British Loser Pays Still the Law

By Matthew Campbell

Jan. 14 (Bloomberg) -- The U.K. should end the requirement for losers in personal injury lawsuits to cover their opponents’ legal costs, according to a government-sponsored review of civil litigation, a move that would bring British rules more in line with the U.S.

Plaintiffs in unsuccessful injury suits shouldn’t have to pay defendants’ legal costs in most cases, while general damages should increase by 10 percent, Lord Justice Rupert Jackson said in a report published today. So-called referral fees paid by lawyers to companies that send them injury cases should also be eliminated, Jackson said.

The U.K. is considering an overhaul of rules on civil lawsuits due to concern over excesses of litigation and fees and the complexity of the legal system. Britain has also been criticized for being an attractive venue for libel lawsuits against media organizations.

“There seems to be a disproportion between the amounts at stake and the significance of the issues” in some civil cases, Lord Igor Judge, the Lord Chief Justice for England and Wales, told reporters in London today. “If these recommendations are adopted as a whole, there will be a welcome impact on the sometimes devastating costs of civil justice.”

Injury Claims

Jackson said some types of expenses in injury claims should no longer be recoverable for successful plaintiffs.

He also suggested that measures similar to those for personal injury claims be applied to libel suits, with plaintiffs no longer able to recover the costs of lawyers’ “success fees” and insurance premiums.

U.K. Justice Secretary Jack Straw said in an e-mailed statement he’d be “considering these proposals in detail.” While some of the proposed changes can be implemented by the judiciary itself, others will require new legislation.

The review didn’t call for an overhaul of the cost structure of most commercial cases, which will be “welcome news” for commercial solicitors, Peter Watson, a partner at Allen & Overy LLP in London, said by phone.

Jackson’s call for a ban on referral fees will damage so- called claims-management companies, which advertise legal services for injuries and then sell the cases on to other lawyers.

Gravy Train

“There’s been a bit of a gravy train for some lawyers and other people for the last few years,” Julian Bailey, a lawyer at CMS Cameron McKenna LLP in London, said in an interview.

The report may also reduce lawyers’ take by capping the portion of injury damages that can be deducted for winning a case at 25 percent, a move Jackson told reporters would help protect funds for long-term medical care.

Judges will probably be called on to help keep costs down by streamlining trials and procedures, Graham Huntley, a partner at Lovell’s LLP, said in an e-mailed statement. “It may be that some rather technical procedural changes could be introduced to meet this end, and they could have real impact on high value, ‘big ticket’ litigation.”

To contact the reporters on this story: Matthew Campbell in London at mcampbell39@bloomberg.net;
Last Updated: January 14, 2010 11:13 EST