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.”

Neuberger: figures are very disturbing

The pre-Jackson regime of recoverable success fees and after-the-event (ATE) insurance may breach the European Convention on Human Rights, with “very serious consequences for the government”, the Supreme Court suggested yesterday.

Lord Neuberger, the court’s president, said that if this argument was right, those who paid out disproportionate additional liabilities “may well have a claim for compensation against the government for infringement of their article 6 rights”. Article 6 is the right to a fair trial.

Implicitly acknowledging the tide of litigation that could follow such a decision, he did not take the argument any further at this stage, saying the government needed the chance to address the court.

Coventry v Lawrence (No2) [2014] UKSC 46 concerned a successful private claim for nuisance brought against the occupiers of a speedway track by two local residents. In a case run under the pre-Jackson costs regime established by the Access to Justice Act 1999, the residents won at first instance, a decision overturned by the Court of Appeal before being restored by the Supreme Court earlier this year. The two respondents were ordered to pay £10,350 each in damages, and 60% of the appellants’ costs.

The appellants’ base costs from the original trial were £398,000, plus a success fee of £319,000 and ATE premium of about £350,000, totalling £1,067,000. This meant the respondents were liable for over £640,000, even before the costs of the two appeals were considered.

“These figures are very disturbing,” said Lord Neuberger, giving the main ruling. “They give rise to grave concern even if one ignores the success fee and ATE premium. The fact that it can cost two citizens £400,000 in legal fees and disbursements to establish and enforce their right to live in peace in their home is on any view highly regrettable…

“The point can equally forcefully be made from the point of view of the respondents. As relatively small business operators, they are not only having to fund their own costs, which presumably would be of the same order, but in addition they are going to have to pay some £240,000 towards the appellants’ costs. It is true that the respondents lost, but they were seeking to defend their businesses and they plainly had a reasonable case, as is evidenced by the fact that they won in the Court of Appeal.”

Lord Neuberger acknowledged how hard it is to ensure that “a case, particularly one that does not involve a very large sum of money but is potentially complex in terms of fact, law and expertise, such as the present case, is both properly and proportionately litigated”.

But he continued: “It would be wrong for this court not to express its grave concern about the base costs in this case, and express the hope that those responsible for civil justice in England and Wales are considering what further steps can be taken to ensure better access to justice. It is only fair to emphasise that this concern relates to the current system and that it is not intended to imply any criticism of the lawyers in this case.”

Lord Neuberger made plain his support for the Jackson report changes introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012, noting among other criticisms of the old regime that while proportionality had a part (albeit limited) to play when assessing the recoverability of base costs, it was excluded from consideration in relation to the recovery of success fee or ATE premium, which were simply required to be reasonable.

Lord Neuberger said the development of European Court of Human Rights jurisprudence – including in the Naomi Campbell case – in recent years meant the court could reconsider the question of whether the 1999 Act costs regime infringed the convention, despite the earlier House of Lords rulings in Callery v Gray and Campbell that it was lawful.

“In the light of the facts of this case and the Strasbourg court judgments relied on by [the defendants], it may be that the respondents are right in their contention that their liability for costs… would be inconsistent with their convention rights,” he said.

The judge also considered how the case may proceed, saying it could be that the Court of Appeal, or even the trial judge, should consider the issue first. There is likely to be a hearing to decide this with all those involved, including any relevant interveners.

Ministry of Justice: “appropriate” new threshold

The Ministry of Justice (MoJ) yesterday announced plans to increase the threshold for the court and tribunal fee remission scheme to around the level of the national living wage (NLW).

The move was specifically aimed at alleviate the impact that fees have had on the volume of employment tribunal (ET) claims, but will apply to all civil and family cases.

The long-awaited review of the impact of fees for ET claims showed a “sharp, significant and sustained fall” in claims, alongside a significant increase in the number of people who have turned to Acas’s conciliation service.

Nonetheless, the MoJ acknowledged that some people – it estimated between 3,000 and 8,000 – who were unable to resolve their disputes through conciliation then did not go on to issue proceedings because they said that they could not afford to pay.

It said: “We do not believe, however, that this necessarily means that those people could not realistically afford to pay the fee. It may mean, for example, that paying the fee might involve having to reduce other areas of non-essential spending; or that they were not aware of the help available, or thought they might not qualify for help, under the Help with Fees scheme; or they may have been unaware of the Lord Chancellor’s exceptional power to remit fees…

“While there is clear evidence that ET fees have discouraged people from bringing claims, there is no conclusive evidence that they have been prevented from doing so… Nevertheless, the review highlights some matters of concern that cannot be ignored.”

It said the “best way” to address the issue of some people being discouraged to pursue action because of fees was to extend access to the support available under the Help with Fees scheme.

This would be to adjust the income, rather than capital, test for fee remissions (anyone with disposable capital of £3,000 or more is not eligible). “We believe that this is the fairest approach because it would benefit people on low incomes, but whose income is just above the current threshold, and are therefore currently expected to pay at least something towards the fee.”

The MoJ proposed raising the gross monthly income threshold for a single person from £1,085 to £1,250, meaning anyone earning less than this would be fully exempt from fees.

This is approximately the gross monthly income that a single person over the age of 25 working full-time for the NLW (40 hours per week at a rate of £7.20 per hour).

“We believe that this is an appropriate level at which to set the threshold for a full fee remission above which the person is required to make a contribution to the fee.”

The same differentials as currently apply for couples (an additional £160 of gross monthly income per month) and for those with children (an additional £245 of gross income per month per child) would be maintained.

“Although our proposal is based on setting the threshold at the level of a single person earning the NLW, we are not proposing to increase it annually in line with increases to the NLW. This is consistent with our approach to fees generally, which are not subject to annual increases. Instead we propose to keep the level of fees and remissions in the ETs under regular review.”

Steve Ough, Chief Software Architect at Eclipse Legal Systems

Staff at Yorkshire-based Eclipse Legal Systems, the UK’s largest independently owned legal software developer, successfully organised and participated in a raffle event raising thousands of pounds for their four nominated charities.

• The Toy Library at St Lukes Hospital in Bradford, which operates a free loan service of specialist toys and play equipment to children with special needs.
• Bradford Foodbank, part of the Trussell Trust, which provides emergency food and support to people experiencing crisis.
• The Bradford Soup Run, which offers food, clothing, blankets and encouragement to the homeless.
• Pulse Radio Secret Santa Appeal, which sends presents to less fortunate children on Christmas day in the West Yorkshire region.

Raffle tickets were purchased by Eclipse staff for the chance to win a host of prizes donated by Eclipse, ranging from an iPad and a Kindle to extra holiday allowance. The total raised through ticket sales was £9,600, split between the four charities.

Steve Ough, Chief Software Architect at Eclipse Legal Systems, comments:

“We were keen to build on the money we had already raised through our sporting challenges in 2013, by organising a fundraising event to support some lesser known – but very deserving –  causes in our local area. A huge thank you to everyone who took part – the £9,600 raised will make a massive difference to all who rely upon the valuable support our chosen charities provide.”

Budget revision: court cannot approve incurred costs

There is a “high premium on swift action” when revisiting costs budgets, a High Court judge has warned, questioning why a revised budget was not prepared quicker than four days after the issue that caused it arose.

In Mr Justice Warby’s latest ruling on the budget of Conservative MP Tim Yeo in his libel action against The Sunday Times, the main revision in dispute was a £36,120 contingency to considering the impact of parliamentary privilege on the case as a result of a change in the law. Of this, nearly £21,000 had already been incurred.

Warby J rejected the submission that he could and should approve the variation pursuant to PD3E 7.6, saying this only allowed the approval of future costs.

He was pointed towards his own statement in his initial ruling on the parties’ budgets that “if work identified as a contingency is included in a budget but not considered probable by the court, no budget for it should be approved. If the improbable occurs, in the form of an unexpected interim application, the costs will be added to the budget pursuant to PD3E 7.9, unless the matter involves a ‘significant development’ within para 7.6 in which case, if time permits, a revised budget should be prepared and agreed or approved.”

Warby J said: “I still take that view, but I do not think it supports [the claimant’s] position. The key words in that passage are ‘if time permits’. If the unexpected happens, and time does not allow for a revised budget to be approved before costs are incurred, then there will often, perhaps usually, be an unexpected interim application and PD3E 7.9 will apply. The fall-back position is CPR 3.18(b).

