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CFAs, QOCs and SLAS: will the Lords get it?

Opposition is growing to the Jackson reforms in the legal aid bill. But do peers grasp the complexity of the changes?

Will the two concessions made yesterday on the legal aid, sentencing and punishment of offenders bill be the start of many, or will they prove to be a false dawn for campaigners against the bill?

With the bill reaching its crucial report stage in the Lords on Monday – and government defeats a distinct possibility – its opponents are making a final push on on both the scope of legal aid and the plans to abolish no win-no fee (properly known as conditional fee agreements or CFAs).

Though legal aid remains the chief focus, and social welfare law in particular, the implications of part 2 of the bill – which are based on Lord Justice Jackson’s review of civil costs – are beginning to sink in too. The core element of the latter is that claimants will have to pay their lawyer’s success fee out of their own damages and the after-the-event (ATE) insurance premium that covers them for the risk of losing and having to pay the other side’s costs. Currently, the losing defendant pays them.

Clinical negligence is an area where the two overlap, as most cases are brought under CFAs already – and the rest will be in future, except for the narrow (if significant) category of serious obstetric cases that were yesterday brought back within the scope of legal aid. A Lords vote on bringing back clinical negligence as a whole is likely and Peter Walsh, chief executive of patients’ charity Action against Medical Accidents, says he is “cautiously optimistic” that it will be won.

But before anyone gets too excited by either this concession or the prospect of more, there is a sting in the tail. The government announced last year that it would establish a supplementary legal aid scheme (SLAS), which will take (or rob, as Walsh puts it) 25% of the damages of anyone bringing a civil claim with legal aid. The SLAS has been largely forgotten in the debate; its stated aim is to ensure equality with the new rules for CFAs, which will limit solicitors from taking more than 25% of a claimant’s damages as their success fee.

The difference, however, is that the latter is an upper limit rather than a fixed amount, and competition is likely to push percentages down. So would someone with a clinical negligence claim be better off on a CFA even if legal aid is available? Walsh says it is important that there is a choice, while legal aid would also ensure cases receive funding for the crucial investigative stage. “A decision could be made later whether to continue on legal aid or switch to a CFA,” he says. “Without legal aid to cover the investigation of very complex and borderline cases, many clients may be unable to get a solicitor to take them on under a CFA.”

But might anything else happen over part 2? Earlier this week, the Law Society, the Association of Personal Injury Lawyers and the Motor Accident Solicitors Society agreed a compromise position on the Jackson reforms that they will put to the government and parliament. Though all are fundamentally opposed to the reforms, it was a recognition that the government is determined to push ahead with them, and represents an attempt to make the best of what they see as a bad job.

The question is whether the government has any interest in listening. And do peers feel as strongly about part 2 as they do about part 1? I sense hope, rather than optimism. But Lord Justice Jackson himself has always touted his reforms as an interlocking package and the way in, possibly, is through an element of it which is reportedly causing problems behind the scenes: qualified one-way costs-shifting (QOCS).

QOCS means that in personal injury cases a claimant will not be at risk of paying the other side’s costs if they lose; the aim is to do away with the need for ATE insurance. However, the Q of QOCS is the difficult bit – this is meant to provide exceptions to the rule where a claimant has conducted the case unreasonably, or where they are wealthy. By all accounts, finding a way to make this work in practice is proving very tough, compounded by fears that any uncertainty could mean that claimants will still need to take out ATE insurance, just in case. This is part of the reason why implementation was put back six months to April 2013. Campaigners hope that if one piece of the Jackson package needs to be rethought, then the door will open for other amendments.

ATE insurers are also unhappy. In a joint statement released today, 10 leading providers complain that they have been ignored throughout the process and argue that the changes will actually increase costs because the likes of the NHS and local authorities will not be able to reclaim their legal fees when they win cases. ATE premiums could also eat up claimants’ damages, while the future of much of the industry is under threat; the companies say that unless some form of ATE premium recoverability is preserved, “access to justice will be significantly affected” for both personal injury and non-personal injury cases.

This is pretty technical stuff, and a worry among campaigners is that many peers will not be sufficiently up to speed to press the government. However, they have already shown themselves to be more interested in the fact that several very significant changes – such as the SLAS, QOCS and the planned 10% increase in damages – will not be on the face of the bill, a key demand from the likes of the Consumer Justice Alliance.

Andrew Dismore, who runs the Access to Justice Action Group, does not expect much from a “government playing hardball”, but observes that even once the bill becomes law, there will still be opportunities to influence how it is implemented. “We have to play to the final whistle,” he says.

Neil Rose is the editor of © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds