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Augusta Ventures LLP

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Augusta is a niche financier that focuses on commercial litigation. It is FCA and JFSC regulated, as well as conforming to UK Consumer Credit Regulations.

Augusta offers its Trinity finance product through accredited law firms. Trinity is ideally suited for small and medium commercial claims, and to date, over 200 firms have accessed the Augusta Trinity platform.

For law firms and their clients, Augusta’s Trinity provides transparency, fast turn around and certainty. The application process is web based, claims have been approved for finance in less than 2 weeks, and Augusta’s funds are deployed in full at the outset.

Key Features:
Small and medium claims financed. Fast turnaround of cases. Transparent online application. Full deployment of financing on approval.

Cost of Funding:
Return of finance and approximately 20% of the net return.

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Negotiation has always been one of the most important lawyer’s skills both for commercial deals and for disputes. Now it needs essential honing in the new environment as more disputes are settled or decided by mediation/arbitration and many go to on-line dispute resolution.

What is the lawyer’s role in these new contexts? How best can we keep control of alternative dispute resolution proceedings? How will the ethics of negotiation change after the new Solicitors’ Code of Conduct, revelations in the Leveson hearings and the long term effects of advice to the banks before the crash?

MBL’s highly interactive full day masterclass will cover these points and more. It involves a number of participatory worked exercises as well as sessions covering:

  • Preparing for Negotiation: The Stages
  • The Strategy Skills of Negotiation
  • Mediation, ADR and Electronic deals
  • The Reluctant Negotiator
  • The New Ethics of Negotiation

Book now and see why a previous delegate described this masterclass as “A course unlike other CPD courses – much more engaging!”

For more details on seminar dates and costs please give us a call on 0161 793 0984, or email quoting Litigation Futures.

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Currency: falling exchange rate

The High Court has awarded a successful German claimant an extra £20,000 in costs to compensate for the impact of the falling value of sterling against the euro – especially since the EU referendum vote – as it had to convert euros into pounds during the case to pay its solicitors.

Mr Justice Arnold said “in principle the successful party is entitled to be compensated for any additional expenditure it has had to incur as a result of exchange rate losses in the same way as it is entitled to be compensated by way of interest for being kept out of the money”.

In Elkamet Kunststofftechnik GmbH v Saint-Gobain Glass France S.A. [2016] EWHC 3421 (Pat), the claimant won and was entitled to 93.5% of its costs, which the judge – on summary assessment as part of the shorter trials scheme – meaning an award of £458,000.

Arnold J said there appeared to be no authority on the exchange rate point – when Elkamet paid the first invoice from its lawyers, Redd Solicitors, the exchange rate was 1.39; the most recent invoice was paid at 1.14.

He continued: “If one accepts, as I do, that in principle the court has power to make an order for damages or costs expressed in a foreign currency, then it seems to me to follow as matter of logic that the court ought to have power, if it decides to make an order in sterling, to compensate for any exchange rate loss.

“Moreover, it seems to me that there is, as counsel for Elkamet submits, a powerful analogy between an award of interest on costs and an award of exchange rate losses on costs.”

The judge acknowledged the practical issues raised by the defendant – exchange rates go up and down, and that satellite litigation over issues like exchange rates should be discouraged – and said they supported “a cautious approach” to the quantification of the loss.

Elkamet calculated that the exchange rate loss as at the previous day’s exchange rate was €29,602, which equated to £25,193. Applying the percentage of 93.5%, that gave a figure of £23,555.

Awarding £20,000, Arnold J said: “It seems to me that I should round that down to recognise the possibility that by the date of payment the exchange rate will have appreciated again.”

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Bogart: range of innovative investment structures

Burford Capital has made an £6.6m profit on a £9m investment in an innovative arrangement that saw it provide a corporate debt facility linked to an arbitration claim.

The third-party funder said the deal “expands the potential of the litigation finance market” by showing it is not just about non-recourse financing to bring litigation.

The facility – agreed in 2012 – enabled Rurelec plc to monetise the value of its arbitration claim and obtain a conventional, fully recourse £9m senior loan from Burford at a 12% capitalised interest rate, lower than would otherwise have been available in the debt markets.

It also included a contingent value right to receive a portion of the ultimate arbitration award, expressed on a sliding scale based on time and amount.

Burford said the result was that Rurelec received the capital it needed at a reasonable price, and was able to monetise a contingent asset (its arbitration claim) for which its lenders and shareholders were not giving it financial credit. Meanwhile, Burford was able to earn “appealing returns in a transaction with lower risk of loss”.

Rurelec, an AIM-listed owner, operator and developer of power generation capacity internationally, did not need the money to pay its lawyers – it used the Burford facility to expand its business while awaiting the outcome of the arbitration.

This concerned the Bolivian government’s decision to nationalise Rurelec’s controlling stake in a Bolivian power company. Last month, the Bolivian government paid £19m in compensation.

Out of this the company repaid the £9m loan to Burford, as well as a further £6.6m.

Rurelec’s chairman, Colin Emson, said: “We were able to use the pending arbitration claim to obtain innovative corporate financing from Burford that lowered our cost of capital and helped our business expand. The ability to monetise a pending claim is something that we could only have achieved with Burford.”

Christopher Bogart, Burford’s CEO, said: “Litigation finance is too often thought of in its most basic form, which does not reflect the range of innovative investment structures we are able to utilise.”

Rurelec was represented by Freshfields Bruckhaus Deringer in the arbitration proceeding and by Skadden Arps Slate, Meagher & Flom in the financing transaction. Burford performed its own internal evaluation of the arbitration claim, and was represented by Latham & Watkins in the financing transaction.

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Ruse: driver and incentive to improve

Posted by Phil Ruse, head of legal protection sales and distribution at Litigation Futures Associate Allianz Legal Protection

My spirits lifted recently when I read the following as the opening of an article: “The Medical Protection Society has said that the NHS could be paying out £2.6bn a year in clinical negligence costs by 2022 and that urgent action is needed before the burden becomes unsustainable.”

I also noted a quote in the Daily Telegraph from Peter Walsh, chief executive of the charity Action against Medical Accidents, who commented: “The changes would deepen a culture of deny and defend in the health service, with trusts knowing that the bereaved could not afford to take them on. This would lead to massive lost opportunities to learn from mistakes.”

Brilliant, I thought, does this mean at long last the NHS is going to take this seriously and hone in on medical mistakes?

Sadly not. It simply turned out to be the usual cry of claimant solicitors charging disproportionate fees, the conclusion of which is that clinical negligence compensation and costs will soon exceed society’s ability to pay. This is a situation that is both true and worrying.

The answer can’t just be about stripping costs out of a legal system. Surely it’s also about learning from medical mistakes and continually improving?

Our current NHS system of accountability serves to act as a disincentive for those who do not take medical negligence mistakes matters seriously and for those who lack the ability to identify and eradicate risks. Why is this message never acknowledged?

At the risk of wandering into business speak; high-performance enterprises are able to distinguish between ‘value demand’ and ‘failure demand’ and work to eliminate the latter.

In other words; value demand delivers exactly what the customer wanted or needed; failure demand is poor service that does not deliver what the customer wants because of failures somewhere in the process.

It’s a cost to industry which is real in terms of extra cost to resolve. This is the driver and incentive to improve.

You rarely enhance customer outcomes by disputing the costs of said failure – if you focus on fixing the cause, then the outcome will improve.

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Grayling: Act restores balance

Grayling: Act restores balance

The Criminal Justice & Courts Bill and the Social Action, Responsibility and Heroism (SARAH) Bill both received Royal Assent yesterday, although the Ministry of Justice would not give a timetable on when they will actually be implemented.

