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Lord Brennan

Lord Brennan: “scale and diversity are the challenges”

Litigation funder Juridica has announced that it intends to diversify its approach and extend its investments to law firm portfolio finance and arbitrations.

The AIM-listed funder, registered in Guernsey, currently specialises in mainly US antitrust and competition cases, which accounted for around two-thirds of its net proceeds last year, combined with commercial and IP cases, which accounted for around a third.

Launching Juridica’s financial results for the last calendar year, chairman Lord Brennan QC said the company had “generated a record amount of cash proceeds because of five settlements in our antitrust and competition portfolio”.

According to the statement, the settlements generated proceeds of $106m (£72m). It currently has $148m invested in 22 active cases.

Lord Brennan said Juridica was “the first to enter the litigation finance market” and “well-established and performing well in this market”, as demonstrated by the results.

“Litigation finance, particularly in the United States, is now at the next stage where scale and diversity are the challenges.”

In its contribution the financial statement, investment manager Juridica Asset Management said it aimed to create a portfolio “that remains based on business-to-business claims but is diversified across not only the three existing asset classes but also law firm portfolio finance, arbitrations, judgments and special situations…

“[A] more diversified portfolio will reduce the risk of adverse judgements in a particular investment whilst reducing the average time of investments, thus providing for more regular cash proceeds to the company and its shareholders.”

It added that it had “significantly expanded” its own team to “include more risk management and a broader range of legal expertise”.

Lord Brennan said that since its launch in 2007, Juridica had developed a portfolio of investments made up exclusively of “business-to-business related claim investments” in the sectors of antitrust and competition, patents and other forms of intellectual property and general commercial litigation.

He said the company did not invest in shareholder class actions, personal injury, product liability, or mass tort claims.

Lord Brennan said: “Although our recent returns are not indicative of future returns, they are a strong endorsement of the quality of the portfolio we have invested in and developed.

“Our investments have continued to mature throughout 2014. Our successes this year enabled the payment of substantial dividends. We continue to see significant opportunities to deploy capital. We look to the future with optimism and expect the portfolio to deliver attractive returns.”

A spokesman for Juridica said the firm’s clients included Fortune 1000 and FT Global 500 companies, inventors, universities and the law firms which represented them.

One of its notable new investments last year was in ProSports IP, a new joint venture with the National Football League Players Association, established to develop and monetise a large of patents in the technology and sports market in the US.

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Lotus case: three separate budgets would merely have added to the costs

The High Court has rejected a Mitchell challenge to a budget that could have left well-known car manufacturer Lotus with hundreds of thousands of pounds of costs up in smoke.

Master Kay QC said Mitchell “does not provide that a party should be penalised where the balance of justice and fairness would indicate that a contrary approach is appropriate”.

Lotus Cars v Mecanica Solutions [2014] EWHC 76 (QB) was one of three separate claims for which the claimant had submitted a single budget of nearly £600,000, the parties having agreed by a consent order that they would be joined for the purposes of case management and trial.

However, the defendant said the terms of the order, and of an allocation order made a week later, meant the claimant should have filed three separate budgets, as it had.

However, Master Kay comprehensively rejected the challenge, saying the wording of the orders – which were in places in conflict with each other – did not specify separate budgets.

He said: “In the case of large group actions where the management of the various cases is to be treated as common and is dealt with accordingly, there is no sensible reason why the cost budgeting should always be considered separately and some good reasons why it should not.”

He added that as a “significant purpose” of budgeting is to ensure that cases are handled as economically as possible, “it seems logical that if cases are to be managed and tried together, a single costs budgeting exercise should be sufficient. The provision of three separate budgets merely adds to the costs”.

Even if he was wrong, the master said he would have allowed relief against the sanction of limiting the claimant to the applicable court fees.

He said the failure in Mitchell was “much more serious” than here and in this case the claimant was trying to comply. Such default as there had been was trivial “and if it was not, there was an understandable reason for the default which did not arise from the solicitor’s failure to act promptly or dereliction of duty”.

“Although the decision in Mitchell indicates that a more robust approach should be taken with applications [for relief from sanction], it does not provide that a party should be penalised where the balance of justice and fairness would indicate that a contrary approach is appropriate,” Master Kay said.

“In my view, the reality of this case was that the claimant was trying to comply with an aspect of the orders and the rules which were not entirely clear and if, with hindsight, it is found that it failed to do so properly, I think that it would be contrary to the overriding principle to apply the penalty required by the defendant.”

The master also cited Mr Justice Coulson’s pre-Mitchell dicta last year in Willis v MRJ Rundell & Associates Ltd that the court should be cautious about penalising a party in respect of non-compliance with the cost budgeting rules.

The defendant’s solicitor, Philip Rubens of Cooke Young & Keidan, confirmed that there would be no appeal. Olswang, which instructed Thomas Croxford of Blackstone Chambers, is acting for the claimant.

