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The Jackson reforms: Is it still a case of wait and see?

Whatever the Jackson reforms achieve, it is unlikely to be a smooth transition, says Theo Solley, predicting that even successful litigants may experience pyrrhic victories.

Litigants must adopt a 'cards on the table' approach Igorij

It still remains to be seen quite how effective the Jackson reforms will be. We seem to be leaving the first phase of transition, having got over the initial shock of it all on that heady day of 1st April 2013. There’s no denying we all knew what was coming our way. Extensive consultation was conducted at all levels to try and determine what would work best. Have the reforms created a better process for the determination and cost of a court case?
 
At the heart of the reforms was an amendment to the core of the Procedural Rules’ overriding objective “... a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.” This proportionality test now applies not only the recoverability of costs from an opponent but also the management of costs on both sides.
 
Proportionate or not?
 
Most litigators have generally been concerned at the lack of guidance on this new rule and the prediction is that it will lead to significant satellite litigation over costs. It will clearly have a major impact on the progress of any civil case.
In order for the reforms on cost management to work it is obvious that litigating parties will now have to behave in a more collaborative way or face real financial penalties.
 
That is counter intuitive given the history of adversarial litigation. Prescribed forms  (Form H) detailing the expected costs of a litigation will now not only provide the court with a full breakdown of what is expected, but will also be useful to manage a client’s expectations on their exposure. Assumptions will also be key in that process and anyone completing Form H would be wise to consider them a necessity. Solicitors are now concerned that their time will be spent setting out the costs at an early stage of litigation, well before the time actually comes to incurring those costs.
 
Cards on the table
 
Any variation from the costs budget (over or under) is unlikely to be allowed without good reason. A recent application to double a budget (Elvanite Full Circle Ltd v Amec Earth) rightly failed, but whilst an initial lenient view may be taken by the courts in Murray v Neil Dowlman Architecture it’s clear it will be extremely difficult to persuade a court to revise or rectify earlier inadequacies or mistakes.
 
The very nature of the time honoured relationship between solicitor and barrister will be affected too. It is no longer as it was and barristers have to carefully consider their time recording and justification for brief fees (something they have not done before), all of which can expose a strategy early on in a litigation. Solicitors now have to consider extremely carefully with their client how much a case will end up costing them and this could potentially end up being a new battleground in itself. This ‘cards on the table’ approach is a dramatic change and one we all litigators have to get used to. Will it do away with the role Supreme Court Costs Office and the need for detailed cost assessment hearing at the end? I doubt it.
 
Good behaviour counts
 
A further key change to the overriding objective under the reforms is the court’s enforcement of strict compliance with its rules, practice directions and court orders. Parties will now have to behave themselves, co-operate and communicate with the other side, something some will find extremely difficult. It also requires the court to play an active case management role, something all practitioners are all wary of. Commercial court Judges seem adamant in not wanting to get involved in case management. Perhaps they are right, knowing what it is they do best. The bottom line is that where costs have until April 2013 been integral to any litigation, they are now much more integral to the judicial process itself.
 
Not smooth
 
Whatever the long-term prospects for the success of the Jackson reforms, few people are predicting a smooth transition. For a lucky few, it will be all they know in the litigation process. It will be harder for those who have been in practice for some time to adapt. I am not alone in my concerns that the reforms as a whole will increase litigation costs and most likely reduce recoverable costs inter parties. This will only increase the pain that successful parties may feel at what, in many cases, will be pyrrhic victories. Let’s wait and see.
 

Posted by:

Theo
Solley

25 July 2013

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