The former will introduce the controversial changes to judicial review, as well as the ban on law firms from offering inducements to potential clients and the new rule that will require courts to throw out personal injury cases entirely where the claimant has been found to be fundamentally dishonest, unless doing so would cause substantial injustice.

There remains great uncertainty as to what type of conduct will trigger the latter provision.

Under SARAH, judges must consider three additional factors when assessing liability in a negligence claim:

  • If the person being sued was doing something for “the benefit of society” – to take account of the fact people were doing a good deed like volunteering, running an event or trip, or helping out by clearing snow.
  • If they had been acting in a “predominantly responsible way” – to make sure the court will give consideration to the fact that people may have taken care when organising an activity but, in spite of their best efforts, an accident has happened.
  • If they were “intervening in an emergency” – if they stepped in to help someone in danger but something went wrong.

Justice secretary Chris Grayling said: “Not only have responsible small businesses been stifled by unnecessary insurance costs and the fear of being sued but volunteers have been deterred from taking part in socially beneficial activities and brave people have been put off from helping someone in trouble.

“This much needed change to the law will encourage responsible employers to stand up to speculative and opportunistic claims, and will help reassure good deed doers who come to the aid of those in difficulty.

“This Act restores a balance to counter the health and safety culture, and provides valuable reassurance to people that courts will take full account of the context of their actions if someone is sued after acting in a socially beneficial way.”

The MoJ declined to provide an implementation timetable for either Act.

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Eclipse200Goldsmith Williams Solicitors – winner of the ‘Highly Commended Legal Partner’ in the Bridging and Commercial Awards – has utilised Eclipse’s Proclaim Practice Management software for over a decade. The firm now employs over 150 staff and offers expert legal advice in Conveyancing, Personal Injury, Probate and Finance.

“Proclaim stood out to us as being both resilient and incredibly flexible. A decade later, the constant upgrades and the inclusive toolkits mean we can still rapidly adapt to the legal sector and tailor the software in line with our development. In short, Proclaim is utterly vital to us as a complete business tool.”
Eddie Goldsmith, founding partner at Goldsmith Williams Solicitors

Goldsmith Williams was experiencing rapid growth within its services and required a robust and adaptable IT solution that would scale up in line with ambitious plans.

In 2002, the firm chose to implement a Proclaim Practice Management Software solution. The flexibility of the system allowed Goldsmith Williams to tailor the solution in line with business needs and provided a fluid and reactive process that guaranteed cost-effectiveness.

In addition, FileView was implemented which allowed the firm’s clients access to case status and provided real-time, secure data. FileView enabled Goldsmith Williams to offer around the clock support to clients, without increasing staff numbers or hours.

Furthermore, Proclaim’s import/export routines are utilised extensively by the firm to integrate with other Proclaim users so case data can be instantaneously shared between Goldsmith Williams and its partners, creating and cementing strong relationships within the market

As an Eclipse client for over 10 years, Goldsmith Williams has witnessed Proclaim’s ability to evolve. The constant upgrades of the system have allowed for growth and development alongside the practice and its requirements. Today, Goldsmith Williams is one of the UK’s leading national law firms. The firm has the ability to rapidly adapt to any client needs, changes in legislation and as yet unknown requirements to the legal sector, thanks to Proclaim’s inherent flexibility.

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Signature: Copied from another document

A personal injury lawyer who persuaded other employees to fake client signatures and lied about it in court has been struck off by the Solicitors Disciplinary Tribunal (SDT).

Lesley Dee Layton, based at Lance Mason Solicitors in Blackburn, also “directed the creation” of a claim form containing an accident date “which she knew to be untrue”.

Admitting all the allegations in an agreed outcome with the Solicitors Regulations Authority (SRA) and approved by the tribunal, Ms Layton said in mitigation that she had made “open and frank” admissions, “always co-operated” with the SRA and had a “previously unblemished career history”.

She went on: “I had always sought to uphold the rule of law and I am thoroughly embarrassed that it came to this”.

Ms Layton admitted that she had “caused to be created” two witness statements in which the signature of a client, referred to as GH, had been copied from another document.

She had been acting for GH in a personal injury claim and failed to obtain a signed witness statement from him by the deadline set by the court.

A few days later she “directed” an employee of the firm to copy GH’s signature from a different document onto a version of his witness statement, and emailed it to the solicitors for the defendants, BLM.

When BLM sent a letter saying that GH’s statement of truth “appeared to have been cut from another document and copied onto the statement”, Ms Layton created a second statement, directed another employee to fake GH’s signature, and sent it to the other side.

Responding to a request from BLM to see the original witness statement, Ms Layton “directed another individual” at the firm to “trace over the signatures” copied into her two witness statements with a ballpoint pen “in order to give the impression they were original signatures”.

GH’s claim was struck out in April 2015, but in a later statement for a costs hearing in September that year, Ms Layton claimed she had “acted appropriately and honestly throughout the matter”.

She insisted she had sent to BLM “what she thought were the original statements”, and could not explain the findings of an expert that “the signatures were copies which had been traced over with ballpoint pen”.

In a second matter, Ms Layton acted for KF in connection with a back injury he suffered working on a prison farm, but KF “could not recall the exact date on which the injury was sustained”.

By the time the three-year limitation deadline expired, in September 2015, Ms Layton had obtained a signed copy of the claim form, giving the accident date as “on or about the 24 September 2012”, but not the particulars of claim.

She sent a letter to the court on 29 September 2015, enclosing a claim form consisting of a second page signed and returned by KF in August and a first page which “she had directed the creation of”, and with a date for the accident of 30 September 2012.

Ms Layton admitted acting dishonestly by causing two versions of GH’s witness statement to be created into which signatures were copied, representing the statement as signed by GH and denying any wrongdoing, both to BLM and the court.

She also admitted acting dishonestly in respect of KF, by causing a claim form to be filed referring to an accident date which she did not believe to be correct and “which purported to have been signed by the client when she knew it had not”.

Ms Layton acknowledged that her actions led to the striking out of GH’s claim and had it been discovered by the court, there was a “high likelihood” that KF’s claim would have been struck out.

She agreed to be struck off of the roll and pay costs of £13,920.

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Mayson: public interest justification

The Association of Costs Lawyers has strongly endorsed the recommendation of leading academic Professor Stephen Mayson that law costs work should only be carried out by properly authorised and regulated specialists.

In his submission to the Ministry of Justice’s review of legal regulation, as reported on our sister site Legal Futures, Professor Mayson urged a move to focus regulation on the type of work involved, rather than who does it.

He said the list of reserved legal activities – which can only be carried out by regulated persons – should encompass those areas of work where there is either a public good or consumer protection justification for doing so.

Classifying law costs work within the category of “activities connected to the administration of justice and due process”, Professor Mayson wrote: “Given the reserved rights currently attaching to Costs Lawyers (including rights of audience and rights to conduct litigation in relation to costs matters, as well as the administration of oaths), when shifting emphasis from regulation by title to regulation by activity, there could well be a public interest justification for extending specific reservation.”

ACL chairman Murray Heining said: “Professor Mayson echoes what we have been saying for a long time. The benefits of using a qualified and regulated Costs Lawyer speak for themselves.

“The Legal Services Act 2007 recognised Costs Lawyers as a specialist arm of the legal profession to ensure that costs are dealt with expertly. This is a vital element of the administration of justice, as is the protection for clients that regulation brings should things go wrong.

“We hope that the Ministry of Justice and Legal Services Board take note of Professor Mayson’s well-reasoned blueprint for refocusing the current regulatory regime on what really matters to clients and the public interest.”

