The Government is set to consult on the introduction of contingency fees in UK litigation alongside other key recommendations proposed by Lord Justice Jackson to reform civil litigation costs.

Parliamentary under secretary of state for justice Jonathan Djanogly announced today (26 July) that the Ministry of Justice will consult on recommendations published in January in Jackson's high-profile report 'Review of Civil Litigation Costs'.

The consultation will launch in the autumn and will seek views on whether lawyers should be permitted to enter into damages-based agreements (DBAs) or 'contingency fees' in litigation. If introduced, lawyers will be allowed for the first time to take a slice of their client's damages, after Jackson acknowledged that the "arguments in favour of contingency fees… outweigh the arguments against".

Djanogly (pictured) said that the Government would also consult on Jackson's proposals to end the recoverability from the losing party of the costs of after-the-event (ATE) insurance premiums and uplifts on conditional fee agreements (CFAs). The consequence of this reform would mean that success fees will be borne by the client rather than the opponent.

The consultation will also consider Jackson's recommendation of a 10% increase in the level of general damages for personal injury, defamation and other tort claims in order to assist claimants to meet the cost of the success fee. Any introduction of these measures would require primary legislation.

Djanogly commented: "We will be consulting in particular on the reform of CFAs which should lead to significant costs savings, while still enabling those who need access to justice to obtain it. The Government is therefore taking these proposals forward as a matter of priority."

The statement will be seen as the first concrete evidence that the new coalition Government is supportive of many of the key recommendations in Jackson's report. Jackson was commissioned by the Master of the Rolls in January 2009 to investigate measures to reduce the rising costs of civil litigation.

Work is progressing on a number of other areas covered by Jackson's review but these will not form a part of the Government's consultation in the autumn. The Legal Services Board is currently looking at the issue of referral fees and will report their findings to the Government. Meanwhile, the Civil Justice Council will consult over the summer on a voluntary code of conduct for third-party funders as recommended by Jackson.

In addition, a range of judiciary-led costs and case management work has been continuing since Jackson's report was published including a pilot of more robust costs management in defamation, mercantile, technology and construction cases. A judicial steering group is looking into further implementation of recommendations regarding case management.