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Solicitors need to be careful to ward against professional negligence claims for mis-selling damages-based agreements (DBAs) or under-settling cases run under them, a QC has warned.
PJ Kirby QC of Hardwicke Chambers said solicitors need to put in procedures that ensure that a full explanation – both oral and written – is given as to the various funding arrangements discussed and why the DBAs was considered suitable.
If a solicitor is not, either generally or in relation to a specific case, willing to undertake a case under a particular type of funding arrangement, then that should be explained and the reasons recorded, he added.
Several commentators have highlighted the difficulty that DBAs work very well for the solicitor, and far less well for the client, if a substantial case settles quickly.
However, Lord Justice Jackson’s recommendation that the client seek independent legal advice before entering in a DBA did not make it into the final regulations – but then the risk of mis-selling was raised again in February by the Legal Services Board.
Writing on his chambers’ website, Mr Kirby said the central issue is whether the client has made a properly informed decision about the funding of its case and whether the method of funding recommended to the client was in the client’s best interests.
“The fact that the DBA turns out to be profitable or indeed unprofitable for the solicitor is not the test as to whether the same was in the client’s best interests at the time that it was entered into,” he said. “It would only ever be the gift of hindsight that would enable the solicitor or client to know which fee arrangement in fact would end up being the best one (and it is most unlikely with the benefit of hindsight that the fee arrangement that turns out to be the best for the solicitor will have also been the best arrangement for the client).”
Mr Kirby said the clients who are most likely to be aggrieved are those who feel that their claims were settled for less than their true worth on the one hand and on the other those clients who consider that the lawyers have received a disproportionate amount of the sum recovered bearing in mind the amount of work actually done by the lawyers.
“There is concern that solicitors may be inclined to advise that claims be settled for less than their true or at least their potential worth in order to ensure that they exclude the risk of loss and no payment, and get paid whilst incurring the minimum level of costs necessary.
“Whilst under CFAs there could also have been the temptation to settle for less than the true worth of the claim in order to avoid the possibility of a loss and no payment, at least with a CFA the more work that was done the more the solicitors would be paid and the greater the amount recovered by way of uplift. Furthermore so long as the uplift was recoverable from the other party the client had no real interest in questioning the amount of the uplift.
“Under a DBA the longer the case goes on the lower the reward for work or effort ratio becomes. Indeed under many DBAs the prospect of the matter going to trial will be of real concern to solicitors who may see any possible recovery under the DBA as being less than the costs incurred on a traditional time-cost basis and much less than the amount due to the solicitor under a CFA with an uplift, yet continuing with the case to trial may be in the client’s best interests.”
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It would be disproportionate and unjust to strike down a Precedent H budget that was signed by a firm’s in-house costs draftsman, rather than by a “senior legal representative”, the High Court has ruled.
Mr Justice Stuart-Smith endorsed the view that the aim of the more robust approach being taken by the courts post Mitchell is not to make compliance an end in itself.
The Precedent H in Americhem Europe Ltd v Rakem Ltd [2014] EWHC 1881 (TCC) was compliant in all respects except that the statement of truth was not signed by a “senior legal representative” of the defendant, as required by practice direction 3E.
Instead, it was signed by an in-house costs draftsman at Shakespeares Solicitors, who the judge ruled was not a “legal representative” or – if he was – was not a senior one.
Though “senior legal representative” is not defined anywhere, Stuart-Smith J said the CPR 2.3(1) definition of “legal representative” seems “to connote someone who is representing in a legal capacity, which is not what is being done by a costs draftsman”.
It was argued that this rendered the budget a nullity and that the defendant’s budget should restricted to the applicable court fees.
But the judge disagreed. Though it was an “irregularity”, he noted that, while CPR 3.14 provides a sanction in the event that a party “fails to provide a budget”, it does not include the additional words “complying in all respects with the formal requirements laid down by PD3E”.
He said: “Here, the document was in a form which stated it was the defendant’s costs budget and would immediately be recognised as such. There was nothing to impede the normal constructive discussions on figures that would have been open to the parties if it had been fully compliant.
“To hold that it was not a costs budget at all would not, in my judgment, be a proper application of a robust approach: rather, it would lack in any form of reality or justification.”
As a result, no question of a need for relief from sanctions arose, but if it had done, the judge said he would have granted relief.
Though it may not have been a ‘trivial’ breach – recognising his earlier ruling in the Philip Pank case – Stuart-Smith J said: “Even in the more robust environment that now obtains, the consequences of refusing relief seem to me to be disproportionate, unjust and therefore contrary to the overriding objective.
“The proportionate and just response, given that no one has been significantly disadvantaged by the irregularity, is to require it to be remedied at the defendant’s cost and to compensate the third party for the modest cost involved in bringing the matter to the attention of the court, summarily assessed in the sum of £50.”
The judge noted that there have been various cases arguing that an irregularity renders the costs budget a nullity. He adopted Mr Justice Leggatt’s comments in Summit Navigation, in which he referred to the pre-Jackson speech of the Master of the Rolls, Lord Dyson, that it is not the aim of the reforms to turn rules and rule compliance into “trip wires”, nor into “the mistress rather than the handmaid of justice”, nor to render compliance “an end in itself”.
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The Judicial Office has launched a pilot programme to improve the diversity of the High Court bench and encourage more applications from senior lawyers and legal academics.
Places on the programme, which includes work shadowing and mentoring with a High Court judge, will be limited to women and those from BAME or “less advantaged social or educational” backgrounds.
A spokesman said the programme would run from the end of this month to June and conclude with a one-day applications workshop, giving advice on how to prepare for a selection exercise run by the Judicial Appointments Commission (JAC).
A JAC selection exercise in July this year will, for the first time, allow those with no previous judicial experience to apply to be deputy High Court judges.
Launching the diversity programme, Lady Justice Hallett said involvement was limited to women and those from minority or disadvantaged backgrounds because those were the areas where the judiciary was “significantly less representative” of society.
“Taking part in the support programme will not guarantee appointment by the Judicial Appointments Commission as a deputy High Court judge or success in a subsequent High Court exercise,” she said.
“Appointment is on merit – and rightly so. But hopefully, it will encourage candidates to apply and provide them with the tools they need to compete.
“The judiciary of England and Wales is the envy of the world for its skill, fairness and integrity. Sitting as a High Court judge is one of the toughest legal jobs there is; but it is also one of the most satisfying and intellectually rewarding.”
A spokesman for the Judicial Office said taking part in the programme was completely separate from the JAC and no “guarantee of success” in its selection exercises, but it would provide candidates with support to help them apply.
As well as coming from the three specified groups, applicants for the 30 places on the programme should have the qualifications required to apply to be a High Court judge and must have no previous judicial experience.
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Mandatory costs budgeting for smaller cases is unlikely to achieve make costs more proportionate in the Commercial Court, according to the judge who initially persuaded Lord Justice Jackson to exclude the court from the process.
Lady Justice Gloster also told judges and lawyers that they need “to learn new tricks” to operate in an electronic court environment.
In a speech organised by Harbour Litigation Funding last month, the transcript of which has just been published, Lady Justice Gloster revealed that as the judge then in charge of the Commercial Court, she was “instrumental” in persuading Sir Rupert Jackson to exclude the court from compulsory costs management.
Noting the “massive support” for this position from the Commercial Court users committee, she explained: “The rationale was that sophisticated parties and litigants in Commercial Court cases were well able to [control], and were already controlling costs by means of budgets for their clients and themselves.
“They were well able to monitor excessive spend by opposing parties both during the case and at the end, and the judge was unlikely to be sufficiently informed about the complexities of the litigation to be able to bring added value to the budgeting exercise.”
That changed as of 22 April this year, when the Commercial Court was brought within the ambit of the costs management regime for cases worth up to £10m.
Gloster LJ asked: “Will it lead in the long run to greater transparency and therefore to more proportionate spends? There has been some criticism of the amount of costs in the Commercial Court and it is clearly critical for the court’s reputation that costs can be justified as proportionate in both large cases and small cases.
“Whether mandatory costs budgeting in the smaller cases will achieve that result, I personally consider doubtful.”
In a speech that looked at how the courts in England and Wales needed to adapt to maintain England and Wales’s “pre-eminent position as a leading global centre of excellence for the resolution of disputes”, Gloster LJ identified the need for judges and lawyers not only to adapt their working practices to new technologies but also “anticipate how commercial disputes are going to be resolved in five to 10 years’ time. And we have to do so quickly to remain competitive”.
She recounted how, as the judge in the Berezovksy v Abramovich case in 2012, she conducted a virtually paperless trial “at least so far as I was concerned”.
“But counsel… at least the more senior ones, appeared unable to relinquish the comfort blanket of hard copy files and the ubiquitous yellow sticker. Vast quantities of ring binders were stacked up like the giants’ gold outside Valhalla in Wagner’s Das Rheingold in serried ranks in the courtroom, and trundled back and forth from chambers every day.”
