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From 1st April…

Paying or receiving referral fees in personal injury is banned. Law firms can pay into collective advertising schemes but they cannot pay for individual referrals.

  • A new proportionality rule will be used by the courts to ensure that the cost of bringing a case is proportionate to the damages at stake. Lawyers are concerned at the lack of guidance on the new rule and predict that it will lead to satellite litigation over costs.
  • Lawyers must comply with requirements to submit and update costs budgets, which will apply automatically to multi-tack cases in the county court and Queens Bench Division of the High Court, and cases worth less than £2m in damages in the Chancery Division, Technology and Construction Court (TCC) and Mercentile Courts. Judges may also require costs budgeting in higher value cases in these courts, but the Commercial and Admiralty Courts are exempt.
  • In personal injury, a new system of ‘qualified one-way costs shifting’ is introduced, protecting losing claimants from being liable for a defendant’s costs, except in certain circumstances.
  • Damages-based agreements are lawful in litigation for the first time. This is an arrangement whereby a client gives up a proportion of their damages to their lawyer, in return for the lawyer taking on the risk of being paid nothing if the case loses.
  • Lawyers’ success fees and after-the-event insurance premiums cannot be recovered from the losing party. The cost of this must instead be met by the clients.
  • Courts will apply a 10% increase in general damages for personal injury cases.

In addition:

From the end of April, fixed legal fees for RTA claims valued under £10,000 reduce from £1,200 to £500

  • From July, for the first time, there will be fixed fees for RTA claims valued up to £25,000 as well as PL and EL claims of the same value.
  • The general small claims track limit, where there is no recoverability of legal costs, will increase from £5,000 to £10,000 in April, and may later rise to £15,000. In the summer, the government is also likely to increase the small claims court limit in personal injury cases from £1,000 to £5,000. This is likely to encompass the majority of whiplash cases.