“Mr Browne [for Mr Yeo] points out that this puts a high premium on swift action to prepare a revised budget. That must be right, but I do not see it as a good reason to adopt a different interpretation.

“Take this case. The issue is said to have arisen on 6 July. It has not been made clear to me why a revised budget could not have been prepared sooner than 10 July. There is some force in Mr Browne’s submission that the analysis I have set out is unsatisfactory for an individual paying privately, such as Mr Yeo. It leaves him in undesirable uncertainty about the recoverability of a large slice of cost until after the assessment stage.

“But I do not think that leads to a different conclusion. As I have said, such a litigant will normally have an unexpected interim application on which to peg reliance on PD3E 7.9. In any event the wording of the practice direction is too clear to allow me to accept that incurred costs can be approved in this way.”

In any event, the judge said he was not persuaded that there has yet been a “significant development in the litigation” within the meaning of PD3E 7.6 which would justify the approval of any additional costs.

Niemczewski: working party needed

The government needs to look at the underlying problems of the RTA claims process before extending it, or risk as many as 80% of cases falling out of it, the head of leading liability adjuster Garwyn Group has warned.

The Ministry of Justice is expected to announce the findings of its evidence-gathering exercise on the proposed RTA process extension in the next few weeks, with the aim of extending it to road traffic cases worth £25,000 and to employer’s and public liability (EL/PL) claims, by April 2013.

Artur Niemczewski, CEO of Garwyn Group, referred to the review of the process undertaken by Professor Paul Fenn and commissioned by the MoJ – published in July, this found that half of cases fall out even though liability is clear cut, which is less likely to be the case in EL and PL claims.

Mr Niemczewksi said: “Serious questions must therefore be asked about the effectiveness of the process in delivering its stated aims. If the government does not address the underlying issues before extending the process to EL and PL, we anticipate a much higher proportion of claims – possibly up to 80% – will drop out, and the process simply won’t work.

“Our experience is that the main reason claims leave the motor process is that the defendant is unable to respond on liability within the prescribed timescale, often because of inadequate information in the claim notification. There should therefore be a direct correlation between the mandatory content of the letter of claim and the period that the defendant is allowed to respond on liability.

“We call upon the government to recognise this fundamental principle and form a working party of practitioners to define content and timescales to allow the proposed portal extension to achieve its objectives.”

Currie: Some benefits coming through

There are too many poor-quality medical reports being produced via MedCo, and so it is premature to extend it to other types of personal injury claim, a leading claimant solicitor has cautioned.

Matt Currie, managing partner for motor road traffic accident claims at Irwin Mitchell, also called on practitioners to tell MedCo about sub-standard reports.

Writing on the blog of the Motor Accident Solicitors Society, Mr Currie said that, at the moment, solicitors could often work through the issues MedCo presented, and the instances of poor quality reports, to achieve the right outcome.

“Post law reform litigants in person will be left in no-man’s land where a doctor has failed to provide an adequate service or report,” he observed.

Nonetheless, he said some of the benefits of MedCo were now coming through: “Some of the data analytics is starting to shine a light on doctors who don’t understand the importance of what they do and some solicitors have started to recognise that attempts to ‘game’ the randomisation can have serious adverse consequences for their business.”

But he suggested that not enough progress has been made given its cost – which ultimately is paid by motorists as MedCo is funded by the Association of British Insurers.

The status of some medical reporting organisations has not been settled, which has meant both more cost and “some agencies… focused on battles with MedCo rather than optimising the service they provide”.

The increase in litigation led to MedCo’s recent announcement of a major hike in fees.

Mr Currie said: “There are anecdotal stories about the approach to audit of some agencies which suggests that the purpose of MedCo has been somewhat forgotten in the audit. Equally there are anecdotal stories about some poor agency behaviours as well.

“Ultimately this distraction means that the obtaining of good-quality independent objective medical evidence in a timely manner is not being progressed in the way it should. Whilst data is helping, practitioners still know that the quality of too many reports is simply not up to scratch.”

There is talk of MedCo’s remit being extended to cover EL/PL claims and also rehabilitation. “There are many arguments why each of this extensions would not be appropriate but the fact that MedCo is essentially still struggling with its own teething problems means that extension could only be viewed as premature,” Mr Currie said.

“Before there is any extension of the remit of MedCo the Ministry of Justice needs to take some responsibility for facilitating a solution that works for the current purpose. MedCo itself needs to ensure that audit is focused on achieving good-quality medical reports.

“At the same time, practitioners need to take responsibility for identifying bad reports and doctors who do not understand their duty. More reporting to MedCo of instances of poor reporting can only help MedCo to focus their audit and training.

“Ultimately the whole industry still needs to work together to make sure that MedCo is working for the consumers who pay for it.”

Eclipse Legal Systems, the sole law society-endorsed legal software provider, has announced integration with new-to-market ReviewSolicitors.

Founded by trio Saleem Arif (co-founder of QualitySolicitors), Michael Hanney and Pete Storey, ReviewSolicitors is a review site exclusively for the legal profession. It uniquely enables law firms to capture client feedback and display it upon an unbiased online platform.

The integration between ReviewSolicitors and Eclipse’s market-leading proclaim case and practice management solution will allow law firms to automatically email clients at the end of their transaction, requesting a review be left at www.reviewsolicitors.co.uk. This automated feedback capture process will enable law firms to refine their service offerings and provide invaluable information to assist new clients seeking legal advice.

Darren Gower, marketing director at Eclipse, comments:

“This integration with ReviewSolicitors will enable Proclaim users to harness the latest review technology platform, capturing vital satisfaction data in a way that is a seamless part of their client and matter management process.”

Saleem Arif of ReviewSolicitors adds:

“In the past, review sites in the legal profession have attracted two types of review: either from those who are extremely satisfied with their service, or those that have had a bad experience. This integration will help to provide a fuller and more representative sample of overall client satisfaction, not just the extremes. This adds a new level of integrity, helping clients to make an informed decision.”

Ellis: wriggle room is now extremely narrow

Yesterday’s Mitchell costs ruling received a hostile reaction from many lawyers, with warnings of a return to tactical litigation, more satellite litigation, and a knock-on effect on firms’ professional indemnity insurance.

Others focused on the clarity of the message that the courts will need considerable persuasion to grant relief from sanctions for failures to comply with rules, orders or directions, and that solicitors need to get their houses in order to avoid getting themselves into the situation in the first place.

Nick Bacon QC of 4 New Square – who together with Roger Mallalieu represented the successful defendant in Mitchell (instructed by Louis Charalambous at Simons Muirhead & Burton) – told Litigation Futures that “we are on a one-way ticket to Singapore” – a reference to the no-nonsense Singaporean approach to compliance with rules and directions after its own Jackson-style reforms.

“Expect turbulence on the way,” Mr Bacon continued. “There will be casualties in the short term. Solicitors will have to improve case management systems and up their game on meeting deadlines.” The “journey time” would be two to three years, and litigators should “expect no further delays”.

Andy Ellis, managing director of costs firm Practico, which also acted for the defendant, said: “This decision will have come as less of a surprise to anyone who was in court for the appeal hearing and was able to gauge the mood music.

“The position of the claimant was not helped by the absence of evidence as to any prejudice he may have suffered as a result of the refusal to grant relief. It was also evident that mere inadvertence or pressure of work – unkindly described by some as ‘the dog ate my homework’ form of excuse – will not get you home when seeking relief from sanctions.”

He emphasised that the new culture is not zero tolerance – the court was clear that it is not concerned with trivial breaches. “But the wriggle room is now extremely narrow when delay will result and especially if the court is inconvenienced.”

Mr Ellis added: “It is also telling that the first major decision that will help shape the administration of civil justice post-Jackson concerned compliance with costs management. There have been whispers that the courts’ commitment to budgeting might be waning – Mitchell shows that this is far from the case.”

Murray Heining, chairman of the Association of Costs Lawyers, said having firm guidance on how courts should approach breaches of orders and rules is “surely welcome”.

“This a judgment that will give Ethelred the unready-type lawyers sleepless nights. Those lawyers working with a team of experts, including costs lawyers, should sleep more comfortably.

“The court expressed hope that the decision would send out a clear message to litigators. Those practising in civil litigation, if they have not already reviewed their practices and procedures, must do so now and ensure that they have the resources to ensure compliance with the CPR and all orders made. They must also ensure that they have the resources to meet procedural obligations.”

Rod Evans, the president of the Forum of Insurance Lawyers, said that while many will understand “the positive reasons why such a robust approach has been adopted, this may well mark a retrograde step in personal injury litigation”.