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New litigation firm, JPS Walker, is implementing the Proclaim Practice Management Software solution from Eclipse Legal Systems, the Law Society’s sole endorsed provider.

Based in Manchester, the firm has been launched by a team of expert solicitors, and will specialise in niche areas of litigation, including financial mis-selling and holiday claims. The boutique firm aims to maintain traditional values, and with proven success and years’ worth of experience within its chosen areas of law, the team will be able to offer a first class client service.

JPS Walker is initially implementing Eclipse’s ready-to-go Proclaim Case Management system for Financial Claims and Personal Injury work, facilitating a secure approach to individual client files, and bringing with it a high level of efficiency to operations. To ensure the team benefits from a fully centralised system, JPS Walker is also implementing the integrated accounting toolset which will provide a detailed analysis of the firm’s financial management data.

Additionally, the practice has selected Eclipse’s secure online document delivery and acceptance tool, SecureDocs, to further complement the system. Not only will this reduce turnaround times, and as a result increase caseload volumes, it will also eliminate the risk of sending confidential information to the wrong recipient.

Following the first phase of implementation, JPS Walker will look to work in conjunction with Eclipse and its dedicated Consultancy team to create a bespoke Holiday Claims system, designing and creating specific workflows and documents to cater for all aspects of this complex area of law.

Michael Walker, Founding Partner of JPS Walker, comments:

“In order to effectively stay ahead of the competition – both within our chosen areas of law, and the industry as a whole – we need a powerful practice management system that can deliver robust, yet customisable workflows. Proclaim will provide us with unrivalled accuracy, teamed with the ability to handle the increasing workload anticipated.

“Furthermore, Eclipse’s extensive knowledge of the industry means we can be confident in working with the team to create a future-proof solution that will serve to enhance efficiencies and ensure the quality of service remains at an optimum level, even as we grow. We’re looking forward to a long and fruitful relationship with all at Eclipse.”

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Burcher Jennings200Burcher Jennings, a leading national legal cost and pricing consultancy is delighted to announce the company’s further expansion with seven new appointments across its London and Exeter offices. These appointments represent the next stage of the company’s growth plan, and further enhance the company’s offering to law firms. With these new additions, the firm now has one of the largest concentration of cost lawyers in the country.

The new appointments include:

In London:

  • Joanne Powell joins as head of the London Office
  • Lisa Hazell joins as head of client services
  • Darrel Lumby joins as senior costs lawyer

In Exeter:

  • Nick Kitchen joins as costs consultant
  • Liz Button joins as costs consultant

Further boost to training practice:

Burcher Jennings’ training practice has also been enhanced and welcomes pricing consultants, Tim Aspinall and Nigel Haddon. Nigel and Tim are two leading practitioners in this field and bring extensive experience in assisting law firms with making positive institutional change that has a noticeable impact on financial performance.

Tim was formerly managing partner of DMH Stallard LLP for 18 years where he led its transformation into one of the most credible mid-market firms in the UK legal market, resulting in the firm winning numerous awards that could be directly attributed to Tim’s influence.

With over 30 years as a practicing solicitor, Nigel was a former managing partner and CEO of the regional law firm, SAS Daniels LLP for more than eight years where he led the firm through four successful mergers and acquisitions.

Martyn Jennings, chief executive commented: “Our core focus has always been on creating ‘Centres of Excellence’ and having the right people on board. We strongly welcome these new team members who come with exceptional skill sets and a passion for delivering excellent client service. These appointments reflect the growing demand for our specialist services, and provide an invaluable resource to continue delivering and further enhancing our pricing and costing solutions for UK law firms.”

He added: “As the legal industry continues to evolve, we are seeing more and more law firms implementing a wider range of pricing and payment options, providing greater client involvement in determining the pricing / costs aspect of the relationship, with more transparency, certainty and predictability. Our focus is on ensuring we too remain aligned with this changing environment by continuing to develop our business and investing in high quality talent such as these.”

On 1 July 2015, Burcher Jennings will be holding its inaugural Pricing Funding and Costs Conference focusing on everything pricing, funding and costs related. The conference agenda, content and speakers have a particular focus on contentious practice areas, and will also cover a full range of issues that are at the core of managing the modern mid-market law firm.


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Jersey: funding not against Jersey law

The Royal Court of Jersey has endorsed the use of litigation funding on the island in a case funded by Harbour Litigation Funding.

It is the second case in which funding has been approved in Jersey, but the first where the issue was fully argued.

In Barclays Wealth Trustees (Jersey) Limited v Equity Trust (Jersey) Limited and Equity Trust Services Limited, Equity Trust tried to have the case struck out because of the funding agreement, but Master Wheeler did not accept that Jersey law prohibited such a contract as Equity had argued.

The judgment follows an earlier Royal Court judgment in another matter funded by Harbour which had endorsed litigation funding in Jersey (Re Valetta Trust in December 2011).

Master Wheeler referred with approval to the Valetta Trust case, where the Royal Court had concluded: “[Harbour’s funding agreement] cannot be said in any way to corrupt the purity of justice. On the contrary, it facilitates access by plaintiffs who would otherwise be unable to bring the proceedings because of a lack of resources.

“Importantly, the agreement provides that control of the proceedings will remain with the plaintiffs and their lawyers; the sole right of Harbour will be to be kept informed…. All in all, far from this agreement being contrary to the purity of justice, it fulfils the important role of facilitating access to justice without endangering the purity of that process.”

Master Wheeler added that had he been required to decide whether the agreement was champertous, he would have found that it was not.

Susan Dunn, Harbour’s head of litigation funding, said: “The Royal Court reached its conclusion having heard representations from both parties about funding and quite rightly, in our view, concluded that the fact a case benefits from litigation funding cannot be a basis for a defendant getting out of its potential liability. It would be an odd outcome indeed if defendants facing funded claimant with good claims were absolved on that basis alone.

Equity Trust was the former trustee and manager of real property unit trusts which ran into financial difficulty in 2007. The case is being brought by the successor trustee and manager, Barclays Wealth, over allegations of breach of trust and breach of fiduciary duty. Equity denies the allegations.

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Medical reports: competition argument

Medical reports: competition argument

The High Court has given hope to Speed Medical’s bid to bring a judicial review of the Ministry of Justice’s (MoJ) approach to MedCo, after agreeing to an oral hearing following a decision to refuse permission that had been made on the papers, Litigation Futures can report.

On Tuesday Mrs Justice McGowan ordered Speed’s case to proceed to a hearing “despite the MoJ’s opposition”, the company said.

As we reported last month, Mr Justice Leggatt had refused to grant Speed permission to bring a judicial review of the decision taken by the MoJ that of the seven medical reporting organisations (MROs) should be presented to a solicitor from a search on MedCo, only one is a ‘tier 1’ provider, meaning it is a high-volume national MRO, like Speed.

Speed argued that through a late response to the letter before action, the MoJ had not provided any opportunity for Speed to consider or respond to the government’s position or defence prior to Leggatt J’s decision.

The Chorley-based MRO renewed its application for an oral hearing and it reported that “after over an hour of submissions, Mrs Justice McGowan felt that the complexity of the points raised justified a substantive hearing at which all the issues could be presented and fully considered”.

Speed said it is working to secure “the earliest possible court date” for what will be a rolled-up hearing dealing with permission and, if successful, the substantive claim.

In a statement, it said: “Whilst Speed supports the intention of the MoJ to break the financial links between solicitors and experts, and Speed also supports the accreditation of experts, Speed believes that the present system of allocation of MROs is unnecessary and ineffective in achieving these aims, and that it is anti-competitive.

