Part 2Litigation funding and costs

Offers to settle

55Payment of additional amount to successful claimant

1

Rules of court may make provision for a court to order a defendant in civil proceedings to pay an additional amount to a claimant in those proceedings where—

a

the claim is a claim for (and only for) an amount of money,

b

judgment is given in favour of the claimant,

c

the judgment in respect of the claim is at least as advantageous as an offer to settle the claim which the claimant made in accordance with rules of court and has not withdrawn in accordance with those rules, and

d

any prescribed conditions are satisfied.

2

Rules made under subsection (1) may include provision as to the assessment of whether a judgment is at least as advantageous as an offer to settle.

3

In subsection (1) “additional amount” means an amount not exceeding a prescribed percentage of the amount awarded to the claimant by the court (excluding any amount awarded in respect of the claimant's costs).

4

The Lord Chancellor may by order provide that rules of court may make provision for a court to order a defendant in civil proceedings to pay an amount calculated in a prescribed manner to a claimant in those proceedings where—

a

the claim is or includes a non-monetary claim,

b

judgment is given in favour of the claimant,

c

the judgment in respect of the claim is at least as advantageous as an offer to settle the claim which the claimant made in accordance with rules of court and has not withdrawn in accordance with those rules, and

d

any prescribed conditions are satisfied.

5

An order under subsection (4) must provide for the amount to be calculated by reference to one or more of the following—

a

any costs ordered by the court to be paid to the claimant by the defendant in the proceedings;

b

any amount awarded to the claimant by the court in respect of so much of the claim as is for an amount of money (excluding any amount awarded in respect of the claimant's costs);

c

the value of any non-monetary benefit awarded to the claimant.

6

An order under subsection (4)—

a

must provide that rules made under the order may include provision as to the assessment of whether a judgment is at least as advantageous as an offer to settle, and

b

may provide that such rules may make provision as to the calculation of the value of a non-monetary benefit awarded to a claimant.

7

Conditions prescribed under subsection (1)(d) or (4)(d) may, in particular, include conditions relating to—

a

the nature of the claim;

b

the amount of money awarded to the claimant;

c

the value of the non-monetary benefit awarded to the claimant.

8

Orders under this section are to be made by the Lord Chancellor by statutory instrument.

9

A statutory instrument containing an order under this section is subject to annulment in pursuance of a resolution of either House of Parliament.

10

Rules of court and orders made under this section may make different provision in relation to different cases.

11

In this section—

  • civil proceedings” means proceedings to which rules of court made under the Civil Procedure Act 1997 apply;

  • non-monetary claim” means a claim for a benefit other than an amount of money;

  • prescribed” means prescribed by order made by the Lord Chancellor.

Referral fees

56Rules against referral fees

1

A regulated person is in breach of this section if—

a

the regulated person refers prescribed legal business to another person and is paid or has been paid for the referral, or

b

prescribed legal business is referred to the regulated person, and the regulated person pays or has paid for the referral.

2

A regulated person is also in breach of this section if in providing legal services in the course of prescribed legal business the regulated person—

a

arranges for another person to provide services to the client, and

b

is paid or has been paid for making the arrangement.

3

Section 59 defines “regulated person”.

4

Prescribed legal business” means business that involves the provision of legal services to a client, where—

a

the legal services relate to a claim or potential claim for damages for personal injury or death,

b

the legal services relate to any other claim or potential claim for damages arising out of circumstances involving personal injury or death, or

c

the business is of a description specified in regulations made by the Lord Chancellor.

5

There is a referral of prescribed legal business if—

a

a person provides information to another,

b

it is information that a provider of legal services would need to make an offer to the client to provide relevant services, and

c

the person providing the information is not the client;

and “relevant services” means any of the legal services that the business involves.

6

Legal services” means services provided by a person which consist of or include legal activities (within the meaning of the Legal Services Act 2007) carried on by or on behalf of that person; and a provider of legal services is a person authorised to carry on a reserved legal activity within the meaning of that Act.

7

“Client”—

a

where subsection (4)(a) applies, means the person who makes or would make the claim;

b

where subsection (4)(c) applies, has the meaning given by the regulations.

8

Payment includes any form of consideration whether any benefit is received by the regulated person or by a third party (but does not include the provision of hospitality that is reasonable in the circumstances).

C157Effect of rules against referral fees

1

The relevant regulator must ensure that it has appropriate arrangements for monitoring and enforcing the restrictions imposed on regulated persons by section 56.

2

A regulator may make rules for the purposes of subsection (1).

3

The rules may in particular provide for the relevant regulator to exercise in relation to anything done in breach of that section any powers (subject to subsections (5) and (6)) that the regulator would have in relation to anything done by the regulated person in breach of another restriction.

4

Where the relevant regulator is the F1Financial Conduct Authority, section 58 applies instead of subsections (1) to (3) (and (7) to (9)).

5

A breach of section 56—

a

does not make a person guilty of an offence, and

b

does not give rise to a right of action for breach of statutory duty.

6

A breach of section 56 does not make anything void or unenforceable, but a contract to make or pay for a referral or arrangement in breach of that section is unenforceable.

