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In a not altogether unexpected turn of events, the Ministry of Justice announced this week that implementation of the civil litigation reforms (which will include the abolition of ATE insurance premiums and CFA success fee recoverability) is to be delayed by six months until April 2013.

When the reforms were announced as part of the Legal Aid, Sentencing and Punishment of Offenders Bill in June last year, it was expected that they would come into force from October 2012, however industry speculation was rife that this timeframe was likely to prove unrealistic.

The MOJ confirmed this suspicion when they announced on Monday 30th January 2012, that their decision to defer implementation has been taken in a bid to allow law firms and legal businesses sufficient time to prepare themselves for the implications of the changes.

MOJ’S RATIONALE FOR THE DELAY

A Ministry of Justice spokesperson said:

“We are committed to reforming the ‘no win no fee’ system so that legal costs for reasonable compensation claims will be more proportionate, and avoidable claims will be deterred from going to court.”

“This will require changes to legal rules and regulations and we want to give sufficient time to get the complex details right. We are also conscious that legal businesses will need sufficient time to plan for the changes, alongside other forthcoming regulatory and funding changes to the industry. We will therefore implement the new measures, subject to Parliamentary approval, in April 2013.”

However, while the government has, to-date, strenuously avoided attempts to moderate the changes, the debate continues in the House of Lords as to whether the Bill’s one size fits all approach will have a positive impact or a damaging effect on access to justice.

ADDITIONAL TIME TO TEST NEW ATE INSURANCE AND LITIGATION FUNDING PRODUCTS

Matthew Amey, director at TheJudge commented “This delay gives lawyers and their clients in the UK another six months to benefit from the current system where ATE insurance premiums are recoverable. This provides additional time for after the event insurers and those involved in litigation financing to develop their products ahead of any changes.”