And in the Court of Appeal, “we would hardly know that the digital revolution had begun”, the judge continued, saying she has never been offered before a case starts access to a digital version of the files – and that when she does ask for the case documents in electronic format, “I am almost always provided with the facility within a day or two, by which time of course the appeal is over and I have marked up my hard copy documents”.
She asked: “So where lies the problem? It lies, I fear, with the judges and the advocates. It is not that judges and advocates are luddites – they are just more comfortable with what they know. But we are all going to have to learn new tricks.
“Parties should in my view be much more aggressive in seeking case management directions that require parties to operate in an electronic court environment, and judges should be much more pro-active in making such orders. Practice directions or new rules may have to be introduced to achieve this end.”
Gloster LJ also complained about the length of pleadings, witness statements, arguments, trials and even (with a “mea culpa”) judgments. “Excessive length – it has to go,” she said, noting that little seems to have changed since the reforms that were instigated in the wake of the BCCI case eight years ago.
One solution was for judges to be “much more proactive” in disposing at an early stage of issues that should not be taken to trial, she said.
The judge also strongly backed the judiciary’s concerns about government plans to charge commercial litigants ‘enhanced’ court fees above cost price. This was an issue “which ultimately is bound to affect the shape of commercial litigation in the years to come”.
While pushing ahead with other changes to court fees after consultation, the Ministry of Justice has yet to announce whether it will take enhanced fees forwards.
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Eclipse Legal Systems, the sole Law Society Endorsed legal software provider, has implemented its Proclaim Case Management solution at new start-up firm, HD Law.
The Bradford-based practice specialises in litigation involving the Consumer Credit Act 1974, in general recovering compensation for those who have fallen victim to mis-sold financial products or products purchased using credit.
This includes a wide range of claims including mis-sold insurance policies such as PPI, under-performing investments, timeshare and renewable energy products and interest rate hedging products.
The new start-up has opted for an entirely bespoke Proclaim Financial Claims Software solution which will facilitate a secure approach to individual client files, bringing with it a high level of efficiency to the firm’s operations and enabling staff to seamlessly share cases with an established Leeds-based practice.
Furthermore, Proclaim will help to streamline processes for HD Law by collating all incoming documents, ensuring every piece of client matter is stored, ready for extraction, in the relevant case.
The firm has also implemented Eclipse’s Task Server tool which will eradicate hours of administration time by carrying out various time-consuming yet vital tasks – ideal for a busy start-up practice.
Adam Hizzett, director at HD Law, comments:
“From previous experience with Eclipse and Proclaim I knew the software was the market leader and definitely the best placed solution for our business. As a new start-up it’s essential we are able to establish ourselves and maintain the impeccable standards we promise to our clients.
“Thanks to Proclaim, I can be confident moving forward that our claims processes can be handled expertly within the system, allowing us to focus on expansion and outgrowing our competition.”
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The rise in court fees this week has removed one of the standard objections to arbitration – that it costs more than litigation – and is likely to drive the take-up of this form of ADR, a City lawyer has argued.
While claimants face paying 5% of the value of their claim as a court fee, up to a cap of £10,000, the registration fee payable to the London Court of International Arbitration for starting an arbitration is £1,750, said Eleni Polycarpou, head of arbitration at Withers.
“Of course, there are other costs associated with arbitrations, most notably the fact that arbitrators charge an hourly rate whereas judges do not. Even so, the new issue fee is a heavy burden to bear so early in the proceedings, in circumstances where only around 3% of claims issued get to trial.”
She said the rush to issue claims last week indicated that parties regarded the new fees as a significant outlay.
“Of course, that in itself may cause problems to come: although the benefit of taking advantage of the reduced issuing fees is obvious, there is a danger that, by hastily issuing in such circumstances, solicitors may find themselves liable to costs orders against them where savvy defendants successfully seek an order for strike-out due to the premature issuing of a claim form.
“In the alternative, ill-informed clients unaware of the excessive increase may also seek to bring claims for negligence against their solicitors for not issuing their claim prior to the increase in the issue fee.
“Either way, it will drive potential litigants away from the traditional route of court proceedings and lead them to look to alternative means by which to resolve their disputes,” Ms Polycarpou said.
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Around 4,000 people die each year in the UK due to asbestos related diseases, a truly horrendous ordeal for them and their families. Unfortunately things have just got even worse. A new HMRC policy has created an unnecessary legal hoop through which relatives of victims will now be required to jump when seeking justice for their deceased loved ones.
The policy was established in November and has been justified by HMRC as necessary to uphold the provisions of the Data Protection Act.
The policy
HMRC states in the policy that it will no longer release the employment history of a deceased person to their legal representatives, until a court application has been received.
When someone is killed by mesothelioma, their solicitor must provide evidence of the victim’s employment locations, how long they worked at each and the degree to which they may have been exposed to asbestos fibres.
This information-gathering process has always been a challenge. Not only does it involve collecting the appropriate employment history, but also the relevant data for each building in which the victim worked. This all requires very thorough investigation.
For example, think of a construction worker who moves from project to project. If he passed away as a result of mesothelioma, his family’s solicitor would need to contact HMRC and research every job he may have worked on. Rapid, unhindered access to these records is vital.
Now, before that process can even begin, a court application that has the potential to be an equally lengthy affair, must be made.
Why the change?
HMRC claims that change is required “because the records are stored in accordance with the Data Protection Act”. However, it has been argued by some that this is simply incorrect and that rights to privacy ‘die’ with the individual, just like our rights to sue for defamation. Even if this is not the case, surely access to an individual’s employment history should be exclusive to the deceased’s loved ones? And they should in turn be free to share the records with their legal representative.
Blocking this immediate access will only stall the claims process and therefore increase the cost of legal fees and expenses.
Further concern for claimants
In addition, the entire claims process for asbestos exposure compensation is set to become even more difficult, following the introduction of a new Mesothelioma Bill.
Under this piece of legislation, only those who have been diagnosed since 25 July 2012 will be able to file a claim.
Also, those who can’t find a responsible insurer from which to claim will be compensated at a discounted rate – 75% of what the claimant should be entitled to – funded by a levy on active employers’ liability insurers.
The only positive for claimants to take from this is that at least some sort of justice will be available even where a definitive guilty party cannot be traced. Still, vice-chairman of the Association of Personal injury Lawyers, John Spencer, has his concerns about the delay of the Mesothelioma Bill’s implementation.
He says: “It is of paramount importance that the bill is introduced as early as possible and implemented speedily in order for inflicted victims to be given the compensation they urgently need.
“The sad reality is that any delay to implementing the legislation might mean that many of those applying to the fund might die before they receive any award.”
Asbestos in UK schools
John is also the chair of my law firm, Spencers Solicitors, and in March, we joined the ongoing campaign to remove asbestos from British schools. It is clear from the available data that asbestos in our schools remains a serious issue. The management and removal of asbestos in schools has been poor at best and non-existent in many, many cases.
Rather than push this issue up their agenda and allocate greater resources to tackling it effectively, it has been revealed more recently by The Guardian that the government’s funding for asbestos removal may even be cut. It said: “Ministers have considered scaling back the Department for Education’s work addressing the issue of asbestos in schools because of budget cuts.”
The mere suggestion of cuts is shocking, especially as we continue to read horror stories of asbestos residing in schools. Within the last couple of weeks, a Birmingham academy was hit with a £10,000 court demand and a £20,000 decontamination bill, after contractors disturbed life-threatening asbestos fibres during the school holiday.
Conclusion
Based on current data, the mesothelioma death rate is expected to peak in 2016 and reduce thereafter. However, we will only see the longer-term eradication (the deadly effects of exposure can take up to 50 years to manifest) of asbestos-related cancer in the UK, on the introduction of an extensive removal operation.
Until then sufferers deserve the full support of all concerned; but the HMRC policy, the delayed Mesothelioma Bill and the suggested cuts to funding only leave us with the feeling that such support is likely to be in short supply.
How can this be right? Have your say in the comments.
Robert Landman is CEO of Spencers Solicitors and a qualified accountant with over eight years experience in the legal industry. Robert provides effective leadership of the business, overseeing and determining business strategy whilst ensuring optimisation of day-to-day operations
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On the back of a successful first year, and recent £60m boost to its funding capital, Augusta Ventures has hired two new members to its expanding London team. Litigation lawyer Philip Lomax from Elborne Mitchell and economist Karolina Ilieva join the Augusta team.
Augusta is taking on new cases every week and, by the end of 2015, intends to fund a minimum of 20 cases a month – more than all other funders put together.
Philip Lomax joins as a litigation analyst in the due diligence team. Philip’s focus will be on reviewing and recommending cases for funding and preparing those cases for legal representation. Before joining Augusta, Philip worked at city firm Elborne Mitchell where he was a member of the shipping and commercial litigation departments, dealing with a broad range of commercial disputes in both arbitration and the High Court.