He explained: “For years we have been encouraged to adopt a ‘cards on the table’ approach to litigation and to work sensibly together to resolve the matter as soon as possible at proportionate cost.

“The Court of Appeal’s (almost) zero tolerance to delay will mark a return to the tactical litigation that had reduced significantly, certainly in the most serious cases. I have no doubt that parties will now be tempted to try and catch each other out. In particular, this decision reinforces the advantages to the claimant of frontloading a case prior to issue and then forcing the defendant on the back foot with strict timetables.

“This decision will also encourage opposed applications rather than consent orders, which may well negate the Court of Appeal’s desire to avoid satellite litigation. This will make Mr Justice Ramsay’s review of pre-issue conduct next year even more important.”

Francesca Kaye, president of London Solicitors Litigation Association, agreed that the assertion strict adherence to the rules would stem a rise in satellite litigation was “questionable”. She said: “There’s every chance that there will be a great deal of satellite litigation around professional negligence claims. So, we may simply be moving the problem not eliminating it.”

Sue Nash, founder of Litigation Costs Services, argued that whilst the sanction itself was Draconian, “the reasoning behind the first instance judgment was sound – Master McCloud made reference to the Master of the Rolls’ 18th lecture in the implementation programme of the Jackson reforms, in which he highlighted ‘the need to further the proper administration of justice, where that goes beyond the interests of the immediate parties’.

“Whether this judgment sees a knock-on effect in terms of paving the way for more professional negligence claims brought against solicitors who make costs budgeting errors remains to be seen.”

Certainly James Field of Triton Legal thought it would do. “Negligence claims can be expected to be for bigger amounts than before,” he said. “Previously, the quantum of negligence claims relating to procedural errors were often restricted to the limited cost of a court application to put matters right. From now on lawyers and their insurers can expect to pay more in compensation for negligence claims arising out of litigation errors.

“How will this impact on insurance brokers and insurers? It may be that the Mitchell decision will make firms with a litigation department a less attractive risk. Firms could see their insurance premiums increase from next renewal to reflect this.

“It may be that a litigation firm’s diary systems will be under even more scrutiny than before from insurers, and brokers may face difficulty placing insurance for firms whose systems are not sufficiently robust. While most firms are now pretty good at keeping track of key dates such as expiry of limitation or deadlines for service, an equally rigorous approach will now be vital for all other deadlines and procedural steps in litigation.”

Nash: costs lawyers play a crucial role

Costs lawyers and others with rights of audience who are not currently eligible for appointment as Queen’s Counsel should have the right to apply for silk, the Association of Costs Lawyers (ACL) has said.

Responding to a consultation by QC Appointments (QCA) – the body that organises the annual silk round – the association argued that “recognition of those at the pinnacle of their branch of the profession should apply equally to costs lawyers, who often will be recognised as the expert in respect of costs in their particular area or more widely”.

It said the benefit of recognition of expertise in the area of costs law was that litigants and their representatives would be able to rely upon the mark of quality conferred by the rank of QC within the specialist field of costs law, in the same way that expertise is presently assured by the achievement of the qualification of becoming a costs lawyer.

The call echoes that of the Legal Services Consumer Panel, which told QCA that QC status should be available to all advocates appearing in the higher courts, whether or not they are barristers or solicitors.

The QCA consultation paper asked whether it should be necessary to hold rights of audience for all civil or all criminal proceedings to be eligible for QC status; whether any higher rights at all should be sufficient to found eligibility; or whether there was a suitable middle position between those two options.

The ACL supported a middle option of permitting lawyers specialising in a particular area of law to be eligible for appointment as QC in particular designated areas.

It said: “The restriction of the rank of Queen’s Counsel to those specialist barristers and solicitors in their particular fields at the expense of other branches of the profession to whom that mark of excellence can likewise be applied is unjustifiable and risks the relegation of a recognised branch of the profession, containing numerous experts who would otherwise be candidates for silk, to a lesser role.

“It is therefore suggested that the category of costs lawyer be eligible for appointment to the position of Queen’s Counsel, to recognise the potential for excellence in this branch of the profession, and the rank be opened up to those qualified as costs lawyers, subject to the satisfactory demonstration of suitable expertise and experience in accordance with the established criteria.”

ACL chairman Sue Nash said: “Expert costs lawyers play a crucial role in keeping the courts and wider litigation system working, and we see no reason why this should not be recognised in the same way as the contribution of others.”

Lord Thomas: the need “even greater” to modernise English commercial law

Privatised systems of justice, such as arbitration, can result in situations where the “law can ossify” and democracy is undermined, the Lord Chief Justice has warned.

Lord Thomas said that “many have felt” that the restrictions on the right to appeal decisions of commercial arbitrators were “too tight and had stultified the development of English commercial law”.

Delivering the Lord Williams of Mostyn memorial lecture, he said: “The more disputes that are and have been determined by private forms of adjudication, the fewer opportunities the courts have had to develop commercial law.

“And the consequence of this is that the law can ossify. It cannot work itself fine; correct errors; make clear the content of rights. Its ability to provide a sure framework for the development and carrying out of social relations, business dealings and so on is undermined. It thus undermines our democracy.”

Lord Thomas said that, until 1979, a “substantial contribution” was made to the development of commercial law by appeals from decisions of arbitrators. He referred to his own experience as a young commercial lawyer, who knew that if he lost an arbitration, he could appeal to the Commercial Court.

“It is undeniable that the practice, as applied not only to the maritime market but also to the commodities market, produced far too many appeals. So in 1979 an Arbitration Act restricted the right of appeal.

“That restriction is now embodied in the Arbitration Act 1996. Many have felt that the restrictions are too tight and have stultified the development of English commercial law.

“As long ago as 2004 in delivering the Sixth Cedric Barclay Lecture, Sir Robert Finch, then the Lord Mayor, called for a widening of the scope of appeals from commercial arbitrations as a need to help the modernisation of English commercial law so that it kept in tune with the developments of the commercial world. Eleven years on, the need is even greater.”

Lord Thomas said resolution by arbitration or mediation could not “clarify or develop” the law.

“Insofar as decisions circulate, they often circulate to a narrow range of lawyers who may then gain special knowledge of the way in which groups of arbitrators decide issues.

“It therefore lacks the features that would enable it to play the wider normative role of decisions reached in litigation before the courts”.

Some funders don’t have access to the money they may claim they have

Posted by Neil Rose, Editor, Litigation Futures

Third-party funding (TPF) has suddenly become the black sheep of the litigation finance industry. In the wake of the spectacularly unsuccessful TPF-backed Excalibur Ventures case – a huge piece of litigation that Lord Justice Christopher Clarke described in December as “speculative and opportunistic” – questions are now being asked about what the problems that are emerging with some of the funding in that litigation mean for the rest of the industry.

This article in yesterday’s Lawyer magazine is a good case in point. But I want to take a broader perspective. In my experience this is not an industry looking to hide in the shade, but its profile has become, in the eyes of some, shady.

In the many years I have been writing about TPF, I have tried (and not always succeeded) to keep a sense of proportion. When Lord Justice Jackson was undertaking the fieldwork for his report, he asked a major roundtable of funders how many cases they had funded – between them it was less than 100.

That may have been a few years ago, but in the context of the amount of litigation in England and Wales, let alone the US and elsewhere, the number of TPF-backed cases remains miniscule – in the first four years of its existence (up to last October), the world’s largest funder, Burford, invested in 51 cases across the world. These were, of course, big cases – Burford’s collective investment in them was $386m.

There are various reasons for this, the most obvious of which is that they need to be big cases to generate the kind of potentially big returns that will attract investors. And, also, given the risk they are taking can run into millions of pounds, funders are understandably very, very picky about the cases they take on.

One of the stranger reasons I keep hearing, however, is that lawyers aren’t keen on TPF because they don’t understand it. Funders are constantly talking about the need to educate the market. But just how hard is it to understand? A funder will pay your legal costs and cover any adverse costs in return for the prospect of taking a proportion of your winnings. There’s a lot more to the detail, but as a concept, it’s not difficult, is it?

Where the market seems to be getting a bad name is through a lack of regulation and cowboys trying to make a fast buck. The challenge for lawyers is to work out who are genuine funders with money in the bank, rather than those who are essentially brokers or try and get the money together once they have a possible case. But lawyers are used to doing due diligence, aren’t they?

