All in this together: government funding restrictions will hamper opt-out oactions

Posted by Oliver Gaynor, litigation funding manager at Litigation Futures sponsor Burford

Following the conclusion last year of its consultation on private actions in competition law, the UK government has announced that it intends to introduce an opt-out regime for large class actions against defendants who have infringed competition law.

Such claims are to be called ‘collective’ actions, and the basic principle is that unless they specifically choose to opt out, UK-domiciled consumers and businesses will automatically be included as claimants provided they satisfy the basic criteria for membership (which will be set by the Competition Appeal Tribunal, the proposed guardian of the regime, at the outset of proceedings).

A hypothetical example might be a claim against a gas supplier for overcharging: all purchasers of gas from that supplier would automatically become claimants, provided they can produce a gas bill from the relevant time.

The policy objective behind this proposal is to open up markets to small businesses by facilitating their means of redress against large, dominant corporations who have acted in an anti-competitive manner; and to deter such conduct (for example, price fixing through cartels) in the first place. In other words, it is to help the Davids against the Goliaths.

Whilst that may seem like a laudable aim, the proposal has its critics. A number of fears and objections were raised in the consultation process; in particular the familiar argument that the changes will open the floodgates to frivolous and unmeritorious claims, and the UK will be plunged into a US-style class action culture.

In response, the government decided to introduce certain restrictions, including the fact that lawyers will not be permitted to enter into any form of contingency arrangement, such as a damages-based agreements (DBA) in respect of any opt-out actions.

The result is an unusual paradox: in the space of two years, the government has introduced legislation to permit lawyers to act under DBAs, but has then decided to restrict competition lawyers from doing so on collective actions – which, due to factors such as the likely size and variety of the claimant groups, would have been some of the most suitable cases for alternative funding arrangements.

The issue is further complicated by the Jackson reforms. Since April 2013, in most cases success fees and after-the-event insurance premiums must be paid by claimants and cannot be recovered from opponents. Thus, the damages pool at the end of a successful claim will be reduced by any such costs, leaving less headroom for litigation funders to make a return.

In opt-out cases where the economic margins are tight, claimants may already find it hard to attract funding, and now will be restricted from asking their lawyers to step into the breach.

The effect may well be to undermine the effectiveness of the policy before it has even been implemented. Put simply, why would claimants choose to bring an opt-out action if, in all likelihood, it is going to mean paying month after month of legal fees? Faced with that choice, it would be surprising if the policy succeeded in bringing a large number of struggling small businesses into court.

Many may decide that focusing on the day job would be preferable to rolling the dice of long, uncertain and hostile proceedings against a global corporation which is determined to protect its market share at all costs.

This anomaly will need to be addressed if the policy aims are going to succeed. In the short term, synthetic risk-sharing arrangements such as the hybrid DBA recently launched by Burford may offer a solution. In a hybrid arrangement, a litigation funder enters into a separate private agreement with the law firm to share a pre-agreed portion of its proceeds in the event the claim succeeds.

Such arrangements are not caught by the DBA regulations, which only apply to agreements between ‘client’ and ‘representatives’ (i.e. the lawyers). In short, there is nothing to prevent a funder agreeing to support a collective claimant group on a contingency basis, and then agreeing back-to-back arrangements with the lawyers.

Clearly, though, it would be preferable for the issue to be properly addressed in the primary legislation. It may be questioned how valid a concern the ‘floodgates’ argument is. Similar arguments were used against the introduction of litigation funding in the UK around a decade ago; however, 10 years of practice have shown that funders will only support strongly meritorious claims that are likely to generate a financial return.

Consequently, as Lord Justice Jackson underlined in his report, third-party funding in fact tends to act as a filter for frivolous claims. The same rationale would apply to any lawyer when considering whether to act on a contingency basis.

Further, the comparison to the United States is specious, given that that US courts do not provide for the shifting of cost risk onto losing parties, and so attitudes to risk are fundamentally different.

Some safeguards for the new collective action regime are clearly appropriate; but excluding the lawyers from sharing in the litigation risk and reward should not be one of them.

Military claims: significant number of EL cases in pipeline

A High Court test case decided yesterday that members of the armed forces are not employees for the purposes of the pre-1 April 2013 fixed success fee regime in employers’ liability claims.

Counsel for the Ministry of Defence (MoD) told the court that the novel point was important in a significant number of continuing pre-Jackson cases.

Broni & Ors v Ministry of Defence [2015] EWHC 66 (QB) brought together three claims relating to injuries suffered by servicemen while training. Both Master O’Hare in two of them and Deputy Master James in the other decided that they were employees as required by the old CPR 45.20.

This defined an employee by reference to section 2(1) of the Employers Liability (Compulsory Insurance) Act 1969 as “an individual who has entered into or works under a contract of service or apprenticeship with an employer”.

The claimants argued that the law is clear that a serving member of the armed services is not an employee under a contract of service and there was no proper basis for construing part 45 more broadly.

The Ministry of Defence responded by calling for a purposive approach to the construction of the words ‘contract of service’.

Mr Justice Supperstone found for the claimants, ruling that there was “no scope for giving a broad or purposive interpretation”.

He added: “The Ministry of Defence owe a duty of care to servicemen whether they work under a contract of service or not, both at common law and under the Health & Safety at Work Act 1974.”

The judge acknowledged that the ruling could cause difficulties at detailed assessments if the court had to investigate whether the claimant had a contract of service.

Determination of the success fees was remitted to Master Haworth.

Langhoff: Burford has three different ATE pricing models

The new after-the-event (ATE) insurance market is taking shape after Temple Legal Protection and Burford Capital became the latest to unveil details of their revised product ranges.

Both have also reported receiving as many applications for ATE in the first quarter of this year as they did in the whole of last as firms scramble to sign clients up before the 1 April reforms.

Temple’s personal injury (PI), industrial disease and clinical negligence products will still have deferred, contingent and self-insured premiums. Premiums start at £35 for cases that settle in the RTA portal, and £65 for other PI and industrial disease cases worth less than £100,000 that settle pre-issue. Post-issue fast-track premiums start at £160 for RTA claims.

In clinical negligence, there is a £5,680 premium, for a £10,000 limit of indemnity, for expert report fees. The premium to cover disbursements and opponent’s costs is £750 (where damages are up to £25,000) or £2,400 (where damages are £25,000 to £100,000).

For cases worth more than £100,000, Temple will provide a bespoke quote.

Director of underwriting David Pipkin revealed that Temple is also piloting premiums as a percentage of damages, meaning that the cost will be lower to the client if they are awarded less than expected. In clinical negligence, the company will in time look to reward firms that have low claims frequencies with lower premiums.

He added that commercial ATE will be largely unaffected by the changes as users had in any case struggled to understand that they didn’t have to pay the premium, he said.

Initially a third-party funder, Burford now offers ATE following the acquisition last year of FirstAssist. New UK chief executive Andrew Langhoff – who is also the company’s global chief operating officer – said Burford’s research showed that “solicitors are eager to explore taking greater financial risk/reward through damages-based agreements, which should fit quite well with funding.

“And despite the fact that ATE premiums will no longer be recoverable, we believe that new pricing models will allow this critical component of litigation finance to continue and thrive.”

He said a package of all three of our products – the funding of lawyers’ fees, the funding of disbursements (including counsel fees) and the provision of ATE insurance – would allow a claimant to effectively transfer all of its litigation risk to Burford.

“Where the merits of a case are generally clear – such as in a cartel matter – such an approach may have significant appeal,” he said.

Putting together disbursement funding with ATE insurance “ideally supports a case where the solicitor has chosen to take on a conditional fee agreement or damages-based agreement”, while Burford will continue to provide standalone ATE on a deferred and conditional basis.

Mr Langhoff continued: “In the post-Jackson era we have three different pricing models – our traditional [Pursuit] pricing, monthly accrual pricing, or the provision of funding to finance an upfront premium.

“In addition to arrangements with claimants, we are also able to structure our products to develop packages for law firms – most immediately to allow them to finance their own WIP or disbursements. We have found a keen interest for such arrangements.”

Mr Pipkin said the reforms would mean “significantly less profit” for ATE insurers, although the impact will not be felt for a couple of years because of the run-off of pre-1 April work. It will also depend on the take-up of new ATE products. “Research indicates that people will buy [ATE],” he said. “They still want to transfer the risk.”

Ameer: We should not rush to judgement on results

Personal injury lawyers are often failing to act in the best interests of seriously injured clients, according to a law firm’s online poll.

The survey by Nockolds Solicitors found that a large majority (81%) of rehabilitation case managers had experienced a situation where a claimant solicitor had ‘clearly not acted in the best interests of the client’.

Yasmin Ameer, solicitor at Nockolds, said that “never in a million years” did the firm, based in Hertfordshire and London, expect its poll of 143 rehab specialists to deliver this result.

“It is extremely concerning and has wide-reaching implications – but we mustn’t rush to judgement.”

Ms Ameer said that, in one incident, a solicitor advised a client against taking on a part-time job because it might reduce the eventual settlement.

“In another case, an immigration solicitor took on a high-value personal injury case and the client suffered because he did not receive the support, treatment and interim payments he desperately needed.”

Ms Ameer said that in a further example, a client was admitted onto a mental health ward with paranoia. Her solicitor wanted her to continue with expert witness appointments even though the case manager said it would not be in the client’s best interests because of the state of her mental health.

A majority of case managers involved in the Nockolds survey were appointed by claimant solicitors (54%) – almost all (84%) before the client received a financial settlement.