Karolina Ilieva is a business economist and joins Augusta as a financial analyst with responsibility for the oversight of the whole Augusta portfolio.Her focus will be on risk analysis and financial modelling for each case. Prior to joining Augusta, Karolina worked at Delta Executive Search, where she was responsible for market research for EMEA Investment Banking & Equity and building a solid analysis of the key players in financial services.
Augusta Ventures is a new breed of litigation funder dedicated to making funding accessible for SMEs and easier to use for law firms. In its first year, it committed £8m to 36 cases and established partnerships with over 40 law firms. It now has over £50 million available in working capital to fund new cases. While other funders focus on a handful of multi-million pound investments in big cases, Augusta invests between £10,000 and £600,000 in a broad range of commercial litigation matters.
Managing director Louis Young says: “With both lawyers and claimants alike realising the benefits of working with an active and transparent funder, it’s crucial we continue to attract the brightest and best legal and financial talent into our business. The arrival of Philip and Karolina gives us the additional expertise where it is required as our portfolio grows.”
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Burcher Jennings, a leading national legal cost and pricing consultancy is delighted to announce that it will be holding its inaugural Pricing Funding and Costs Conference in London on 1 July 2015.
The event is in recognition of the growing pressure on law firms to establish modern day pricing solutions, and will provide attendees with insight into what currently constitutes best practice across the related issues of pricing, funding and costs. The event will take place at the Grange City Hotel in London from 9am to 5pm.
The conference agenda, content and speakers have been specifically tailored to the needs and interests of law firms and will be of particular interest to: Managing Partners; Practice area Department Heads (Partner level); CEOs; CFOs; FDs; CIOs; Heads of L&D and Heads of Marketing & BD.
Martyn Jennings, Chief Executive commented: “Pricing for value is, to my mind, one of the most critical challenges for providers of legal services at the moment. The need to understand value – from a client’s perspective – and the ability to construct an appropriate pricing offer are now key attributes of a modern practitioner. In light of this, our event will seek to provide guidance and direction on everything pricing, funding and costs related including pricing, litigation costs, litigation funding, pricing IT, marketing and BD using pricing – this event has it all.”
Many leading practitioners across law and finance will be speaking at the event including: Professor Stephen Mayson; Richard Burcher, Managing Director, Validatum®; Robert Camp, Managing Partner, Stephens Scown; Richard Marshall, Managing Partner, Lupton; Chris Bull, Executive Director, Kingsmead Square; Neil Cameron, Neil Cameron Consulting Group; Steve Din, Doorway Capital; Rocco Pirozzolo, Director of Litigation Funding at Harbour Litigation Funding; Professor Dominic Regan, the leading UK authority on litigation costs and Lord Justice Jackson’s civil costs reforms; Joanne Powell, Costs Consultant & Head of London Office, Burcher Jennings; Scott Keyser, Scott Keyser Proposals, bid advisor to large professional service providers such as Allen & Overy, Nabarro and Ernst & Young and Abby Winkworth, MBA, CCIM, Partner and Director of Marketing and Business Development, IBB Solicitors.
For further information, please visit Burcher Jenning’s website here.
This event is CPD accredited for 6 hours. CPD code – EXG/VALI.
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Maximising damages for claimants in RTA cases is now important given that firms can take up to 25% of the claimant’s damages under the CFA. This raises real problems of access to justice in low value cases – in order to encourage law firms to take on these cases, there has to be incentive for firms to do so. Otherwise they will simply not undertake low value cases, and thus restricting access to justice for accident victims.
The costs of law firms conducting work in the portals has also been restricted, and we now have the introduction of fixed costs PI cases post Jackson.
MBL’s half day course will give you a thorough understanding of issues surrounding maximising damages in PI RTA cases and costs, from inception to settlement or trial, and from a claimant’s perspective, post Jackson.
The course will focus on practical advice and tips, looking at how to efficiently and effectively investigate such cases.
Dates are available in Leeds, Bristol, Birmingham, Manchester and London – for more details or to book your place please email lucy@mblseminars.com quoting ‘Litigation Futures’.
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Briggs: unattractive prospect for claimants and their solicitors
Cases that exit the RTA and EL/PL protocols and then proceed on the multi-track are not subject to fixed recoverable costs, the Court of Appeal has ruled today.
In its second significant ruling on costs and the protocols in a week, the court said the uncertainty had arisen from an oversight in the drafting of part 45.29B by the Civil Procedure Rule Committee.
Qader & Ors v Esure Services Ltd & Ors [2016] EWCA Civ 1109 dealt with two conjoined appeals where road traffic claims left the protocol and assigned to the multi-track due to allegations of dishonesty. The Association of Personal Injury Lawyers and Personal Injuries Bar Association both intervened in the appeals.
Giving the unanimous ruling of the court in overturning the ruling in Qader, Lord Justice Briggs said “the claimants in each case, and their solicitors, face the unattractive prospect of pursuing their claims and resisting serious allegations of dishonesty, at trials likely to last well over one day but upon the basis of a fixed costs regime which, as will appear, was plainly designed to be suitable only for fast-track cases”.
The problem was that part 45.29 appears “unambiguously to apply the fixed costs regime to all cases which start within the relevant protocols but no longer continue under them”, the judge observed. This was exacerbated by the fact that the work on creating the regime focused on the fast-track.
Briggs LJ said: “After more hesitation than my Lords [Gross and Tomlinson LJJ], I have come to the conclusion that section III A of part 45 should be read as if the fixed costs regime which it prescribes for cases which start within the RTA protocol but then no longer continue under it is automatically disapplied in any case allocated to the multi-track, without the requirement for the claimant to have recourse to Part 45.29J, by demonstrating exceptional circumstances.”
While acknowledging that “no ordinary process of construction or interpretation of the wording of the relevant rules could lead to that result”, he said “careful analysis of the historic origins of the scheme… demonstrate that it was not in fact the intention of those legislating for this regime in 2013 that it should ever apply to a case allocated to the multi-track”.
He continued: “A conclusion that it should so apply is a result which can only have arisen from a drafting mistake, which the court has power to put right by way of interpretation even if, as here, it requires the addition of words, rather than giving the words actually used a meaning different from their natural and ordinary meaning.
“It should normally be possible to understand procedure rules just by reading them in their context, but this is a rare case where something has gone wrong, and where the court’s interpretative powers must be used, as far as possible, to bring the language into accord with what it is confident was the underlying intention.”
Briggs LJ highlighted a Ministry of Justice response to consultation in February 2013 that said: “It has always been the government’s intention that these proposals apply only to cases in the fast track and if a case falling out of the protocols is judicially determined to be suitable for multi-track, normal multi-track costs rules will apply.”
He said: “There is no evidence that the government altered its policy in relation to multi-track cases falling outside the fixed costs regime as set out [that response], nor that the rule committee consciously decided to adopt the opposite approach.”
This apparent failure met the test on whether the court has jurisdiction to put right drafting errors in statutory provisions, the judge concluded.
The best way to give effect to the intention would be to add to part 45.29B, after the reference to 45.29J, the words: “… and for so long as the claim is not allocated to the multi-track…”
Briggs LJ added: “I recognise the force of [counsel for Esure’s] submission that this process of interpretation by the addition of words risks giving rise to satellite litigation at the allocation stage by claimants seeking to disapply the fixed costs regime in relation to their claims.
“I consider that this is a risk best addressed by relying upon the good sense and vigour of case management judges in furthering the overriding objective, and in penalising those who seek to abuse the opportunity to which the allocation stage in such a claim gives rise.
“I recognise also that my proposed insertion of words to part 45.29B does nothing about the anomaly represented by the £25,000 apparent damages ceiling in part A of Table 6B. It is unnecessary in the context of these appeals to do so, both because neither of them reached settlement prior to the issuing of part 7 proceedings, and because the damages claimed are well below £25,000.
“It is a continuing anomaly which, in my view, the rule committee should be invited to consider at the earliest available opportunity. It may also be minded to devise an amendment to section IIIA of part 45 which fully reflects the concerns which underlie this judgment, not merely in relation to the RTA protocol, but to the EL/PL protocol as well.”
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The civil courts have missed their 100% costs recovery target for 2014-15, it has emerged.
As a whole, the civil courts recovered 92% of their expenditure in fees during the financial year 2014-15, with the family courts (including the Court of Protection) recovering 87%. The civil, non-family, courts recovered 94%.
The figures, set out in HM Courts & Tribunals Service (HMCTS) annual report and accounts, were an improvement on the previous year, when total civil business collected 82% of its expenditure in fees and family 79%.
Costs recovery in the tribunals runs at much lower levels, with employment leading the way on 17%, followed by asylum and immigration on 11% and other tribunals (including land and gambling) on 9%.
However, employment tribunals raised 10% more than the previous year, where they were bottom of the table, following the introduction of a new fee structure.
When the tribunals are included, costs recovery for the whole of HMCTS for the last financial year was 74%.
