UK: Jackson Reforms on Civil Litigation Costs

Last Updated: 8 April 2013
Article by Stuart Evans and Liane Bylett

The biggest recent overhaul of civil litigation procedure will take effect on 1 April 2013, as a result of Lord Justice Jackson's report on civil litigation costs.

The reforms suggested by Lord Justice Jackson are intended to promote access to justice at proportionate cost. The idea is that Judges will actively case manage claims through the Court system with a view to controlling costs. There are five key areas of reform, which we will explain below.

1. Funding

Until recently, a Conditional Fee Agreement (CFA) or "no win no fee" agreement was the usual form of contingent funding arrangement between solicitors and their clients. A CFA is an agreement that legal charges will only be payable in specified circumstances – usually when the client wins their case. In most cases, the CFA will contain a "success fee" so that, in specified circumstances (again usually that the client wins their case) the charges would include an uplift, making them higher than they would have been without the CFA. The success fee could be up to 100% of the base costs. The success fee would then be recovered from the client's unsuccessful opponent along with other costs, which could mean that the recoverable costs could be much higher than in conventional non-CFA cases. In addition CFAs would usually be backed by After the Event (ATE) insurance which would cover the client against adverse costs, to reduce their litigation risk still further. Again, if you won your case, the ATE premium would be recoverable (subject to assessment) from your opponent.

However, following Lord Justice Jackson's reforms to civil procedure, CFA success fees and ATE insurance premiums cease to be recoverable from unsuccessful opponents in most civil litigation (the main exception being insolvency cases, this being deferred until 2015). This means that even if you win your case, whilst your opponent would have to pay your base legal costs, you would be responsible for paying the CFA success fee and ATE premium. CFAs may now therefore be seen as a less attractive option post 1 April, for those seeking low risk litigation.

As a result of the Jackson reforms and as an alternative to CFAs, solicitors will now able to enter into Damages Based Agreements (DBA) with their clients for all types of work. Under a DBA, the solicitor would take as their fee a percentage of the damages awarded to the client if successful at trial. In the majority of civil litigation cases, there will be a cap of 50% of damages that can be taken as the solicitor's fee. The cap is 25% for personal injury cases. (There remains the scope to recover some of these costs from the losing party, making it different from the classic US-style contingency arrangement). If the client lost the case, in most cases the client would pay nothing or very little, provided that the DBA was complemented by ATE insurance, which would cover the client for adverse costs and (potentially) disbursements.

It remains to be seen how DBAs will work in practice, as the Law Society has not yet released their precedent DBA wording. However DBAs will hopefully provide a possible alternative funding option in addition to CFAs in circumstances where lawyers are prepared to share the risk of litigation with their client.

2. Costs

In multi-track cases (which are usually cases where over £25,000 is in dispute), parties are now required to prepare a costs budget which must be agreed between the parties and approved by the Court in the early stages of a case. The costs budget must be filed at Court within 28 days of the Defence being filed and give details of the estimated costs to be incurred. The parties must disclose their budgets to each other and attempt to agree those costs detailed. The extent of the agreement must be recorded and made available to the Court. The Court will then consider the budgets submitted. It has the power to approve, vary or amend the budgets. The Court will then make a "costs management order" which records any agreement between the parties and its approval of the budget. The costs awarded at the end of the case to the winning party should therefore be in line with those costs which were set out in the approved costs budget and previously approved by the Court. The Court will not approve any further costs beyond the approved budget unless there is a good reason to depart from that figure. It is therefore important for the costs to be accurately estimated at the outset and they should be reviewed throughout the course of the case and, if necessary, amended with the consent of the other party and the approval of the Court in a subsequent application.

The general rule for costs in civil litigation is that the loser pays the winner's costs. However the principle of "one way costs shifting" will now apply for all personal injury cases and claims under the Fatal Accidents Act 1976 or Section 1(1) of the Law Reform (Miscellaneous Provisions) Act 1934. This means that in such cases a claimant should not be required to pay a defendant's costs even if their claim is unsuccessful; but the defendant would be required to pay the claimant's costs of the action if the claim is successful. A losing claimant may, however, be required to make some contribution to a defendant's costs if it has the resources to do so and/or has acted unreasonably in its conduct of the litigation. It remains to be seen whether this is extended to other civil cases.