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Budget failure: sanction need not be nil assessment

Budget failure: sanction need not be nil assessment

A claimant’s failure to update his budget in advance of an unplanned preliminary hearing has led a High Court judge to rule that “every assumption” would be made against him in assessing the costs.

Mr Justice Warby said ordering no costs would be disproportionate, and was in any case not a sanction prescribed by CPR 3.18 (relating to assessing costs where a costs management order has been made) or the practice direction.

Simpson v MGN Ltd & Anor [2015] EWHC 126 (QB) concerned the costs of a preliminary hearing on meaning and an application to strike out a plea of justification in a libel claim brought by Premier League footballer Danny Simpson against the Daily Mirror.

The claimant’s original budget had included a contingency for such a hearing – which the defendant contested – but Master Yoxall declined to direct a preliminary issue and so neither approved nor disapproved the figure. However, the defendant’s contingency was agreed.

The claimant then sought an order for the preliminary hearing and served an amended budget on the defendant, which failed to respond until two working days before the hearing; the claimant had not filed the amended budget with the court in the meantime.

The hearing was largely a success for the claimant but the defendant argued that his approved costs budget did not make provision for the hearing and there was no good reason to depart from it, meaning no costs should be allowed. The claimant described this as “rank opportunism”, especially given the late reply to the claimant solicitor’s letter on the amended budget.

Warby J said the application of rule 3.18(b) – not departing from a budget unless there is good reason to do so – was not straightforward here, given that the claimant had put forward a budget for this phase of the litigation which was not agreed, approved or disapproved, while the defendant’s budget had been agreed.

“I am inclined to think that the wording of CPR 3.18 was not aimed at such a situation, but rather at ensuring that once the court has reached a decision on what it is reasonable for a party to spend on a given phase that conclusion should be final in the absence of some good reason. However, that was not a point addressed in argument and I reach no conclusion on it.

“Assuming that I am wrong in this, it seems to me that on the facts of this case there is good reason to depart from the budget approved by Master Yoxall for this phase of the litigation, by allowing recovery of some costs by the claimant.”

Among the factors the judge took into account were that the claimant’s proposed budget for this phase had been known from before the overall budget was set, the revised budget that was sent through, and the defendant’s delayed response to it – “that is not a co-operative approach”, he said.

Further, “the claimant’s failure to comply has had only a modest impact on the efficient dispatch of this litigation, and no appreciable impact on the efficient conduct of litigation overall. It was never likely to have any substantial impact on either.”

Making every assumption against the claimant in assessing the hearing’s costs was a “just and proportionate” sanction that “in more general terms provides a sufficient incentive to parties to comply”.

The defendant also complained that while the claimant had filed its costs schedule for the hearing with the court, it had not been served on the defendant.

Again Warby J noted that this failure to comply with paragraph 9.5 of practice direction 44 did not prescribe a sanction of no costs being recovered.

However, he said the failure led to unnecessary delay in costs in resolving the assessment and he made a deduction from the costs claimed to reflect this.

Overall the claim for £24,096 was slashed to £10,500 (both including VAT), with the major reduction coming from only allowing the costs of one counsel when two had been instructed, which Warby J said was not necessary.

Jon Lord, a Council member of the Association of Costs Lawyers, commented: “This ruling shows how some of the kinks in the budgeting process still need to be smoothed out; otherwise they risk just introducing an unnecessary layer of costs into litigation.

“In keeping with the football theme of the case, the only goal scored was an own goal by Mr Simpson in failing to serve his team sheets (budget and statement of costs) on the opposition before the game. The penalty for that was sensibly proportionate in the form of the additional cost caused by his failure.”

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Jackson: Budgeting now works well in England

Sir Rupert Jackson, only weeks into his new role as an arbitrator, has called for costs budgeting to tackle the “high level of costs” in arbitration, at least for lower-value claims.

Sir Rupert, back at his old chambers, 4 New Square, told an international conference in Mauritius that this year’s annual arbitration survey by Queen Mary University, published last month, found that two-thirds of respondents described the high level of costs as “the worst feature of international arbitration”.

“I understand that the lion’s share of those costs are the legal fees of the parties, rather than the fees paid to arbitrators,” he said.

“I therefore invite people to consider the benefits of introducing costs budgeting/costs management into arbitrations, at least for lower-value claims. This regime, although controversial at first, now works well in the English courts.

“A mild version of costs budgeting already exists in maritime arbitrations under the LMAA Terms. Para 11 of schedule 2 requires the parties, after the close of pleadings, to complete a questionnaire. Question 15 asks for an estimate of costs through to the end of the reference. At the end of the case arbitrators can take this into account when assessing recoverable costs.”

Virtually all of the survey’s 922 respondents favoured arbitration rather than litigation for cross-border disputes because of better enforceability of awards and the ability to avoid national courts.

Sir Rupert, who retired from the Court of Appeal in March this year, said he had appeared as a barrister in many arbitrations, domestic and international, between 1973 and 1998.