“Speed had approached the MoJ prior to the hearing yesterday with a request that the parties agree to a substantive hearing. The MoJ refused and argued against our request in court. So far, the MoJ has shown no signs of being willing to consider our position or to work together to resolve the issues.

“Unfortunately, whilst the current MedCo system remains in place, the absence of competition will remove service innovation from the market to the detriment of the consumer.”

An MoJ spokesman said: “The court has not given this case permission to proceed, but has instead deferred that decision for a later date. We will continue to robustly defend this and any other legal challenges.

“We want to see the cost of insurance premiums come down for working people – motorists should not continue to bear the cost of a system that has been open to abuse.

“The improved system for medical evidence system makes sure that genuine whiplash claims can be settled but those without merit are stopped.”

In the meantime Speed is one of the tier 1 MROs to create 10 tier 2 agencies to increase its chances of instructions. We reported last week that the government has called on MedCo to stamp out practices such as this.

This article was amended to clarify that permission to bring the JR had not been been granted by McGowan J

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Smart: New London offices are ‘large enough to accommodate our future ambitions for even further growth’

After boasting another set of impressive year-end results for the period 1 April 2013 to 31 March 2014, niche lines insurer Elite Insurance has invested heavily in acquiring additional skills over the past 6 months, to cope with growing demand for its services.

Increasing staff numbers has also meant that this expanding company has quickly outgrown its original offices in High Holborn. Last week Elite relocated to impressive new premises at the heart of the insurance district, on Lower Thames Street.

CEO, Jason Smart, said: “This is a very exciting and positive move forward for the company. We are delighted with the additions to our already very talented team and look forward to the results they produce. Our fantastic new offices will serve to heighten our London presence and are large enough to accommodate our future ambitions for even further growth.”

Elite currently writes business in a number of classes which include financial lines, motor, pet, legal expenses, warranties and bonding and surety to mention a few, and across a range of jurisdictions. For enquiries ring 0845 601 1221 or visit the Elite website.


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Hillier: Vicious spiral

The government has been “slow and complacent” in its response to the rising costs of clinical negligence and should consider mandatory mediation for certain types of claim, MPs on the public accounts committee (PAC) said today.

They also criticised the Ministry of Justice for not assessing the impact of its various reforms and understanding how they may lead to more clinical negligence claims.

The recommendations came off the back of the recent National Audit Office (NAO) report on clinical negligence, which said its cost to the NHS – which has quadrupled over the past decade – will double again over the four years.

The NAO called on the government to take a “stronger and more integrated approach” across the health and justice systems to rein costs in.

The PAC said it had raised concerns about the rising costs of clinical negligence claims on “numerous occasions, going back to at least 2002”, but costs have continued to rise.

“It is clear that tackling the rising costs of clinical negligence requires urgent and far-reaching action by more than one government department, but currently there is no overarching cross-government approach to tackling this issue,” it said, echoing the NAO.

It said the Department of Health, Ministry of Justice and NHS Resolution had to take “urgent and coordinated action to address the rising costs of clinical negligence”.

This included reviewing, by April 2018, whether current legislation remains adequate – the government has suggested changing the 69-year-old law that requires that damages levels assume private provision of health and care costs, even though patients will receive free NHS care – and “appraising further measures to reduce the legal costs of claims, for example whether mediation should be mandated for certain types of claims”.

The committee also instructed the trio to clarify why it was taking longer to resolve claims; the average time increased from 300 to 426 days between 2010–11 and 2016–17.

“There can be several reasons for delays, some of which are within NHS Resolution’s control and some are not. NHS Resolution has to live within its budget, and so must manage the pace of settlements to remain within this limit.

“Some delays have been due to bottle necks at court and the Ministry of Justice told us that it is aiming to streamline court processes for clinical negligence cases.”

The PAC criticised the government for not assessing the impact of changes to legal reform on the volume of clinical negligence claims.

“On the rising number of low-value cases, but which have high legal costs, the Ministry of Justice accepted that government could have predicted the impact that legal reforms have had on the number of claims and claimants’ legal costs.

“These legal reforms included the introduction of ‘no-win-no fee’ agreements, to promote access to justice among people who would not have been eligible for legal aid, and the capping of legal fees for road traffic accident claims which led to more clinical negligence firms moving into the clinical negligence market.

“The Ministry of Justice told us it had taken action to address some of these issues and that it hopes to extend fixed recoverable costs to as many litigation areas as possible, particularly clinical negligence claims below £25,000.”

The committee also found that the NHS’s culture when things go wrong “appears to be predominantly defensive, rather than candid and transparent, which limits its ability to learn lessons”.

It told the Department of Health and NHS Resolution to work with trusts “to identify and spread best practice in handling harmful incidents and complaints. This should include how trusts say sorry and support patients when things go wrong”.

The PAC noted that increasing financial pressures on the NHS have started to affect waiting times and the quality of care, which risks leading to even more clinical negligence claims.

Almost 40% of clinical negligence claims against trusts are related to a failure or delay to diagnose or treat a patient, it said, telling the Department of Health and NHS Improvement that they should report back by April 2018 “on how they have ensured that trusts prioritise resources on patients that are most at risk of harm from increasing waiting times in the NHS”.

A lack of consistent data across the system meant the NHS does not understand why people do (or do not) make claims, or the root causes of the negligence, it added.

PAC chair Meg Hillier MP said: “I am concerned that funding available for NHS services and the costs of clinical negligence are locked in a vicious spiral – one that without urgent action will spin out of control.

“Of course it is important that patients who suffer because of clinical negligence are compensated. But government has been far too slow to understand and get a grip on the increase in negligence costs.

“The NHS must move more quickly to share best practice in the handling of harmful incidents and complaints.”

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Twambley: high time insurers are held to account

Claimant lawyers have leapt on a newspaper report that accused insurers of “routinely inflating repair costs” by as much as 100%, while receiving “undisclosed kickbacks” for the difference.

Lobbying group Access to Justice said the Association of British Insurers (ABI) had shown “breathtaking hypocrisy” in failing to condemn the practice while continuing to argue for whiplash reform.

According to a Daily Telegraph investigation, insurers representing the innocent drivers in accidents “rip off” rival firms representing the at-fault drivers.

“Across the industry the process is creating a hidden cost layer potentially affecting all drivers, which could be worth as much as £750m, equivalent to around 5% of the UK’s 34m drivers’ annual insurance premiums.”

The paper said that, under pre-agreed price arrangements, repair firms working for ‘not at fault’ insurers produced inflated ‘invoice-only’ labour rates, which are charged to the at-fault party. Once this is paid, repairers then pass the first insurer a kickback for the difference between the rate on the invoice and the true cost of the work.

In a statement, the ABI responded: “It is common for a motor insurer to agree what are effectively bulk discounts with car repair companies. This practice is not new, is in line with other sectors who use economies of scale and helps control claims costs, which benefits customers.

“When an accident occurs and the non-fault insurer initially pays for repairs, they are under no obligation to pass on these discounts to their competitors when they seek reimbursement from the at-fault insurer.

“The system could work better and the industry welcomed the investigation by the Competition and Markets Authority in this area in 2014, but the CMA chose not to take action.

“Repair costs still contribute less than a fifth towards the cost of a motor premium compared to more than a third for personal injury pay outs. Costs involving discounted repairs are a drop in the ocean compared to the impact on motor premiums arising from the increasing complexity of repairs, the rise in insurance premium tax, changes to the discount rate and whiplash-related claims.”