HMCTS said in its 2012-13 annual report that it aimed for “full cost recovery for civil and family business” by March 2015.
In this March this year, huge fee rises came into force for civil claims worth more than £10,000, with claimants paying 5% of the value of their claim, up to a cap of £10,000.
The Law Society commenced judicial review proceedings in February, at one point citing the Magna Carta’s ban on the buying and selling of justice. However, after obtaining a counsel’s opinion, the society dropped the action in April.
Commenting on the HMCTS figures on costs recovery, A Ministry of Justice spokesman said: “Taxpayers should not have to subsidise the civil courts, which is why we want to recover all running costs through fees.
“We made a lot of progress last year, with a significant increase in the amount recovered. We expect further progress this year following changes introduced in March.”
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Angela Viney Conveyancing Services is a specialist commercial and domestic conveyancing firm operating from offices throughout West Yorkshire. The firm has gone from strength to strength over the last thirty years due to its commitment to client service and providing high quality and expert advice from its team of dedicated solicitors.
Darren Becks (partner), and Jack Viney (conveyancer /Proclaim administrator) at Angela Viney Conveyancing Services, talk about the decision to implement Proclaim and the on-going benefits of the case management solution.
Why did you decide to replace your existing system?
Our previous system was generally unsustainable and simply couldn’t keep up with our business needs. In particular, as we operate across 4 offices, we needed a system that could manage data regardless of location, as well as offer us a solid platform for future development and expansion.
Why was Eclipse your chosen provider?
Initially, Eclipse and its Proclaim solution were referred to us by a number of other businesses who were benefiting from the software. Although we knew of Proclaim through its reputation, we decided to meet with a number of suppliers in order to get an accurate comparison of the legal software available within the market.
It became clear after a demonstration that the Proclaim solution could offer a lot more functionality in a variety of aspects – particularly reporting – but also allowed for complete customisation in terms of screens and workflows. Additionally, we knew we would see a significant ROI from the system thanks to the sheer scope of automation.
Furthermore, we liked the idea of working with a local business, as not only would it mean solidifying close business relationships within the local economy, but we’d also be lucky enough to benefit from the entire Eclipse team just a few miles away.
What are some of the benefits you’ve seen from Proclaim?
Firstly, and perhaps most importantly, the complete flexibility of the system is fantastic. The on-going ability we have to tweak Proclaim as and when we need to means we can adapt our work to suit client needs. For example, sometimes we undertake unusual commercial work – our previous system was extremely prescriptive and wouldn’t allow for this, but with Proclaim, we can simply tailor the workflow within a few easy steps, and without needing to contact our Relationship Manager or the Support team.
Another brilliant feature is the ability to specify access for certain users. Depending on job titles and roles, we can limit particular areas of the system, as well as create an effective audit trail to ensure each member of staff is completing the required work. Taking this further, Proclaim’s inbuilt task management feature means we can oversee all tasks and delegate them to users, ensuring most importantly, that work is being completed on time for clients, but also providing senior staff with total control.
Additionally, the overall layout of Proclaim is well suited to our needs. The interface makes work extremely efficient as whenever a client calls, we can access their details with literally the click of a button, or thanks to the Outlook integration, we can use the ‘drag and drop’ method for any incoming and outgoing emails.
In terms of Eclipse, we’ve found the overall experience with the entire team absolutely great – the firm delivers a very professional, yet very personal client service. The Support team is excellent, whilst our Relationship Manager has brilliant technical knowledge and is always happy to help.
How has the ETSOS integration enhanced your service offering?
The ETSOS integration has increased our efficiency massively. It has provided us with a seamless search ordering process directly from Proclaim so there’s no need for us to go back and forth between the portal and our desktops anymore. This in turn saves us a lot of time and means we are able to increase efficiencies for our clients as well as increase our profitability!
How successful were your training sessions with Eclipse?
The training was absolutely fantastic. All our staff have completed the necessary courses to enable basic use of Proclaim, but Jack underwent the Technical training as well in order to tweak the system to suit business needs.
Thanks to this, and as we mentioned earlier, we are now able to customise the system – completely in-house – to suit our way of working, or to suit any unusual work requests. We wouldn’t be able to do this were it not for the in-depth training we received!
Overall, feedback from our entire team was extremely positive. The size of the groups were perfect, ensuring everyone was able to work through the exercises, whilst the trainers themselves were excellent and were easily able to get everyone working through the session regardless of skill and experience.
Additionally, the training facilities were great, ensuring we were all able to work on our own desktop and use the system in real-time.
Do you have any future plans for your use of Proclaim?
Ideally, in the long term, we hope to implement Eclipse’s accounting and financial practice management toolset to provide a fully centralised and firm-wide desktop application.
In the interim, we’re looking at Proclaim’s integration with the Land Registry Business Gateway. Once implemented, this will provide staff with seamless Gateway interaction from their Proclaim desktops, as well as provide 2-way integration for data and documentation, ultimately enhancing our clients’ experience.
Overall, we are thrilled with our Proclaim solution and the complete service offering from Eclipse. We look forward to benefiting from a long and fruitful relationship!
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The Civil Procedure Rule Committee is to investigate claims that the Jackson reforms have made it “virtually impossible” for solicitors to claim success fees in cases involving children, it has emerged.
Committee member HHJ Halbert told its May meeting that in his opinion a rule change would be needed before lawyers acting for children can claim success fees from damages, now that they can no longer be claimed from defendants.
His comments came in a supplement to a paper on the issue by District Judge Hovington, who said that a number of his colleagues had highlighted the problem of child victims and success fees.
Judge Halbert outlined the basic facts of an appeal by a law firm against a district judge’s refusal to allow payment out of a child’s damages.
The case, which was anonymised, settled with payment to the child of £2,700 plus costs, and a success fee of £675. The district judge hearing the case approved the settlement, but not the payment of success fees.
“There are major problems with this case,” Judge Halbert said. “The first is the status of the appeal. The appeal has been lodged by the solicitors. Neither the litigation friend, nor the defendant, have any interest in the outcome of the appeal.
“In reality the parties in the appeal are the solicitors and the child. The solicitors are not parties to the action so they have no locus standi to appeal. To do so, they are acting in conflict with their interests of their own client, namely the child.”
Judge Halbert said he had raised the matter with the Supreme Court Costs Office, which took the same view that the solicitors had no locus.
The judge said that there was a further problem over the basis on which the appeal could be funded.
“The money cannot come out of the child’s damages without the leave of the court, and there is no chance that this will be granted.”
In response, the rule committee decided that a review of the rules was necessary and, “in view of the complexity of the problem”, a sub-committee should be set up to identify the issues and how they could be addressed in the rules, with DJ Hovington as chair.
In his paper, DJ Hovington said concern had been expressed that while detailed assessment of costs could be disproportionate by reference to the amounts involved, the rules were unclear as to when summary assessments could be made.
He said that it was likely that in order to dispense with the requirement for detailed assessment, judges may need the kind of detailed information which could only be provided where the detailed procedure was followed.
DJ Hovington added that, where detailed assessments were carried out, there were the “further complications” of the conflict of interest between solicitor and child, and the costs for the child exceeding the 10% uplift in general damages.
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Disclosure: Court orders sampling of 55,000 documents
A High Court judge has ordered a manual search of 55,000 documents in a $65m breach of warranty case because of concerns over the claimants’ approach to computer-assisted review (CAR).
Mr Justice Coulson said disclosure had been “something of a running sore in this case”, which potentially involved three terabytes of data made up of 20m electronic documents in 860,000 folders.
Coulson J said the CAR exercise carried out by the claimant companies, represented by City firm RPC, and the sampling it produced, could not be described as “transparent” or “independently verifiable”.
The judge said there were “perhaps 10 paralegals and four associates involved in the searches”, but it was “not apparent that there was any overseeing senior lawyer”.
Coulson J that counsel for the defendant companies was “right to say that the sheer volume of those involved with the CAR system in this case may mean that it has not been ‘educated’ as well as it might have been, particularly in respect of the criteria for relevance”.
Delivering judgment in Triumph Controls UK and another v Primus International Holding and others [2018] EWHC 176 (TCC), Coulson J said the claimants sought around $65m from the defendants for breaches of warranty following the sale of the defendants’ aerospace business.
The defendants sought orders from the court arising from “fundamental deficiencies” in the claimants’ disclosure. The first was that the list of 860,000 folders and file paths identified by the claimants on a shared drive should be provided to them, so they could see if there were any that should be searched.
The second was for a manual review of the remaining 220,000 documents which had not already been subject to a manual search, out of the 450,000 which had been identified as potentially disclosable.
Coulson J said the claimants had “always been clear” about the shared drive, their approach had been reasonable and proportionate, and the defendants were “very late” in complaining about it.
He rejected the defendants’ application for further disclosure of the folders/file paths.
Coulson J said he had “much greater concerns” as to the claimants’ approach to searching the 450,000 documents identified in the original keyword search, aided by CAR.
