Cost reforms threaten to rip the heart out of the legal profession, says Trevor Ward

April 2013 signals a sea change for the legal sector when Lord Justice Jackson’s reforms come into force.

Tasked by the government to look at the troublesome costs aspects of personal injury litigation, the process is now virtually at an end. There has been much consultation and ping-pong debate through the Houses of Parliament but, with very little amendment, the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) received Royal assent in May 2012 and will bring most of the measures into law from next April.

Shifting the burden

The essence of the changes will be to shift the burden of some elements of recoverable costs in successful cases from being paid by the tortfeasor to the client, or some say more likely, the clients’ legal advisers.

There has been much ‘spinning’ about the compensation culture (found on independent analysis not to exist) and fat cat lawyers creaming in profit from high success fees.

It is true there have been some unpalatable examples of profiteering. However, the vast majority of practitioners dealing with complex cases, such as medical negligence, have balanced the recovery of success fees against the losses/lost time and non-recovery at all on cases they have been prepared to investigate to allow the public to have the very real need for access to justice.

That was the very purpose of the success fees introduction; to allow the great middle England to access a lawyer who was prepared to take the risk of investigating their complex case for the reward on some, but not all cases.

The new regime removes the possibility of that reward unless the practitioner agrees to take it from the innocent client’s compensation. The client would no longer receive their full entitlement to 100 per cent compensation.

To add further woe, the new rules on cost management, including proportionality in the recovery of costs, whether insurance premiums are recoverable and who is liable for the costs of on-going disbursements on a case, will add further pressure on the lawyer/ claimant relationship and risk even more funds being diluted from the claimants’ compensatory award.

Legal Aid, which had remained available for such clinical negligence cases, is to be removed except for a small class of brain injured baby cases; but not all child cases.

Deaf ears

The removal of Legal Aid was not one of Lord Jackson’s proposals (in fact, he stated it should be retained) and even with the defendant’s main representative body (the National Health Service Litigation Authority) submitting they would prefer it to be retained, it fell on deaf ears.

Some would say it cannot be right that the government introduces legislation that will probably reduce the number of viable claims being pursued against government bodies.

Most practitioners conducting these cases have achieved professional accreditation to do so. In the absence of a regulated market it must be debatable as to whether any such accreditation is now necessary.

It is reckoned that with pressures within the wider personal injury market being equally troubling, that some practices are dabbling in complex areas of work such as medical negligence in order to bolster what might be falling income streams.

These changes will have a significant impact on medical negligence practices; the cherry picking of cases will become more widespread as practitioners become increasingly risk averse.

Firms will have to build in more efficiency into their working practices and business models, while funding options will likely become even more complicated with undoubted satellite litigation to iron out any issues on interpretation.

It doesn’t bode well for the public’s access to justice.

For those who continue with this line of work it will indeed be a brave new world.

Trevor Ward is a medical negligence partner at Linder Myers