Alarm has been raised at a move by the government that appears to give the Jackson reforms retrospective effect.
Radical changes to the no win, no fee system are due to come into force in April 2013 as part of the Legal Aid, Sentencing and Punishment of Offenders bill.
The reforms will remove the recoverability of success fees from defendants under conditional fee agreements (CFAs). However, in an amendment tabled last week to the bill, the government proposes to apply that change to cases preceding April 2013.
In effect, that will mean where a costs order is made after the reforms come into effect, the success fee will not be recoverable, even if the CFA was signed before the provisions come into force.
Claimant lawyers will be concerned that defendants will simply refuse to settle ongoing cases until after April 2013, on the basis that their costs will then be much lower. There are also questions about what advice firms can offer claimants about their potential compensation when there is such uncertainty about what fees they will be expected to cover.
Iain Stark, chairman of the Association of Costs Lawyers, said: ‘Putting aside the rights and wrongs of the Jackson reforms, it is patently unfair to retrospectively change the terms of the agreement between solicitor and client.
‘Depending on the terms of the CFA, solicitors may suddenly find themselves unable to claim their budgeted success fee from either the other side or their own client. Barristers would be similarly affected.’
He said solicitors will now face the dilemma of whether to gamble on a case concluding before April 2013, knowing claimants’ compensation will be up to 25% lower after that date.
He added: ‘Retrospective legislation is rarely a good idea and it is hard to see any justification for this change.
‘Success fees should cease being recoverable for agreements entered into after the commencement date - that is the simple, logical and fair approach.’
The amendment has been tabled by justice minister Lord McNally and will be debated on Wednesday at day four of the report stage of the bill in the House of Lords.
source: lawgazette.co.uk
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