Among the changes he noticed in arbitration was a “proliferation of arbitral institutions”, with a greater proportion of cases than before, and more use of three-person tribunals.

The former judge, who recalled that he had only appeared as a barrister before male arbitrators, noted: “There are more women arbitrators and it is clear that the gender balance will continue to improve.”

In a speech delivered to the 11th International Conference on Law and Alternative Dispute Resolution, he said: “In England, most of the construction arbitration work now is international rather than domestic. London is an attractive centre for international arbitrations.

“At the same time there are fewer domestic arbitrations than in the 1990s for two reasons: First, adjudication now leads to the resolution of most construction disputes. Very few cases go on to any further proceedings after there has been an adjudication.

“Secondly, improvements in the court process often make litigation in the TCC [Technology and Construction Court] more attractive than arbitration.”

Sir Rupert said arbitration was “head and shoulders above litigation” in terms of procedural reform.

“Every dispute resolution system needs to adapt to the changing needs of society and the rapid advances of technology. That means an almost constant process of procedural reform.

“In the world of litigation, procedural reform is a political process. That character of the process sometimes prevents necessary reforms from ever happening. I have seen many instances of that in my work of civil justice reform.

“Even when political intervention does not block civil justice reforms, it often causes substantial delays. There was a delay of some three-and-a-half years between the publication of my January 2010 report and the implementation of its recommendations. By contrast, arbitral institutions can and do respond swiftly to the changing needs of their users”.

Sir Rupert said arbitration had led the way with the hot tubbing of experts, a procedure which was now “catching on” in the courts of England and Wales, despite initial scepticism.

However, he said arbitration was not as transparent as litigation, leading to comments from Lord Thomas, the former Lord Chief Justice, that arbitrators were developing the law without judicial insight and giving awards and setting out principles known only to the ‘cognoscenti’.

Sir Rupert commented: “It is fair to say that there is a problem here. In some areas of business activity, disputes are almost always arbitrated.

“Examples are big IT disputes, satellite agreements and large joint venture agreements. In these areas there is not any publicly available body of judicial decisions, which parties can study before they embark upon arbitration. Other relevant arbitral decisions are not generally available and they do not have the status of precedent.”

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Posted by Neil Rose, Editor, Litigation Futures

The final countdown: when will the portal fee be announced and will it blow the market apart?

Events like the Motor Accident Solicitors Society (MASS) annual conference in Manchester last Friday are great for people like me. Aside from the interesting debates on stage, they offer the chance to catch up with those most likely to be in the know, as well as hear the latest gossip and rumours circulating during the tea breaks and the pre-conference receptions (thank you, Compass Costs and Premex).

Of course, the April reforms dominated discussion. The best-sourced rumour I heard – confirmed by people whom I trust to have their information first-hand – is that the government is to make a significant policy shift on the interaction between qualified one-way costs-shifting (QOCS) and part 36.

In July the Ministry of Justice said that part 36 will trump QOCS, but only up to the level of damages recovered by the claimant. Word now is that the level is to be increased to take in the recovered costs as well, to the horror of claimant lawyers and quiet delight of after-the-event insurers, as this will only increase the risk that needs insuring.

Separately on QOCS, Charlie Cory-Wright QC, chairman of the Personal Injuries Bar Association, told a HP2-T21 session at the annual Bar conference on Saturday that it was rumoured that where a successful claimant has lost along the way – such as at an interlocutory stage or on a particular issue – they would have costs enforced against them in the traditional way, up to the limit of the damages, costs and interest. “That’s not one-way costs shifting,” he said. “That’s two-way cost shifting with a cap.”

Back to MASS. The referral fee ban was a big topic of conversation. One solicitor I met on Thursday said that in one evening she had heard seven different ways of addressing it (which was four more than she HP2-T28 had worked out herself). Agency instructions and work-in-progress sales are among the options being discussed, it would seem, while there is apparently nothing in the legislation to stop a claims management company with a client in their office (so this will only work for the local operators) pointing them to a telephone and getting them to call the panel law firm and pass on their details.

But all anyone really wanted to know is the new portal fee. It’s always a delicate matter when publishing rumours, and I felt far more secure about the QOCS news above, which seemed well known among movers and shakers. The portal fee, by contrast, remains shrouded in secrecy and some people whom I would expect to know something, if there was something to know, insisted that they were as clueless as everyone else.

Taking all that into account, the figure I started to hear on Friday was that where £600 was previously being bandied around, £800 has emerged more recently. Remember that it is in some insurers’ interests to have a higher fee that they will be able to share in some sort of post-referral fee ban ABS arrangement. But don't adjust your business plan quite yet. By next week the rumour may have taken it to £400. Or £900. It just shows how much the government needs to get on and put everyone out of their misery by announcing the figure.

So we are set for a significant official announcement in the middle of next month. Or rather, that’s the rumour.

