13 September 2012
The waiting game
Posted by Neil Rose, Editor, Litigation Futures
Are the sands of time running out for sensible implementation of the Jackson and other reforms?
So here we are, less than seven months from implementation of the Jackson reforms and the RTA portal extension, and there is an awful lot we still don’t know.
We thought that at least the 10% increase in damages was settled – certainly the country’s top judges did. But as we reported last week, they’ve effectively had to admit they acted hastily in deciding as they did by taking the unprecedented (well, nobody I’ve asked has seen this happen before) step of reopening the Court of Appeal ruling in Simmons v Castle.
They didn’t tell anyone they were hijacking the case to make the announcement, nor did they hear any argument on the point. So how embarrassed now are the Lord Chief Justice, the new President of the Supreme Court and the vice-president of the Court of Appeal? When was the last time three such eminent judges took a mis-step like this?
We’ve seen the new rule on proportionality, but Lord Neuberger, as the Master of the Rolls, went out of his way to say a few months ago that he would not give “any sort of specific or detailed guidance” before the new rule has come into force and been applied. “The law on proportionate costs will have to be developed on a case-by-case basis. This may mean a degree of satellite litigation while the courts work out the law, but we should be ready for that, and I hope it will involve relatively few cases.”
Some, like Kerry Underwood, have argued that this is hopelessly wrongheaded. He says: “Unless specific, detailed advice is given, then what is the point of proportionality? Why should the country’s most senior judge not say: “I have spoken with my judicial colleagues and reviewed the evidence and unless factors (d) and/or (e) apply I would expect a party never to recover more in costs than a sum equal to 40% of damages in a personal injury claim, 20% in a commercial claim.”
There has been some progress on how qualified one-way costs-shifting will work, but issues remain outstanding. The Civil Justice Council working group has made recommendations on how damages-based agreements should operate, but we don’t yet know what the Ministry of Justice will do with them. There is still time to draft and approve the rules, but practitioners will have to be very nimble in their response.
We have yet to see how the Solicitors Regulation Authority will implement the referral fee ban, although it is not hard to guess the rough shape of its outcomes-focused approach. But how much will this help with the question of collective marketing schemes and other approaches that seek to exploit the exception built into the new law for payments made as “consideration for the provision of services”?
The very nature of outcomes-focused regulation is that it will be for solicitors to work out what they think is in the rules and only find out afterwards if they were wrong.
And what about the RTA portal? According to a story by Post magazine yesterday, insurers met earlier this week and voiced frustrations over the claimant and defendant communities’ alleged lack of engagement with the industry, and that at one point they even considered pulling out of extension plans (but eventually decided to stay on board).
According to the article, insurers are keen to get the IT build underway and properly tested to ensure that the portal extension is delivered by April 2013. But before you can build the system, surely you need to know how it will work, and as yet we don’t have the rules of court that will underpin the extended portal.
I imagine it will be argued, at least in relation to the vertical extension to higher-value RTA claims, that the current rules will do, but claimant lawyers will counter that different provisions are needed for a £25,000 claim, such as over expert reports. And I assume the process for a straightforward RTA claim cannot be copied across to a complex £25,000 employer’s liability case. What shortcuts will the Ministry of Justice have to take to ram all this through by April?
Post added: “It is thought that claimant bodies are impeding extension plans because of concerns about how it will affect legal costs.” Will the government simply impose the new fees? There isn’t really time for a mediated settlement, given how contentious that is likely to be. And how can you set the fees before you know the process and amount of work involved anyway?
As for the increase in the small claims limit, we are promised a consultation shortly – if it has the usual three-month consultation period, it is tough to see that concluded and implemented in time for April.
How anyone is meant to plan their businesses in this climate, I simply don’t know. It is no surprise that we have seen acquisitive firms like Neil Hudgell, with its ‘We buy any files’ website, picking off those who have decided to get out now, nor that many of the more interesting early alternative business structures have a strong personal injury focus. Deals such as Antony Hodari’s acquisition this week of Paul Rooney Partnership will surely become more prevalent.
Uncertainty is usually great for lawyers (and, of course, for journalists) and there will be some rubbing their hands at the thought of the costs war resuming. But this kind of uncertainty is surely not good for anyone (except journalists), least of all the client. The premature launch of the RTA portal in 2010 shows what can go wrong when some things in the law are rushed.
Nonetheless, whatever the practical problems, it would take a brave decision to delay implementation – the government has firmly hung its hat on April as implementation day. But I wonder if the Ministry of Justice will have the courage to start the reforms from Monday 1 April, or might it wait a day – right now, the danger that for many years I and others will look back at the day the government made an April Fool of itself through hasty implementation looks all too real.
Tags: contingency fees, damages, damages-based agreements, Jackson report, OFR, outcomes-focused regulation, proportionality, QOCS, qualified one-way costs-shifting, referral fees, RTA portal