Most organisations will, at some point, have to respond to a claim (meritorious or not) alleging discrimination under the Equality Act 2010. The usual rule for most litigation before the courts in England and Wales is that the loser pays the winner’s costs (or at least pays a proportion of them).
The government is considering introducing rules that would mean an unsuccessful claimant would no longer risk having to pay their opponent’s costs: as such, the government’s call for evidence seeks views and evidence on the current arrangements for bringing discrimination claims in the civil courts of England and Wales. Cost-capping and qualified one-way costs-shifting (QOCS) are among the options on the table. The call for evidence closes on 19 February 2025, so anyone still wishing to contribute should do so without delay.
Background
Since the 2020 judicial review brought by disability campaigner Esther Leighton, the government has been under pressure by campaigners to reduce barriers to bringing civil discrimination claims by offering claimants a form of cost protection. In that case, the specific aim was to force the government to extend the qualified one-way costs shifting (‘QOCS’) regime that is currently only available for personal injury and clinical negligence claims. The claim was rejected on the basis that the government was still considering options for reform.
That remains the case and the government maintains that it still does not have sufficient evidence to decide on the issue. The Labour government is now looking to address that by building a clearer picture of the claims that are currently being brought and the shape of any reform needed.
What is the problem?
The prospect of a claimant having to pay both their own legal costs and those of their opponent if they are unsuccessful is often considered a major barrier to bringing claims of all types in England and Wales. The issue applies particularly to discrimination claims by individuals, who are rarely entitled to legal aid under the current system.
The main mechanisms available to claimants to manage costs challenges are:
- Contingent Fee Agreements (CFAs), otherwise known as ‘no win, no fee’, under which a law firm agrees not to receive a payment if the claim is unsuccessful, but charges a higher ‘success fee’ if they win. They may alternatively take a share of any damages received, under a Damages-Based Agreement.
- After-the Event (ATE) insurance, which covers any costs payable to an opponent if the claim is unsuccessful.
In years gone by, claimants would have been able to recover both success fees under a CFA and the ATE premium from opponents. That changed in 2013 as a result of concerns that the system was encouraging a litigation culture and increasing the overall cost burden of litigation.
The current position is that ATE premiums are an upfront cost and success fees reduce the amount of any damages that the claimant receives. Campaigners have long argued that this pushes the risk back too far on claimants, discouraging many from bringing valid claims.
What are the options?
The government first wants to gain a better understanding of the civil claims that are being brought in relation to discrimination under the Equality Act 2010. The call for evidence asks for data about factors such as: the types of claim, claimant and defendant; how claims are funded (and whether ATE insurance was available); success rates; and levels of costs.
The government is considering three main solutions to encourage access to justice:
- QOCS
The fundamental feature of the QOCS mechanism is that if a claim is unsuccessful, the claimant is not liable to pay the defendant’s legal costs (unless they were fundamentally dishonest). The QOCS regime applies to personal injury claims, where there is often a major imbalance in power between individual claimants and well-funded, insured defendants. There have been calls to extend QOCS to other regimes that share similar features, including discrimination claims and professional negligence cases (as we recently discussed).
2. Cost-capping
A product of the Aarhus Convention, which protects access to justice in environmental claims, the Environmental Costs Protection Regime caps the level of adverse costs payable by either the claimant or the defendant. The default costs caps for these claims are £5,000 for individual claimants, £10,000 for claimant organisations and £35,000 for defendants (although these can be revised up or down).
3. ATE insurance
Adverse costs insurance is one of the mechanisms that claimants already use to mitigate litigation risk. The consultation notes anecdotal evidence that claimants can find it difficult to obtain cover. The government has not at this stage put forward any suggested reforms to ensure that insurance is available to claimants at an affordable level. Providing additional certainty in the form of fixed costs is one thing that could assist. In its ongoing review of litigation funding, the Civil Justice Council also raises the prospect of reverting back to the position where ATE premiums could be recoverable from a defendant if the claim succeeded.
Comment
Since the government began cutting back on legal aid decades ago now, successive governments have struggled to find appropriate solutions which enable claimants to bring meritorious claims without unduly encouraging spurious litigation and inflating costs for all.
This consultation suggests that the government may bring the costs regime for discrimination claims in line with that which exists for personal injury or environmental claims. With each of those having no shortage of critics, the debate is far from over.
If you have any questions around the consultation or obligations under the Equality Act more widely, do get in touch. We work with organisations to review and draft EDI policies as well as bringing and defending Equality Act complaints and claims by beneficiaries, service users, employees, members and volunteers.