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High Court: revised budget overlooked

The High Court has rejected a bid to limit a winning party’s costs to a previously approved budget where a substantially revised one was seen by the court and other party but not dealt with at the pre-trial review (PTR).

While leaving the detail for the costs judge to sort out, Mr Justice Akenhead said he would have approved at least a doubling of the claimant’s £493,000 approved budget.

In National Museums and Galleries On Merseyside (Trustees of) v AEW Architects and Designers Ltd [2013] EWHC 3025 (TCC), involving the Technology and Construction Court costs management pilot, the claimant had won and the judge’s latest ruling dealt largely with costs issues.

The court made the costs management order in February 2012. By 3 January 2013, the claimant’s estimate had gone up to £1.1m.

It was contained in the then appropriate forms, lodged with the court for consideration at the PTR on 22 March 2013. The intention was to review them, but this did not happen.

Paragraph 6 of practice direction 51G – which governed the pilot – said that “a party whose cost budget is no longer accurate must file and serve a budget revision… The court may approve or disapprove such departures from the previous budget”.

Paragraph 8 said the court would not depart from the receiving party's last approved budget unless satisfied that there was good reason to do so.

Arguing about an interim costs payment, the paying party said that, applying paragraph 8, the costs judge could not depart from the last formally approved budget, pointing to Mr Justice Coulson’s recent ruling in Elvanite, where he rejected the successful party’s bid to nearly double its approved costs budget after the case had concluded.

Akenhead J said he agreed with the principles set down in Elvanite. However, he observed that paragraph 6 “suggests that no formal application needs to be issued by the parties seeking a revision and that the court may of its own motion approve or disapprove the revision, albeit doubtless giving the parties the opportunity to be heard”.

He continued: “There are, however, important differences between the Elvanite case and this, the most prominent being that here there was, simply, an oversight by both parties and, indeed, by the court at the PTR to get round to addressing the substantially increased costs budgets [of both parties].

“So far as I can recall, this was because there was a lot of business to get through on what was a busy Friday in the TCC. There has been no hint or suggestion that either was challenging or would have challenged the other's revised budget. Indeed, it is more probable than not that each would actually have agreed the other’s.”

The judge listed “some very obvious reasons” why the budgets had substantially increased and said that as the trial judge and at this late stage, “it would not be appropriate as such to revise [the claimant’s] only formally approved budget. This is, however, a very obvious case, based on my knowledge of the case and the case management, for a substantial upward departure from the approved budget.

“It is most appropriate, however, to leave the detail of this issue to the costs judge but, doubtless, he or she can take into account what I have said.

He said it is “more likely than not” that he would have approved a revised budget of at least £1m.

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Tulk: CMCs left in the cold

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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RTA: fast-track premium from £35

Keystone Legal has launched its new “modular” after-the-event (ATE) insurance product which includes standalone cover for part 36 offers and a guarantee that the amount offered is the least the client will receive.

FlexProtect has three freestanding modules for cases where the prospects of success are in excess of 50%. Solicitors can add additional cover as the claim progresses.

The basic limit of indemnity for fast-track cases is £100,000, with everything bespoke for multi-track matters.

The first module, for disbursements, runs from the start of the case up to a part 36 offer or part 7 proceedings. It has a £100,000 limit of indemnity, with fast-track premiums of £35 for road traffic cases, £75 for employer’s liability, £100 for public liability and £125 for local authority slips/trips.

The second module covers adverse costs for the period from litigation beginning to a part 36 offer or the case conclusion. Fast-track premiums start at £100 for an RTA and rise to £300 for local authority slips/trips.

The third module provides part 36 cover and a full damages indemnity. This means that once a client has received a part 36 offer the solicitor feels is too low, Keystone will guarantee that offer, “giving peace of mind to the client whilst helping to allow the solicitor to get on with running the case further”, said director Andy Parker.

The premium for either track is 25% of the difference between the part 36 offer and the final settlement, subject to a discount if the case settles pre-issue. An advance on compensation is also available to clients.

Mr Parker said: “We have developed FlexProtect as a modular product for a number of reasons. Firstly, why should clients pay for more ATE cover than they need by using a ‘one size fits all’ solution? FlexProtect has ‘low start’ pre-issue premiums with the option to add additional modules of cover should the claim progress into litigation. In many scenarios we feel this offers a better value, best advice approach for solicitors mediating ATE insurance on behalf of their clients.

“Secondly, in our experience different solicitors have different approaches to running cases, often with a focus on or specialisation in running certain case types which can result in different requirements when choosing ATE cover. FlexProtect allows solicitors to tailor the product to the types of clients and cases they take on.”

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Car crash: should interim damages payment be taken into account?

A recent ruling caused by “shoddy” drafting of the CPR highlights the importance of any extension of fixed costs being accompanied by “a well-drafted and fully integrated set of procedural rules”, a costs specialist has warned.