And they also have the Association of Litigation Funders (ALF) as a guide. Last week the ALF updated its code of conduct in three significant respects – requiring members to maintain £2m of capital, introducing a complaints procedure and ensuring the code applies to any entity with which a member is connected.

ALF chairman Leslie Perrin readily acknowledges that £2m is not enough, but it is the first step in the still-young association’s journey, and a big one at that. If there is one thing that is critical to the TPF market, it is the ability of a liable funder to pay out when necessary. So far as I know, it has not proven a problem for the eight members of the ALF – it is a hard but recognised truth that the best thing that can happen is to lose a few and be seen to pay out. It is important to note that none of the Excalibur funders are either UK based or ALF members.

The problem with voluntary self-regulation, of course, is that however strict the code of conduct, however damning the finding after a complaint, there is not much the ALF can do to a member other than expel it from the association. They can then carry on exactly as they were doing beforehand.

So does that mean we need full regulation? The only clamour for that has come from the US Chamber of Commerce, which has lobbied hard over here, buying itself platforms at various conferences and getting in front of politicians.

Having presumably failed to have an impact domestically on this issue, the chamber seems to have targeted the UK as the place to tip the first domino, using the fact that some members have operations in the UK as a pretext. But the interest in what they are saying is minimal at best – they just don’t have a place in the debate over here.

The reality is that the case for regulation has simply not been made out yet – it seems a lot of effort for such a small number of players – and the ALF needs to be given more time. Even if the Excalibur case does raise questions, might there be other ways of addressing them, such as early payments into court as a way of showing a funder is good for the money?

The immediate challenge for the ALF is to become a well-known, respected player in the litigation world so that the first question a solicitor investigating a funder will ask is whether they are a member, and if not, why. It should be in the interests of organisations like the Law Society and City of London Law Society to devote time to appraising the ALF and, assuming it passes muster, advise solicitors only to use its members.

In a world of conditional and contingency fees, it is hard to oppose TPF on the basis of principle – by its nature it does not promote frivolous litigation, and in fact arguably speeds up settlement by showing the other side that a disinterested third party is prepared to put their money where the claimant’s mouth is.

At the same time, TPF has not developed in the way envisaged when the Civil Justice Council (CJC) first championed its cause in the mid-2000s and effectively opened the door to the funders in the market today. In a report in 2007, the CJC said: “Third-party funding has the potential to increase access to justice in areas of consumer rights and multi-party action.”

But that has not really happened; unsurprisingly, funders have instead been attracted to big-stakes commercial litigation and arbitration, rather than facilitating the kind of access to justice deficits that concerned the CJC.

To me that is the failure of the TPF market to date, not any want of regulation.

Disclosure: rules have become impossibly burdensome

The cost of commercial litigation remains “exorbitant”, with abolition of general disclosure the first attack that should be made on it, a leading City solicitor has argued.

Nigel Boardman, a high-profile partner at magic circle firm Slaughter and May, said the legal profession has not given “an adequate response to the change in the economy since 2008”.

Writing in the Financial Times, he said: “We are still too keen to protect our own short-term interests when we should see that our and Britain’s long-term prosperity depends on a vibrant and fair legal marketplace, in which the law assists business rather than impeding it.”

On litigation, he acknowledged that there has been “some attempt at reform” since the excesses of BCCI’s case against the Bank of England in 2005. “But the price of justice remains exorbitant.”

He pointed to Boris Berezovsky’s recent suit against Roman Abramovich, after which Mr Berezovsky has had to pay, as the loser, £35m towards Mr Abramovich’s costs after a 12-week trial. The legal action by Kazakstan’s BTA Bank against former chairman Mukhtar Ablyazov involves 50 leading solicitors, including 22 partners, and 32 barristers, including eight QCs, he recounted.

“This is a return to the dark days of Jarndyce v Jarndyce – the Dickensian family dispute that runs for generations until the entire estate is consumed by costs. It is unacceptable that it should continue.

“At minimum, a reform of civil litigation should do away with the process of document disclosure, whereby each party has to produce any document that may be relevant to the case – a rule that has become impossibly burdensome with e-mails and electronic storage. Instead, each side should produce only those documents on which it relies, which would slash the cost of litigation.”

Mr Boardman also called for an end to a reliance on oral hearings, “which date from a time when most people could not read and are now merely an expensive and otiose theatre”. Instead, the judge should assess the merits of the case on the basis of written submissions, he said.

“This system already works in Germany, where nearly all commercial disputes are resolved with less than an hour of oral hearing and no document disclosure. I would not suggest Germany owes its economic success to an effective system for resolving commercial disputes – but it must help.”

Other issues included simplifying the tax code and “sensible deregulation” of corporate law, such as around the requirement for a prospectus when issuing shares.

Mr Boardman said the government would have to lead these reforms, but “the legal profession – which has undeniably benefited from the undue complexity of corporate regulation – must now do more to shape and promote a fundamental reform of business law”.

ARAG crowned legal expenses winners

ARAG walked away with the legal expenses team of the year accolade at the Underwriting Service Awards, held in Kensington, London on Tuesday 19 November. The awards were coordinated by leading insurance publications Post Magazine and Insurance Age.

Despite a strong shortlist, ARAG excelled in its class to win this prestigious award. The awards are unique in one key area: they are based not on insurer submissions judged by a panel, but on large-scale objective input from UK commercial broking professionals. Over 1,000 individuals were asked to grade the all-round professional calibre for each insurer they have worked with during the previous 12 months.

Managing director Tony Buss comments: “Although this was the fourth year of the awards, it was the first year that legal expenses had been included, so we are delighted to be the first winner of the award.”

The last recognised survey on legal insurance was in 2010, which also saw ARAG triumph.

Dave Haynes, head of underwriting, said: “Such a win is testimony to ARAG’s ability to provide high-quality legal protection and assistance products in areas such as motor, homeowners, businesses, and private and commercial landlords.”

ARAG partners can be assured that products meet their specific requirements. “Our philosophy is to make our partners stand out from the crowd by developing LEI products that are unique to their particular markets,” added Dave.

Burke: year of transition

Leading legal expenses insurer DAS dipped into the red last year, while its after-the-event insurance business shrank.

The Bristol-based company reported that a loss after tax of £5.7m for 2015, compared to a restated profit of £0.5m in 2014.

Gross written premium for 2015 was £111m– down from £143m – which it attributed primarily to a reduction in ATE business.

The company said ATE premiums were “impacted by a reappraisal of the basis of estimating revenue for clinical negligence products, premium adjustments from a review of old policies and other adjustments” – resulting in a total one-off reduction of £16m.

DAS’s loss ratio hit 76.4%, meaning that it paid out £76.40 in claims for every £100 received in premiums, while the combined operating ratio – calculated by taking the sum of incurred losses and expenses and dividing them by earned premium – also worsened significantly from 103.5% to 119.6%.

More positively DAS reported launching a new home legal expenses offering, while it maintained a “solid capital position”, benefitting from a capital injection of £5.3m from its parent company ERGO during the year.

During 2015, the company also won the gold retail award at the 2015 Nudge Awards for the use of behavioural science in creating communications to increase customer understanding of legal expenses insurance by designing and testing customer welcome letters to maximise comprehension. The Nudge Awards aim to set a gold standard for work in the behavioural science community.

DAS chief executive Andrew Burke described 2015 as “a year of transition”. He explained: “The company undertook a rigorous review of its operations, invested significantly in new platforms and began a refresh of its senior leadership team.

“This is part of our long term strategy to ensure that we have the capability and structure to embrace innovation and continue to enhance our position as a valuable strategic partner.

“While the underlying business remains strong, 2016 has seen further investment in customer propositions, improved systems, controls and expertise which will impact the company’s financial performance in the short-term. Looking further ahead, the strength of our capital position, structure and people means that I am extremely positive about the future of the business.”

The update also confirmed that legal action against former CEO Paul Asplin is continuing. It has been reported in the insurance press that DAS is bringing a private prosecution against Mr Asplin and several others for conspiracy to commit fraud against the company, following an audit of the ATE division.

According to Insurance Age, it was believed that he was originally suspended in 2014 over concerns about his relationship with a former service supplier to the insurer, before leaving the company last year. Mr Asplin has protested his innocence.

A hearing to decide whether the case will progress is expected in December.

• Insurance premium tax rose from 9.5% to 10% on 1 October.

County courts: judges giving LiPs leeway

The number of cases being adjourned in the country court is increasing, research by the Law Society has suggested.

