11 March 2014Print This Post

Jackson has done nothing to improve commercial litigation, say City solicitors

Costs: criteria for determining whether they are disproportionate are obscure

Litigators from many of the City’s top firms have expressed deep concerns about the impact of the Jackson reforms, saying they have increased the cost of litigation without improving its efficiency.

The litigation committee of the City of London Law Society was particularly critical of costs budgeting and the impact of the Mitchell ruling.

Publishing the paper it has submitted to the Civil Justice Council’s review of the first year of Jackson, the committee – which is chaired by Clifford Chance partner Simon James – said it was concerned that the reforms “may have an adverse effect on the international perception of litigation in England”.

Among a myriad of complaints about budgeting, the committee said the cost of preparing a budget commonly exceeds the recoverable allowance for doing so – “often by a large margin” – that the approach of the court to budgets is “uncertain and inconsistent” and that “the criteria for determining whether costs are disproportionate are obscure and, in practice, are likely to depend upon the predilections of the individual judge”.

The paper said: “The committee is also concerned that some judges have a limited understanding of what is required to run a major commercial case. Conducting large-scale litigation is a significant exercise in project management, an exercise that many judges will never have undertaken.”

It argued that judges who consider that the budgeted costs are too high rarely look to cut down the steps required to take the case to trial, and instead set a budget “merely reflecting the judge’s underlying but largely unexplained view of what aggregate figure the losing party should pay in costs”.

The problems with budgeting were exacerbated by the Mitchell ruling, the committee continued. “The committee is concerned that this represents a punitive and formalistic – even anachronistic – approach to litigation that is out of kilter with the pre-eminent need for justice to be both done and seen to be done.”

The potentially penal sanctions for breach of a rule will increase compliance costs for solicitors and, as a result, their clients, it said, and will lead to the courts facing lots of applications for time extensions.

“This is not to say that courts should never be strict with time limits. It may be, for example, that unless orders should be enforced more strictly than has traditionally been the case. But what might have been undue leniency in the past risks turning into undue rigidity now.

“Courts should be able to recognise when a party is genuinely trying to progress a case and when it is stalling unnecessarily or jeopardising a trial date, and act accordingly.”

The submission also questioned why the regulations effectively prevented firms agreeing hybrid damages-based agreements (DBAs) with clients, with full DBAs “little, if at all, used in commercial litigation”.

It also recommended scrapping disclosure statements on the basis that they added to the cost of litigation but “have little material effect on the disclosure order made by the court”.

By Neil Rose

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