The survey also revealed that 69% of case managers had been verbally abused either by their clients or clients’ families, while 13% had been physically assaulted.

Most of them (69%) said they had experienced a situation where the client’s family had not acted in his or her best interests.

The vast majority (93%) believed that the statutory services available to their clients within the community were not up to the required standard, and for most (61%) the biggest frustration was the speed at which funding was made available.

Most case managers (52%) viewed the ability to form strong relationships as the most important skill for them to possess, as opposed to problem-solving ability (28%) or in-depth knowledge of the client’s condition (20%).

More than a third (36%) of case managers had experienced mental health problems as a result of their work.

Ms Ameer concluded: “In my experience, personal injury solicitors provide an outstanding service for seriously injured clients, but case managers play a hugely important part in the rehabilitation process and we must respect what they are saying.

“There is clearly a perception – rightly or wrongly – that solicitors are, on occasions, not acting in the best interests of their injured client.  Now we know that this perception exists, it is our duty to make doubly sure that we act in a way which reassures case managers.”

Jonathan Hogg, Partner, Guy Williams Layton

Highly renowned North West firm, Guy Williams Layton, is implementing the Proclaim Practice Management Software solution from Eclipse Legal Systems, the sole Law Society Endorsed legal software provider.

Guy Williams Layton is the successful union of several highly respected firms that have been providing legal services throughout the North West for many years. Currently based in Liverpool and Heswall, the firm prides itself on its ability to adapt to the changing needs of the legal market, whilst preserving the best aspects of true personal service. The firm attributes this to its substantial investment in its effective use of technology.

Eclipse will implement its Proclaim Case Management system throughout the offices and across a number of departments – including Debt Recovery, Conveyancing, Employment and Probate – serving to standardise working practices and enable teams to work from a centralised system. As part of the implementation, Eclipse will also conduct a full accounts conversion from Guy Williams Layton’s incumbent system, providing a fully integrated Proclaim Practice Management Software solution.

To further drive client service and streamline efficiencies within the Conveyancing department, Guy Williams Layton is opting for Proclaim’s integration with the Land Registry Business Gateway (LRBG), serving to automate a number of stages within the Conveyancing process, as well as provide fee earners with access to Land Registry services – entirely through the Proclaim desktop.

Additionally, in a bid to enhance client inception procedures, the firm will benefit from Eclipse’s New Business Enquiries toolset, providing end-to-end management of all incoming enquiries. Staff will be able to nurture on-going prospect relationships and target them with relevant marketing materials, and when the time is right, create a live client file to include all pre-existing data.

Jonathan Hogg, Partner at Guy Williams Layton, comments:

“Eclipse’s expertise in the legal industry, its Law Society Endorsement, and Proclaim’s comprehensive toolsets, meant it was our first choice in terms of software providers. Proclaim will deliver a sophisticated, innovative and flexible legal software solution, and will truly enable us to effortlessly streamline our processes and introduce high levels of automation.”

“We pride ourselves on our reputation for providing exceptional client care, and utilising Proclaim will enable us to enhance our service offering even further, allowing us to provide a seamless client journey from instruction through to completion.”

McLaren MP4: damaged in accident

A claimant who drove a top-of-the-range Mercedes while his McLaren supercar was being repaired has recovered the cost of the credit hire, despite owning other high-spec vehicles, including two Aston Martins.

The court found that “need was to be assessed not in some objective utilitarian sense”, his barrister reported.

According to Guy Vickers from Exchange Chambers, Charles Gow owned a McLaren MP4 which he had bought for £190,000 just weeks before it was involved in an accident. The party-at-fault – a tractor – had struck a pothole and lurched sideways, causing scratches to Mr Gow’s car.

Following the accident, Mr Gow told the tractor driver’s insurer, NFU Mutual, that he would accept a replacement Ferrari while the McLaren was repaired. This did not happen and after two months he hired a Mercedes SLS AMG coupe instead, also a very luxurious “supercar”, although less valuable than his McLaren.

The insurance company was not prepared to pay for the cost of hiring the Mercedes, contending that the damage was just a few scratches and Mr Gow clearly had alternative, very nice, cars available to him including two Aston Martins (which were seven and nine years old), a BMW 5 Series and a Range Rover.

Mr Gow argued that none of these were close to being on a par in terms of prestige with the McLaren, although he had driven one of the Aston Martins while waiting for the Ferrari he was initially promised.

Mr Vickers said that the judge ruled in Mr Gow’s favour, accepting the argument that the McLaren was a particularly special car and Mr Gow did not have a like-for-like replacement he could have driven instead.

The judge noted that although the Mercedes was one of the better models on the market, it fell short of the “status and prestige” of the McLaren. In the result Mr Gow recovered the hire charges in full and also general damages for the two months before he hired the Mercedes during which, although he drove his Aston, he was nevertheless deprived of the enjoyment and use of his McLaren.

Mr Vickers said: “Mr Gow successfully argued that, in this context, need was to be assessed not in some objective utilitarian sense but by considering what type of vehicle the claimant had the use of before the accident and whether any of the other cars he already owned could replace that use.

“So although he had other cars, some of them objectively highly desirable, none of them was a supercar like his McLaren and the defendant, having to take his victim as he found him, was obliged to recompense him the cost of hiring an equivalent to his own.”

Sue Nash, managing director of Litigation Costs Services, explains how the costs management regime is meant to work, and the effect that last week’s Henry ruling will have on it

Dyson: surprise absentee from Henry bench

Lord Dyson MR has said that “it is not an exaggeration to say that, from my perspective, costs management is the key to the Jackson reforms” and also that “if costs management succeeds, the reforms will succeed”.

Given this, the Court of Appeal judgment in Henry v NGN has been eagerly awaited. Following Master Hurst’s ruling that there was no good reason for a departure from the budgeted costs, the case was leapfrogged to the appeal court and heard on 4/5 December 2012, but the subsequent early judgment failed to materialise and it was only last Monday that it was handed down.

Before analysing the judgment, it is necessary to look at the background and why it is so important.

The Woolf reforms

The main thrust of these reforms was supposed to give the courts the power to manage cases so as to give effect to the overriding objective (CPR 1.1), which states:

“(1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly.

(2) Dealing with a case justly includes, so far as is practicable –
(a) ensuring that the parties are on an equal footing;
(b) saving expense;
(c) dealing with the case in ways which are proportionate –
(i) to the amount of money involved;
(ii) to the importance of the case;
(iii) to the complexity of the issues; and
(iv) to the financial position of each party;
(d) ensuring that it is dealt with expeditiously and fairly; and
(e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases.”

In chapter 7 at paragraph 20 he stated: “My recommendations, together with the new rules, are intended to ensure that litigation is conducted less expensively than at present and to achieve greater certainty as to costs.”

The Jackson report

The problem is that the Woolf reforms either did not go far enough or have not been implemented properly (it depends on your perspective). Paragraph 6 of Lord Justice Jackson’s final report stated: “The present project is, essentially a matter of building upon Lord Woolf’s work and proposing reforms where (after ten years’ experience) these appear to be appropriate.”

And at 3.3 he said: “Case management by the court, with the assistance of the parties, was one of the cornerstones of the Woolf reforms.”

Part of case management is the control of costs of the case. Indeed, to Jackson LJ, the two are inextricably linked. He went on to deal with costs management in chapter 40, although there were references to it throughout his report. In chapter 40 (1.4) he said:

“The essential elements of costs management are the following:
(i) The parties prepare and exchange litigation budgets or (as the case proceeds) amended budgets.
(ii) The court states the extent to which those budgets are approved.
(iii) So far as possible, the court manages the case so that it proceeds within the approved budgets.
(iv) At the end of the litigation, the recoverable costs of the winning party are assessed in accordance with the approved budget.”

The Law Society broadly supported the proposals in principle agreeing with Jackson LJ’s proposition that:
(i) Litigation is in many instances a ‘project’, which both parties are pursuing for purely commercial ends.
(ii) Any normal project costing thousands (or indeed millions) of pounds would be run on a budget. Litigation should be no different.

(iii) The peculiarity of litigation is that at the time when costs are being run up, no-one knows who will be paying the bill. There is sometimes the feeling that the more one spends, the more likely it is that the other side will end up paying the bill. This gives rise to a sort of ‘arms race’.
(iv) Under the present regime, neither party has any effective control over the (potentially recoverable) costs which the other side is running up.
(v) In truth both parties have an interest in controlling total costs within a sensible original budget, because at least one of them will be footing the bill.
(vi) The parties’ interests may, in truth, be best served if the court (a) controls the level of recoverable costs at each stage of the action, or alternatively (b) makes less prescriptive orders (e.g. requiring notification when the budget for any stage is being overshot by, say, 20% or more).

How it will (or should) work

District Judge Chris Lethem – charged with judicial training on costs management – has described costs management thus: “[It] will involve the production of a detailed costs estimate… [which] the court will then use… as part of the case management exercise leading to an order that will limit the parties costs.”

Mr Justice Ramsay, who is responsible for the implementation of the reforms, gave the 16^th lecture in the Jackson Implementation series of lectures at the Law Society last May (a ‘must read’ here). The new rules are appended at CPR 3.11 to 3.18 and PD3E.

At 3.12(2) the purpose of the rules is set out: “The court should manage both the steps to be taken and the costs to be incurred by the parties to any proceedings so as to further the overriding objective.”

Costs management will apply generally to all multi-track cases commenced on or after 1 April 2013 in a county court, the Chancery or Queen’s Bench Division (except the Admiralty and Commercial Courts) unless the court otherwise orders and to any other proceedings where the court so orders. Unless the court otherwise orders, all parties except litigants in personmust exchange cost budgets within 28 days after service of the defence. In default the budget will only comprise applicable court fees.