Access to Justice spokesman Andrew Twambley said that with calculating the average car insurance premium at £847 in Q2 2017, “insurers could be holding back a potential saving of £42” – more than the £35 the government has said its whiplash reforms should save.

He continued: “On the one hand the ABI wants to deny ordinary people their rights for the sake of a £35 saving, but on the other they refuse to hand back £40 to motorists from their dodgy repair practices…

“The ABI blames anything and anyone but their own member companies for the rising cost of premiums, and it is high time they are held to account.”

Meanwhile, Deborah Evans, chief executive of the Association of Personal Injury Lawyers, suggested that the story was further evidence that “the truth [is] coming out” about the real causes of the rising cost of car insurance.

“ABI figures show that the average cost of a settled vehicle damage claim has risen 23% since 2013, while the average cost of a motor-related injury claim has fallen 5%. The rising costs that come with complex vehicle technology and spiralling spare parts costs due to currency fluctuations ignited by Brexit are no doubt also playing a part in the cost of damage claims.

“Yet it is still injuries which are used as scapegoats to hide an insurance-led agenda to cut the very real cost of genuine claims.

The false whiplash claims excuse does not wash. Fraud isn’t as big a problem as insurers want you to believe. The ABI’s own figures show that proven fraud is only 0.17% of all motor-related claims, and only a portion of this will relate to injuries.”

Meanwhile, Direct Line yesterday unveiled a 9.5% increase in operating profit for the first half of 2017 to £354m – while the overall cost of motor claims fell 3% to £404m.

It also said that a review had found the cost of reducing the discount rate was lower than originally expected, leading to the release of £49m of reserves. A government announcement on the future of the rate is expected on Thursday.

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Andrew Ritchie QC

Ritchie: “there will suddenly be a rush”

A new personal injury service, launched today by leading personal injury silk Andrew Ritchie QC, aims to “break the dam” that has led the sector to fall behind others in its use of arbitration.

Mr Ritchie said the Personal Injury claims Arbitration Service (PIcARBS) was designed for claims worth over £50,000, but was particularly useful for larger claims, which had been hit especially hard by enhanced court fees.

The QC, chairman of the Personal Injury Bar Association, said 15 other silks had already signed up to PIcARBS. He said that although the personal injury sector was “very vital”, it suffered from inertia.

“It has not done what the shipping people, or the building people or the commercial people have done. There is no personal injury court of arbitration.

“The pre-action protocol expressly says that ADR should be considered by the parties, including arbitration.”

Mr Ritchie said the root cause of problems with personal injury litigation was the change to the overriding objective initiated by Lord Justice Jackson, and the importance now put on convenience for the court.

“Since Denton, there have been fewer strikings-out, but there is still a lot of technical point taking. Lawyers have to make applications in advance for extensions, leading to masses of paperwork. Mitchell and Denton are responsible for hundreds of meaningless applications to district judges and masters.”

On the courts, he said: “Instead of a taxpayer-funded service, there is now a service we have to pay for and, with enhanced fees, we are now having to pay for the family courts as well.”

Mr Ritchie said that, with PIcARBs, there were no Mitchell strike-outs, no costs budgeting and no court fees. All its arbitrators were specialist QCs, rather than district or circuit judges with no PI experience.

Parties would be charged £1,600 plus VAT to cover their entry to the system, the signing up of an arbitrator, opening their individual user home page and providing e-filing for the duration of the arbitration.

PIcARBS is owned by a limited company of the same name, of which Mr Ritchie is the only director, but it is non-profit making, meaning that the £1,600 fee would be reduced if enough cases went through the system.

Mr Ritchie said he had discussed the arbitration service with insurers during the past year and with the NHSLA, and he hoped that both would eventually come on board.

“This is a three-year project for me,” he added. “In the next three years the dam will break. It will either be the NHSLA or an insurer, and there will suddenly be a rush.”

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Petyt: Alliance ‘will deepen our clients’ awareness of both firms’ services in the marketplace.’

Kain Knight, one of the UK’s largest firms of costs lawyers, and DMJ Recruitment, a leading supplier of human resources to the legal and company secretarial sectors, have formed a strategic alliance to promote each other’s services via a series of joint initiatives including co-branded seminars and online and offline marketing activities.

Kain Knight deals with the widest spectrum of legal costs from small criminal and family matters to high value, high profile complex commercial cases. DMJ Recruitment provides highly motivated and skilled individuals specialising in five key recruitment areas; legal private practice, in-house legal, legal support, legal mergers and company secretarial.

Peter Petyt, chief executive officer of Kain Knight, said: “DMJ Recruitment is widely recognised by the legal profession as the best place to find highly skilled professionals in the industry.

“Many of our law firm clients and contacts are also clients and contacts of DMJ Recruitment and we have therefore formed a strategic alliance to work on joint initiatives which will deepen our clients’ awareness of both firms’ services in the marketplace.”

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Mastercard: legal uncertainty over appeal

Lawyers for one-time Law Society official and Chief Financial Services Ombudsman Walter Merricks have filed an application for permission to appeal the Competition Appeal Tribunal’s (CAT) decision to dismiss the proposed £14bn collective action against Mastercard.

The claim was a follow-on action after Mastercard was found to have infringed EU law by imposing charges (known as ‘interchange’ fees) on the use of MasterCard debit and credit cards. It was claimed that this increased costs for retailers and consumers.

It was brought on behalf of a class of 46m people who used a Mastercard over a 16-year period, but the CAT dismissed Mr Merricks’ application for a collective proceedings order because it was not satisfied that his experts would be able to get the evidence to show that the illegal fees were then passed on to consumers in the form of higher prices.

Further, it said there was “no plausible way of reaching even a very rough-and-ready approximation of the loss suffered by each individual claimant”.

In a statement, Mr Merricks’ solicitors, Quinn Emmanuel, said there was “some legal uncertainty” as to whether there was a direct right of appeal to the Court of Appeal or whether it needed to go to the Administrative Court for a judicial review.

“However, given that this is the first ever judgment on an application for collective proceedings, and the very significant public policy issues at stake, Mr Merricks is confident that the case will ultimately end up before the Court of Appeal and that the appeal or judicial review will succeed.”

His counsel are Monckton Chambers’ Paul Harris QC, and Marie Demetriou QC and Victoria Wakefield of Brick Court Chambers.

Mr Merricks acknowledged that he could be in for “a long fight” but argued that Mastercard was trying to argue “both ways” as it also faces claims from retailers, in which he said the credit card company submitted that the retailers passed on the illegal fees to consumers.

He continued: “I believe that the tribunal was wrong in its analysis and in the legal test that it applied. The conclusion that it would not be enough for me to prove the loss suffered by the class as a whole and that I needed to show that I could calculate the actual loss suffered by each individual consumer cannot be correct.

“The government decided that a new regime was needed to allow consumers to recover the losses caused to them by illegal, anticompetitive conduct engaged in by big business. If I can establish the total amount of harm that Mastercard has caused to UK consumers, then why should consumers then get nothing at all if I cannot calculate the precise loss that each individual consumer suffered?

“Rather than allow consumer recovery, this would reward unlawful conduct by allowing companies to keep their ill-gotten gains. An effective consumer redress regime that allows for private enforcement can be a real support to the public enforcement of competition law. This is what the government and the competition authorities wanted to bring about.”

Mastercard has until 8 September to file a response to the application.

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Andrew Caplen

Caplen: “Flat tax on those seeking justice”

The Law Society has issued a pre-action protocol letter for a judicial review challenging government plans to increase some court fees by over 600 per cent.

One of the grounds of the Law Society’s challenge is that the proposals would amount to “selling justice” contrary to the principles of Magna Carta.