Lee Coulthard, assistant regional manager in the Leeds office of costs firm John M Hayes, said it would also be important for the rules themselves, rather than the principles behind them, to be put out to consultation.

But he continued: “Sadly, past evidence suggests that this hope is likely to prove forlorn.”

In Jones v Jones, a case in North Shields County Court, an interim payment of £1,800 was made in respect of vehicle damage, and so was not included in the subsequent part 7 proceedings. The defendant made a part 36 offer of £5,850 in respect of ‘the whole claim’, which was accepted.

The issue was whether the £1,800 should be added to the £5,850 to calculate the fixed costs in table 6B (£1,160 plus 20% of the damages as it settled before allocation). The difference amounted to £360 + VAT.

The claimant relied on CPR 45.29C(4)(b), which says: “Unless stated otherwise, a reference to damages means agreed damages.”

The defendant, meanwhile, looked to CPR 36.20: “Fixed costs shall be calculated by reference to the amount of the offer which is accepted.”

Mr Coulthard reported that the court found in favour of the claimant. “The argument that it would be absurd to exclude damages agreed outwith the scope of the final part 36 offer from the scope of costs was accepted, especially as it was obvious that if the vehicle damages had not been agreed pre-action and had been included in the proceedings then the fixed costs would have been on the whole sum.

“The court recognised the problem with the wording of CPR 36.20, and dealt with this by reading the words ‘by reference to’ as meaning ‘having a bearing on’, such that the amount of the part 36 offer had to be taken into account when determining the fixed costs but was not the only relevant sum.

“There was also criticism of the drafting of the rules, as CPR 36.20 assumes that there will only ever be one part 36 offer disposing of the entirety of the claim, but this is clearly not the case.”

Mr Coulthard, who did not act in the case, said the decision was “surely correct”.

He said: “Whilst the defendant’s reasoning is superficially attractive based on a formal reading of the wording of CPR 36.20, the result is so patently absurd that it is no surprise that the court interpreted the provision so as to avoid that consequence.

“Of course, as was recognised by the judge, the problem is caused by shoddy drafting and a failure to ensure that part 36 tallies with the provisions of part 45. This is certainly not the first time that such problems have been caused by a failure of the rules to account of the practical realities of running cases.

“It can only be hoped that any extension of fixed costs is accompanied by a well drafted and fully integrated set of procedural rules. Furthermore, the rules themselves, rather than just the general principle of any extension, should be subject to a reasonable period of consultation. Sadly, past evidence suggests that this hope is likely to prove forlorn.”

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Parliament: criticism from Labour, Conservative and DUP MPs

The Ministry of Justice (MoJ) came under fire yesterday from MPs over its plan to end the exemption that allows the continuing recoverability of success fees and after-the-event (ATE) insurance in mesothelioma cases.

However, justice minister Shailesh Vara insisted that there is insufficient justification for mesothelioma cases being treated in a different way from other serious personal injury and fatal claims.

Under section 48 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), recoverability cannot come to an end for mesothelioma cases before the MoJ has carried out a review of the likely effect and published a report.

Last summer the MoJ consulted on changes to the way mesothelioma cases are run, and asked if – as a result of those reforms, the 10% increase in general damages and also the separate Mesothelioma Bill – the exemption should come to an end. In his announcement last month on the outcome of the consultation, Mr Vara said it would do this July.

In a Westminster Hall debate secured by Labour MP and former claimant solicitor Andy McDonald, MPs from all sides of the House hit out at the move.

Mr McDonald argued that no case had been made for changing the position. He said: “To have introduced a new regime in April 2013 with the exceptions, and then to consult on whether the exceptions should still apply, alongside a whole host of other matters in relation to mesothelioma claims, in July 2013 was simply ludicrous.

“There were just three months between the introduction of the new regime in April and the July review; that was simply far too soon for any proper assessment to have been made of the likely effects of sections 44 and 46 [banning the recoverability of success fees and ATE respectively] on mesothelioma claims. No one can tell at this stage how much clients will be charged by solicitors under LASPO. The situation is developing as the market adapts.

“The same can be said of the cost of ATE insurance. The government are jumping the gun. They need to pause and commit to a genuine process of review.”

Mr McDonald predicted that without success fees, “some cases that should run will not, as they will be too risky”.

“Removal of the exception will result either in those cases not running, or in mesothelioma victims having to pay out of their compensation. That was clearly not the intention of Parliament, and I urge the government to reconsider.”

He was supported by Conservative Tracey Crouch – who said the MoJ had made a “bad decision” – and Nigel Dodds of the DUP, as well as fellow Labour MP Ian Lavery and shadow justice spokesman Andy Slaughter.

Ms Crouch said: “An individual who contracted mesothelioma because they worked in industry, worked in a dockyard or lagged a ship has to navigate through a minefield of complex case law, and they need specialist legal help. It is not fair that they should be punished by sections 44 and 46 of LASPO when they receive such help.”

