The Government has announced that it will be delaying the
proposed changes to Conditional Fee Arrangements ("CFA")
and After the Event ("ATE") Insurance, in respect of
insolvency proceedings, until 2015.
The Legal Aid, Sentencing and Punishment of Offenders Bill,
delivered to Parliament in June 2011, contains draft provisions
dealing with litigation funding and costs which would abolish the
recoverability of CFA success fees and ATE premiums from the losing
party in any form of litigation. There is widespread concern that
these proposals would have a negative impact on insolvency
litigation, as it would make it more difficult for Insolvency
Practitioners and their lawyers to recover funds from unscrupulous
directors and third parties.
In view of the increasing use of CFAs in insolvency litigation, the
Government announcement is welcome news as it demonstrates that the
Government appreciates that insolvency should be treated
differently to other areas of litigation and it will allow the
insolvency profession to work with the Government to implement
alternative measures to allow these cases to be pursued in the
future.
The implementation of all other proposals under the Jackson reforms
for non-insolvency proceedings, originally expected in October of
this year, has been delayed until April 2013. Therefore, where
there are cases to be pursued by way of a CFA, it would be prudent
to move quickly to ensure that they are dealt with before the
changes come into force.
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