Almost a third (32%) of cases were adjourned or deferred to another day in 2016/17, compared to 25% the previous year, according to those who replied to its survey.

The most popular reason given for delays was the hearing being double booked (48%), with 36% blaming delays on judges scheduled to hear the case becoming “unexpectedly unavailable”.

Litigants in person (LiPs) also featured prominently in the study, with 16% of solicitors saying their hearing was adjourned after an earlier case overran because of the involvement of LiPs.

The researchers said solicitors who blamed delays on some ‘other’ reason tended to cite LiPs being involved or “court operations”, commenting that judges were willing to give LIPs “extra chances” or revise time estimates to suit them.

One solicitor commented at the end of the survey: “Certain judges in our local county court have been too willing to give adjournments to litigants in person even where they have no defence in law.

“One matter in particular was repeatedly adjourned because the judge hearing it wished to hear from the defendant who had not filed a defence and did not attend on multiple occasions.”

The survey was based on responses from 55 solicitors on the society’s Insight panel who had taken cases to the county court at some stage between March 2015 and March 2017. The society cautioned that the small sample meant the results should be regarded as “indicative” rather than “statistically significant”.

Solicitors were asked whether cases were adjourned because interpreters who were due to be at the hearing had become “unexpectedly unavailable” but none gave this as a reason.

At the end of the survey, lawyers were given the chance to elaborate on why cases were adjourned.

Comments on the operation of the county courts included: “The whole systems seems to be grinding to a halt. It takes months for allocation and directions to be dealt with, and months for any application to be listed.”

Another solicitor said: “Courts are much slower at responding to correspondence, listing application hearings or sending out directions.

“Frequently when directions are sent out the dates have passed for the first two directions. It is impossible to speak to anyone at most county courts.”

On lack of notice of adjournments, one solicitor said: “Pulling the plug on a trial the day before is hugely stressful for a client and costs a fortune in wasted costs for most ordinary litigants.”

Another said: “The case was first adjourned at Exeter County Court in June 16. It was then adjourned in September and has only recently now been relisted for June this year.

“Each time we were told only days before that the case was double booked, despite making it clear it was unlikely to settle.”

A solicitor who sat as a deputy district judge added that he was aware that lists of cases to be heard had to be cancelled frequently because of the lack of judges.

“We’ve experienced phenomenal growth over the last year and Proclaim has seamlessly scaled with us. Thanks to the high level of automation built into the system we’re now in a position to process larger volumes of cases, and at a much quicker rate.

“In the future we’re aiming to focus further on our expansion, and move towards a fully electronic service, including the creation of virtual mail rooms – and with Proclaim we have the scope to do this, whilst simultaneously streamlining our core business offering.”
Simon Wadlow, Business Development Manager at Total Legal Solutions

Total Legal Solutions offers a nationwide costs and claims service for the Insurance and Legal sectors. Based in Sheffield, the firm provides clients with cost services from bill drafting and negotiations to points of dispute and advocacy. Total Legal Solutions prides itself on its reputation and ability to deliver an entirely bespoke service to each client depending upon their specific requirements.

Challenge

Since its inception, Total Legal Solutions has experienced a rapid and substantial growth, originally starting with 4 employees and expanding to 13 full time and 24 self-employed in just 18 months. In line with this, the firm needed a system to centralise the way the team worked, and ensure staff could continue to meet client expectations and deadlines.

Additionally, as a number of its clients were already Proclaim users, the team knew it would be extremely beneficial to offer a paperless Proclaim-to-Proclaim file transfer process.

Solution

After initially looking to work with Eclipse on file transfer functionality only, Total Legal Solutions realised it could receive huge efficiency gains from a fully integrated case management system, whilst keeping the business in line with law firm regulations.

With previous knowledge of Proclaim, the firm knew of its capabilities, as well as the ease in which it could be adapted to fit in with business requirements and the staff’s way of working. After an initial discussion, Total Legal Solutions implemented the Proclaim Costs Drafting Case Management system.

Results

Since implementation, Total Legal Solutions is benefiting from high levels of automation across all aspects of its case handling, eliminating a number of the administrative tasks inherent in bill preparation, including layout, calculation and red line bill production.

As a number of costing firms have different methods of working, it can often be an extremely fragmented process, all the more challenging when on-boarding new staff members from other firms. With Proclaim, Total Legal Solutions now has the confidence to know fee earners can be seamlessly introduced to the system, resulting in a centralised way of working throughout the firm.

Additionally, the in-built history screen for each case means staff benefit from an at-a-glance view of every action taken, in date order, rather than looking through various paper files across desks or filing cabinets. Taking this further, the diary and task list functionality ensures deadlines are never missed and enables any member of staff to schedule an automatic reminder at a given point in the future, either for themselves or another member of the team.

Perhaps most importantly, Proclaim’s file transfer functionality has driven Total Legal Solutions closer to its goal of operating as a paperless business. Since implementation it has saved days’ worth of painstaking administrative work, and for those clients also operating electronically, it has essentially eliminated the need for DX services as instructions can be received and work commenced within minutes, ultimately serving to greatly increase turnaround times and efficiency.

Case Study highlights

• Comprehensive Costs Drafting Case Management system
• Seamless Proclaim-to-Proclaim file transfer
• High levels of automation
• Greatly enhanced turnaround times

Rolls Building: new case doubles STS cases to two

The High Court has approved the first application to transfer a case started in the normal way into the shorter trials scheme (STS).

Mr Justice Birss said he believed that, once the case was transferred, it would be “the second case in the Rolls Building to be in the scheme”, with the other having gone straight into it.

Birss J said that under the STS, cases were managed by a docketed judge, with trials limited to four days and summary costs instead of costs budgeting.

“The initiative as a whole also seeks to foster a change in litigation culture: a recognition that comprehensive disclosure and a full, oral trial is often unnecessary for justice to be achieved.

“That in turn should improve access to justice by producing significant savings in the time and cost of litigation.”

Birss J said cases could be started in the STS by issuing them in the relevant court and marking the claim form, and transfer of cases was dealt with Practice Direction 51N.

The judge said it had been pointed out to him that none of the practice direction “state in terms that the court can transfer an existing case into the STS”, although “they could be said to presuppose that such an order can be made”.

Delivering judgment in Mosaic Home Ownership v Peer Real Estate [2016] EWHC 257 (Ch), Birss J said that the parties agreed that the case should be transferred and he believed “the court does have power to transfer an existing case into the STS and to transfer a case out of the scheme if it is within it”.

He said the overriding objective, to deal with cases justly and at proportionate cost, “expressly includes, as far as practicable: saving expense, dealing with cases in ways which are proportionate and allotting to a case an appropriate share of the court’s resources” under CPR 1.19(1).

“Having an appropriate case conducted in the STS is likely to reduce the cost to the parties and at the same time free up the court’s resources to make them available to other litigants.”

Birss J said the court’s power under CPR 3.1(2)(m) to take any step or make any order for the purpose of managing the case and furthering the overriding objective provided an “express basis” for the court to make the necessary order in this case.

He said that transferring a “proper case into the scheme is likely to save expense, deal with the case in a proportionate way and allot to it an appropriate share of the court’s resources”.

Construing practice direction 51N as a whole, the STS was clearly intended to work in such a way that cases could be transferred in and out, he found.

The STS in the Chancery Division was for “business cases in the widest sense”, as opposed to “purely private, non-commercial matters such as family property and family trusts”.

The case before him illustrated the “wide scope” of business cases, as it involved specific performance of a contract by which the claimant contended that the defendant agreed to sell a property in London.

“This is obviously a commercial property dispute, and as such falls well within the ambit of the STS. The fact that the claimant is a registered provider of social housing does not mean this case falls outside the scheme.”

The judge concluded: “I am satisfied that the court has power to transfer this case to the Shorter Trial Scheme and that it is an appropriate case to be transferred. Under the scheme this dispute will come on to trial faster and at a lower cost that might otherwise have been the case.”

House of Lords: clause sets law back to Victorian times, says APIL

Government proposals to amend health and safety law will “put the clock back to Victorian times” and make litigation “more protracted and expensive”, peers have been warned.

According to the Association of Personal Injury Lawyers (APIL), a government addition to the Enterprise and Regulatory Reform Bill – which is being debated in the House of Lords today – will abolish a worker’s right to HP2-N36 compensation for breach of health and safety regulations; instead they will have to prove that negligence has occurred.

