Question to the Ministry of Justice:

To ask the Secretary of State for Justice, what estimate he has made of the economic effect on small businesses of reforms to funding of insolvency litigation implemented by the Legal Act, Sentencing and Punishment of Offenders Act 2012.

When it came to power this Government made a priority of controlling legal costs which had become unsustainably high. We made changes to the law on how ‘no win, no fee’ conditional fee agreements (CFAs) operate, following recommendations by Lord Justice Jackson. The CFA reforms in Part 2 of the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012 were delayed for insolvency cases until April 2015, to allow parties sufficient time to prepare for and adapt to the changes.

In April 2011 the Government published an Impact Assessment in relation to the reforms set out in Part 2 of the LASPO Act. It explained that there may be a reduction in the number of cases brought where no win no fee CFAs are used, but overall the LASPO reforms should make costs more proportionate.