Damages-Based Agreements Regulations 2010

My Lords, I declare an interest which causes in me a sense of déjà-vu. I was responsible for the Access to Justice report which led to the rules which now govern civil procedure in this jurisdiction. At the same time as that report was being implemented, the then Government decided to reduce legal aid. As a consequence, they had to find some alternative method of giving access to the courts, because it was clear that, without legal aid of the sort that had hitherto been available, access would be greatly reduced, which would have made a mockery of the purpose of the report which the Government were implementing and for which I was responsible. That report bore the title, Access to Justice, and its object was to assist people to litigate in the courts. It was clear that they had greater rights as individual citizens than they had hitherto, but that those rights were probably of less value than they should be if the citizen was not in a position to exercise them in the courts. Conditional fee agreements were therefore introduced. However, then it was found that conditional fee agreements by themselves were not working, because the terms on which they were being used were too big a deterrent for the citizen to take advantage of them. Consequently, the insurance industry was mobilised to provide a product which would link up with the conditional fee agreement and protect the citizen in a way which would otherwise not have been the case; but even that action was not sufficient. Therefore the decision was taken to make the party who lost the proceedings, in the case of a citizen who had a conditional fee arrangement, pay the uplift of the conditional fee agreement and, in addition, the insurance premiums. That changed the balance between the parties in a way which was unsatisfactory, although that was not appreciated at the time, because it gave the claimant a position which was out of balance in regard to the position of the defendant. That applied to litigation generally. I do not believe for one moment that the Government wanted to get to the position where the situation between the claimant and the defendant was out of balance in the way that I have indicated. However, the pressure of circumstances caused the Government of the day to make recommendations, which were subsequently reduced into law, which had unintended consequences. That brings me to these two sets of regulations. On the information which is available to me, it is clear that not enough research or consultation has taken place to see the consequences of what is proposed. Furthermore, it seems to me that there is a very real danger that, although the Government are supportive of the admirable report prepared by Lord Justice Jackson, the Government will undermine his report rather in the same way as my report was undermined. Although the general opinion a decade later is that the recommendations I made have benefited civil procedure, it is undoubtedly the fact that one of their objects has not been achieved: the control of costs. The process, as has already been indicated in this debate, is now far too expensive. Nevertheless, the Jackson report indicates that there are ways of combating that. In particular, what is required is management of cases so that the costs that are now being incurred are not incurred. That is the proposition to which we should be paying attention. Although it may be said this is a provisional action which is being taken, I would urge the Government, based on my experience, not to go down the road that they are proposing to go down at this stage until the matter has been considered properly. I would suggest very respectfully to them that they are putting the cart before the horse in introducing these two measures before they come to their conclusions on the Jackson report. That is the way to reform properly; to reform in a way in which the results can be constructive. From the Jackson report, I shall give an example on defamation. It is a weighty report, but it is one of considerable value. On page 406, at paragraph 3(1.1) to (3.3), the report refers to the defamation cost management pilot, which is to find ways in which to have a consensus between both sides of the profession and others involved in this area as to how defamation proceedings can be conducted without incurring costs on the scale on which they are now being incurred. It refers to the pilots taking place in defamation proceedings in London and Manchester for a 12-month period commencing October 2009. It concludes by saying: ""At the time of writing no feedback is available from the defamation pilot. However, it is anticipated that data from the pilot will become available during 2010. I am told by a defamation solicitor, who happens to be experienced in costs budgeting, that it takes him about an hour to prepare an estimate of costs"." It then goes on to deal with that aspect, and I do not need to trouble the House with that. However, I refer to it as a sort of possibility that would change the position with regard to costs. I am certainly not happy with the position with regard to costs in defamation proceedings at the moment, but I question whether the dangers of reducing the uplift form 100 per cent to a maximum of 10 per cent could not have very damaging effects on the other party to litigation in addition to the media, which has an interest that needs protecting by the courts. I am very grateful for the Motion to amend, which I would support because, in advancing that Motion, the noble Lord made it clear that the personal consequences of not being able to bring proceedings, which could be the result of a 10 per cent cap, can be very serious indeed to the citizen—more serious, if I may say so, than the harm that would be caused to the press. We want not to rush into amendments of a sort now proposed but to carry out the research properly that needs to be done before we seek to change the law in this way. We have heard from the Opposition that, if there is a change of government, they will look at the position afresh. Are these regulations going to be brought into effect for the period that will elapse between a possible change of government and today? That is surely not the way that we should go about reform. There is a need for a change of culture. One thing that is clear is that change in the legal profession and system is always achieved most successfully when there is co-operation between those involved. From what I am aware, it is clear that the main players in the legal profession are happy to enter into negotiations to find a way through. It may be that these regulations have acted as a catalyst; if that be so, they have served their purpose. Perhaps the right thing to do now is to explore further the possibility of finding a more satisfactory conclusion or a less risky one than is now proposed. I have focused primarily, so far, on the conditional fees, but I would also say that great caution needs to be exercised with regard to the other regulations as well. They are introducing into our system contingency fees, which of course Members of the House are aware have very different features from conditional fee agreements. I am particularly nervous about those being introduced into the employment field, because in the employment field, very properly, the right to representation before tribunals is wider than that of the legal profession itself. That means that there will be others who can recover up to one-third of the amount of damages which are awarded in an employment case, depriving the citizen of the damages he is entitled to as the consequence of the regulations in regard to the conduct of proceedings.