The budgets cannot be exceeded where a costs management order (CMO) has been made save by agreement with the other side or with the permission of the court (there is provision in the rules for either party to apply to vary their budget). Where no CMO has been made, an amended version of CPR 6.5(a) states that where the costs claimed are more than 20% over budget, the court may limit the costs to “such sum as is reasonable for the paying party to pay in light of that reliance, nothwithstanding that such sum is less than… the costs reasonably and proportionately incurred”.

The Henry judgment

In Henry v NGN [2013] EWCA Civ 19 the receiving party’s failure to comply with the practice direction governing the defamation costs management pilot led Master Hurst at first instance to rule: “The fact is that the claimant has largely ignored the provisions of the practice direction and I therefore reluctantly come to the conclusion that there is no good reason to depart from the budget.”

The appeal was the first test of the Court of Appeal’s approach both to the importance and the application of the new costs management regime and it is perhaps of some surprise that the Master of the Rolls did not chose to sit on it himself (as he has indicated he will do concerning any challenges arising out of the Jackson reforms).

It is certainly a matter of regret that the judgment does not provide the clarity that all practioners had hoped for; instead it has opened the door to challenges (by either party) that there may be ‘good reason’ to depart from a budget.

At paragraph 18, the court sets out the matters to be considered: “Whether there is good reason to depart from the approved budget in any given case… is likely to depend on, among other things, how the proceedings have been managed, whether they have developed in a way that was not foreseen when the relevant case management orders were made, whether the costs incurred are proportionate to what is in issue and whether the parties have been on an equal footing.”

There are certainly likely to be arguments that the new rules governing costs management from 1 April 2013 do not differ in any material sense from Practice Direction 51D which governed the defamation pilot, despite what is said on this point in the final paragraph of the judgment. Therefore, whilst the judgment is good news for the claimant solicitors in this case, it is bad news for the future of the new costs management regime. It will lead to uncertainty and, probably, to the satellite litigation so abhorred by the courts.

What it means in practice

Despite the judgment, it is clear that firms will have an uphill struggle to justify any departure from their budgets so it is essential that firms put in place systems not only to record but to monitor their work by each phase of the litigation (the draft budget forms that have been being used in the pilot schemes identify 10 phases).

Firms will already be working on cases that will become subject to costs management once issued so preparing for the new regime is something that all firms should be looking at (and working on) now.

Litigation Costs Services is a Litigation Futures sponsor

Sampson: many people don’t know what their insurer will pay for

Legal expenses insurance (LEI) is a good thing in the post-LASPO world but consumers have little understanding of it, the Legal Ombudsman (LeO) warned today.

In LeO’s 2011/12 annual report – a full account of which can be found here on Legal Futures – Chief Legal Ombudsman Adam Sampson also referred to cases in which customers had brought their complaint to his organisation after losing money on unrealistic ‘no win, no fee’ promises and dubious fixed-fee services.

Mr Sampson said before-the-event LEI is expected to fill the funding gaps left by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. However, the results of a YouGov survey commissioned by LeO to find out how much people knew about LEI are “concerning”.

At least 40% of those surveyed had some type of legal insurance cover. However, 74% of them were unsure or didn’t know what financial cover their policy provided and 89% did not know which legal services were excluded under the terms and conditions.

He wrote: “So, many people don’t know what their insurer will pay for: they may not even realise that their lawyer will be reporting to someone else apart from them.

“This degree of confusion notwithstanding, legal expenses insurance is beneficial for the simple reason that it’ll continue to allow people to take legal action when they would not otherwise have been able to afford it. But it can limit choice when the relationship goes wrong and the lawyer prejudges the view the insurer will take.”

He cited the case of a client who used LEI to obtain an injunction against his neighbour for trespass. The panel firm said he needed a surveyor’s report to prove where the boundary separating his land from his neighbours’ actually lay, but decided not to obtain such a report on the assumption that the insurers would not pay for it. This meant the case was not strong enough and so the firm closed its file.

The client then paid for a surveyor himself and as a result of his findings the firm agreed to take on his case again. The client complained, and LeO found that the firm should not have assumed that the insurance provider would not pay for the report. The firm was ordered to apologise and pay £200 in compensation for the inconvenience he had suffered; the client took his business to another solicitor.

“This case highlights the potential for both lawyers and consumers to become confused over what legal expenses insurance actually covers. It also shows how aspects of a legal service may be circumscribed, meaning not all costs are necessarily covered by a legal insurance policy.

“It is possible, if not likely, that the reliance on legal expenses insurance may further confuse the consumer and further confuse their means to redress.

“In this case the fault lay with the lawyer but it will not always be clear to the consumer who it was who decided to discontinue their case that they feel, rightly or wrongly, was a foregone conclusion.”

LeO highlighted the case of Eileen Dunn, from Leicester, was told to pay a firm £15,000 for a personal injury case that never made it to court, despite instructing them on a supposed ‘no win, no fee’ basis. LeO made the firm waive its charges.

Ms Dunn said: “The firm led me along in the belief I had a legitimate case, changed their minds at the last moment saying it wouldn’t stand up in court, and then tried to bully me into paying £15,000. If they had said from the start I didn’t have a case I wouldn’t have pursued it.”

Other case studies showed instances where what appeared to be transparent fixed pricing failed to give real clarity about the true cost to the consumer, which he ascribed in part to the economic pressures lawyers are facing.

Mr Sampson said: “The arrival of new commercial products is generally to be celebrated as it makes legal services more affordable for most of us.

“However, we’ve seen the damage done to the reputation of the financial sector by the mis-selling of complicated products. The payment protection insurance scandal has cost the banking industry billions of pounds. It would be disastrous if the legal sector exposed itself to a similar risk.”

Dobson: considering funding should be standard step

Posted by Stephen Dobson, legal reviewer at Litigation Futures sponsor Augusta Ventures

Failure in appropriate cases to advise on the suitability and availability of after-the-event (ATE) insurance and third-party funding will amount to professional misconduct and may amount to professional negligence, as this case study explains.

Scenario

Mr and Mrs Smith invested their life savings in building their dream house. The project went disastrously wrong. The Smiths consulted Mr Brown, a solicitor with expertise in construction disputes. They explained that they had sunk nearly all of their capital into the project, and they estimated their losses at £1.5m.

Mr Brown advised that their case had a decent chance of success, and proposed that his firm should take it on under a partial conditional fee agreement. His firm’s client-care letter advised the Smiths of the adverse costs risk and provided a cost estimate and details of billing procedures, but he made no reference to ATE insurance or third-party funding.

The Smiths resolved to go ahead with the case on the terms proposed by Mr Brown, and to fund the litigation from their pension funds.

The case was a nightmare. Costs soared, mediation failed, it went to trial and the Smiths lost. They had spent £450,000 on (discounted) fees and disbursements, and were liable for the other side’s costs to the tune of £500,000. The total would wipe out their pension funds.

A sorry story, but not an implausible one; anyone with significant litigation experience will have been seen something along these lines. Litigation is risky.

The question is, how much of the risk should the client have to bear? In my view the Smiths were left to carry far too much. I explain below my reasons.

The regulatory position

The SRA’s Code of Conduct is expressly based on 10 principles. Principles 4, 5 and 6 are relevant. They are mandatory, and state that “you” (i.e. every solicitor) must:

4. act in the best interests of each client
5. provide a proper standard of service to your client
6. behave in a way that maintains the trust the public places in you and in the provision of legal services.

The Code of Conduct itself prescribes the following relevant mandatory outcomes:

• O (1.1) You treat your client fairly.
• O (1.6) You only enter into fee agreements with your client that are legal and… which you consider are suitable for the client’s needs and take account of the client’s best interests.
• O (1.12) Clients are in a position to make informed decisions about the services they need, how their matter will be handled and the options available to them.
• O (1.13) Clients receive the best possible information, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of the matter.

Those outcomes are evidenced by the following indicative behaviours (insofar as relevant):

• IB (1.13) Discussing whether the potential outcomes of the client’s matter are likely to justify the expense or risk involved, including any risk of having to pay someone else’s legal fees.
• IB (1.16) Discussing how the client will pay, including whether public funding may be available, whether the client has insurance that might cover the fees, and whether the fees may be paid by someone else such as a trade union (my emphasis).
• IB (1.17) Where you are acting for a client under a fee arrangement governed by statute, such as a conditional fee agreement, giving the client all relevant information relating to that arrangement.
• IB (1.19) Providing the information in a clear and accessible form which is appropriate to the needs and circumstances of the client.

What of Mr Brown’s approach, in the light of this regulatory framework? He was sedulous in providing regularly updated cost estimates; he helped the Smiths by agreeing to represent them under a CFA; he spelt out his firm’s terms regarding costs, disbursements and billing arrangements.

What he failed to do was explain to the Smiths how they could avoid the risk of an adverse costs award, and got most of the cost of fighting the case paid for without risking their pension funds, by arranging ATE insurance and third-party funding, both of which would have been available at a palatable cost.

With them in place, the Smiths would have suffered no loss from an adverse costs award and (depending on the funding model) would have only paid a proportion of their own costs and disbursements to run the litigation. If the claim had succeeded, they would have foregone a percentage of the damages recovered plus interest on the amount of finance provided.