He said the claimants did not do what they said they would in their electronic documents questionnaire (EDQ), which promised a manual review of all the documents responsive to keyword searches.
“Although the broad outline of the searches undertaken by the claimants was subsequently explained in September 2016, it was not a detailed exposition. At no time have the claimants provided relevant details as to how the CAR was set up or how it was operated.”
Coulson J went on: “This problem has been compounded by the lack of information as to the sampling exercise. All that the defendants, and the court, have been told is that there was a sampling exercise which produced a predictive figure of 0.38%.
“But there is no information as to precisely how that sampling exercise was conducted. There are, for example, no stated tolerances and no explanation of how many rounds of sampling were undertaken. That again is unsatisfactory.”
Coulson J said the claimants were concerned that a manual review of the remaining 220,000 documents would cost £180,000 and take two months, but that this must be set against the size of the claim.
“As to the estimated time, I consider that two months is very much a ‘worst case scenario’ because, whatever the arguments might be as to their status as proper comparators, there was other evidence in the documents which indicated that it would not take anything like as long as two months.”
The judge ordered the parties to agree a methodology by which a sample of 25% of the 220,000 documents could be manually searched, the search to take “no longer than three weeks” and the results to be put in a letter which Coulson J could be shown at a later hearing.
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Using Part 36 as either a shield or a sword can be a significant ‘game-changer’ in litigation. By attending this half day course you will go back to the office armed with the most up to date knowledge on the law and tactics surrounding CPR Part 36.
In this new course which has been rewritten by Dominic ‘from scratch’ he will guide you through the burning questions for all litigators, including:
- Who is the winner?
- Are fixed costs trumped by Part 36?
- Defeating the new proportionality test – is it possible?
- Can Part 36 circumvent Mitchell?
For the full course details including course dates and costs please click the link above.
To book your place now please email lucy@mblseminars.com quoting Litigation Futures, or give us a call on 0161 793 0984.
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Supreme Court: hearing next year
The Supreme Court has consolidated three cases on whether the continuing recoverability of additional liabilities in publication and privacy cases are incompatible with publishers’ rights to freedom of expression.
It announced today that Mr Justice Mann’s ruling in Frost and others v MGN Limited has been leapfrogged to the highest court given that a previous ruling of the House of Lords is at issue.
A spokeswoman confirmed that it would be heard together with appeals against Mr Justice Milling’s ruling in Miller v Associated Newspapers Limited and the Court of Appeal’s decision in Times Newspaper Ltd v Flood. The hearing is likely to be early next year.
In Frost, a phone-hacking matter brought by eight claimants, the success fees claim exceeded £1.4m and the ATE premiums £632,000. Many more cases are in the pipeline and so the point has considerable significance.
Mann J said that, like Mr Justice Mitting in Miller, he was bound to follow the House of Lords costs ruling in Campbell v MGN in 2005, which determined that the existing conditional fee agreement (CFA) regime, which allowed for the recovery of uplifts, was not a breach of article 10 of the European Convention on Human Rights.
But in MGN v UK, the European Court of Human Rights (ECtHR) had taken a “contrary view”, he continued. The effect of that decision on the previous House of Lords decision “has yet to be tested”.
Mann J went on: “As a matter of the law of precedent, therefore, I am left with an apparently clear decision of the House of Lords, at least in relation to the uplift, and an apparently contrary decision of the ECtHR.
“When faced with that same situation, Mitting J in Miller considered that the laws of precedent required him to follow the English decision and I consider that I should do the same.”
Mann J said the position of ATE premiums was “technically different” to success fees as they had not been at issue in the Campbell case and so neither court made a ruling on their recovery.
“However, for my part, I find it very hard to see how ATE premiums fall to be treated differently in the circumstances.”
Mann J said he agreed with Mitting J that the recovery of ATE premiums did not contravene article 10 either.
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Justice will be ill served by the “emasculation of legal aid” leading to more litigants in person, while the question of allowing compulsory mediation should be revisited, the Court of Appeal has warned.
Though the outspoken comment came from Sir Alan Ward ahead of his retirement, Lord Justice Hughes also weighed in, saying the case in question was a “good example of the way in which efforts to save money on legal representation can often end up costing everyone, and in particular the public, more rather than less”.
Wright v Michael Wright Supplies & Anor [2013] EWCA Civ 234 – which was heard in December, but the judgment has only just been published – concerned a dispute between two businessmen who, in the words of Sir Alan, “have become resolute litigators and they litigated in person”.
Praising the efforts of the trial judge, Anthony Thornton QC, Sir Alan said: “What I find so depressing is that the case highlights the difficulties increasingly encountered by the judiciary at all levels when dealing with litigants in person.”
He cited the difficulties of bringing “order to the chaos which litigants in person invariably – and wholly understandably – manage to create in putting forward their claims and defences”.
He continued: “Judges should not have to micro-manage cases, coaxing and cajoling the parties to focus on the issues that need to be resolved. Judge Thornton did a brilliant job in that regard yet, as this case shows, that can be disproportionately time-consuming.
“It may be saving the Legal Services Commission, which no longer offers legal aid for this kind of litigation, but saving expenditure in one public department in this instance simply increases it in the courts. The expense of three judges of the Court of Appeal dealing with this kind of appeal is enormous. The consequences by way of delay of other appeals which need to be heard are unquantifiable. The appeal would certainly never have occurred if the litigants had been represented.
“With more and more self-represented litigants, this problem is not going to go away. We may have to accept that we live in austere times, but as I come to the end of eighteen years service in this court, I shall not refrain from expressing my conviction that justice will be ill served indeed by this emasculation of legal aid.”
The case also showed it is not possible to shift intransigent parties into mediation. “The raison d’être (or do I simply mean excuse?) of the Ministry of Justice for withdrawing legal aid from swathes of litigation is that mediation is a proper alternative which should be tried and exhausted before finally resorting to a trial of the issues. I heartily agree with the aspiration and there are many judgments of mine saying so. But the rationale remains a pious hope when parties are unwilling even to try mediation.”
He suggested that it may now be time to review the landmark 2004 ruling in Halsey – in which he was one of the judges that said parties cannot be forced to mediate. “Perhaps some bold judge will accede to an invitation to rule on [the questions subsequently raised about the ruling] so that the court can have another look at Halsey in the light of the past 10 years of developments in this field,” Sir Alan said.
Mr Justice David Richards, the third member of the court in Wright, endorsed Sir Alan’s comments “on the difficulties posed for and by litigants in person in their conduct of all but the most straightforward cases. Their involvement on one or both sides in complex cases has in the Chancery Division, where I sit, grown from virtually nothing to being a commonplace in only a few years.
“Judges do all they can to help, but these cases impose great burdens on the time and resources of the court and the parties.”
Litigation Futures reported yesterday the concerns of the new chairman of the Association of Her Majesty’s District Judges about the impact of the growth in litigants in person.
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High Court: strong public policy grounds in favour of upholding assignment
A company that takes assignments of small consumer claims not worth pursuing on their own to build group actions does not fall foul of the rules against champerty and maintenance, the High Court has ruled.
Rather, access for customers to justice was being “enhanced”, said Stuart Isaacs QC, sitting as a deputy High Court judge.
The company, CaseHub, promises to “turn your complaint into cash”.
Its website explains: “Let’s say someone has done you harm. Maybe they’ve overcharged you, misled you in some way, or did something particularly unfair. You have a complaint against them, but you don’t have the time to get involved.
“Lawyers in this case are no good: they’re too expensive for you to try and claim a few hundred quid, or even a grand.
“Well, that sucks. We can try and fix it though. We do all we can to resolve your complaint (going as far as court action against the other side, if needed). You never have to go to court: we do everything.”
The defendant in Casehub Ltd v Wolf Cola Ltd [2017] EWHC 1169 (Ch) – decided in May but only just published – operates a software-as-a-service business and the claim relates to a problem in August 2016 which meant that new users did not receive log-in information to enable them to access the service and so terminated their agreements within the first month.
This led to a cancellation fee of £196, in accordance with its terms and conditions. Casehub has taken assignments from customers of their claims against the defendant to be refunded the cancellation fees.
Mr Isaacs said there were two forms of the claim purchase agreements: one provided the assignor receives 60% of the recovered money, with the assignment given a nominal value of 1p, while the other was a straight payment of £40 for the assignment, with CaseHub retaining all of the proceeds if it succeeded.
He found that it was not a bare cause of action: “The charges paid to the defendant by the customers which are the subject of the claim purchase agreements are not a debt owed by the defendant to the customer. However, they do consist of a liquidated sum which is the subject of a claim in restitution.
“In my judgment, under the claim purchase agreements the claimant acquired the right to the sum in question and the assignment of the right to bring a restitutionary claim to recover the sum is incidental and subsidiary to that right properly and is not a bare cause of action. The fact that liability to repay the sum is disputed does not affect its assignability.”