The society also argues that government does not have the power to raise fees for the purposes it has stated in the Ministry of Justice consultation – to make ‘departmental savings’.

It accused the government of proceeding without evidence to justify the increases, which it described as “effectively a tax”.

The society went on: “Consultees were not told how much money needed to be raised from enhanced fees or why – this is a breach of the government’s own consultation principles, which state that sufficient reasons must be given for any proposal to permit intelligent consideration and response.

“When the government tabled its second round of proposals on higher fees for possession claims and general civil applications, it had already made up its mind about certain options, which is unfair.”

A spokesman added: “The society has asked the government to provide information on how much money it proposes to raise through enhanced fees and what it will spend the money on.

“It has also asked the government to explain how modernisation of the court services will appear in the government’s accounts.”

The society’s pre-action protocol letter was also signed by the Bar Council, CILEx, the Forum of Insurance Lawyers (FOIL), Association of Personal Injury Lawyers (APIL), Motor Accident Solicitors Society (MASS), Chancery Bar Association and the Commercial Bar Association (COMBAR).

Andrew Caplen, president of the Law Society, said: “The government’s policy on ‘enhanced court fees’ amounts to a flat tax on those seeking justice.

“The government’s hikes – due to come in from April – will price the public out of the courts and leave small businesses saddled with debts they are due but unable to afford to recover.

“State provision for people to redress wrongs through the courts is the hallmark of a civilised society.”

London Solicitors Litigation Association (LSLA) warned earlier this month that the rises could mean that court fees for commercial cases exceeding legal costs, while the City of London Law Society has also attacked the increases.

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Euros: currency fluctuation not accounted for

The novel issue of recovering more in costs to reflect changes in the exchange rate between sterling and the euro since the referendum has come before the High Court again, but this time it was refused.

Mr Justice Coulson also made it clear that when calculating an interim payment on account of costs, the court’s starting point “will almost always be the payee’s approved costs budget”.

The defendant sought the extra costs following the recent decision of Mr Justice Arnold, in which he awarded a successful German claimant an extra £20,000 in costs to compensate for the impact of the falling value of sterling as it had to convert euros into pounds during the case to pay its solicitors.

In MacInnes v Gross [2017] EWHC 127 (QB), Coulson J said the circumstances here were different: Arnold J was dealing with a summary assessment where he had particular figures to consider, and evidence as to how those figures had arisen.

“I have neither: there is simply a claim that, to the extent that the first defendant has suffered such a loss, he is entitled to be compensated. I am instinctively reluctant to make such an open-ended order.”

He said he was also “uncomfortable” with the idea that an award of costs should be treated as an order for compensation, as if it were a claim for damages.

Coulson J continued: “I consider that there are inherent differences between the two regimes, and that orders for costs have never been regarded as compensating the payee for the actual costs that he has paid out. On the contrary, unless the payee has an order in his favour for indemnity costs, he will never recover the actual costs that he has incurred.”

Finally, he did not see the close analogy between ordering interest on costs, which was commonplace, and ordering exchange rate losses due to the particular time that the costs were paid, which was not.

“The paying party can work out in advance the additional risk created by the potential liability to pay interest on costs, but any potential liability to pay currency fluctuations is uncertain and wholly outside his control.

“Furthermore, it might be argued that the generous rate of interest on costs at 4% over base is designed to provide at least some protection to the payee against such events.”

He therefore refused the application to recover any further sums by way of currency fluctuations on costs.

On the interim payment on account of costs, Gavin Mansfield QC, for the claimant, argued that when the costs were assessed by the costs judge, that assessment would “start from scratch”.

He also said that in any event the defendant had incurred considerably more than £570,000 in his approved costs budget – its costs were said to have reached £956,279.

Coulson J rejected these submissions. “One of the main benefits to be gained from the increased work for the parties (and the court) in undertaking the detailed costs management exercise at the outset of the case is the fact that, at its conclusion, there will be a large amount of certainty as to what the likely costs recovery will be.

“One consequence is that, for the purposes of calculating the interim payment on account of costs, the starting point will almost always be the payee’s approved costs budget. Another consequence is that the court assessing the interim payment can ignore the fact that, as here, there may have been significant expenditure on costs by the payee above the budget figure: any increase is a matter for the costs judge and the relatively onerous burden of recovering more than the budget figure is on the payee.

“So when making an interim payment on account of costs in a case with an approved costs budget, the days of the educated guesswork identified by Jacob J in Mars UK Limited v TeKnowledge Limited [1999] 2 Costs LR 44 are now gone.

“Instead the court can be confident that there is a figure for costs which, because it has already been approved, is both reasonable and proportionate.”

In calculating the figure, the judge reduced the £570,000 by 10% – “which I regard as the maximum deduction that is appropriate in a case where there is an approved costs budget” – and then added back £15,000 to reflect the interest on costs he had awarded. That produced an interim payment on account of costs figure of £528,000.

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Chris Grayling

Grayling: Ruling follows row over ‘secret deal’

The High Court has ruled that the government cannot go ahead with abolishing recoverability of success fees and insurance premiums in mesothelioma cases this autumn because it failed to carry out a proper review of the impact on victims.

Mr Justice Davis ruled yesterday that the government’s decision in December last year to implement sections 44 and 46 of the Legal Aid Sentencing and Punishment of Offenders Act 2012 (LASPO) must be set aside and a new review carried out, as required by section 48 of the Act.

The High Court ruling follows a demand from MPs on the justice select committee that the Lord Chancellor, Chris Grayling, carry out a second review after a row over a ‘secret deal’ between the government and insurance industry.

The judicial review was brought by Tony Whitston, chairman of the Asbestos Victims Support Groups Forum UK.

Delivering judgment in R (on the application of Whitston) v the Secretary of State for Justice [2014] EWHC 3044 (Admin), Davis J said his reading of the select committee’s report had not influenced his decision.

Davis J said the government launched a consultation exercise on the handling of mesothelioma claims in December 2012, and said that the review would be carried out as part of the exercise.

However, the judge said that this was concerned principally with reforms to procedure through the introduction of a pre-action protocol and fixed costs regime and described the attempted review as an “adjunct”.

Davis J said: “No reasonable Lord Chancellor faced with the duty imposed on him by section 48 of the Act would have considered that the exercise in fact carried out fulfilled that duty.

“I do not find that a consultation exercise per se was an inappropriate means of fulfilling the duty. Rather, the nature of this consultation meant that it did not permit the Lord Chancellor to do so.”

Mr Justice Davis said he “could not possibly” share the view of the interested party, the Association of British Insurers (ABI), that no relief should be given because the government’s failings “could not have made any conceivable difference to the outcome”.

He responded by saying that “this was not a case in which the procedural failing was minor or technical in nature”.

Davis J concluded: “It follows that it is not for me to set out the form of the review that will be required if the Lord Chancellor is to fulfil his duty under that section.

“My task has been to identify whether what happened did satisfy the requirement under section 48.  Having done so, it is now for the Lord Chancellor to carry out a proper review of the likely effects of the LASPO reforms in whatever manner he concludes will permit him reasonably to achieve the required purpose.”

A Ministry of Justice spokesperson said: “Mesothelioma is an awful condition which can destroy lives in a frighteningly short amount of time, and we want to help sufferers and their families. We are committed to finding the best way to get claims settled fairly and quickly.

“It remains our view that the Ministry of Justice review of this issue was conducted fully and openly and we are disappointed with this judgment. We will now consider our next steps.”

Richard Stein, the partner at Leigh Day who acted for the claimant, said: “[The] judgment should send a clear message to the government that it has to conform with the laws of the land and cannot ride roughshod over the interests of mesothelioma sufferers and their families to benefit the insurance industry.”