The MPs criticised the MoJ for not publishing a report and also for linking the change to the Mesothelioma Bill, which deals with claims by victims who cannot trace their insurer.

Mr Vara said the required report would be published – declaring that “the government are satisfied that it meets our obligations under section 48” – and that the link with the bill was to do with timing and bringing the different reforms in together this summer.

He said: “The government have carefully considered the likely effect of implementing the LASPO reforms on mesothelioma claims, including the evidence put before us by respondents to the consultation. The issues raised, however, were generally similar to those in other very serious personal injury cases to which the reforms already apply.

“There was little explanation of any particular feature of the mesothelioma claims process that would lead to a different or disproportionate effect on claimants’ access to justice, should the reforms apply.

“Ultimately, in our view, there needs to be a specific justification for the continued difference in treatment between mesothelioma cases and other personal injury cases – most particularly, other serious personal injury cases that have their own tragic features involving, as some do, catastrophic injury and the need for substantial care arrangements for the remainder of a claimant’s life, sometimes when the claimant is very young.”

Speaking after the debate, Matthew Stockwell, president of the Association of Personal Injury Lawyers, said: “It’s impossible to rationalise why dying people should have to pay for the inherent risks of pursuing redress, when they certainly never asked to be in a position where they need compensation.

“Mesothelioma claimants know they are going to die, and they know they have to race against the clock when they make a claim. They are simply trying to make their last few months more bearable, and to ensure that their families will have some security when they’re gone. If ever a claimant needed full compensation, it is surely the claimant facing a death sentence just because he turned up for work.”

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Vijay Rathour, a vice-president in the London office of digital risk management and investigations company Stroz Friedberg, considers the implications for e-disclosure of a recent High Court ruling

E-disclosure: emerging technologies facilitate rapid initial analysis of documentation

The criticism meted out by Mr Justice Ramsey, following what has been described as multiple failures in the e-disclosure process in the case involving the West African Gas Pipeline Company (WAPCo), may have caught some practitioners by surprise.

But with the complexity and sheer volume of data involved in a growing number of cases, sometimes reaching hundreds of millions of documents that require detailed analysis, what is the role of emerging technologies in addressing some of these concerns?

Courts increasingly expect that the best technology will be used, and used well, to keep cases within reasonable time and cost limits. This was highlighted as a key issue in West African Gas Pipeline Company Limited v Willbros Global Holdings Inc [2012] EWHC 396 (TCC) by Mr Justice Ramsey, who criticised the ineffective use of technology in processing the disclosure, which ultimately caused expensive delays.

Failings in the de-duplication process resulted in a doubling up of judgements made on identical documentation and inconsistent redaction of potentially privileged material. While clients have a key role to play in deciding the scope of this process, such as whether all duplicates should be removed or whether multiple individual copies should be retained to show specifically who read what, in this particular case the process was found to be inconsistent and confusing. This caused further failures, as multiple reviewers had made differing subjective judgements on the same documents.

Practice direction 31B, which has been in force since 2010, has allowed a further tightening of guidance relating to electronic disclosure. In parallel, the courts are increasingly aware of the technologies available and of how they can transform the practice of disclosure.

A fundamental catalyst to change is technology and, in particular, keyword recognition. Established and emerging technologies – such as early case assessment and auto-coding – facilitate rapid initial analysis of documentation to filter what is important, before undergoing scrutiny by human reviewers.

Early case assessment, an effective but still fairly underused technology, allows fee-earners an insight into the categories of documents making up the whole of the potentially disclosable population, well ahead of such information being passed to opposing parties. This significantly enhances the effectiveness of the review process, as the technology can be applied to a pool of millions of documents to radically reduce what needs to be subsequently subjectively analysed by humans.

Improved artificial intelligence in the auto-coding of documents is also making headway. This allows intelligent scanning to identify key forms of language, phrases and combinations of words that suggest important content, including privileged material or documents that demonstrate that litigation was being contemplated at a particular point in time. Such key technologies leverage the skills of human reviewers to focus on the most valuable and critical areas of the document review exercise.

While there has been a greater appetite to embrace such technologies in some other jurisdictions, notably in the US, there are growing signs that we could shortly see these become a regular feature in the UK. Once available and accepted, there is little doubt judges will start to query any case where they are not used effectively to help achieve the overriding objectives of justice and the CPR.

Early consultation with e-disclosure experts can help to ensure that the exercise is carried out as cost-effectively, accurately and consistency as possible, preventing embarrassing and costly judgements against instructing parties.

An area of continued debate is the role of outsourcing and offshore documentary review. As WAPCo has highlighted, offshore reviews can be difficult to manage, while the burden of ensuring that the review achieves the high standards required by the English legal system can be left open to chance.

Subtleties perhaps lost in translation and failings in the use of the technology underpinning the review, led to overseas reviewers missing large volumes of potentially relevant material in that case, drawing substantial criticism from opposing parties and the court.