In a briefing to peers, it said government figures indicated that around 70,000 cases a year are likely to be affected: “This is time consuming, costly and can be a very difficult situation in which to succeed because
HP2-T16 the guilty employer holds all the cards. The situation obviously becomes even more difficult if the claimant has been killed. These are the very reasons the law was changed in the first place, in Victorian times…

“The burden of proof will transfer to injured workers, who will find it harder to claim compensation as a result – more people will lose valid claims, leaving the state to look after them rather than the guilty party. Litigation will be more protracted and expensive.”

APIL said the proposals go much further than recommended in the Lofstedt review of health and safety, which called for a review of regulatory provisions that impose strict liability.

The Bar Council and Personal Injuries Bar Association have also called on peers to challenge the government on the change. Bar Council chairman Michael Todd QC said: “If the Government’s latest proposals are implemented, justice will be denied to many, including those no longer able to work, or whose family members have been killed at work. The cost of funding their care and support will instead fall to the state. That cannot be in the public interest.”

Tulk: CMCs left in the cold

A former Russell Jones & Walker partner is bidding to “reinvent” the medico-legal process in low-value personal injury claims with a new service that will “redress the imbalance which predisposes evidence to favour the instructing party”.

iSaaS Technology, co-founded by Adam Tulk, is working with the Association of Personal Injury Reporting Experts (ASPIREX), a new independent grouping of doctors working in the field.

The launch of ‘ePIsource Legal’ comes ahead of the Ministry of Justice consultation on whiplash, which will consider introducing independent medical panels to replace the current assessment of whiplash injuries either by GPs or by doctors employed by medical reporting organisations (MROs).

The new service uses web-based technology to support the administrative function carried out by MROs, separating the evidence procurement process from the expert analysis.

It effectively enables law firms to take on the administrative function of an MRO, using ePIsource Legal’s 4,000-strong medical expert panel, and make a profit from doing so if it is efficiently run.

This panel will be guided by ASPIREX, a non-profit independent association and the first of its kind for doctors doing this kind of work. It requires doctor members to submit to randomised peer review and continuous professional development through well-known expert witness training organisation Bond Solon.

iSaaS argues that MROs and the experts on their panels are too close to the instructing parties. “Current practices for obtaining whiplash medical reports can lead to allegations of biased, poor quality evidence, driven by the fact that medical experts have become reliant on MROs for their livelihood and MROs have a commercial relationship with the instructing party.

“These interdependencies can impact not only on the selection and training of experts, but also on the time available to the medical expert to produce high-quality forensic evidence. This combination significantly impacts the effectiveness of whiplash medical reports.”

iSaaS has worked with regulatory specialists from national law firm Weightmans to ensure ePISource Legal is compliant with both the upcoming ban on referral fees – which will cover the instruction of medical experts – and the Solicitors Regulation Authority’s Code of Conduct. Accountancy firm Baker Tilly has also assisted in its development.

Mr Tulk said that under outcomes-focused regulation, law firms are now responsible for the “entire customer experience”, and report that MROs are the “weak link”.

He acknowledged that MROs perform “an important role in administering and improving efficiency in the acquisition of medical evidence”, but said the link between the instructing party and the expert panel must be severed. “It is not the role of the MRO to be training, peer reviewing or selecting the medical expert panel. Any attempt to do so by MROs, or their trade body, will simply perpetuate the potential for bias because of the obvious commercial interests at play.”

The service leaves claims management companies that currently receive commissions for using particular MROs “in the cold”, Mr Tulk said; it is already processing 3,000 reports a month. Down the line he raised the possibility of the ‘blind’ instruction of experts to add to the sense of independence. iSaaS was co-founded by Dr David Pearce, a former chairman of the Association of Medical Reporting Organisations.

• Leading MRO Premex Services has launched a dedicated brand to support professionals handling the most complex personal injury cases. Premex Plus delivers enhanced features such as specialist reports, pagination of medical records and tailored clinical assistance.

  In addition to personalised support delivered by a specially trained team of case handlers, Premex Plus customers have access to a variety of new benefits including in-house nursing support, recruitment of specialist medical experts and dedicated expert panels with specific knowledge in complex areas such as occupational disease and clinical negligence.

Sumption: luxurious occupation

Lord Sumption has called for a return to a more straightforward approach to how judges construct contracts that focuses on the words rather than trying to work out what the parties intended by looking at the surrounding circumstances.

He said the Supreme Court has recently begun to move towards that, which he described as “a more defensible position”.

“Judges are fond of speculating about the motives and practices of businessmen in drafting contracts,” Lord Sumption said at the start of the Harris Society Annual Lecture, Keble College, Oxford. “It is a luxurious occupation.”

The lecture, entitled ‘A question of taste: The Supreme Court and the interpretation of contracts’, explained that while “one would think that the language that the parties have agreed provided the one sure foundation for a hypothetical reconstruction of their intentions”, over the past 30 years the House of Lords has “embarked upon an ambitious attempt to free the construction of contracts from the shackles of language and replace them with some broader notion of intention”.

He added: “The House of Lords’ flight from language depended on two closely related concepts. One was the ‘surrounding circumstances’. The other was ‘commercial common sense’.”

Lord Sumption identified the ruling of “the towering figure of Lord Hoffmann” in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 as where the highest court took a decisive shift towards this more flexible interpretation.

“Language, he suggested, was a mere matter of dictionaries and grammar. Meaning was something different, namely what the document would convey to a reasonable person against the relevant background…

“The background may not only enable one to choose between possible meanings of the words, but to select impossible ones instead… If the background suggests that something has gone wrong with the words, the law may attribute a different intention to them.”

Lord Sumption argued: “It is, I think, time to reassert the flexibility of language in the interpretation of contracts.

“It is true that language is a flexible instrument. But let us not overstate its flexibility. Language, properly used, should speak for itself and it usually does. The more precise the words used and the more elaborate the drafting, the less likely it is that the surrounding circumstances will add anything useful.

“I do not therefore accept that the flexibility of language is a proper basis for treating the surrounding circumstances as an independent source from which to discover the parties’ objective intentions.

“The surrounding circumstances may well enable us to discover what the objective was, but not how far it has been achieved. In a negotiation, the parties’ objectives are likely to be different.”

The judge said that one major problem with using the surrounding circumstances to modify the effect of language is that the law “rigorously excludes the use of pre-contractual negotiations as evidence of intention”.

Further: “Judges are not necessarily well placed to determine what commercial common sense requires.”

He explained: “Judges start from the answer and work backwards. They come to the question of construction after the dispute has arisen, when the parties are at loggerheads. They understandably focus on what has gone wrong, and look to the contract to put it right.

“Their instincts about what the parties must have intended is therefore likely to be quite different from that of the parties at the time that the contract was originally agreed, when they did not have the eventual catastrophe in mind.

“Moreover, judges’ notions of common sense tend to be moulded by their idea of fairness. But fairness has nothing to do with commercial contracts.”

Lord Sumption said the Supreme Court had rowed back to some extent, in the 2015 cases of Arnold v Britton and (in the Privy Council) Krys v KBC Partners.

“But if the Supreme Court has sounded the retreat, it has, I must admit, sounded it in rather muffled tones. It has not actually admitted that earlier decisions went too far. Neither of these cases overruled or even criticised the decisions in Investors Compensation Scheme or [2011 case] Rainy Sky.

“Moreover, both were majority decisions reached in the face of powerful dissents, by Lord Carnwath in the first case and Lord Mance in the second. They felt that the majority view attached too much weight to the language of the contract and not enough to unreasonableness of the result.”

While he conceded that it was “not entirely clear” how the Supreme Court would ultimately resolve these differences, “some indication of the new direction of travel” could be seen from the recent judgment of a unanimous court in Wood v Capita Insurance Services [2017] UKSC 24.

In that case, Lord Hodge, delivering the leading judgment, found that “business common sense” was useful but added that “in the tug o’ war of commercial negotiation, business common sense can rarely assist the court in ascertaining on which side of the line the centre line marking on the tug o’ war rope lay, when the negotiations ended”.

So he went on to examine the language of the contract, which led to a harsh result, but Lord Sumption said “there were reasons apparent from other provisions of the contract why the parties could rationally have intended it”.

He concluded: “Just as ICS changed the judicial mood about language and tended to encourage the view that it was basically unimportant, so the more recent cases may in due course be seen to have changed it back again, at least to some degree.