He went on to find no or insufficient public policy grounds to determine the assignment as invalid. “On the contrary, there are in my judgment strong public policy grounds in favour of upholding the assignment.”
These included that the individual claims were too small to be cost or time-effective for the consumers to bring claims directly, while it was “fallacious of the defendant to suggest that there are adequate alternative means of enabling customers to pursue their claims, for example by third party financing or with ‘no win, no fee’ arrangements”.
The judge explained: “Assuming in the defendant’s favour that those means are available for the relatively small sums at stake in the present case, it does not follow that other alternative arrangements should be prevented.”
Further, access for customers to justice was being “enhanced”. Mr Isaacs said: “The courts recognise the need for innovative but responsible ways of increasing access to justice for the impecunious.”
He also found that, since the sums in dispute were quantified, “there is no risk of damages being inflated or the litigation process being abused in other ways; neither the ‘purity of justice’ nor the ‘interests of vulnerable litigants’ is threatened in the present case; there is no adverse impact on the administration of justice”.
Also, “the claimant has a legitimate and genuine commercial interest in being able to pursue the claims assigned to it in order to protect the liquidated sums it acquired under the claim purchase agreements”.
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The Civil Justice Council’s costs committee has extended the deadlines for submissions to its review of the guideline hourly rates (GHR).
It will now accept responses to both the costs survey – which officially closed on Friday – and the call for written evidence, whose deadline was 6 December, until 4pm on Thursday 12 December.
Mr Justice Foskett, chairman of the committee, said the expert advisers who will be collating the survey results said they could accommodate a 10-day extension.
“We have received a few requests for an extension of last Friday’s deadline and, accordingly, feel that in order to maximise the return we should try to meet these requests if we can,” he said.
“We have also already received some responses to the call for evidence that was issued on Friday 8 November, for which we are grateful. Simply to bring the deadline for responding to that call into line with the final date for completing the survey, I can also confirm that any response received by the same time will be considered by the committee.”
The judge emphasised the strict confidentiality that is being observed by the research time. “Nothing will be published that discloses the identities of the respondents and indeed their identities will not be revealed to the committee members, its economic advisers or anyone else without the express consent of the particular respondent.
“A handful of members of the CJC secretariat will be able to access each full survey just for the purpose of checking its authenticity and of ensuring that all the data is properly transferred to the experts and then to the committee.”
Only the chairman or the vice-chairman, Senior Costs Judge Peter Hurst, will be informed of the identity of a respondent if there is some query that needs following up – but Foskett J said this had not yet been necessary.
The survey can be found here, and the link to the call for evidence here.
The committee expects to hold a small number of oral evidence sessions in early 2014, with its report, making recommendations to the Master of the Rolls, Lord Dyson, on GHR for 2014, planned for completion at the end of March 2014. It will then be for the Master of the Rolls to take the decision on setting rates for 2014. This will then become an annual exercise.
Read Mr Justice Foskett’s blog on the committee’s work here.
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Leading litigation funding broker TheJudge has launched a bespoke funding service for smaller business disputes that combines after-the-event (ATE) insurance cover and low-cost litigation funding.
The Conn3ct facility offers “far leaner pricing models” than traditional big-ticket third-party funding, reflecting both the lower financial risk and often faster litigation timetable associated with smaller commercial and professional negligence claims.
TheJudge argues that claimants involved in non-injury litigation will be hardest hit by the Jackson reforms from next April, and practitioners will have to decide whether smaller-value commercial and civil claims are economical to pursue, especially given the limited availability to date of litigation funding products aimed at smaller commercial claims has to date been limited.
The company argued that Conn3ct is superior because it involves shopping around for cover, and provides exclusive access to some funders.
Director Matthew Amey said: “For litigators handling small and medium-sized business and professional negligence disputes, Conn3ct delivers a lifeline for clients who need litigation finance support, but whose cases don’t allow for the large cost normally associated with litigation funding.”
Senior broker Helen Smith added: “A key advantage of Conn3ct is that the client is free to pick and mix what funding or ATE insurance cover they require. Conn3ct is supported by multiple-capacity providers, so in addition to having various options, clients can be sure that competitive market testing is undertaken before they sign up to a given deal.
“We will undoubtedly see more combined insurance and funding packages in future, but only through real market comparisons can clients be sure their terms are competitive.”
Conn3ct follows the launch of TheJudge’s “Insolv3ncy” service, which is specifically designed to provide insolvency practitioners with low-cost funding solutions to maximise creditors’ recovery. The appeal of Insolv3ncy was bolstered by the government’s announcement to defer abolishing success fee and ATE premium recoverability for insolvency cases.
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Several well-known names in the costs world have joined a new costs ADR service.
Costs Alternative Dispute Resolution (CADR) brings together former Senior Costs Judge Peter Hurst, one-time SCCO colleague Colin Campbell, as well as 20 barristers and five costs lawyers.
The barristers include QCs Nick Bacon, Simon Browne, PJ Kirby and Ben Williams, as well as leading juniors such as Erica Bedford, Kevin Latham, Roger Mallalieu and Robert Marven.
Mr Campbell is a consultant at costs firm Kain Knight and three of the costs lawyers on the panel – Andrew Bennetts, Chris Butler and John Ivory – work for the firm too.
CADR offer the full range of services – arbitration, mediation, early neutral evaluation and expert determination – as well as provisional assessment and straightforward legal advice.
It has members available in London and the South East, Manchester, Leeds and the South West, and plans to expand the catchment area rapidly. CADR is also working with various ADR bodies and courts to provide a legitimate resource of costs expertise in Europe, the Middle East, Singapore, Hong Kong and Australia, with further associations expected in North America.
Hannah Rawlins, CADR’s registrar said: “We are very pleased to launch CADR with a plethora of costs luminaries appointed on our panel. CADR’s experiences in dealing with the frustration of clients adapting to Jackson’s regime changes, research commissioned by UK Trade and Investment on legal costs in an international capacity, and the significant delays that are currently experienced in the Senior Courts Costs Office have subsequently formed the basis of the CADR concept.
“We are working closely with various ADR bodies in an attempt to place CADR in an environment where demand for a relevant and effective solution to costs issues has now become significant.
“Fuelled by the effects of the Jackson reforms and our expansion strategy, CADR will be looking to invite further costs experts onto the panel over the coming year.”
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Proportionality: now two costs judges to one
A second master of the Senior Courts Costs Office has expressly disagreed with the Senior Costs Judge on the issue of whether pre-LASPO additional liabilities should be subject to the new proportionality test.
Master Brown instead backed the analysis of Master Rowley just before Christmas that only base costs should be subject to the test, contrary to Master Gordon-Saker’s ruling in BNM, which is going to the Court of Appeal later this year.
Even if this was wrong, Master Brown said, additional liabilities should not be aggregated with the claimant’s base costs for the purposes of the test.
Sitting as a county court judge in Murrells v Cambridge University NHS Foundation Trust, a clinical negligence case, Master Brown explained at length why he came to his conclusion, echoing many of Master Rowley’s findings.
He noted that if the test did apply to additional liabilities, it would have “a considerable prejudicial effect upon those litigants and lawyers who have entered into pre-commencement funding arrangements”.
He said: “It seems likely that they will have entered into such arrangements in the reasonable expectation that the additional liabilities would continue to be recoverable as they were pre-LASPO.
“To apply the new test to additional liabilities in the way contended for would, however, require many litigants to submit to a substantial, if not complete, disallowance of their additional liabilities as against the other party or parties to the litigation, whilst at the same time the liability to pay an insurer or the lawyers the additional liability would be preserved.
“If that were right it would inevitably lead to many litigants, including -it might be observed- victims of mesothelioma, having to give up deserving claims or defences. I agree with Master Rowley: in these circumstances the defendant’s contention cannot be reconciled with transitional provisions and the clear will of Parliament. The intention must have been to provide, at the very least, an orderly retreat from the old funding scheme…
“In the circumstances I respectfully disagree with the decision of Master Gordon-Saker in BNM as to the application of the new proportionality test to additional liabilities and therefore also as to the need to aggregate base costs with additional liabilities.”
Master Brown added that even if he had decided the test did cover additional liabilities, he would still have ruled that it was not appropriate to aggregate additional liabilities with base costs in applying it.
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Warby: no jurisdiction after order was sealed
A High Court judge has refused newspaper columnist Katie Hopkins permission to appeal against his high-profile ruling that she had to pay £24,000 in damages over two libellous tweets, saying she applied too late.
He indicated that he would not have granted permission anyway.
Mr Justice Warby handed down judgment on 10 March in favour of blogger and campaigner Jack Monroe, and then heard argument and made his decisions on costs. These included an order for an interim payment of £107,000 on account of costs. The formal order reflecting these decisions was sealed on 21 March.
In his ruling yesterday, Warby J recorded: “During this process there was no application for permission to appeal. The skeleton argument for Ms Hopkins stated that she was considering her position in relation to an appeal but was not making or seeking an extension of time for doing so.