The challenge in document reviews is finding the defensible balance between cost and effectiveness and the findings in WAPCo highlighted the necessity to ensure that the document review exercise is planned early and effectively. The substantial cost of legal expertise means that time wasted in improperly planned and executed review exercises will rapidly inflate costs and judges are unlikely to sympathise when these could easily have been avoided, with appropriate assistance from document review experts.

Highly effective technical solutions and review strategies can be put in place to ensure that a review can be conducted in an effective and cost-efficient manner. Experience shows that this will go a significant way in preventing some of the complications that sometimes arise in offshore reviews and the problems that led to the judge’s criticisms in the wake of this particular case.

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America: common-interest protection

A US Federal Court has ruled decisively in favour of litigation funders being able to see privileged material and so-called ‘attorney work product’ without those materials being disclosable to opposing parties.

Work product is the US term for materials created in the preparation of a case. In the unnamed case, which involved funding from AIM-listed Burford Capital, the court held: “It is quite evident that the subpoenas seek the production of documents that were prepared by counsel for [the claimant] in anticipation of and during litigation and are protected by the work product doctrine.

“Litigation strategy, matters concerning merits of claims and defences and damages would be revealed if the documents were produced. The matters directly involve the mental impressions of counsel and are protected from disclosure as work-product. Moreover, the production of the items subpoenaed would intrude upon attorney-client privilege under the ‘common-interest’ doctrine. The ‘common-interest’ doctrine protects communications between parties with a shared common interest in litigation strategy…

“Here, Burford and [claimant] now have a common interest in the successful outcome of the litigation which otherwise [claimant] may not have been able to pursue without the financial assistance of Burford.”

Chistopher Bogart, Burford’s chief executive, said: “This ruling is significant in ensuring that litigants can seek funding to even the litigation playing field without fear of exploitation by their opponents.”

Meanwhile, in Australia, funder International Litigation Partners has survived a challenge to the legality of its agreement after the High Court (the country’s highest court) ruled that the funder was providing its client with a credit facility rather than a financial service as defined by legislation, and so did not need an Australian financial services licence.

Had it been the latter, the client would have been able to rescind the contract because the funder did not hold a licence and walk away without having to pay an $A8m (£5.1m) early termination fee.

The decision comes on the heels of changes to Australian corporate law that seek to ensure that litigation funding is not treated as a managed investment scheme and therefore subject to detailed regulation.


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MoJ: committed to minimising the impact on the market

MoJ: committed to minimising the impact on the market

The Ministry of Justice (MoJ) is looking at widening the definition of ‘direct financial links’ that have to be declared by users of MedCo to break the “unhealthy relationships between organisations operating in the personal injury sector”, it has emerged.

The details of the call for evidence announced yesterday revealed that the MoJ is also willing to consider changing the make-up of the seven medical reporting organisations (MROs) offered to users – it is currently facing a judicial review challenge because only one large, tier 1 MRO appears in each ‘offer’, which it is argued is anti-competitive.

In his foreword to the call for evidence, civil justice minister Lord Faulks said: “The government is aware that the personal injury sector is fast moving and contains many innovative organisations and individuals.

“It has, however, become apparent that a number of new business practices have developed in this sector with the potential to undermine both the government policy objectives and public confidence in MedCo.”

The call for evidence said that the declaration of direct financial links aims to meet the goverment’s objectives of “enhancing independence in medical reporting through the breaking of unhealthy relationships between organisations operating in the personal injury sector”.

It explained: “The declaration currently covers direct financial links between those commissioning medical reports and those carrying them out. It does not currently cover financial links with other types of organisation such as MRO to MRO or other types such as ownership by close family members.” It asked whether the declaration should be extended.

MROs are asked to provide comparative data on the volume of reports they were handling before and after the introduction of MedCo as the MoJ looks at the offer made to users.

“The overall aim of the decision on the offer was to balance – as far as was practical – the potential impacts on the market with achieving the government’s overall policy objective of enhancing the independence of medical reporting in support of whiplash claims.”

But it said the fact that high-volume MROs have registered multiple new smaller MROs “have the potential to put at risk the chances of existing MROs competing for selection and also runs contrary to the policy objective of providing users with a range of seven different – i.e. unconnected – MROs to choose from”.

Further, “a significant number of small MROs – where each MRO is a separate corporate entity – are sharing a number of centralised services and resources as part of a collective entity”.

The MoJ said: “The system was neither designed nor intended to permit these types of behaviours or business models. The government is fully supportive of MedCo, and is clear that it has – through the application of the qualifying criteria, its user agreements and ethics policy – the requisite tools to address the current issues arising.

“Additional actions arising from the analysis of the responses to this review may also be undertaken by MoJ to strengthen the framework within which MedCo operates.”