In my view, in failing to advise on the possible availability of ATE cover and external funding, Mr Brown plainly breached SRA principles 4, 5 and 6, and outcomes 1.1, 1.6, 1.12 and 1.13; and failed to comply with indicative behaviours 1.13, 1.16, 1.17 and 1.19; and accordingly was guilty of serious professional misconduct.

Legal liability?

What of Mr Brown’s legal position? I am not aware of any directly applicable authorities, although in Adris v Royal Bank of Scotland [2010] EWHC 941 (QB), Judge Wakeham QC found that it was a “gross breach of duty on the part of [the solicitor] to [his] clients” to fail to tell them that they had no ATE insurance when they would have been expecting to have it.

Plainly it would be wrong automatically to equate a breach of the Code of Conduct, however serious, with professional negligence (see e.g. Sarwar v Alam [2001] EWCA Civ 1401 and Mastercigars Direct v Withers [2007] EWHC 2733 (Ch)).

But my feeling is that given particularly what the Smiths had made known to him about their financial position, a court could well conclude that Mr Brown’s failure to explain to them the possible availability of ATE cover and external funding amounted to breach of the common law contractual and tortious duties of care he owed to the Smiths, for which he should be found liable in damages.

Conclusion

I do not say that solicitors should advise clients about the possible availability and suitability of ATE cover and third-party funding in every case. There will be many situations in which it would be inappropriate to do so.

But in my view, the well-run law firm should include consideration of the possible relevance of ATE cover and third-party funding as a standard step in its engagement procedure in contentious matters, to ensure that it does not fall foul of the SRA, the Legal Ombudsman and the court.

Aaron Pearson, director and compliance officer at Three Graces Legal

Eclipse Legal Systems, the Law Society’s sole endorsed legal software provider, is implementing its Proclaim Case Management Software solution at Liverpool-based law firm, Three Graces Legal.

The new start-up, established in November 2015, offers a wealth of experience in working for organisations of all sizes, as well as providing legal services for individuals.

As part of a fast-developing sector, Three Graces Legal prides itself on its ability to continuously improve its business processes, and provide clients with an exceptional standard of service, taking into account the individual needs and circumstances of each.

Eclipse is implementing its out-of-the-box Employment and Personal Injury Case Management systems at the firm, providing all staff with step-by-step procedures to streamline case progression.

Due to Proclaim’s ability to improve speed and efficiency through high levels of automation, Three Graces Legal will be able to enhance the quality of client service, whilst greatly improving the bottom line.

Furthermore, Proclaim will enable the firm to increase its productivity and cope with an expanding volume of cases, by providing fee earners with all the necessary documents – produced at the click of a button – eliminating the need for duplicate data entry and saving hours of administration time.

Aaron Pearson, director at Three Graces Legal, comments:

“We needed our core technology to be as efficient as possible, which is why we chose Eclipse’s Proclaim Case Management solution. Essentially, it will streamline a huge number of our administrative tasks and allow us to build upon our already established reputation of excellence.

“Eclipse is more than qualified to scale with us as we grow and develop, and its position as the Law Society’s sole endorsed provider only cements our confidence in the decision.”

Hudgell: fielding 12-15 enquiries a week from firms looking to get out of PI

The legal market continues to contort ahead of the April reforms, with a law firm leaving clinical negligence work and a deal for a medical reporting agency falling through.

Hertfordshire firm HRJ Law has sold a number of clinical negligence case files for a six-figure sum to acquisitive Hull-based practice Neil Hudgell Solicitors.

Geraldine Kennedy, managing director of HRJ Law, said pending changes to funding clinical negligence claims had prompted a decision to focus on other areas of practice. “This move enables us to develop our commercial and private client work,” she said.

Nearly two years ago Neil Hudgell Solicitors launched a website called ‘We buy any files’ and since then it has bought four other legal practices outright, caseloads from seven other firms and there are three more deals in the pipeline.

They include a £1m-plus deal with Solihull-based Forum Law Ltd to acquire its high-value public liability and clinical negligence work, as well as the PI files of north Yorkshire-based Williamson Hill and the PI and clinical negligence caseload from former Peterborough-based Carters Solicitors,

Managing director Neil Hudgell said: “Huge changes in the legal landscape mean many lawyers are exiting personal injury and clinical negligence practice or leaving the profession for good. My own practice, on the other hand, is one of those actively looking to acquire firms or caseloads as part of our growth strategy…

“Two years ago, we had to go out of our way to stimulate interest.  Now we are fielding 12-15 enquiries a week and I don’t expect to see that lessen any time soon.”

Meanwhile, legal support services business Impact Holdings (UK) plc has pulled out of a planned £1m acquisition of a medical reporting organisation due to the uncertainty in the personal injury market.

In September, Impact – which provides short term funding solutions, loans administration, accounting, IT and infrastructure support services – announced that it had signed heads of agreement to buy Medical Legal Appointments Ltd and its parent company DACH, which in 2011/12 had a turnover of £4.7 million and profit after tax of £165,000.

However, last week the company released a statement that the deal is not going ahead at the present time, citing “the recent announcements regarding the fixed cost regime in the personal injury market and the uncertainty this creates”.

Impact said it “continues to pursue other avenues as part of its strategic realignment to become a provider of services to the legal and professional sectors”. It also operates in the property based bridging and development market.

Kazakhstan: Big fan of English courts

London’s commercial courts were busier than ever last year, with a 22% rise in the number of litigants and 7% increase in the number of cases heard, a survey has found.

The survey highlighted strong demand from both Russia, third in terms of the number of litigants, and Kazakhstan, which came second on the list behind the UK with 31 litigants.

Researchers from communications consultancy Portland studied 158 cases heard in the commercial courts between March 2017 and April 2018.

London’s continuing role as a “destination of choice” for commercial litigants was confirmed by a rise of three in the number of countries represented in the past year to 69.

Despite the difficult diplomatic background, Russia featured for the third time in a row as one of the top three users of the commercial courts, alongside the USA, with 20 litigants each.

“City law firms will undoubtedly continue to watch Russia’s relationship with the commercial courts,” researchers said. “Tensions between London and Moscow show little sign of easing.

“Despite this, current high-profile proceedings with Russian litigants look likely to maintain the country’s prominence in the courts for the coming year.”

Germany came in fourth place for the number of litigants with 18, followed by two countries with their own rival commercial courts – the UAE and Singapore.

Researchers said the appearance of Cyprus in seventh place “may be due to the Russian-Cypriot Double Tax Agreement, which grants favourable tax provisions for Russian businesses”.

Panama and India had 12 litigants each in the commercial courts, the Netherlands and Luxembourg 11 and Switzerland and Jersey 10.

The most common pairings in the courts were UK v UK cases (47), Russia v Russia (6), Kazakhstan v Kazakhstan and UAE v Jersey – both with five cases.

Commenting on the “increasingly competitive” market for international litigation, researchers said Singapore in particular had been used as a model for other jurisdictions.

China announced the opening of commercial courts similar to the Singapore International Commercial Court to manage disputes from the Silk Road trade route, part of its “one belt, one road” initiative.

“Dubai meanwhile is well established as a regional trade hub and is attracting an increasing number of international litigants, with a notable focus on Africa.”

Portland said the London courts faced a potential challenge closer to home, from a so-called ‘hard-Brexit’ and the risk that rulings made in London might no longer be enforceable in the European Union.

“This could in turn make London a less attractive litigation destination. Potential litigants may look to other European Union courts for relief.”

Researchers added that there was a record number of litigants from EU countries in the commercial courts last year – 105.

Legal changes “appear to have had an impact”

The impact of LASPO and the decline in the number of claims management companies (CMCs) cut third-party personal injury claims by 10% in 2013, the Institute and Faculty of Actuaries has said.

The Institute said this was the first time in 10 years it had recorded a drop in third-party claims, and there was also a 5% reduction in the average cost per claimant, from £5,000 to £4,750.

In its fifth annual report on the issue, which collated and analysed data for 2013, the actuaries said legal changes “appear to have had an impact on motor insurance claims”.

The report found that the numbers of CMCs fell by 35% in 2013, reducing their turnover from personal injury claims by a third, from £354m to £238m.

“The number of CMCs has now halved since 2011,” researchers said. “Regions with the highest volume of CMCs continue to record the highest frequencies of third-party injury claims. London (2.2%), Liverpool (2.0%) and Manchester (2.0%), all record the highest frequency.”

The Institute said ‘frequency’ measured the number of claims as a percentage of the number of cars, rather than just volume. It said the average density of CMCs across the UK was two for every 100,000 people.

The report also found that insurers had responded to the drop in claims, by cutting third-party premiums for the financial year to the end of March by 19%.

“We believe that the reduction reflects an anticipation of claim frequency reductions by insurers and the impact of a very competitive market,” researchers said. “Net of previous premium increases, motor insurance premiums have increased below the rate of inflation since 2007.”

They said previous reports highlighted discrepancies between falls in the numbers of property damage claims and increases in personal injury claims and the high volume of small claims.

David Brown, chairman of the working party which produced the report, said legal changes in 2013 appeared to have had a “significant impact” on motor insurance injury claims.

“However, we remain uncertain as to what the final impact of these changes will be, as well as that of other legal changes, such as the upcoming whiplash reforms.

“What is clear is that the motor insurance industry anticipated the impact of legal changes and has already passed on the reduction in costs to consumers.”

Saville: international standard hope

The Academy of Experts has launched a model form CV to help courts decide whether an expert witness truly is an expert.

Its judicial committee, chaired by Lord Saville and whose members included Lord Justice Jackson, has produced the CV, which will sit alongside the academy’s model form of expert report.

