UK: Construction Disputes: The Rollout Of The Jackson Reforms

Last Updated: 29 July 2011
Article by Julian Bailey

Lord Justice Jackson delivered his Final Report on Civil Litigation Costs in early 2010. The Final Report was the culmination of a year-long review of the civil litigation system. Lord Justice Jackson's remit was very broad, in that he was required to look at how cost savings could be made in all aspects of civil litigation.

The Final Report made 109 recommendations for law reform. Some of those recommended reforms could have been (and now have been, or will be) implemented by changes to the rules of court. Others require primary legislation.

The most significant recommendations coming out of the Jackson costs review related to legal funding, and in particular Conditional Fee Agreements ("CFAs"), usually referred to as "no win / no fee" agreements. Lord Justice Jackson recommended that the law be changed so that success fees and After-the-Event ("ATE") insurance premiums (which are usually a necessary part of a CFA) cease to be recoverable by successful claimants.

Implementation of the Jackson Reforms

The Jackson report was released in the period leading up to the 2010 general election, during which the issue of civil litigation costs was very much on the back burner (for political purposes). After a period of consideration, the Conservative / Liberal Democrat government made noises to the effect that they would accept the primary recommendations and implement them. In 2011 the wheels have now been put in motion to do so.

The Legal Aid, Sentencing and Punishment of Offenders Bill was introduced into the Parliament in June 2011. If enacted, the Bill will (among other things) render success fees and ATE premiums irrecoverable from unsuccessful litigants in most cases (including construction cases). CFAs will not be banned, but their economic justification (for some lawyers, at least) will be severely emasculated.

On the other hand, the Bill also contemplates (as recommended by Lord Justice Jackson) legal practitioners being able to enter into "damages-based agreements", otherwise known as "contingency fee" agreements. Contingency fee agreements are those under which a lawyer is paid his fee out of the damages awarded to his client – often as a percentage of the damages. Lord Justice Jackson concluded that contingency fee agreements, which are used widely in the United States and Canada, should be available in England and Wales as a form of litigation funding to improve access to justice. His recommendation (which is to be implemented) is that although claimant lawyers may act on a contingency fee basis, unsuccessful defendants should only be required to pay the claimant's reasonable legal costs, which may be less than the amount of the contingency fee taken by the successful claimant's lawyer. The difference – if there is one – between the two amounts will usually be paid to the claimant's lawyer out of the damages awarded, which could in some cases mean that a claimant is undercompensated for its loss (but there are other measures in the Jackson recommendations to address this possibility).

It seems likely that the litigation funding reforms described above will take effect at some point later in 2012. They will also be relevant to arbitrations with English seats.

Implications for the resolution of construction disputes

The CFA reforms that are to be implemented will have an enormous impact on many legal practices, particularly those of claimant lawyers acting in personal injury and similar cases. For construction lawyers and clients the impact may not be as great. Although CFAs are increasingly used in construction cases, they are by no means a staple. It remains to be seen how much of a take-up of contingency fee agreements there will be in construction cases. However, some parties may welcome the incentive that contingency fee agreements give their lawyers to resolve cases quickly, while making all or part of their fees conditional on (and deferred until) a successful outcome. Clients and their lawyers may also welcome the opportunity for a "partnering" or "risk sharing" approach where the lawyer's uplift more closely reflects the degree of success than tends to happen with CFAs (with their binary win/lose trigger).

Although these major recommendations of Lord Justice Jackson are being implemented, the status of others is yet to be determined. In particular:

  • Pre-Action Protocols: Lord Justice Jackson recommended that the status of the Construction & Engineering Protocol be reviewed once the London TCC moves into the new Rolls Building, where it will join the Commercial Court and the Chancery Division. Neither of those courts has any specific Pre-Action Protocol. The move to the Rolls Building has been delayed and will probably not happen until 2012. So although the Construction & Engineering Protocol continues to be applied, its future is by no means assured.
  • Claimants' settlement offers. The Final Report recommended that the cost rules concerning claimants' settlement offers be "beefed up", so that an unbeaten claimant offer will attract not only a more favourable costs award, but a further entitlement to 10% of the damages awarded to the claimant (with the amount being capped or tapering off for damages over a certain figure). The Legal Aid, Sentencing and Punishment of Offenders Bill expressly permits rules of court to be made that require an unsuccessful defendant to pay an "additional amount" where it fails to beat a claimant's settlement offer. Details of what that "additional amount" will be, and how it is calculated, are not presently known, but it is reasonable to anticipate that the new rules on settlement offers will broadly follow Lord Justice Jackson's recommendations.
  • Expert evidence. Lord Justice Jackson recommended that concurrent expert evidence or "hot tubbing" be piloted, to see whether it would shorten the amount of time taken for experts to give evidence (and thereby reduce cost). A pilot has been conducted in Manchester, but no results of the pilot have been disseminated. The CPR and indeed the TCC guide permit "hot tubbing" to be conducted already, and there are reported TCC cases (outside Manchester) in which it has been used. "Hot tubbing" is often used successfully in international arbitrations. If anything, what we could expect to see is not a change to the law but a change to the case management of construction cases, with concurrent evidence possibly becoming the preferred way of experts giving evidence, rather than for there being the sequential, individual examination of experts.
  • A TCC Fast Track and Fixed Costs. "Fast track" cases are primarily those with a value of up to £25,000. Lord Justice Jackson recommended that recoverable costs be fixed in the fast track, so as to be kept proportionate to the sums in dispute. He also recommended that a fast track be created for TCC claims - currently there is none. It is understood that the recommendation for fast track fixed costs is likely to be implemented. What is less clear is whether the TCC will obtain a fast track. If it does, this should help to ensure that costs in smaller TCC cases do not dwarf the sums in issue.

The most radical aspects of the Jackson report are now being implemented. The impact of these changes, particularly on cases where CFAs are routinely used, cannot be underestimated. TCC cases (and construction arbitrations with English seats) will also be affected, but the reform measures recommended by Lord Justice Jackson for such cases are perhaps more in the nature of "fine tuning" than a radical overhaul. This is because, in the main, TCC litigation is usually conducted in an efficient manner. And this, in no small measure, can be attributed to the cultural change that Mr Justice Jackson (as he then was) brought to the TCC when he was the judge in charge, from 2004 to 2007.

Julian Bailey assisted Lord Justice Jackson in preparing both his Preliminary Report and his Final Report: see Chapter 1, paragraph 5.6 of the Final Report (downloadable at www.judiciary.gov.uk)

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 27/07/2011.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.