Claimants set to lose out from Jackson review

The Jackson review into the costs of legal cases involving negligence was launched last year. Claimants will be the losers if his recommendations are adopted.

A report by a top judge into the costs of legal cases by people who have been injured by someone else’s negligence, including at work, was launched last year after a decade of insurance industry complaints that they were costing too much. The Jackson Review of Civil Costs was published on 14 January and claimants will be the ultimate losers if his recommendations are adopted by this or a future government.

The Jackson report is good news for insurers and their shareholders, while the proposals will make it far harder for unions to provide a comprehensive legal service to their members. In a recent letter in the Guardian the Association of British Insurers accused claimant lawyers, including Thompsons, of being interested only in defending their income. Yes lawyers, including Thompsons, will lose income if the Jackson review of civil costs is implemented in full. And nobody sheds tears for lawyers’ earnings. But implementation of the Jackson review will rob injured people of up to 50 per cent of their compensation while insurers get extra profits.

Jackson condones deductions from claimant’s damages of up to 25 per cent. This is because the money that insurers pay when they lose a claim – a success fee – which is meant to cover the cost of unsuccessful cases will no longer be paid by them but by the claimant (the fee will be capped at 25 per cent).

Claimants will also have to pay for unrecovered disbursements i.e. the costs of medical reports and court fees. So potential deductions are up to 50 per cent. Perhaps Jackson has forgotten the furore about no-win-no-fee lawyers taking money from compensation.

The report was always going to recommend fixed costs in personal injury claims. These are the amount of the costs of pursuing a claim that can be recovered from the defendant in personal injury claims, where the likely value of the whole claim is less than £25,000 compensation.

We have always opposed fixed costs. We have seen the massive disparities in damages recovered in the fixed costs coal health schemes (we recovered the highest damages across the schemes while other firms got very little for their clients by comparison). We pointed this out to the Jackson team but inconvenient truths are hidden away in the voluminous report.

Fixed costs also herald the day that employers can estimate what the cost of injuring a worker would be and whether it is a price worth paying. That will hurt claimants far more than lawyers.

It is unsurprising that the insurance industry is delighted with Jackson. Allianz said it “will allow insurers to return to an environment of underwriting-led pricing, untainted by non-risk income”. In plain English: it’s a return to the good old days of making money by paying out less and an end to the discredited practice of extortionate referral fees paid by claimant lawyers for cases.

In the Guardian letter, the ABI’s acting director Maggie Craig repeated their predictable line that “for every pound paid in compensation an extra 40 pence is paid in legal costs”. That’s a statistic that the ABI has never been able to stand up. And we’ve asked them many times for the evidence.

Yes there are cases where the legal costs of a claim have been disproportionate to the cheque finally received by the injured party. But who is to blame? We say it is the insurers by failing to respond within the time limits and dragging claims that should have been settled all the way to court.

The insurance industry has complained long and loud to the government and judiciary about legal costs and has got almost everything it wanted from the Jackson report. Craig said that, as a result of Jackson, she was looking forward to “a new world where consumers can make an informed choice on which law firm they use based on quality and value for money”. With a race to the bottom as the inevitable result of this report it is it looking like Hobson’s choice for consumers who aren’t in trade unions.

Far from promoting quality, Jackson’s proposals will make taking risks with difficult cases and pushing for maximum damages a rare trait to be found in a lawyer.

Our guest writer is Tom Jones, Thompsons Solicitors

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