The academy said that with oral evidence being given less and less, a CV is the only way that the court is able to ascertain the appropriateness of an expert.

“Up until now the contents of experts’ CVs have been varied and sometimes more of a marketing device than something appropriate or useful to the court,” it said. “The judicial committee… prepared the model CV in response to an increasing number of concerns raised by senior judges about the quality and content of CVs in the reports they were seeing. CVs are often too long and do not contain information that would assist the courts.”

Lord Saville, who is also the academy’s president, said: “In developing the model form of expert witness CV, the judicial committee wanted to provide a template. This would ensure that experts, irrespective of their discipline, set out their qualifications and experience relevant to matters on which they are expressing their opinion in a clear and simple format.

“In the same way that the model report format has been widely adopted around the world we believe that the model CV could be a new international standard adopted and used by all experts.”

The other members of the committee that drafted the model CV included Lord Reed, Lady Justice Hallett and Mr Justice Bean, along with senior judges from Hong Kong, Scotland and Northern Ireland.

High Court: disinheritance claim needs hearing

A litigant in person’s contentious probate claim, part of which was dismissed by a High Court master as “no more than tittle tattle”, needs a proper hearing, a judge has decided.

Andrew Sutcliffe QC, sitting as a High Court judge, said Master Price should not have treated the defendants’ application as being for summary judgment when it was for a strike-out.

Mr Sutcliffe said that the master did not “expressly consider the fairness” to the claimant of doing this and dispensing with the procedural requirements involved.

“It seems that what the Master did was to apply a test on the basis of an application not before him in circumstances where he had neither explicitly exercised his discretion to treat the application before him as including an application for summary judgment nor explained to the claimant the consequences of the course he proposed to take.

“The fact that the claimant was a litigant in person cannot be ignored. She was in my view entitled to have proper notice of the fact that the defendants were applying for summary judgment.”

The court heard in St Clair v King and another [2018] EWHC 682 (Ch) that Anna St Clair was a step-daughter of Jean Lech, who died in 2012. After Ms St Clair’s father died in 2008, Ms Lech disinherited both Ms St Clair and her daughter, replacing them as beneficiaries by her nephew and carer.

Ms St Clair disputed the validity of the will disinheriting her on a variety of grounds, including undue influence, testamentary incapacity, want of knowledge and approval, and fraud.

Ms St Clair, who was not represented before Master Price but was represented by a direct access barrister before the High Court, argued that the master should not have struck out her claims on the basis that they had no real prospect of success but instead should have adjourned the hearing to give her an opportunity to obtain legal advice.

Her counsel also complained that it was unfair for the claimant to be handed a 15-page skeleton argument by the defendant’s barrister “as she went into court”, adding to the unfairness of asking a litigant in person to deal with the application at such short notice”.

Mr Sutcliffe said it was “crucial” to the outcome of the appeal that the master proceeded on the basis on an application for summary judgment under Rule 24.2, when an application to strike out under Rule 3.4 was before him.

Instead of concluding that the particulars of claim disclosed no reasonable grounds for bringing them, the master applied the “summary judgment test”, that they did not have any realistic prospect of success.

Mr Sutcliffe said it was “obvious” that the claimant was not given the 14 days’ notice of a summary judgment she was entitled to and he was not persuaded that she had a “proper appreciation” of the fact she was facing one.

The judge accepted counsel for the claimant’s submission that to proceed on the basis that the defendants had made a summary judgment application amounted to a “serious procedural irregularity”, and that there should be a rehearing of the case, rather than a review.

Mr Sutcliffe disagreed that Ms St Clair’s claims of undue influence could be regarded as “fanciful” and lacking any prospect of success “without hearing the evidence to be called at trial”. He made a similar finding regarding the claimant’s want of knowledge and approval, and lack of testamentary capacity claims.

The judge allowed the claimant to amend her pleadings to include an argument based on mutual wills and breach of promise, but refused to allow a fraud claim to be included.

Mr Sutcliffe allowed Ms St Clair’s appeal and said he would hear from the parties on the question of costs.

He said that in light of this decision and because her claims of undue influence, want of knowledge and approval, and lack of testamentary capacity were permitted to proceed, it was not “appropriate” for the award of costs on the indemnity basis to stand”.

Courts: where are the solicitors?

Solicitors were the least successful group of people applying for judicial appointment over the last six months, and the situation is getting worse, the latest figures from the Judicial Appointments Commission (JAC) have shown.

While for most characteristics recorded, such as gender and race, the proportion of applicants was roughly in line with the proportion ultimately recommended for appointment, this was not the case for solicitors.

Some 45% of those who applied for 20 selection exercises during the period were solicitors, but only 27% of recommendations came from that branch of the profession.

The problem seems to occur after the initial sift of applicants, as 50% of those shortlisted were solicitors.

The figures also showed the difficulty with getting solicitors to apply in the first place – for example, 85% of the recruitment pool for deputy district judges (civil) were solicitors, but only 58% of applicants were. And just 34% of those recommended were solicitors.

By contrast, 57% of those recommended were barristers, even though they made up 28% of those who applied. One in six barristers succeeded, compared to one in 20 solicitors.

Also, 20 of the 23 chartered legal executives who applied were shortlisted, but none were appointed.

The situation is deteriorating. This was the fourth civil DDJ exercise in the last eight years; in 2007, 78% of applicants and 68% of recommendations were solicitors.

The statistics showed that 42% of all applicants, 42% of the shortlisted candidates and 43% of recommended candidates were women, and overall the proportions of applicants who were women were similar to the proportions of women in the posts’ respective eligible pools.

Some 17% of applicants were from a black, Asian and minority ethnic background, as were 18% of shortlisted candidates and 13% of recommendations.

Christopher Stephens, chairman of the JAC, said: “The latest statistics show a solid performance for both women and BAME candidates. For example, the JAC recently recommended 10 new High Court judges of exceptional quality. These include three women, four judges aged under 50, one with a disability and two with a BAME background. This is a diverse group of senior judiciary.”

There were 73 applicants for the High Court posts, of whom 39 were barristers, 24 existing salaried judicial office holders and five solicitors. Nine of the appointments were barristers and the other an existing judge.

Mr Stephens said: “The figures for solicitors and CILEx Fellows are disappointing this time, particularly for the deputy district judge (civil) selection exercise. There was a much stronger field of candidates for this exercise than the previous one in 2012 and so competition was particularly tough.

“I hope to see candidates from both professional backgrounds achieve more success in the exercises to be reported in the next set of statistics.”

Leading costs, pricing and funding consultants Burcher Jennings have kicked off a year as the “baton holders” for Headway, the brain injury charity, with a “Budgets, J-codes and E-billing” training seminar for clients in the grounds of HM Prison Styal.

All proceeds from the seminar will be donated to Headway, and the innovative prisoner rehabilitation charity The Clink will also benefit, as the venue for the event is The Clink restaurant at HMP Styal, where catering is provided by female prisoners training for catering qualifications to help them secure hospitality work on their release.

As well as providing a dual charitable benefit, the training seminar will allow costs lawyers attending to update their skills and accrue CPD credits.

The event is one of a year-long series of Burcher Jennings fundraising events for Headway, with the firm having taken on the challenge of maximising fundraising before handing on the baton to another firm.

Michelle Barron, Head of Operations at Burcher Jennings, said:

“Our work frequently brings us in to contact with the consequences of catastrophic brain injuries, and we’re well aware of the amazing role the Headway team play in supporting people with life after brain injury. The whole firm is excited to be embarking on a year of fundraising events to support Headway’s fantastic work. By hosting the event at The Clink we’re also supporting prisoner rehabilitation – so although we’re ‘sending our clients to jail’, they’ll emerge after the training session with updated costs skills, CPD points and a hot breakfast inside them!”

As this year’s Headway baton holders, the team in Burcher Jennings nationwide network of offices from Carlisle to Truro will be looking to fill the year with a wide range of other fundraising events, with plans already including:

• CEO Martyn Jennings, Sue Jennings and Head of the Manchester Office Victoria Morrison-Hughes climbing the O2 Arena in London;
• Team members running the London Marathon in aid of Headway;
• An Autumn Black Tie Ball.

Michelle Barron, Head of Operations at Burcher Jennings, added:

“Throughout the year, we’ll be raising money for a fantastic cause, raising awareness of Headway’s important work, and having a thoroughly enjoyable time.”

For further information about any of the events planned, or to make a donation to Burcher Jennings year of fundraising for Headway, please contact Michelle Barron on 0870 7777 100.

RTA: review responses back changes to prevent skewing of market

There should be a complete ban on pre-medical offers, claimant representatives have argued in responses to the government’s call for evidence on the MedCo portal, while insurers called for the regulation of medical reporting organisations (MROs).

But the Ministry of Justice’s call for evidence, part of the review of MedCo announced in July, which ended earlier this month, saw agreement on the need for changes to prevent the skewing of allocations of experts offered by MedCo to instructing parties, brought about by some large MROs registering multiple smaller companies.

Responding to the ministry’s call, the Association of Personal Injury Lawyers (APIL) observed that the audit and accreditation of MROs should have occurred before MedCo went live in April.

It argued that:

• The definition of a “national” – that is, tier 1 – MRO should mean that it should not just cover sufficient postcodes, but that it should also be able to provide a medical report within 25 miles of the client within four weeks of the instruction;
• An algorithm should be used in MedCo’s random selection of experts which “links the ratio of tier one and tier two MROs/experts offered for selection with the total number of tier one and tier two experts registered”. This would prevent market skew; and
• Each expert selected should be accompanied by “an indication of quality and client care” offered.

