Travel companies successfully sued by customers will find their costs ‘substantially’ reduced if the recommendations of a new judicial report are implemented.
Travlaw senior partner Stephen Mason welcomed the report, Review of Civil Litigation Costs, claiming if implemented, the core suggestions would reduce costs and charges for defendants should they lose the case.
He said the core recommendation is the abolition of ‘no win, no fee’ success fees, which can often double the cost of losing a case for the defendant.
Mason said: “It has been suggested these fees have gone too far.”
Instead the claimant’s lawyer would be paid up to 25% of the claimant’s award, should they win the case.
The report also recommends abolishing referral fees, which sees lawyers pay insurance companies in return for being given potentially expensive claims to fight.
Mason said more good news comes in the form of the recommendation of introducing a scale of fixed costs that the claimant lawyer can claim from the defendant, according to how much the claimant is awarded should they win the case.
The scale would be introduced for payments of between £5,000 and £25,000 and would end the current practice whereby a claimant’s lawyer can bill the defendant according to how much work they claim to have done.
However, Mason said the report is not all good news for defendants – it recommends increasing the actual damages paid out by 10%.
He said: “If the proposals are accepted, this will be great news for travel companies who are sued because the cost of going to court and the cost of settling will be substantially reduced.”
Mason added many of the changes could be implemented within weeks as they are simple changes to the current rules. However, he said certain changes, such as the abolition of referral fees, would take longer as they would need to be agreed by Parliament, a process likely to be delayed by the general election.
The report will now be considered by justice secretary Jack Straw, who said: “It is a remarkable piece of work, which is based on extensive consultation and puts forward a broad range of significant recommendations for reform. I look forward to considering these proposals in detail.”
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