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Adam Smith Institute attacks Jackson report

26 August 2010

A report for the Adam Smith Institute has strongly criticised Lord Justice Jackson’s proposed civil justice reforms.

The criticism by the influential right-wing think tank comes at a time when justice minister Jonathan Djanogly is reviewing conditional fees and deciding how to respond to the Jackson report.

The Adam Smith report, by solicitor and independent legal consultant Anthony Barton, calls for limits on success fees and ATE insurance premiums, and for the scrapping of legal aid for most compensation claims.

Speaking to Solicitors Journal this afternoon, Barton said a limit of ten per cent on success fees as a proportion of damages was “too low”.

The ten per cent limit was proposed by former justice secretary Jack Straw as a way of controlling the cost of libel actions.

Barton said there should be a debate on the limits applied to success fees. “It might be difficult to get it right first time round,” he said. “But the beauty of a cap is that it could be implemented by regulation, which is much more flexible than primary legislation.”

He added that legal aid should be scrapped for medical negligence claims. In the report, entitled ‘Access to Justice: Balancing the Risks’, Barton said: “The present CFA system allows overgenerous recovery of success fees and ATE insurance premium against defendants; this can be readily reformed.

“The risks of litigation can be apportioned fairly between the parties by capping the level of the success fee and the ATE insurance premium recoverable from the defendant; the claimant will have price incentives.

“A capping of additional costs liabilities can be probably achieved by secondary legislation and/or rules of court. Lord Justice Jackson’s proposed shifting of additional costs liabilities is impractical and requires primary legislation.”

Barton said Jackson LJ’s proposals, such as the abolition of recoverability of success fees and insurance premiums, were “wide-ranging and could have massive unintended consequences”.

In particular he said one-way costs shifting could “open the floodgates” to speculative litigation against the NHS and lead to the introduction of “de facto no-fault compensation by the back door”.

He went on: “The present system with all its excesses and imperfections does provide some control mechanism.

“Lord Justice Jackson’s proposals do not accord with political reality or economic feasibility. They conflict with legal dicta; they do not reflect government thinking.”

Barton proposed that, to compensate claimants for the cost capping of CFAs, there should be a modest uplift in general damages.

However, he also recommended that the time had come for abolishing legal aid for “most compensation claims”.

Barton said that, bearing in mind the government’s review of legal aid and the wider context of public spending cuts, it was crucial that any reform of conditional fees provided “appropriate practical solutions”.

He added that there should be an integrated review of access to civil justice which combined consideration of legal aid, reform of costs in CFAs and the Jackson report, and which addressed Lord Young’s review of the operation of health and safety laws and the growth of the “compensation culture”..

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