APIL said there were insurers that still made offers to settle without a medical report, a practice that was “grossly unjust to the claimant” and should be subject to a “complete ban”.

In its submission to the MoJ, law firm Thompsons Solicitors, which said it spent over £15m on 20,000 medical reports in the year to July 2015, including those in relation to RTA cases, agreed with APIL on the ban, saying: “If the government is really interested in refining a system to the benefit of the consumer – the claimant – not the corporate entities in the market, it should outlaw pre-medical offers with immediate effect. Instead the consultation paper talks merely of ‘discouraging pre-medical offers to settle’.”

The Association of British Insurers (ABI) argued that MROs should be subject to independent regulation, because MedCo was ill-equipped for the role and was currently being forced to act as a “pseudo regulator”.

It continued: “The dysfunctional behaviour witnessed has almost exclusively emanated from MROs in their attempts to undermine the system of random allocation for their own commercial gain.”

The ABI said the statement of financial links made by registering MROs should be widened to prevent connected businesses from appearing in random allocations of experts. But there should be no adjustment to the existing formula for ‘offers’ by MedCo at this point, until the question of multiple registrations was resolved.

Litigation Futures revealed recently that MedCo had started to sanction some MROs for breaches of registration conditions.

Perrin: costs budgeting call

Leading third-party litigation funder Calunius Capital has announced the first closing of its second fund, raising an initial £30m of capital.

The fresh cash injection has so far come from those invested in its first fund, but the company hopes that a second closing in three months will have brought in another £30m from new investors.

The Calunius Litigation Risk Fund 1 was launched in December 2010 and is now closed after raising and committing £40m. Both funds are based in Guernsey.

The first fund’s highest-profile investment to date is funding the Elvis Presley estate in its action over unpaid royalties against a German label owned by Sony, which is now in the German Federal Supreme Court.

Other cases include international arbitration proceedings against the governments of Uzbekistan and Venezuela in connection with unlawful expropriations of the assets of listed gold-miners Oxus Gold and Rusoro Mining. It has also made several investments in private recovery actions by victims of cartels.

Calunius said its cases have been heard all over the world, including in London, Paris, Washington and Munich.

Mick Smith, head of origination at Calunius Capital, said: “The first closing of our second fund represents a further advance for Calunius Capital, cementing its place among the world’s leading litigation funders with assets under management in excess of $100m. We are especially pleased to receive the ongoing support of our anchor investors from our first fund.”

Chairman Leslie Perrin added: “Litigation funding is now achieving a very wide degree of acceptance from investors, lawyers, judges and most importantly, from businesses, large and small, who are increasingly seeing our financial products as desirable risk management tools. The CFOs and GCs of the most solvent companies view litigation funding as a rational commercial choice.”

Though it has invested in English litigation, Mr Perrin said the risk of adverse costs made it an unpopular jurisdiction for funders. To ameliorate this, he called for an end to the exemption from mandatory costs budgeting for many worth more than £2m – the results of a judiciary review of this, launched last June, are still unknown.

“I think costs budgeting would be excellent through the system – I can’t think why the cases that need it the most don’t get it,” he said.

Costs cap: Different from fixed costs

An award of indemnity costs after a successful part 36 offer in a provisional assessment does not remove the £1,500 costs cap, the Court of Appeal has ruled in overturning the High Court.

The Association of Costs Lawyers has called the outcome “harsh” for its members and called on the Civil Procedure Rule Committee to review the decision.

In W Portsmouth and Company Ltd v Lowin [2017] EWCA Civ 2172, the substantive mesothelioma claim settled for £70,200.

On 3 March 2015, Ms Lowin made a part 36 offer of £32,000 in respect of her costs. A month later, the detailed assessment process began with her claiming £55,086.

On 8 December 2015, Master Whalan provisionally assessed her costs at £32,255. Having beaten the offer, he made the usual part 36 order.

Ms Lowin claimed £6,091 for the costs of the assessment proceedings. Though ordering the company to pay the costs on the indemnity basis, Master Whalan decided that they should be capped pursuant to CPR 47.15(5). This led to a total of £2,805 – £1,500 in costs plus VAT and the £1,005 court fee.

On appeal, Mrs Justice Laing reversed him after following the Court of Appeal’s ruling in Broadhurst v Tan, which decided that a party who beat a part 36 offer in a case where fixed fees applied was eligible for indemnity costs as there was tension between the two concepts.

But giving the ruling, Lady Justice Asplin said Broadhurst was not relevant and that Master Whalan had taken the correct approach.

Unlike with fixed costs, a cap did not prevent costs being assessed on the indemnity basis “or affect the quantum of the costs which are being assessed under that rule”, she said.

“It merely inhibits the amount which can be awarded, the assessment of the party’s costs having taken place on the indemnity basis as required by CPR rule 36.17(4)(b). If the party’s costs assessed on the indemnity basis were less than the cap, the full sum would be awarded…

“It follows that, with great respect, I do not consider that the judge was right to conclude… that there is a material conflict between costs assessed on the indemnity basis and costs assessed on that basis subject to a cap.”

There was, Asplin LJ continued, nothing in the CPR to suggest that the cap should be disapplied.

“Such a construction is also consistent with the policy behind both CPR rule 47.15 and part 36.

“It does not undermine the intention to encourage the quick and cheap resolution of the assessment of costs in cases in which the costs claimed are £75,000 or below.

“Nor does it deprive the successful party of the not inconsiderable benefits in CPR rule 36.17(4)(a)-(d) albeit that the costs under (b) [indemnity costs] are subject to the cap.”

A spokesman for the Association of Costs Lawyers said: “While the clarity provided by the ruling was needed, the outcome is very harsh for costs lawyers.

“There will be plenty of cases where the paying party does not accept a part 36 offer and instead causes the other side to spend significantly more than £1,500 in dealing with costs issues.

“But on beating their own offer at assessment, the receiving party enjoys all the usual benefits, except in relation to this one aspect of their case. And it will be their costs lawyer who suffers through no fault of their own.

“We call on the Civil Procedure Rule Committee to consider the impact and fairness of this ruling – making this exception seems at odds with the thrust of the whole part 36 scheme.”

Conflict of interest between children and their solicitors

The Civil Procedure Rule Committee is to investigate claims that the Jackson reforms have made it “virtually impossible” for solicitors to claim success fees in cases involving children, it has emerged.

Committee member HHJ Halbert told its May meeting that in his opinion a rule change would be needed before lawyers acting for children can claim success fees from damages, now that they can no longer be claimed from defendants.

His comments came in a supplement to a paper on the issue by District Judge Hovington, who said that a number of his colleagues had highlighted the problem of child victims and success fees.

Judge Halbert outlined the basic facts of an appeal by a law firm against a district judge’s refusal to allow payment out of a child’s damages.

The case, which was anonymised, settled with payment to the child of £2,700 plus costs, and a success fee of £675. The district judge hearing the case approved the settlement, but not the payment of success fees.

“There are major problems with this case,” Judge Halbert said. “The first is the status of the appeal. The appeal has been lodged by the solicitors. Neither the litigation friend, nor the defendant, have any interest in the outcome of the appeal.

“In reality the parties in the appeal are the solicitors and the child. The solicitors are not parties to the action so they have no locus standi to appeal. To do so, they are acting in conflict with their interests of their own client, namely the child.”

Judge Halbert said he had raised the matter with the Supreme Court Costs Office, which took the same view that the solicitors had no locus.

The judge said that there was a further problem over the basis on which the appeal could be funded.

“The money cannot come out of the child’s damages without the leave of the court, and there is no chance that this will be granted.”

In response, the rule committee decided that a review of the rules was necessary and, “in view of the complexity of the problem”, a sub-committee should be set up to identify the issues and how they could be addressed in the rules, with DJ Hovington as chair.

In his paper, DJ Hovington said concern had been expressed that while detailed assessment of costs could be disproportionate by reference to the amounts involved, the rules were unclear as to when summary assessments could be made.

He said that it was likely that in order to dispense with the requirement for detailed assessment, judges may need the kind of detailed information which could only be provided where the detailed procedure was followed.

DJ Hovington added that, where detailed assessments were carried out, there were the “further complications” of the conflict of interest between solicitor and child, and the costs for the child exceeding the 10% uplift in general damages.

Please join us for a complimentary breakfast and update on the upcoming changes in Insolvency Law and some practical steps to ensure you are fully prepared.

Venue: South Place Hotel, 3 South Place, London, EC2M 2AF.

Date / Time: 23 February, from 8.30am – 10.00am.

We are delighted to have the following speakers:

• Colin Campbell (former Costs Judge): CFAs – What have we learnt since LASPO was implemented?
• Steve Ruffle (Temple Legal Protection): ATE – Pre and Post April?
• Mitesh Modha (Kain Knight): Costs Budgeting in Insolvency: what does this mean?

Agenda

8.30am                 Registration, breakfast, tea & coffee served

9.00am                 Seminar starts

10am                     Seminar closes with a Q&A

If you are able to attend, then please could you e-mail Scott Jarrold at Kain Knight, call: 01279 755 552 or visit: kain-knight.co.uk/insolvency-law-breakfast-seminar/

We look forward to seeing you at the event.

Hours: claim appeared excessive

A claimant law firm has been given a major shot across the bows over its costs claim in a clinical negligence case after a High Court judge heavily reduced the sum its client sought as payment on account of costs, on the grounds of both proportionality and necessity.

Rallison v North West London Hospitals NHS [2015] EWHC 3255 (QB) concerned a negligence claim over a treatment delay that settled for £450,000.