Furthermore, the Courts will be enforcing a new proportionality rule throughout in relation to costs. This means that costs must be not disproportionate, even if they are necessarily incurred; that is they must bear a reasonable relationship to the sums in issue, the complexity of the case and a number of other factors. This test will be applied on costs assessments, so that even costs coming within a costs management order will still be subject to further scrutiny and review.

The upshot of these new provisions will be that there is a greater prospect of the percentage of costs being recovered from the losing party being lower than under the previous rules. They will also cause a greater front loading where the parties are incurring "costs about costs".

3. Disclosure

In the course of litigation, parties will be required to complete a disclosure exercise which involves carrying out a reasonable search for documents relevant to the case, helpful or otherwise (whether you are claimant or defendant). A list of those documents is then provided to your opponent, who can then request to inspect those documents (provided the document is not privileged or there are other valid reasons why inspection is inappropriate).

As a result of the Jackson reforms, in "multi-track" cases the parties are now required to provide the Court with a disclosure report setting out details of available documents, which should be discussed with the opponent before the Court makes an order for disclosure at the first Case Management Conference. The Court has a "menu" of options in respect of the disclosure order, from dispensing with disclosure altogether to ordering a full scale investigation for documents. The disclosure requirements under the old system were mainly a matter for discussion between the parties and these additional requirements mean that costs in the litigation will be even more front-loaded.

4. Part 36 offers

A "Part 36 offer" is a specific form of offer to settle a claim made In accordance Part 36 of the Civil Procedure Rules. It can be made by a claimant or defendant. The operation of Part 36 means that there are prescribed consequences of acceptance, or failure to accept, a Part 36 offer. Until now, those consequences were in relation to the level of costs which must be paid and the rate of interest applied.

For claimant's Part 36 offers made on or after 1st April 2013, however, a new sanction will be imposed upon a defendant who does not accept the offer and then does not beat that offer at trial. Unless the Court considers it to be unjust, it will require the defendant to pay to the claimant an additional sum of up to 10% of any damages awarded up to £500,000 and up to 5% of any damages awarded between £500,000 and £1,000,000. The maximum sanction would therefore be £75,000.

If the damages are substantial then this could lead to a heavy additional "penalty" payment to the claimant. This will mean that, after 1st April 2013, defendants will have to give additional careful consideration to the risks of not accepting a claimant's Part 36 offer after that date.

5. Case management

The Jackson reforms encourage judges to take a more active role in managing cases through the court, including costs budgeting provisions and disclosure orders (as outlined above). Going forwards, the Courts will be less tolerant of unjustified delays and breaches of Court orders.

In a slight change to the previous rules, once the parties have filed and served their pleadings, a Court officer will now make a provisional allocation to the track which seems to be most appropriate and will serve a notice of allocation on the parties, which will require them to complete a Directions Questionnaire (which replaces the Allocation Questionnaire required pre-1st April 2013) and file proposed directions by a certain date.

The small claims track is designed for low value cases and it is intended that parties will be able to bring and defend claims without legal assistance. Even if a party seeks legal representation, they will not be able to recover any legal costs from their opponent even if they win their case. The financial threshold for the small claims track was £5,000, but from 1st April 2013 the threshold will be increased to £10,000. This means that many more claims will fall within the small claims track and litigants may have little choice but to represent themselves (unless they are prepared to bear the totality of their legal costs themselves or seek occasional assistance from lawyers during the case).


There can be no doubt that the Jackson reforms comprise significant changes to civil procedure and will have a wide-ranging impact. However, it remains to be seen how the changes will really work in practice, and the front loading of costs in some areas is a real concern for parties.Future court reports on their application will help to shape our thinking and approach.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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

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

In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (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

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’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.


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.


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 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.


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.


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.


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.


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

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

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

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