“It would appear that the question had been considered and a conclusion reached that no application would be made at that time. It was said that any application would be made to the appeal court.”
On 23 March, Ms Hopkins’ solicitors, Kinglsey Napley, told the judge that she intended to appeal and that leading counsel had advised that it would be desirable to seek permission from him, prior to applying to the Court of Appeal.
However, Warby J decided that, as the order had been sealed, he no longer had jurisdiction over the case.
“A reserved judgment is given, and the decision is made, when the judgment is handed down at a hearing in court. On the face of it, the application to the lower court must be made then, or at some later date to which the hearing is then adjourned for that purpose, at the request of the potential appellant or at the instigation of the court.
“If an application is not made at one or other of those times, it can only be made to the appeal court. This is a clear and understandable regime, which places the onus on the party who may wish to appeal to make a decision, or to ask for time to make one.
“The standard practice of circulating reserved judgments [as was done here] should make it easier for a party to decide whether to seek permission, and to identify grounds of appeal which can be argued at the hand down. It is inherently desirable to avoid afterthoughts, and to avoid the uncertainty for the opposite party that would result if these were permitted.”
Kingsley Napley said the judge could still comment on the proposed grounds of appeal, but having concluded that he had no jurisdiction, the judge declined to do so.
“But I will say this. I would have refused permission, as I do not consider any of the four grounds of appeal to have a real prospect of success or that there is any other compelling reason for an appeal to be heard.
“This was not a case which raised any great issues of legal principle. It turned essentially on its own facts. The points of law that are raised are in my view untenable. The Court of Appeal will not lightly interfere with findings of fact.”
Warby J also refused to stay payment of the £107,000 and the assessment of the costs.
“The point is made that the claimant’s solicitor has declined to give any undertaking or comfort as to repayment of the £107,000, if the court decided that should be done.
“It is Ms Monroe herself who would be liable to repay, and it is said that she is of limited means. I do not consider that the information before the court discloses a sufficient risk of these monies being lost, to justify the imposition of a stay.
“The question of whether to stay assessment can be reconsidered if an application is made to the Court of Appeal, and the single judge takes a different view from mine on the merits of the proposed appeal.”
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Gibraltar: some concern over insurer with little track record
The High Court has accepted after-the-event (ATE) insurance cover of £5m as sufficient to dismiss an application for security for costs.
Mr Justice Snowden described the ATE market as “substantial and mature” and that insurers did not have a commercial incentive to fight tooth and nail to avoid paying out because of the damage it would do to their reputation.
However, the judge expressed some concern that part of the ATE was being provided by a Gibraltar-based insurer with little track record.
He was ruling in Premier Motorauctions Ltd & Anor v Pricewaterhousecoopers LLP & Anor [2016] EWHC 2610 (Ch), an action being brought by the joint liquidators of the claimant companies against PwC and Lloyds Bank which they say is worth up to £54m. The defendants have estimated their costs at £7.2m between them and sought security for costs.
The liquidators have put in place a multi-tiered ATE policy worth £5m: the primary layer of £250,000 is provided by QBE Insurance, the next £750,000 by Elite Insurance, the next £1.75m by QBE, the next £750,000 by Elite, the next £500,000 by Acasta European Insurance Company, and the final layer of £1m by DAS.
Snowden J said the starting point of any analysis of whether to order security for costs must be to ask the threshold jurisdictional question posed by CPR 25.13 – whether there was “reason to believe” that the liquidators would be unable to pay the defendant’s costs if ordered to do so.
Reviewing the case law, he followed the approach of Mr Justice Stuart-Smith in Geophysical Service Centre v Dowell Schlumberger (ME) Inc [2013] EWHC 147 (TCC).
Snowden J said: “The question is not whether the ATE policy provides the same security as cash or a bank guarantee, or indeed whether the ATE policy provides the same security as might a deed of indemnity from the same or another insurer.
“It is whether, having regard to the terms of the ATE policy in question, the nature of the allegations in the case and all the other circumstances, there is reason to believe that the ATE policy will not respond so as to enable the defendant’s costs to be paid.”
He added that there was also “a public interest in permitting ATE insurance on appropriate terms to provide access to justice for insolvent companies under the control of responsible insolvency office-holders”.
The judge went on to dismiss the defendants’ various criticisms of the ATE policy, such as their questioning of whether full disclosure of material facts had been made to the insurers.
He noted that the policy had been taken out with the assistance of experienced lawyers and that the claimants had no commercial interest in breaching its conditions.
“Moreover… the joint liquidators have every incentive to ensure that the terms and conditions of the ATE policies will be adhered to and that they will respond. The companies have no assets, so that the joint liquidators must be well aware that if the companies were to lose and the ATE policies were not to respond as a consequence of any failure on their part, there would at least be a significant prospect of the defendants applying for a costs order against them personally under section 51 of the Senior Courts Act 1981.
“I would add that although the defendants suggested that an ATE insurer faced with an adverse costs order against the companies would be likely to fight tooth and nail to deny liability under the policies, I think that point was rather overplayed…
“The ATE market in the UK is now a substantial and mature one, and a significant part of that market relates to the funding of insolvency cases. It is also one in which the relevant professionals such as insolvency practitioners and solicitors are well-informed as to the reputations of the rival ATE insurers.
“In this situation, whilst ATE insurers are of course entitled to take a stand on their policy terms and conditions, they are unlikely to have a commercial incentive to take an unusually defensive line in seeking to avoid liability under the policies they issue. If they were to do so, this would soon become known in the market, and potentially profitable future business would be placed elsewhere.”
The defendants also argued that no reliance could be placed upon the policies with Elite and Acasta because they were based and regulated in Gibraltar, and have no credit rating.
Snowden J ruled: “A comparison between an ATE policy and the traditional requirements for the provision of cash or a ‘first class’ bank guarantee where security for costs is ordered is not appropriate when applying the threshold jurisdictional test under CPR 25.13. Where there is an ATE policy in place, the question is simply whether there is reason to believe that the insurer will not pay under the policy when called upon to do so.
“In that regard, whilst the absence of a credit-rating and concerns over the failure-rate of Gibraltarian insurers do suggest that there might, in general terms, be greater risk of Elite or Acasta defaulting on their obligations than, say, QBE, at least in relation to Elite there is evidence that it has an established track record, and there is nothing that gives me any particular reason to believe that it will not pay if called upon to do so under the policies that it has issued.
“That is not the case in relation to Acasta. The reality is that I have seen little or no evidence about its history or current operations, and the lack of any recent financial information and the points made by the defendants as to its balance sheet do give me reason to doubt its financial standing and ability to pay under the policy that it has issued.
“If Acasta stood alone, I would, on the basis of the evidence that I have seen to date, be inclined to think that the jurisdictional threshold under CPR 25.13 had been crossed.
“As it is, however, Acasta is the provider of only one layer of ATE insurance, of £500,000 in excess of £3.5m. On the basis of the current estimates, this layer of assessed costs will not be reached until well after disclosure and possibly much later.
“Accordingly, and consistently with the practice of the court to order the provision of security for costs in stages as a case progresses, I do not think that it would be appropriate, at least at this juncture, to order the provision of security for costs in place of the Acasta layer.”
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Newly launched third-party funder Bentham Europe – a joint venture between leading listed Australian funder Bentham IMF and US hedge funds – has hired a leading litigator from Irwin Mitchell as its chief investment officer.
Jeremy Marshall was formerly Irwin’s London head of litigation and dispute resolution and joins as Bentham opens its London office, having first announced its plans in March.
Bentham Europe’s stated aim is to become Europe’s leading litigation funder “by investing in a broad range of high-value commercial litigation and international arbitration claims”. It will particularly focus on cartel cases, multi-party actions and securities litigation with a claim value of £5m plus in single-party cases and more than £30m in multi-party cases.
IMF has agreed co-funding arrangements and joint venture arrangements with subsidiary entities of funds managed by Elliott Management Corporation. IMF said these funds have billions of US dollars under management globally.
The pair are splitting equally the funding costs and operational expenses of Bentham Ventures BV, and in return will share in the profits and losses on an equal basis. They will jointly guarantee the business’s funding obligations to litigants, including adverse cost exposure.
Bentham Europe Ltd is a wholly owned subsidiary of Bentham Ventures, and will identify, evaluate and recommend funding opportunities to the joint venture. IMF will provide “certain consultancy services” for a fee.
John Walker, managing director of Bentham Europe and one of IMF’s founders, said: “We are looking to reinvent the market for third-party litigation funding with a streamlined approach to choosing cases and the financial ability to fund the largest multi-party claims. Having an experienced litigator, like Jeremy, with significant experience of the UK market will be a direct benefit to the law firms and the in-house community we will be working closely with.”
Mr Marshall added: “The opportunities are significant and I look forward to developing the European market as we fund major commercial litigation and arbitration claims.”