The claimant – whose solicitors were Stewarts Law – made an overall costs claim of £1.13m, including success fees, and he sought an interim payment on account of costs of £574,000, including a £107,000 after-the-event (ATE) insurance premium. The defendant offered £250,000.

The claimant’s pleaded case valued his claim at £3.9m, his skeleton argument put it at £3m, while in the settlement negotiations, he suggested that it was worth not less than £1.5m.

The defendant argued that the costs claimed were disproportionate, and that “a substantial proportion” of the individual items of costs claimed could not be justified in any event.

Mr Justice Garnham adopted the approach of Lord Justice Christopher Clarke in Excalibur Ventures LLC v Texas Keystone Inc [2015] EWHC 566 (Comm), that a reasonable sum for costs on account would often be one that was an estimate of the likely level of recovery subject to an appropriate margin of error.

Garnham J first looked at whether, viewed globally, the costs claims appeared to be disproportionate, while emphasising that he was “not expressing any final conclusion on the propriety of the claimed costs”.

“In my view, there is an argument of real substance here that the total costs claimed is not proportionate to the complexity of the case, to the amount which it might reasonably have been anticipated would be recovered and to the amount actually recovered.”

It was a “fairly typical clinical negligence case with significant, but not unusual, causation difficulties”, he found, and both £3.9m and £3m seemed, “at least at first blush, to have been substantially greater than the genuine value of the claim”.

Having decided that, the second stage was to consider, “adopting a fairly broad brush approach”, the necessity of the individual items claimed.

“In those circumstances, in my view, it is necessary to consider the actual sums claimed in a little more detail. In that regard I accept the submissions of [counsel for the defence] that the hours allegedly devoted to the preparation of this case seem, at least at this stage, excessive.”

The claimant’s schedule of costs said that the senior solicitor at Stewarts Law working on this case spent 472 hours on preparatory work ahead of trial, while other solicitors spend 189 hours on documents and 107 hours on correspondence.

“That is the equivalent of a solicitor working almost every working hour of some 23 weeks exclusively on the preparation of this case before it even got to trial. Of incidental interest is that that preparation produced a trial bundle consisting of just three lever arch files.

“Those figures as to time spent by the solicitors preparing this case for trial are all the more remarkable given that it is evident that they relied heavily on counsel in preparing the case for trial. The costs schedule claims that 177 hours work was done by leading counsel and 199 by junior counsel (although presumably that includes a substantial allowance in respect of their brief fees).

“At least at this stage it is not easy to see how all these figures can be justified. In those circumstances I reject the claimant’s claim for an interim award of costs in the sum of £574,000.”

Though that made the defendant’s figure of £250,000 “much more realistic”, the judge said it was intended to cover the ATE premium, which was “highly likely” to be recovered in full. As a result, he increased the payment on account of costs to £307,000.

All commercial lawyers need to identify the commercial concerns of the client. Exclusion and limitation clauses are used to deal with those losses that are most significant to any business. These clauses are probably the hardest negotiated and the most fought over in any litigation; because they allocate risk. These clauses, above all others are those that require clear and unambiguous wording.

MBL’s one-hour webinar will give you practical guidance on drafting and interpretation of exclusion/limitation clauses for use in commercial contracts.

It is aimed at every lawyer that drafts or interprets commercial contracts and will outline some of the recent case law on incorporation, interpretation and statutory control through UCTA “unreasonableness”. Exclusion and limitation clauses are fundamental to commercial contracting because they deal with the allocation of risk. While the recent decisions inevitably turn on the specific facts of each case there are, nevertheless, several key lessons that can be identified and applied when using these clauses.

For more information on webinar content and costs please email lucy@mblseminars.com quoting Litigation Futures. Alternatively give us a ring on 0161 793 0984.

Volkswagen: share price fall

Third-party funder Bentham Europe is set to back a shareholder in Germany against Volkswagen (VW), as the fall-out from the use of ‘defeat device’ software to beat emissions testing continues to grow.

Since the disclosures by the car company, its market capitalisation has fallen by some €25bn and investors have seen the share price collapse from approximately €160 to €100.

Bentham said it is now “in discussions with institutional investors worldwide to fund a shareholder action”, alleging breaches of German securities law over in the eight years to September 2015.

The company said the actions will seek to establish that shareholders are entitled to compensation for losses caused by VW’s alleged breaches of the German Securities Trading Act, based upon “the company’s apparent failure to inform the market, over a long period of time, about its suspected practice of installing and using ‘defeat device’ software in a very significant number of vehicles it manufactured and sold into the United States and other world car markets”.

VW’s alleged conduct has resulted in worldwide investigations, including criminal investigations in Germany and the US, the resignation of senior company executives, and the prospect of a large scale and worldwide vehicle recall.

Bentham is now trying to get in contact with all current and former shareholders who acquired at least 10,000 VW shares on a German or European exchange between 1 January 2007 to 18 September 2015, and who had not sold all of them prior to the market opening on 21 September 2015.

Jeremy Marshall, Bentham Europe’s chief investment officer, said: “Volkswagen shareholders are justifiably concerned that Volkswagen has appeared to have allowed this practice to continue for what may have been a number of years, in the assumed knowledge that its disclosure to the market would be likely to cause them and their shareholders significant financial harm.

“We expect a legal claim to reveal the true extent of the problem and allow shareholders to seek compensation for the undoubted harm that has been suffered. Shareholders – who saw billions wiped off the value of Volkswagen in two days – deserve more than just an apology for what appears to be long-running and concerted cheating of the system.”

In order for the claims to proceed, a “sufficient number” of shareholders will need to agree to be funded by Bentham Ventures.

Meanwhile, Leigh Day, the London and Manchester group action specialist investigating potential legal claims on behalf of VW vehicle owners, said it has written to the company’s new CEO to demand that the company agree to a full refund of the premium consumers have paid for their ‘clean’ diesel cars and compensation for other related losses.

VW has not admitted to falsifying emissions data in the EU, although 1.2m vehicles are being recalled.

The letter from partner Bozena Michalowska-Howells said: “However, if it is found that defeat devices have been used in our clients’ vehicles, this undoubtedly amounts to a misrepresentation and a breach of contract…

“Whilst we welcome the news that repairs will be undertaken to upgrade the affected cars to comply with EU nitrogen dioxide emission standards, such repairs may result in reduced fuel efficiency and increased CO2 emissions which in turn may impact upon the vehicle excise duty payable and other associated costs. Our clients are also very concerned about the impact of the use of defeat devices on the re-sale value of their cars.”

Ms Michalowska-Howells called on VW to enter into negotiations to set up a settlement scheme.

Taylor: reforms tailored to Scottish litigation

Changes to civil litigation funding in Scotland that could be dubbed ‘McJackson’ for their adoption of key reforms introduced in England and Wales, have been recommended in a long-awaited report to the Scottish government.

But the Taylor Report of the review of expenses and funding of civil litigation in Scotland, written by Sheriff Principal James Taylor, rejected outright Jackson LJ’s support for a ban on referral fees, noting that alternative business structures (ABS) would make policing a ban untenable. Mr Taylor also defended claims management companies’(CMCs) “legitimate role” in educating the public.

The report contained 85 recommendations, including proposals for qualified one-way costs shifting (QOCS) in personal injury cases, damages-based agreements (DBAs) with capped deductions on a sliding scale, judicial costs management, and a costs budgeting pilot.

Introducing the reforms, Mr Taylor, the former Sheriff Principal of Glasgow and Strathkelvin, said that in addition to wanting a cautiously “incremental approach” to the reforms, including pilots, he wanted the Scottish Civil Justice Council to keep them under close review.

“If there is one lesson to be learned in this jurisdiction from the various attempts to reform legal expenses in England and Wales, it is that predicting how lawyers will react when the financial dynamics and incentives are altered, is very difficult,” he warned.

In his preamble, Mr Taylor insisted he had “not deferred to what has been implemented south of the border”. He noted that a key difference between the two systems was that neither after-the-event insurance premiums nor success fees had ever been recoverable from the losing party in Scottish ‘speculative fee agreement’ cases – the equivalent of conditional fee agreements.

Rejecting a referral fee ban, Mr Taylor said: “There is evidence that the present [Scottish] ban on referral fees is regularly circumvented and there is no appetite to enforce the ban.” ABSs would make policing a ban even more difficult and a ban may be “redundant”.

But solicitors receiving referrals should be required declare to clients their expertise to do the work and be transparent about remuneration, as well as ensure the referrer did not cold call, he added.

In Scotland solicitors’ referral fees are limited by a practice rule that prohibits sharing profits with non-qualified persons. But flat fees are commonly paid for inclusion on referral panels, with no objection by the Scottish solicitors’ regulator, the Law Society of Scotland, said the report.

Mr Taylor added that CMCs had a “legitimate role” to play in informing people of their rights, promoting access to justice and providing solicitors with “a crucial lever for acquiring work in a market environment”.

Making a distinction between Scottish and English litigation, he compared the perception of a ‘compensation culture’ in England and Wales and the relatively low increase in all claims in Scotland in recent years – 7% compared to 23%

The number of claims was also proportionately lower, he said, with clinical negligence claims between 2008/11 totalling one-30th of the number of claims in England, yet the Scottish population was a tenth as large. Claims in employer liability were one-12th England’s, in motor liability one-24th, and in public liability one-15th.

He added that in 2011/12 there had been a decline in the level of litigation of 35% compared to 2008/9; 85,256 cases against 131,633 respectively.

