Lord Justice Jackson’s headline civil costs reforms will be implemented in full, the government announced today, as it simultaneously opened a consultation on reform of the county court system.

The Law Society warned that the reforms meant ordinary people would no longer be able to obtain redress.

Justice secretary Ken Clarke confirmed in a statement this afternoon that legislation will be introduced to give effect to Jackson’s key reforms, meaning that:

  • lawyers will no longer be able to recover success fees and after-the-event insurance from losing defendants;
  • contingency fees will be permitted in litigation before the courts;
  • general damages will rise by 10%;
  • success fees will be capped at 25% of damages in personal injury cases.

Clarke also unveiled a new consultation, Solving Disputes in the County Courts: Creating a Simpler, Quicker and More Proportionate System, which proposes increasing the cap for claims in the low-value road traffic accident (RTA) scheme from £10,000 to as much as £50,000, and expanding it to employers’ liability and public liability personal injury claims.

The new consultation also proposes to:

  • increase the minimum value of high court claims from £25,000 to £100,000;
  • raise the maximum value for claims in the small claims process from £5,000 to £15,000;
  • introduce compulsory mediation for small claims;
  • run mediation awareness sessions for higher value claims;
  • make mediation settlements enforceable by the courts;
  • introduce enforcement orders for small claims;
  • create a single national county court jurisdiction.

Clarke said: ‘Most people dread going to court because of all the cost and anxiety it involves. We must change that by helping them to avoid court where possible and cutting costs where that is unavoidable.

‘With no major reform for 15 years, the civil justice system has got out of kilter.

'Businesses and other people who have been sued can find that spiralling legal costs, slow court processes, unnecessary litigation and the "no win no fee" structures, which mean greater payments to lawyers than to claimants, are setting them back millions of pounds each year.’

Law Society president Linda Lee said: ‘Taken together with the government’s legal aid reforms, these plans on civil costs funding mean that ordinary people won’t be able to obtain proper redress for the wrongs they have suffered.

'Jackson’s recommendations were a series of opinion-based views and did not rely on sufficient empirical evidence or properly conducted impact assessments.’

Solicitor and former Labour MP Andrew Dismore, co-ordinator of the Access to Justice Action Group, accused the government of trying to bury bad news for civil justice claimants behind the legal aid cuts.

‘The winners will be the insurers and the losers those who have suffered injuries and disabilities through no fault of their own,’ he said.

‘And it is not only accident victims who will lose out.

'Most small business litigation against big customers or suppliers is funded in this way. Most developing world litigation is also done on "no win, no fee". Human rights and environmental cases for the poorest people in the world against some of the richest multinationals will also be at an end.’

Consumer Justice Alliance chairman Nigel Muers-Raby said: ‘These plans will place insurmountable legal and financial hurdles in the path of many legitimate claimants, significantly curtailing broad access to justice whilst failing to meet its cost-reduction objective.

‘Whilst we recognise this new government want to make an impact, has it really had enough time to review all the submissions it has received or is this simply a case of pushing ahead with its own agenda?’

Michael Frisby, head of litigation at Guildford firm Stevens & Bolton, said that the rewards for taking on personal injury cases without legal aid have ‘effectively been removed’ by the changes, which also spell bad news for small to medium-sized enterprises involved in commercial litigation, but good news for institutional clients facing CFA-funded cases.

Dan Watkins, director of find-a-solicitor service Contact Law, said that the changes could mean that an employer with shoddy working practices may go unpunished.

‘By reducing the profitability of no win, no fee cases, this will disincentivise lawyers from taking cases on with marginal evidence,’ he said.

The MoJ said that its new proposals would help ‘avoid the anxiety and expense of court where possible’, although access to the courts will still be available.

The ministry cited statistics suggesting that, over the last two years, three quarters of the 10,000 small claims that were mediated were concluded successfully.

It suggested that because 75% of small claims last year were settled after allocation, but before trial, 87,000 would have been more successfully concluded with mediation.

The MoJ said that 96% of mediation took place over the phone, therefore taking up less court time.

Seamus Smyth, president of the London Solicitors Litigation Association, said: ‘The proposals for the redistribution of costs are not unexpected.

'These measures will be welcomed by many, particularly defendants such as the NHS and insurers. But claimants of modest means or with small claims will not be happy.

‘The LSLA applauds the MoJ’s commitment to radical reform and achieving a genuine reduction in litigation costs, and welcomes the opportunity to engage in the next round of consultation.

'Until there is radical reform of the civil procedure, the satellite litigation about who bears the ever-increasing cost will continue.’

On contingency fees, Smyth added: ‘While many are fundamentally opposed to American-style contingency fees, they do at least have the advantage over CFAs that they are understandable.

'Once CFAs were allowed, it is difficult in principle to object to contingency fees as an additional means by which claimants might fund their litigation.’