Bentham IMF’s annual results to 30 June 2014, published last month, showed that it recovered £42m from investments that completed in the year, of which £14.4 was net gain. Overall the company’s profit in 2013-14 was £5.5m. Over the 159 cases it has completed in its history, IMF has generated a gross return on every Australian dollar invested of 2.73 times.
Of the 159 cases, there were 104 settlements, 14 wins, six losses and 35 withdrawals. IMF is currently invested in 30 active cases with a combined claim value of £1.15bn.
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Two of UK’s leading medico-legal reporting agencies have launched a quality mark for medical experts in a bid to head off criticisms of the current regime.
Coming at the same time as the government’s whiplash consultation, which seeks to introduce independent medical panels, Premex Group and Premier Medical Group have endorsed the newly created Certificate in Medical Reporting (CertMR).
Premex Services and Premier Medical Group estimate that between them they procure 50% of all medical evidence required in personal injury cases in the UK. Over 3,000 practicing NHS medical experts from both companies’ panels are expected to complete the new qualification.
Medical professionals seeking the accreditation must complete one or two modules depending upon their expert speciality. The first module confirms that the expert fully understands part 35 of the Civil Procedure Rules (on experts) and the second module confirms their awareness of the latest relevant medical literature regarding whiplash-associated disorder. Once awarded, the CertMR will be on every report from that expert.
Donald Fowler, managing director of Premex Services, said: “The CertMR accreditation will provide added reassurance to all stakeholders in personal injury cases that the doctors who prepare medical reports on behalf of Premex Services and Premier Medical Group and their clients have met a rigorous set of agreed standards.”
“It is important to recognise that there are bad apples in every barrel and as industry leaders we are committed to working with only the best possible medical experts, including only those who take their independence and position as officers of the court very seriously.
“This accreditation, endorsed by our two firms and in part developed by the leading legal training business Bond Solon, will further raise the bar in terms of the quality of the medical evidence used in personal injury cases and set the benchmark for others to reach.”
Stuart Sheehy, managing director at Premier Medical Group, added: “We know the medico-legal experts both our companies use do a great job and uphold the highest standards of professionalism and independence… But with this jointly agreed accreditation we can begin to put in place more formal recognition of their knowledge and expertise.
“In the case of whiplash, we have sought to ensure medical experts on our panels have access to all the latest studies and evidence to help them make informed and objective decisions on injuries. It will help to overcome a growing perception that every claim for whiplash is somehow a fraudulent claim.”
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A claimant’s failure to update his budget in advance of an unplanned preliminary hearing has led a High Court judge to rule that “every assumption” would be made against him in assessing the costs.
Mr Justice Warby said ordering no costs would be disproportionate, and was in any case not a sanction prescribed by CPR 3.18 (relating to assessing costs where a costs management order has been made) or the practice direction.
Simpson v MGN Ltd & Anor [2015] EWHC 126 (QB) concerned the costs of a preliminary hearing on meaning and an application to strike out a plea of justification in a libel claim brought by Premier League footballer Danny Simpson against the Daily Mirror.
The claimant’s original budget had included a contingency for such a hearing – which the defendant contested – but Master Yoxall declined to direct a preliminary issue and so neither approved nor disapproved the figure. However, the defendant’s contingency was agreed.
The claimant then sought an order for the preliminary hearing and served an amended budget on the defendant, which failed to respond until two working days before the hearing; the claimant had not filed the amended budget with the court in the meantime.
The hearing was largely a success for the claimant but the defendant argued that his approved costs budget did not make provision for the hearing and there was no good reason to depart from it, meaning no costs should be allowed. The claimant described this as “rank opportunism”, especially given the late reply to the claimant solicitor’s letter on the amended budget.
Warby J said the application of rule 3.18(b) – not departing from a budget unless there is good reason to do so – was not straightforward here, given that the claimant had put forward a budget for this phase of the litigation which was not agreed, approved or disapproved, while the defendant’s budget had been agreed.
“I am inclined to think that the wording of CPR 3.18 was not aimed at such a situation, but rather at ensuring that once the court has reached a decision on what it is reasonable for a party to spend on a given phase that conclusion should be final in the absence of some good reason. However, that was not a point addressed in argument and I reach no conclusion on it.
“Assuming that I am wrong in this, it seems to me that on the facts of this case there is good reason to depart from the budget approved by Master Yoxall for this phase of the litigation, by allowing recovery of some costs by the claimant.”
Among the factors the judge took into account were that the claimant’s proposed budget for this phase had been known from before the overall budget was set, the revised budget that was sent through, and the defendant’s delayed response to it – “that is not a co-operative approach”, he said.
Further, “the claimant’s failure to comply has had only a modest impact on the efficient dispatch of this litigation, and no appreciable impact on the efficient conduct of litigation overall. It was never likely to have any substantial impact on either.”
Making every assumption against the claimant in assessing the hearing’s costs was a “just and proportionate” sanction that “in more general terms provides a sufficient incentive to parties to comply”.
The defendant also complained that while the claimant had filed its costs schedule for the hearing with the court, it had not been served on the defendant.
Again Warby J noted that this failure to comply with paragraph 9.5 of practice direction 44 did not prescribe a sanction of no costs being recovered.
However, he said the failure led to unnecessary delay in costs in resolving the assessment and he made a deduction from the costs claimed to reflect this.
Overall the claim for £24,096 was slashed to £10,500 (both including VAT), with the major reduction coming from only allowing the costs of one counsel when two had been instructed, which Warby J said was not necessary.
Jon Lord, a Council member of the Association of Costs Lawyers, commented: “This ruling shows how some of the kinks in the budgeting process still need to be smoothed out; otherwise they risk just introducing an unnecessary layer of costs into litigation.
“In keeping with the football theme of the case, the only goal scored was an own goal by Mr Simpson in failing to serve his team sheets (budget and statement of costs) on the opposition before the game. The penalty for that was sensibly proportionate in the form of the additional cost caused by his failure.”
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Kain Knight, a leader in the legal costs industry, is hosting a ‘best practice’ seminar on legal costs for solicitors handling Court of Protection work in the New Year.
The seminar, which is free of charge, will be held at the Crowne Plaza Hotel in the City of London on Thursday 16 January 2014, with registration from 8.00am.
Chairing the seminar will be Kelly Stedman, a senior Costs Lawyer from Kain Knight.
Expert speakers on Court of Protection work will be His Honour Judge Denzil Lush, and Katherine Scott from barristers’ chambers 39 Essex Street. Both speakers will be answering questions from the floor after their presentations.
Court of Protection cases have become a growth area for lawyers, driven by more people living into advanced old age, and by an increase in large personal injury pay outs.
To see the full details and to register for the seminar, visit the Kain Knight website www.kain-knight.co.uk or email Penny Ridoutt at penny.ridoutt@kain-knight.co.uk.
Nick Hood Media & Marketing Advisor, Kain Knight Tel: +44 (0)7967 658 296 E: nick.hood@kain-knight.co.uk Twitter: @Kain_Knight | Neil Boom MD, Gresham PR Ltd. Tel: +44 (0) 7866 805 108 www.greshampr.co.uk |
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ARAG Legal Services has retained both the Legal Expenses Team of the Year and the Managing General Agents Team of the Year awards at this years’ Underwriting Service Awards, held at the Royal Garden Hotel in Kensington yesterday evening (16 November).
It is the fifth year in succession that the legal expenses and assistance provider has been voted the service leader in the Legal Expenses category, which is awarded after a study of empirical data gathered from a large number of UK broking professionals.
ARAG has also achieved a unique “three-peat” in the MGA Team of the Year category, having picked up the award in both 2015 and 2016. The category was previously decided from a similar survey of broker opinions but this year was awarded by a panel of independent industry experts judging submissions made by each company.
“I always say that there is something a little bit special about the Underwriting Service Awards”, comments David Haynes, Head of Underwriting and Marketing at ARAG “because we are being judged by our peers in the industry.”
“ARAG makes no secret of the fact that service is very important to us and is one of the key reasons we have been as successful as we have. We never pretend that service excellence is easy, and there is a huge amount of hard work that goes on at ARAG to maintain the standards we have set for ourselves. So, these awards really do reflect a big team effort.”
“The service of our underwriting teams is obviously at the forefront tonight, but the MGA Team of the Year award also recognises the work of our Product Development team, who worked very closely with our broker partners to develop the Care Provider Legal Solutions product, so it is right that they should take some credit too.”
Now in their seventh year, the Underwriting Service Awards are organised by the publishers of Insurance Post, which has been providing news to the UK insurance industry since 1840, and its sister title Insurance Age.
Blog
The increasing appetite for third-party funding in Europe

Although investors in common law jurisdictions have for sometime recognised litigation as an asset worth investing in, litigation funding remains less prominent in the civil law jurisdictions of mainland Europe. However, the European appetite is beginning to shift in favour of litigation funding, and many large dedicated funds active in common law jurisdictions such as the US, UK and Australia are starting to provide third-party capital to claimants with strong cases.