Mr Whitston called on the government to “see this judgment as an opportunity to take a new approach based on justice for victims and not the profits of big financial institutions. The old plans were rooted in a culture of secret deals with insurers and flawed consultations, which excluded the victims of asbestos. Now is the time for a change”.

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Funding facility “can keep on growing”

Cost and pricing consultancy Burcher Jennings has launched a new funding package for law firms, which it believes is “the first of its kind in the UK legal industry”.

Described as a “revolving evergreen facility that can increase in size as the firm grows”, the firm said the package had been developed with an unnamed risk capital provider, backed by an international fund management group.

Martyn Jennings, chief executive of Burcher Jennings, said the funding scheme aimed “to help counter the several long-standing structural challenges law firms face, namely, succession planning, the gradual withdrawal of legal aid and how to secure a competitive advantage by offering clients a wider range of options in terms of pricing”.

Mr Jennings went on: “Whether it is to fund disbursements, costs awards, the work in progress of clinical negligence and other CFA matters, individual commercial cases or just the firm’s day-to-day working capital, it is absolutely essential for any managing partner to have a strong understanding of its firm’s own short-term and long-term funding requirements.

“It makes no sense to us why, if a law firm is growing, it should have to repay its borrowings at a time when it really needs even more funding. That’s what our scheme aims to achieve, namely, a funding facility that can keep on growing.”

A spokesman for the risk capital provider said the funding package offered firms a “real competitive advantage” over their rivals.

“Whilst there are no restrictions on how the funding is applied, firms are already showing considerable interest in using the scheme to fund the new higher court fees, financial remedy proceedings and where they employ partners considering retirement.”

A spokesman for Burcher Jennings said the scheme was available to all firms regulated by the Solicitors Regulation Authority, and the “principal advanced does not ordinarily need to be repaid but, instead, can roll-over for so long as the facility is in place”.

Just Costs Solicitors and Novitas Loans launched a costs advance scheme in 2013 to help law firms bridge the gap between applying for and receiving their case fees.

Costs firm Kain Knight formed a strategic alliance in 2014 with funder VFS Legal to enable law firms to raise finance against their drafted bills.

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KainKnight200Please 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?


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:

We look forward to seeing you at the event.

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Medical report: user agreements set deadlines

MedCo has continued its enforcement activity by suspending 23 medical reporting organisations (MROs) and 14 direct medical experts (DMEs) for failing to upload medical case data to its system.

Both are required to upload medical case data as part of their user agreements – MROs within 30 days and DMEs within six months from the date of selection by the instructing party.

MedCo acted after sending out reminder communications and subsequent warning letters. The suspended MROs and DMEs will be allowed to complete existing instructions, but will no longer be presented in MedCo search offers.

In a statement, MedCo said it would “reassess their position on the system once their outstanding case data has been uploaded”.

It added: “MedCo has written to all users to advise them of the enforcement action and to confirm that medical case data upload will continue to be monitored and form part of the MedCo 2017 audits.”

It emerged last month that in the year to 31 March 2017, MedCo sent 337 warning letters, suspended 235 users – MROs, DMEs and ‘authorised users’, mainly claimant lawyers – although 84 of them were reinstated after modifying their behaviour. In all, 134 user agreements were terminated.

The behaviours that were sanctioned included circumventing the random search selection process and influencing medical experts’ opinions on diagnosis/prognosis.

It also took action over undertaking medical examinations in inappropriate circumstances, increasing market share of instructions in breach of government policy, and failing to upload case data, the company behind the system has revealed.

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Dyson: seeking comprehensive evidence-based recommendations

The guideline hourly rates (GHR) are set to undergo a fundamental review this year which could result in rates being set for specific areas of work in addition to seniority and geographic banding, it has emerged.

The new Civil Justice Council costs committee met for the first time last week to scope out its work and warned that it should not be assumed that an increase in the GHR will result.

The committee had been asked to report by January 2014 but it decided that this was not realistic “given the scale of the exercise and the impact of the numerous April 2013 reforms”, a synopsis of the meeting said.

Instead it is aiming to report by the end of March 2014, a delay agreed by the Master of the Rolls, Lord Dyson. In response to a letter from the committee’s chair, Mr Justice Foskett, Lord Dyson said: “Although I am keen for a new rate to be established, given that it has not been updated since 2010, my primary concern is that I have comprehensive evidence-based recommendations to assist me in determining the rate.”

The committee resolved that it needed to investigate the cost of work – that is, the expense of time – and not just charge-out rates (“important though that aspect was”, the synopsis noted). It emphasised the importance of confidentiality for its data sources as a high response rate was important for the committee to offer authoritative advice.

The synopsis continued: “Although personal injury cases remain a key element in the process, the committee has to look at setting a rate or rates across the whole spectrum of civil litigation. One proposal was that distinct sets of rates should be recommended for particular areas of law, eg, personal injury, clinical negligence etc.”

Seeking Lord Dyson’s views on this, Mr Justice Foskett said in his letter: “The rationale would be to reflect the reality of the way the market imposes different rates depending on the volume and complexity of a particular area of law…

“At the end of the day, of course, whether we could achieve recommendations of this nature will depend on the quality and extent of the evidence we receive and the resources available to evaluate the evidence.”

Lord Dyson said he was open to the idea: “I am happy to take advice from the committee. I will then reach a conclusion based on the strength of the argument and the weight of views expressed to the committee on the merits of the proposal.”

The names of those on the committee have yet to be released as the Law Society has not finalised its claimant and defendant nominations, while a consumer representative has not yet been selected.

Three academics will be helping the committee: Professors Paul Fenn, Neil Rickman and Steve Machin. Professor Machin, who is a new name to those in the costs world, is a professor of economics at University College London.

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High Court: no suggestion claimant would be disadvantaged

A security for costs order in favour of a defendant funded by a conditional fee agreement (CFA) should include a 100% success fee, the High Court ruled last week.

Mr Justice Tugendhat also said a party should not be forced to disclose the full agreement so as to gain such an order.

He said the scales of justice in a defamation case involving a prominent Tanzanian businessman suing a woman based in England weighed in favour of the defendant receiving security for costs up to the full amount permitted for under a CFA.

In Mengi v Hermitage [2012] EWHC 2045 (QB), he overturned the ruling of the Master on both the CFA point and also restriction of the order to 75% of the defendant’s costs, which were estimated in total at just over £1m, excluding the success fee; the claimant’s were more than £1.2m, plus £300,000 in pre-action costs. The defendant sought just under £2m as security.

The Master had said: “In the absence of the full CFA, I find it difficult to form any sensible view of the likelihood of the defendant being able to establish a right to recover the uplift, let alone the likely percentage… I am not therefore in the absence of the actual agreement persuaded I should allow for such an uplift in the order for security.”

He added that the absence of the full CFA did not mean in principle that a security for costs order is not appropriate, but that on the facts of this case he could not “engage meaningfully with the point” without it. “In other words, if you want the extra security, you must provide the CFA.”

Mr Justice Tugendhat said the defendant “should not be put under indirect pressure” to waive her right not to disclose the CFA in full so as to apply for security for costs. He noted that there was no suggestion “that the claimant would be hindered or obstructed in his pursuit of his claim if he were ordered to give security in the full amount of the defendant’s agreed budget plus 100% uplift”.

The judge also said there was no “illegitimate speculation” in the court taking into account that, if the defendant succeeded to the extent that she obtained an order for costs, such costs would involve a success fee.

