Lawyers wary of cost-shifting plan

Claimants who win their cases could still end up with nothing under the government’s new costs rules for personal injury, lawyers warned this week.

Claimant solicitors said the way government plans to implement its qualified one-way costs-shifting (QOCS) rules will ‘undoubtedly’ deter people from making valid claims. QOCS is intended to remove the need for claimants to take out after-the-event insurance, by creating a new costs system under which they will not generally be liable for a defendant’s costs even if they lose a case.

But claimant lawyers say this will be undermined by the government’s plan, revealed last week, to allow the rules governing offers made under part 36 of the Civil Procedure Rules to ‘trump’ QOCS rules.

In a commissioning note to the Civil Justice Council, the Ministry of Justice revealed that, if a claimant rejects a defendant’s part 36 offer and then ultimately fails to beat it at trial, they will lose their QOCS protection and be exposed to the defendant’s costs up to the level of their damages. Claimant lawyers had argued fiercely against part 36 rules ‘trumping’ QOCS in this way, while defendant lawyers said it was needed to encourage early settlement.

A spokeswoman for the Association of Personal Injury Lawyers said: ‘We are extremely disappointed that part 36 offers should take precedence over QOCS, and we’re particularly concerned about the disparity between sanctions payable by claimants and defendants.

‘[Whereas the claimant could lose all their damages if they fail to beat a part 36 offer], the sanction for defendants is just a 10% fine for failing to beat a claimant’s offer. This is a huge risk for claimants which will undoubtedly deter people from making valid claims.’

The MoJ is seeking further advice from the CJC in relation to another key battleground between claimants and defendants - the rules governing what claimant behaviour should cause the loss of QOCS protection. In its commissioning note, the MoJ said QOCS will not apply to fraudulent claims, but it wants advice on how to ensure that dishonest or exaggerated claims do not benefit from QOCS.

Leading claimant solicitor Stuart Kightley, partner at London firm Osbornes, said: ‘It is crucial that the government keeps it simple and maintains the focus on fraud and dishonesty. Anything else and the new system will be floored by satellite litigation and the need for costs insurance.’

• See the June issue of Gazette sister publication, Litigation Funding, for full analysis of the latest QOCS developments.