that the small claims limit for personal injury claims should be raised to about £2,500, so long as there is an overhaul of the fixed fees that go with the present regime.

The Ministry of Justice only very recently reviewed this same issue and decided against changing the limit. It is therefore fascinating that Jackson LJ is willing to reopen this can of worms. He is clearly prepared to consider all options, regardless of who he upsets in the process.