“Experience has suggested that the loose approach to the construction of commercial documents, which reached its highest point in Rainy Sky, may have done a disservice to commercial parties by depriving them of the only effective means of making their intentions known.”

Heining: costs lawyers have been thrust into the mainstream of the litigation process

Smaller law firms are struggling with the demands of budgeting, while larger practices are not as capable as they think, a judicial roundtable organised by the Association of Costs Lawyers (ACL) has heard.

But an ACL White Paper said costs management is here to stay – even if the teething problems will take some time to pass.

District Judge Margaret Langley, who sits at Central London County Court, told the event: “It is the small firms, certainly, who are really struggling. It is also some of the big firms, that you would think must have had training, and misunderstand what the rules say and just assume they are right.”

She added: “If I have three [multi-track cases] listed in a day, at least one will not have a budget. When you tell them, they look at you blankly… It is astonishing.”

Incoming ACL chairman Sue Nash told the roundtable: “There is a lot of head-burying. [Firms] realise that they need to know something, but when I ask them, ‘Well, are you recording your work by phase? Have you been doing this since last April and are you doing it now?’, there is a bemused shifting of the head.”

ACL chairman Murray Heining added: “There has been a lack of forward planning by a number of firms, on the basis that ‘Well, we will start dealing with these when we get the first one and until then, we will do nothing about it’. Law firms would be well advised to introduce a Costs Lawyer to a case at the outset.”

District Judge Ian Besford, a Regional Costs Judge, said that some judges remain hostile to costs management. “They would prefer not to do it. I am told that in certain areas, judges have unilaterally decided that in each case it is not suitable for cost budgeting… They tend to think that the process of detailed assessment that used to be in place was more than sufficient.”

Mr Justice Ramsey, the judge in charge of Jackson implementation, acknowledged that “some judges” have found cost management a real challenge. But nonetheless, “there is an awful lot of cost management going on”, he said, and was positive about the benefits: “For the first time, people are now seeing what the recoverable costs of the other side will be and what their recoverable costs are, at a very early stage. That is extremely helpful in trying to consider whether you should settle a case.”

The ACL White Paper concluded: “There is no doubt that costs management is not only here to stay, but will also be applied more widely in future. It has brought the skills and value of the Costs Lawyer to the fore, the quantity surveyors of the litigation world.

“The teething problems will take some time to pass, and if the 15 years since Woolf have taught us anything, it is that lawyers will still get the CPR wrong. The impact on access to justice also needs to be kept under constant review.”

Mr Heining commented: “The introduction of costs management on 1 April 2013 was a major moment in the history of the costs lawyer profession.

“By putting costs at the heart of the case management process, rather than being a matter left until after the event, it has thrust costs lawyers into the mainstream of the litigation process, where our skills and experience can benefit parties, their lawyers and the judiciary alike – and ultimately the good administration of justice.”

Download the white paper – ACL White Paper 2014 – or email enquiries@costslawyer.co.uk for a hardcopy.

Amey: Conn3ct delivers a lifeline for clients

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.

The government had not been “transparent or open” about the agreement

MPs on the justice select committee have demanded that the government carry out a second mesothelioma review, following a row over a “secret deal” between ministers and the insurance industry.

They said the review, into the impact of abolishing recoverability of success fees and insurance premiums for mesothelioma claims, had not been approached in a “thorough and even-handed way”.

The committee said the timing and nature of the review meant that respondents to the consultation did not have “much relevant information” and the “shoehorning of part of the review into a wider consultation on the claims process was a maladroit way of proceeding”.

MPs said the government had been “forced” to accept Section 48 of the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO), which required it to carry out a review before ending recoverability for mesothelioma claims.

During justice committee hearings last month, evidence emerged of a secret agreement between the government and the Association of British Insurers.

Under the deal, contained in a “heads of agreement” document, the insurance industry agreed to pay for the special scheme outlined in the Mesothelioma Act 2014 for victims who cannot trace employers or insurers, in return for an end to recoverability.

The first payments under the Act are due this month. The government’s original aim was that this would coincide with abolition of recoverability, but Lord Faulks told the committee during oral evidence that nothing would happen until the autumn.

MPs said they were concerned that the government had not been “transparent or open” about the fact that its overall policy on mesothelioma had been “shaped in accordance with an ‘agreement’, however informal and elastic, which it had reached with employers’ liability insurers”.

The committee went on: “It is hard to see how a balanced and informed public debate can take place when a prior agreement has been reached between two of the principal parties to that debate, and that agreement is not known to others participating in the debate, including victims.”

Commenting that it could not recall any subject it had investigated where there was such a “pronounced binary division of opinion and approach”, the committee concluded: “The haste with which the government embarked on a review and consultation, and the way in which it presented them, left those who favoured retention of the LASPO exemption for mesothelioma potentially disadvantaged in terms of marshalling a persuasive case.

“We recommend that the government defer the introduction of the change it has announced until it has undertaken a further consultation, which should be framed unambiguously and centrally on the question of whether the LASPO provisions should be brought into effect for mesothelioma.

“This consultation should be informed by an updated cost-benefit analysis, on which respondents should be asked to comment.

“We consider that such a consultation should not be undertaken until sufficient time has elapsed for the effects of the LASPO changes in non-mesothelioma cases to be assessed.”

Dean: ruling provides sufficient authority to challenge fees

A reasonable and proportionate fee to pay a medical agency not signed up to the Medical Reporting Organisation Agreement (MROA) is £200, a regional costs judge in Liverpool has decided.

Ruling in three conjoined cases, District Judge Woodburn at Liverpool County Court said he was aware that “a number of other cases” involving the same issue were awaiting his judgment.

The lead case was Charman v John Reilly (Civil Engineering) Ltd, but each involved a claimant represented by Liverpool law firm Duncan Gibbins, which instructed Tri Star Medicals – the firm’s partners are also directors and shareholders of Tri Star. Each medical report was charged at £350 plus VAT.

The fee payable under the MROA is £200 for a GP report where there is no need for medical records, and the defendant – represented by Nick Bacon QC – argued that this was evidence of a reasonable and proportionate fee.

Both the defendant and judge cited HHJ Cook’s 2002 ruling in Stringer v Copley, in which he allowed the charges of the medical agency incurred in obtaining the report, but only so far as they did not exceed the reasonable and proportionate work if it were carried out by a solicitor. He also said the agency’s invoice should distinguish between the medical fee and their own charges.

DJ Woodburn noted that Stringer “has remain undisturbed for a period in excess of 10 years”, and also expressed frustration that such an invoice had not been provided.

He said the defendant was “entitled to ask reasonable questions as to how the costs they are asked to pay, are arrived at”. But he continued: “I do not believe that the fixed-price agreement reached by the signatories to the [MROA] is the appropriate measure of a reasonable and proportionate charge. The parties chose to be signatories of the agreement; there is no good reason for those terms to be imposed on non-parties.”

He said: “Doing the best I can in relation to fairly straightforward low-value claims where medical records are not required, where there is a ready panel of willing medical specialists available, where standard letters may be used to notify the claimant and the solicitor of the medical appointment and having regard to the use of a standard process for high-volume work, I would assess the cost of a reasonably experienced and competent medical agency to carry out the work to obtain the medical report at £50 plus VAT, where applicable.

“In the absence of any information to assist me, I would further assess the cost payable by the agency to the medical expert [in such circumstances] at £150.”

Howard Dean, director of costs at Keoghs – which represented the defendant in Charman – commended the decision and said it should provide “sufficient authority to successfully oppose claims in excess of MROA rates on fairly straightforward low-value claims”.

He was also pleased by the emphasis on the claimant and their solicitor providing a breakdown of the invoice. “We shall continue to challenge claims where the medical agency fees are in excess of MROA fees,” Mr Dean said.

The Criminal Injuries Compensation scheme has undergone further revisions and this revised scheme applies to all new claims regardless of when the incident occurred. Many Personal Injury solicitors will look towards undertaking CICA claims in the new and drastically tougher post Jackson environment. It is vital that the current CICA scheme is understood if these cases are to be done efficiently and viably.

MBL’s one hour webinar will explain the scheme and its use in practice alongside how it differs from previous schemes practitioners will be used to. Points covered in this webinar will include: the CICA process itself; the types of compensation available; the levels of compensation; the effect of character and convictions.

Who qualifies for compensation? What sort of incident qualifies? These questions and more will be answered by presenter Gary Barker in this brand new webinar, streaming on 6 February 2014.

For more information and to book, please click here.