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Hopper: room for improvement in the manner in which solicitors treat experts

Hopper: room for improvement in the manner in which solicitors treat experts

Experts giving evidence concurrently – known as ‘hot tubbing’ – is assisting the courts and reducing costs, according to a survey carried out by the Expert Witness Institute (EWI).

The poll of 154 experts also found that half had seen the number of instructions received go up over the past year – while a third had seen their fees rise. But late payment by solicitors was a significant problem.

Though only 15% of the experts surveyed had actually been involved in some way with hot-tubbing – a key innovation introduced by the Jackson reforms but still in its early stages – those who had gone through the process reported that it assisted the court to determine disputed issues of expert evidence, reduced the length of the trial and saved costs.

Some said hot-tubbing was also being used in mediations and early neutral evaluations, while just one respondent felt that the practice achieved nothing. The positive findings echo those of a Civil Justice Council report in August.

In July, Lord Justice Jackson predicted that the use of hot-tubbing would increase as the benefits become more widely accepted.

A fifth of respondents also reported a growing number of court orders for single joint experts, a shift that on balance found support – while 37% approved of this, 23% said such orders should only be made in very limited circumstances.

The experts were generally happy with the quality of instructions from solicitors (68% agreed that ‘Most are good – they know what they’re doing’), while the rest found them slipshod, increasingly so in some cases due to the strain the solicitors were under.

Less happily, 54% reported having been pressured to change a report, while just 10% said they were paid on time – 42% said they were paid “very late and only after a lot of chasing”. Only 19% said the solicitors always or usually let them know the outcome of the case – which is often linked to when they will eventually be paid.

Perhaps unsurprisingly, there was little love for the Legal Aid Agency among those experts who did legal aid work – some 59% considered the fee rates unsustainable, while 21% thought the agency’s rules too restrictive.

Institute chairman Sir Anthony Hooper said: “The survey, together with our recent 20th anniversary conference, paint a picture of a dedicated group of people who are open to changes in the way expert evidence is delivered for the benefit of the justice system. Hot-tubbing is a significant reform for expert, judge and lawyer alike and the early signs are encouraging.

“Experts and solicitors must work together. The survey shows that there is room for improvement in the manner in which solicitors treat their expert witnesses.”

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Budsworth: reforms not aimed to help boost the profits of insurers

The government’s “reasoned approach” to whiplash reform is encouraging, the Motor Accident Solicitors Society has said.

The Ministry of Justice announced yesterday that its response to the whiplash consultation will be delayed until after the transport select committee inquiry’s on whiplash has concluded, and to assess the full impact of the LASPO reforms on the motor insurance industry before making further changes to the system.

MASS chairman Craig Budsworth said: “This is something that MASS has long been calling for. It is vital that we understand the full implications of the LASPO reforms and address any unintended consequences for consumers before further change is considered. The present reforms bring down costs and will help tackle fraud and a full assessment of the changes should show that there is no need to take Draconian measures such as raising the small claims limit.

“As part of this assessment we are pleased to see that the government will be looking at whether or not the reduced legal costs in the system are being passed on to consumers. These changes were designed to help individual policy holders in these difficult times, not to help boost the profits of insurers. We are encouraged by this reasoned approach from the Ministry of Justice.”

MASS has also estimated that the insurance industry will collectively save as much as £1.4bn from the LASPO reforms and challenged the insurance industry to commit to passing all of the savings onto their customers via reduced insurance premiums.

The figures are based on the government’s estimate of 828,000 RTA claims a year. Assuming average costs of £2,500 for RTA claims (adopting Aviva’s figure), this represents a success fee saving of £375 per claim (including VAT), leading to £310m.

MASS’s estimate for an average after-the-event (ATE) insurance premium across all RTA claims is £500; around half are run under before-the-event cover, leaving the other half under ATE, meaning £207m.

The revised costs will reduce recoverable costs by around £850 (£1020 when VAT is included). Assuming this saving will apply to all RTA claims, the saving for at-fault insurers will be in the region of £844m.

Mr Budsworth said: “It was great to hear Chris Grayling challenging the insurance industry to bring down premiums last week. For too long, the ever rising cost of motor insurance has been attributed to legal costs. We must all now look to the insurance industry.

“Legal costs have been falling for 10 years and the reforms introduced last month mean that legal costs are going to fall even further. Premiums may have dropped slightly last year, but the change pales in comparison to massive hikes we have seen in recent years and the healthy profits being made across the industry.

Citing the Confused and Towers Watson Car Insurance Price Index, MASS said premiums fell by 5.6% in the first half of 2012, having risen by 38% in 2011.

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Pipkin: time to end the political rhetoric

Posted by David Pipkin, director of Litigation Futures Associate Temple Legal Protection

National Audit Office (NAO) claims that imply excessive legal costs are the cause of rising NHS Resolution expenditure are unhelpful at best, disingenuous at worst and either way do not provide any answers to NHS problems or support genuine access to justice.

The recent NAO comments on the subject contradict themselves by stating first that no evidence has been found relating poorer patient safety to a rise in negligence costs; and then follow on by disclosing that declining performance against waiting time standards is a factor, due to delayed diagnosis or treatment. A slight anomaly, or an unexplained paradox?

Presenting on the rising NHS negligence costs at the Westminster Health Forum seminar on earlier this month, NAO director Jenny George admitted: “The truth is we just don’t have the data to draw any definite conclusions.”

There is, however, much data in circulation to provide some context. Clinical negligence costs may have quadrupled over the past decade to £1.6bn, but this represents a little over 1% of the NHS total budget.

Let’s assume those costs were cut in half overnight. Is it realistic to suggest that patient standards would significantly increase due to the extra half a percent in the kitty, where the other 99% wasn’t enough? That’s assuming excessive legal fees are the real problem; in reality, claimant legal fees only contribute around 20% to the overall, with defence costs in the region of 10%.

I agree with Kimmo Boote, an associate at Dutton Gregory Solicitors and a clinical negligence specialist, who says: “Whilst the government’s stance in wanting to reduce the costs of expensive lawyers who use up valuable NHS resources may strike a chord with voters and taxpayers, the likely result will be that access to justice will be denied to many claimants who will have been injured by the very people that they had trusted to look after them in the first place.”

Perhaps one of the reasons claims are rising is patient dissatisfaction with how they are treated after the incident, with insufficient apologies and explanations of what and why things went wrong.

The UK has very poor risk statistics in many areas, such as birth injury. It is said only 4% of patients that could claim actually do. What if that doubles? It would be a disaster for the NHS but it wouldn’t be an increase in the current risk patients face.

There are many safeguards in place to protect the NHS from spurious claims as well: ATE insurers like us are gate keepers helping to filter out weak or speculative claims.

Perhaps it’s time for the NAO to end the political rhetoric and work together with all interested parties – the NHS, the government, victims of clinical negligence and the legal profession – to source the ‘missing data’ and establish the genuine cause of the rise in clinical negligence within the NHS.

This has to be better than focusing on the outcome of the negligence, which is, after all, that vulnerable victims are seeking support and stability for an uncertain future.


The misleading claims behind the campaign to lower the discount rate

Matthew Best Temple Legal Protection

A coalition of organisations which represent the NHS and health professionals has made strong claims in a letter to justice secretary David Gauke that the legal costs of clinical negligence claims are crippling the NHS. Similar comments were made by the National Audit Office (NAO) in September last year and yet the case doesn’t hold water. The letter was signed by the NHS Confederation, Academy of Medical Royal Colleges, British Medical Association, Family Doctors Association, Medical Protection Society, Medical Defence Union and the Medical and Dental Defence Union of Scotland.

February 9th, 2018