“One is left with the conclusion that there is a different culture in Scotland, as opposed to England and Wales, when it comes to litigation,” he said.

Meanwhile, QOCS was necessary to redress the asymmetric relationship between litigants and insurers in “virtually all personal injury actions”. He said: “In many cases there is a true David and Goliath relationship.”

In the event of the Scottish equivalent of a failure to beat a part 36 offer to settle, any adverse costs award would be limited to 75% of the damages awarded by the court.

Other recommendations included that all parties to litigation should disclose the nature of their funding and the identity of the funder at the outset.

Kim Leslie, convener of the Law Society of Scotland’s civil justice committee, said access to justice would be improved if the proposals were adopted but that the society would “actively investigate” whether DBAs had brought benefits in England and Wales “and what lessons can be learned in relation to Scotland”.

She added: “The idea of solicitors paying referral fees to non-solicitors would be a fundamental change for Scotland, and one which could have far-reaching implications into other areas of practice.

“However, we live in a changing world and with the prospect of legal firms going into business with other regulated professionals, the time is right to look at the question of sharing fees.”

A public consultation preceding the Taylor report received 70 responses. Research for the report included a meeting in London with Jackson LJ.

Regan: MR is a massive fan of the reforms

The Court of Appeal is highly likely to uphold the Draconian Plebgate costs budgeting ruling, Professor Dominic Regan has argued.

The leading civil justice academic also predicted that the Damages-Based Agreement (DBA) Regulations will be amended after “massive lobbying” by large law firms.

The Plebgate case, involving a libel claim brought by former cabinet minister Andrew Mitchell against The Sun, saw a High Court master limit his budget to the court fees because of his solicitors’ failure to comply with the budgeting rules.

Addressing the Association of Costs Lawyers’ costs conference in Manchester on Friday, Professor Regan observed that the Master of the Rolls Lord Dyson – who will be sitting on the appeal, which has been fast-tracked to the court – is a “massive fan” of the Jackson reforms, as is Lord Neuberger, the president of the Supreme Court.

“Never forget that Jackson was the work of the judiciary… I really do not see that the Court of Appeal is going to want to be seen to be undermining, betraying or, indeed, killing off this newborn child,” he said.

During an earlier straw poll, delegates agreed that the appeal court is likely to uphold Master McCloud’s judgment.

Professor Regan also expected the review into the courts that are currently exempt from costs budgeting to lead to the widespread adoption of budgeting – “surely the bigger the claim, the more there is a case for budgeting”, he said.

There has been a long-standing doubt that the DBA Regulations as drafted allow hybrid DBAs that mix hourly rates with a contingency element, and as a result commercial firms have steered away from using DBAs. Despite the Ministry of Justice saying in April that it was reviewing the regulations as a result, nothing has been forthcoming.

Professor Regan said it seemed certain the regulations will be amended next April following lobbying from firms including those in the magic circle. It was reasonable, he insisted, for the client “to have some degree of involvement” in their case.

Other changes next year, he said, will include a tidying up of part 36 – including an increase in the ‘reward’ claimants receive when a defendant does not match their offer, on the grounds that the current maximum of £75,000 is “peanuts” in the context of a £10m claim.

Professor Regan also suggested that compulsory ADR is back on the agenda, and highlighted Sir Rupert Jackson's continuing support for fixed costs for all fast-track work, and paperless litigation. Further, the next two years will see “profound argument” over the meaning of the new proportionality rule. Nobody, he said, “has a clue” what it means at the moment.

Judge: concern that bench does not have more women

There has already been a “significant increase” in the number of litigants in person and that is only going to increase with the legal aid cuts next year, the Lord Chief Justice has warned.

Speaking at his annual press conference last week, Lord Judge said the growing number of cases with litigants in person – now called self-represented litigants – on both sides was slowing down the courts.

He said that with a self-represented litigant “the judge actually has to help one of the litigants and say, ‘Well, maybe you should take this point’, or, ‘Maybe what you are trying to say is this’. That presents a great difficulty, because the person who is represented is sitting there thinking, ‘Well, whose side is the judge on? The judge is on the side of the self-represented litigant’.

“So this is an extremely delicate balance, to make sure that the self-represented litigant is getting justice and doing justice to his own case, without simultaneously upsetting, and understandably upsetting, the litigant who is represented into thinking the judge has made up his mind against them.”

He continued: “Where you have two self-represented litigants, life becomes very difficult indeed, and up and down the country, particularly in civil cases, district judges up and down the country have long lists in which both sides are now self-represented. The cases take much longer and they are much more difficult for the judge.”

Lord Judge said he was concerned that the bench, particularly at the higher levels, does not have a broader representation of women and those from “the minority ethnic communities”.

He said: “I have spent quite a lot of my time trying to change that. But we are turning a tanker around, and it takes time. You can only appoint people by selecting from those who apply.” He pointed out that just 11% of QCs and 25% of law firm partners are women. “It would be surprising if you had a bench which was not inevitably affected by those sort of statistics when you are choosing from lawyers to become judges.”

He added that – though he was not happy about the fact – the judiciary was reflective of society in that few women are also in roles such as editing newspapers or directors of large companies. But Lord Judge rejected any notion of quotas, saying that “as far as I am concerned, the only basis for appointment to the bench must be on merit”.

Doerries: timely suggestion

The Bar Council, Law Society and Chartered Institute of Legal Executives (CILEx) have already begun talks on forming a working party that will take forward Lord Justice Jackson’s call for a contingent legal aid fund (CLAF), it has emerged.

Earlier this week, the judge said the legal profession should create the CLAF – a not-for-profit third-party litigation funder – to back both regular litigation and “deserving” cases which would otherwise not be attractive because of the level of damages sought.

The Bar Council had previously shown enthusiasm for the idea, setting up a CLAF group in 2009 to investigate the possibility. However, in his speech, Jackson LJ noted that the project went into abeyance after 2011. “Understandably the profession wanted to see what the scene would be after [my] reforms had been implemented and after any legal aid cutbacks had taken effect.”

Bar Council chairman Chantal-Aimée Doerries QC said it had already opened discussions with CILEx and the Law Society to set up joint working party to examine the establishment of a CLAF.

She said: “The Bar Council has supported the development of a CLAF for many years. The civil justice system is currently facing multiple challenges with the result that access to justice for many has become restricted. Lord Justice Jackson’s suggestion that the concept of a CLAF should be re-visited is therefore timely.

“As experience from overseas has shown, a contingent legal aid fund may provide an additional source of funding the civil justice system and thereby help to address some of the problems many people face about access to justice today. Clearly the viability of a CLAF, and its scope, need to be considered very carefully in the current context including the civil courts structure review which is being led by Lord Justice Briggs.”

CILEx president David Edwards said: “The funding of litigation continues to pose problems for many individuals who without the means to pursue cases are being denied access to justice. Lord Justice Jackson has indicated that now is the time for the legal profession to come together, and collaboratively consider the potential to establish a contingent legal aid fund. CILEx welcomes the opportunity to work together to explore the issues in more detail.”

For the Law Society, president Jonathan Smithers added: “Lord Justice Jackson has put forward some interesting proposals for legal aid funding, which we will consider carefully. The market has changed since this idea was last proposed, and it makes sense to see whether the obstacles which prevented it from proceeding in the past can now be overcome.”

Service: no evidence that the notice had been sent

The Senior Court Costs Office has become the latest court to refuse relief from sanctions, saying that though its decision was harsh, “the claimants’ solicitors should have known the change that was coming”.

The case involved a failure to serve notice of funding and Master Gordon-Saker refused relief even though he accepted that the solicitors – McHale & Co – had intended to serve it and indeed may have actually done so. But they were unable to prove that they had.

Harrison & Anor v Black Horse Ltd [2013] EWHC B28 (Costs) was a payment protection insurance mis-selling case handled under successive conditional fee agreements that went through two appeals and settled after permission to appeal to the Supreme Court was granted. The defendant agreed to pay the claimants’ costs throughout, except for after-the-event insurance premiums.

The dispute concerned the appeal to the Court of Appeal, for which the claimants claimed costs of nearly £1.5m, and whether notice of funding was given. The absence of evidence that it had been put into the DX meant service could not be deemed under CPR 6.26. The automatic sanction was that the claimants could not recover any success fees.

Considering the application for relief from sanction, Master Gordon-Saker accepted at face value – in the absence of any direct challenge – the defendant’s assertion that its approach to the appeal might have been different, and that its solicitor’s advice in relation to settlement would have been different, had the notice been received. However, the court could not say that the defendant would have behaved differently as a result.

The judge said that this would have been a “borderline case” for relief under the old version of CPR 3.9, but post-Mitchell the failure was not trivial and the claimant had not shown good reason for the failure to give notice.

He said: “This may seem harsh, particularly given my view that the failure was not intentional. But the claimants’ solicitors should have known of the change that was coming. The amendment of CPR 3.9 was recommended by Lord Justice Jackson in his final report published in December 2009.

“The change of approach and the ‘Singapore experience’ were emphasised by him in the fifth implementation lecture on 22 November 2011. The new, tougher approach to relief from sanctions was again emphasised by the Master of the Rolls in the 18th implementation lecture on 22 March 2013.”

A delay in applying for relief also counted against the claimant – the defendant served its points of dispute in February, the judge had suggested an application for relief in March, but it was not made until July.

The judge acknowledged the recent High Court ruling in Forstater, where the claimant failed to serve notice of funding but then gave the information in correspondence, with relief granted from the date of the letter. Agreeing that this then made it “a failure of form rather than substance”, he noted that the court did not grant relief from the period before the letter.