7

Subsection (8) applies in a case where—

a

a referral of prescribed legal business has been made by or to a regulated person, or

b

a regulated person has made an arrangement as mentioned in section 56(2)(a),

and it appears to the regulator that a payment made to or by the regulated person may be a payment for the referral or for making the arrangement (a “referral fee”).

8

Rules under subsection (2) may provide for the payment to be treated as a referral fee unless the regulated person shows that the payment was made—

a

as consideration for the provision of services, or

b

for another reason,

and not as a referral fee.

9

For the purposes of provision made by virtue of subsection (8) a payment that would otherwise be regarded as consideration for the provision of services of any description may be treated as a referral fee if it exceeds the amount specified in relation to services of that description in regulations made by the Lord Chancellor.

58Regulation by F2FCA

1

The Treasury may make regulations to enable the F3Financial Conduct Authority, where it is the relevant regulator, to take action for monitoring and enforcing compliance with the restrictions imposed on regulated persons by section 56.

2

The regulations may apply, or make provision corresponding to, any of the provisions of the Financial Services and Markets Act 2000 with or without modification.

3

Those provisions include in particular—

a

provisions as to investigations, including powers of entry and search and criminal offences;

b

provisions for the grant of an injunction in relation to a contravention or anticipated contravention;

c

provisions giving Ministers or the F3Financial Conduct Authority powers to make subordinate legislation;

d

provisions for the F3Financial Conduct Authority to charge fees.

4

The regulations may make provision corresponding to the provision that may be made by virtue of section 57(7) to (9) (but as if the reference to the Lord Chancellor were a reference to the Treasury).

5

The power to make regulations under this section is subject to section 57(5) and (6).

59Regulators and regulated persons

1

In relation to a referral of business within section 56(4)(a)—

a

a regulator is any person listed in column 1 below;

b

a regulated person is any person listed in column 2;

c

a regulator in column 1 is the relevant regulator in relation to the corresponding person in column 2.

1. Regulator

2. Regulated person

the F4Financial Conduct Authority

an authorised person (within the meaning of the Financial Services and Markets Act 2000) of a description specified in regulations made by the Treasury

F7. . .

F7. . .

the General Council of the Bar

a person authorised by the Council to carry on a reserved legal activity within the meaning of the Legal Services Act 2007

the Law Society

a person authorised by the Society to carry on a reserved legal activity within the meaning of the Legal Services Act 2007

a regulatory body specified for the purposes of this subsection in regulations made by the Lord Chancellor

a person of a description specified in the regulations in relation to the body

2

In relation to a referral of prescribed legal business of any other kind—

a

a regulator is any person listed in column 1 below and specified in relation to business of that kind in regulations made by the Lord Chancellor;

b

a regulated person is any person specified in accordance with column 2 in relation to business of that kind;

c

a person specified under paragraph (a) in relation to business of that kind is the relevant regulator in relation to a person specified in accordance with the corresponding entry in column 2 in relation to business of that kind.

1. Regulator

2. Regulated person

the F5Financial Conduct Authority

an authorised person (within the meaning of the Financial Services and Markets Act 2000) of a description specified in regulations made by the Treasury

F6. . .

F6. . .

an approved regulator for the purposes of Part 3 of the Legal Services Act 2007 (approved legal activities);

a person who is authorised by the regulator to carry on a reserved legal activity and is of a description specified in regulations made by the Lord Chancellor

a licensing authority for the purposes of Part 5 of that Act (alternative business structures)

a person who is licensed by the authority to carry on a reserved legal activity and is of a description specified in regulations made by the Lord Chancellor

60Referral fees: regulations

1

This section applies to any regulations under sections 56 to 59.

2

The regulations are to be made by statutory instrument.

3

The power to make the regulations includes power to make consequential, supplementary, incidental, transitional, transitory or saving provision.

4

A statutory instrument containing the regulations may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

Pro bono representation

61Payments in respect of pro bono representation before the Supreme Court

1

In section 194 of the Legal Services Act 2007 (power for certain courts to order losing party to make payment to charity where other party is represented pro bono) in subsection (10) for the definition of “civil court” substitute—

civil court” means—

a

the Supreme Court when it is dealing with a relevant civil appeal,

b

the civil division of the Court of Appeal,

c

the High Court, or

d

any county court;

relevant civil appeal” means an appeal to the Supreme Court—

a

from the High Court in England and Wales under Part 2 of the Administration of Justice Act 1969,

b

from the Court of Appeal under section 40(2) of the Constitutional Reform Act 2005, or

c

under section 13 of the Administration of Justice Act 1960 (appeal in cases of contempt of court) other than an appeal from an order or decision made in the exercise of jurisdiction to punish for criminal contempt of court;

2

This section applies in relation to appeals to the Supreme Court only where the decision, order or judgment that is the subject of the appeal is made or given on or after the day on which this section comes into force.

Costs in criminal cases

62Costs in criminal cases

1

Schedule 7 (costs in criminal cases) has effect.

2

Schedule 8 (costs in criminal cases: service courts) has effect.