Leading costs, pricing and funding expert Burcher Jennings is today launching Burcher Jennings Litigation Funding.

The new service provides law firms and their clients with tailored, expert advice, on a case by case basis, on the full range of funding options.

With Burcher Jennings Litigation Funding, firms ensure that their clients can make informed decisions about financing and obtain the right funding for their case.

The service ensures firms can be confident they are meeting their SRA compliance obligations, and that profitability is driven through the retention of clients that might otherwise look elsewhere to fund and complete their cases.

The new service sees Burcher Jennings working with top funding consultants, and marks an expansion of Burcher Jennings’ ‘full-service’ approach to increasing firms’ profitability. It is a natural extension of the popular Funding for Growth service, and results from clients expressing an interest in accessing similar funding streams for litigation.

Martyn Jennings, CEO, Burcher Jennings, said:

“The law firms we work with are under unprecedented pressure to maintain, let alone increase, profitability in the face of continuing dramatic changes to the legal system.

“Our years of experience in costs and pricing help firms deliver profitability by building client trust, confidence and satisfaction.”

“Hearing from solicitors about the increasing challenges their clients face in accessing justice where litigation is required, it was a natural step for us to launch an expert litigation funding service. There is a wide range of complex funding options on the market, and lawyers aren’t financial advisers.

“As with our established and complementary Funding for Growth service, we can help firms get it right, allowing them to increase business and focus on delivering great client care”.

To find out more about Burcher Jennings Litigation Funding, please go to http://www.burcherjennings.com/user/documents/Litigation_insert_May_2016.pdf

Mr Hochhauser: “no authority on the point”

The High Court has ruled that a claimant’s part 36 offer was a counter-offer, meaning that an earlier common law offer by the defendants no longer remained open for acceptance.

Andrew Hochhauser QC, sitting as a High Court judge, said there was “apparently no authority directly on the point”.

Mr Hochhauser said he preferred the arguments of counsel for the defendant law firm, Jacobs Solicitors, which was being sued for professional negligence by the bank DB UK.

“A part 36 counter-offer is still a counter-offer,” he said. Mr Hochhauser said that because in the case “one is dealing with an initial common law offer, the impact on it of any counter-offer has to be addressed by reference to common law principles”.

This meant that once the bank’s part 36 offer was made in May 2016, the law firm’s earlier ‘without prejudice save as to costs’ letter was no longer available to be accepted.

Delivering judgment in DB UK Bank v Jacobs Solicitors (claim no. HC2013000358), Mr Hochhauser said the bank argued that that the law firm had “failed adequately to report” on the fact that the bank’s borrower was purchasing a new-build property by way of a sub-sale, and claimed over £162,000 in damages.

Jacobs argued that the bank would have made the loan in any event and pleaded contributory negligence. The law firm denied that the claim had been settled. The bank argued that it had.

The court heard that a few days before trial, at the end of last month, the bank’s solicitors, Rosling King, sent Caytons Law, acting for for Jacobs, a letter saying that it was accepting a without prejudice offer made by Caytons in August 2015.

The judge rejected an argument by the bank that the offer was not capable of acceptance on the grounds of uncertainty.

However, Mr Hochhauser said that in May this year Rosling King sent Caytons a letter containing a part 36 offer. Counsel for Jacobs argued that this was a counter-offer, which had the effect of rejecting the earlier without prejudice letter.

The judge agreed that once the part 36 offer was made, the law firm’s letter was no longer available to be accepted. As a result there had not been a settlement of the claim, which must proceed to trial.

E-disclosure: co-operative decision making on protocol

An e-disclosure protocol developed in a collaborative initiative by practitioners and legal IT specialists has been approved by the Technology and Construction Court (TCC) for use from 1 January 2014.

It is designed to help with larger document cases in the TCC by setting out a template for the parties to follow. It guides them on how to extract electronic digital data from the clients repositories, through to sorting and processing that data in accordance with e-disclosure requirements.

The joint initiative involved the Technology and Construction Solicitors Association (TeCSA), the Technology & Construction Bar Association (TECBAR), and the Society for Computers and Law. They also had some help from disclosure industry specialists.

Nabarro construction dispute partner Steven Williams, who chairs TeCSA’s e-disclosure sub-committee, said the protocol would be a step-by-step “roadmap” that would help smooth the necessary – and potentially contentious – processes that the parties need to go through when sifting through huge masses of electronic data.

Various decisions had to be made co-operatively, on such things as “getting rid of duplicates, agreeing search terms to filter out irrelevant or privileged material, and conversely to use keywords to identify relevant material”, he said.

The TeCSA/TECBAR protocol includes a template document designed to provide structure for discussions between the parties from the beginning of the case through to trial. It also helps to record agreements reached on methodology, which the judge can use in the case management process.

Mr Williams said the protocol supported the Jackson reforms, in particular in helping practitioners to price up e-disclosure as part of budgeting required under the reforms. “Very early on, they will have made a number of decisions on how they are going to conduct e-disclosure which will make the scope more definite and pricing easier.”

The judge in charge of the TCC, Mr Justice Edwards-Stuart, told an e-disclosure training event in London this month that the judges of the TCC had been consulted on the protocol during its development and “support its adoption in appropriate cases”.

He said that from 1 January the court could order parties to adopt it unless they both agreed to an alternative. With the court’s approval, they could agree “suitable or case-specific modifications” to the protocol. The TCC’s guide would be revised and updated to reflect the e-disclosure protocol, along with other Jackson reform developments, he said.

A comprehensive guide to the protocol has been written by Andrew Haslam, the founder of Allvision, an IT consultancy to the legal industry, and a member of the e-disclosure protocol working party.

Blair J: commercial dispute resolution must not become “marooned”

The ‘financial list’ launched by the High Court in October last year for claims linked to the financial markets and worth over £50m is “operating well”, Mr Justice Blair has said.

Blair J said that eight new cases had been started in the list by the end of 2015, along with two that had been transferred.

Delivering the Institute of Commercial and Corporate Law annual lecture, Blair J said the financial list covered a “wide range of transactions”, including those in the fixed income, equity, derivatives, loan, FX and commodities markets, as well as complex banking transactions and sovereign debt.

The City of London Law Society argued that the lower limit for claims heard by specialist judges through the new list should be set at £10m rather than £50m.

Mr Justice Blair said that “despite some teething problems”, the use of costs budgeting at Commercial Court for cases worth under £10m “seems to be settling down”.

Referring to the shorter and flexible trials schemes, both introduced in October last year, Blair J said: “These are both pilot schemes, and express in formal terms the practice of the London Commercial Court which has always accommodated such flexibility.

“It is fully realised that these are for some types of case, and not for all. But their purpose is important—to help encourage a change in litigation culture, in that a full, oral trial on all issues may not be necessary for justice to be achieved.”

Mr Justice Blair said that over a quarter of cases (25.8%) begun in the Commercial Court last year involved arbitration. He said the issues included interim measures to preserve the status quo before an arbitration, challenges to awards on the “limited grounds” available under the Arbitration Act 1996 and enforcement.

“My belief is that dispute resolution procedures whether through the courts, arbitration, or mediation, work best when they work in harmony with each other,” Blair J said. “In the interests of the parties, some disputes are best arbitrated, some are best litigated – it is important to keep that perspective.

“This is demonstrated by the example of Singapore, which already has an effective arbitration centre. To complete its structure, the Singapore International Commercial Court was launched in January 2015.

“More generally, in the absence of a supra-national body, supervision by the courts of the seat, by judges with experience in commercial matters, providing a light-touch but nevertheless vital back-stop, may ultimately be the best guarantee of the continuing success of international arbitration.”

Blair J said three new commercial courts had been created in the Gulf recently – the Dubai International Financial Centre Courts, the Qatar International Court and Dispute Resolution Centre, which he helped to set up, and the Abu Dhabi Global Market Courts, which opened in October last year.

Referring to the new “pilot market test case procedure” for issues that needed immediate guidance on English law, without the need for a cause of action, Blair J said: “This is a facility which may be of most use in cases of urgency, where legal risk may be an unacceptable addition to systemic risk. But it is ultimately a matter for users how to take it up.”

He concluded: “Many of the kind of disputes under discussion are commercial in a traditional sense. There are others which manifestly have ramifications for society as a whole.

“The mechanisms used to resolve all disputes have to be sensitive to the wider societal implications of the decisions taken. Commercial dispute resolution must not become marooned on an island of its own making.”