The review will also consider the qualifying criteria for MROs, including the definition and scope of the ‘national coverage’ required to become a tier 1 provider, on the basis that “the government is committed to minimising – where possible – the impact on the market from the whiplash reform programme whilst also seeking to deliver the key public policy objectives”.

The call for evidence also seeks any other views on reform. Interested parties have until 4 September to respond.

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Crosse: Useful consultation period

Civil Procedure Rules Committee last week gave its ‘in principle’ approval to the disclosure working group’s proposals being piloted next year, it has emerged.

The pilot will operate from 1 January 2019 in the Business and Property Courts – London, Birmingham, Bristol, Cardiff, Leeds, Liverpool, Newcastle and Manchester – and last for two years.

According to Simmons & Simmons partner Ed Crosse, the former president of the London Solicitors Litigation Association who has worked on the reforms, final approval of the rules will be sought at the next committee meeting next month.

He said the proposals, first published in November 2017, “have been significantly improved as a result of the feedback” received during the three-month consultation that followed, which comprised written responses and 26 roadshow meetings and discussions around the country.

The consultation led to the start-date being moved to 2019 – the original plan had been as soon as practicably possible – to allow the courts, profession and clients time to prepare.

Professor Rachael Mulheron of the Queen Mary University of London will lead a project to monitor the new rule during the pilot.

The working group’s report concluded that not only has the standard disclosure test introduced in the CPR not reduced either the volume or cost of disclosure, but also the volume of data that might disclosed has reached “unmanageable proportions” in many cases.

In any case, the existing rule was “conceptually based on paper disclosure and is not fit for purpose when dealing with electronic data”.

Under the pilot, the “fundamental yardstick for the parties and the court, throughout, should be what is appropriate in order fairly to resolve the issues in the case”, the working party said.

It recommended that what has been termed ‘standard disclosure’ should disappear in its current form; “its replacement should not be ordered in every case and will not be regarded as the default form of disclosure”.

The duties of the parties, and of their lawyers, in relation to disclosure would be expressly set out. These would include a duty to cooperate with each other and assist the court over disclosure, and to disclose known adverse documents, irrespective of whether an order to do so is made.

There would be ‘basic disclosure’ of key/limited documents relied on by the disclosing party and necessary for other parties to understand the case they have to meet, to be given with statements of case. A search should not be required for basic disclosure, although one may be undertaken.

The working party said that, for some cases, basic disclosure may obviate the need for any further disclosure.

There have been criticisms of the reforms, with the Law Society warning that they could lead to miscarriages of justice, and a barrister highlighting the problems they could cause in professional negligence claims.

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Stock Exchange: COLG share price has fallen

“Continued losses” at third-party funder Therium Capital as it waits for cases to conclude are set to contribute to increasing losses at its parent company, investors were warned yesterday.

But they were also told that demand is strong and there are good longer-term prospects for the funder.

In an interim management statement to the Stock Exchange, City of London Group plc (COLG) said that the outlook for Therium’s portfolio of cases is “encouraging”, but it was encountering “significant delays in case resolutions” – and therefore in receiving its “performance fees”.

COLG is a financial services group focused on providing merchant banking services to finance the SME and professional services sectors.

The lack of major case resolutions before the company’s year-end on 31 March was one of the reasons that COLG’s loss in the second half of the year was likely to exceed the £1.3m recorded in the first half, it said. The share price has fallen by nearly two-thirds over the past year, and closed yesterday at 27.5p.

But the statement emphasised that “Therium has continued to see strong demand for case funding and consequently has been easily able to allocate capital for the funds raised in 2013”.

As previously reported, Therium is in talks to establish an international joint venture to fund commercial litigation cases, and the statement said that “concluding this venture has taken longer than initially expected”. Further, Therium is in “active discussions” with two groups of investors to establish its next two litigation funds.

Therium is 50% owner of Novitas Loans, a specialist legal market lender. The statement said: “[Novitas] continues to expand profitably and has been successful in attracting new forms of finance and launching new lending products to law firms and their clients. The loan book continues to grow significantly.”

Last autumn, Novitas began working with Just Costs Solicitors on its cash advance scheme, which enables law firms to draw down on up to 70% of their likely recoverable costs once they have successfully settled personal injury, clinical negligence and industrial disease cases. It lent over £1m in the scheme’s first three months.

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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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Tony Dyas

Dyas: ups and downs

Posted by Tony Dyas, senior business developer at Litigation Futures Associate Allianz Legal Protection

Where does after-the-event (ATE) insurance go from here? If you asked most providers that question in 2013 in the lead-up to LASPO, then you could be forgiven for thinking that there wouldn’t be an ATE market in 2017.

If you asked ATE providers now, most would at best be cautiously optimistic about the future.

At ALP we were quick to recognise what LASPO would mean for our customers, and whilst this was the biggest change ATE market has ever seen, the future still looks rosy – if a little different.

So what is the key to making ATE successful? For us it’s simple – stop looking back and start listening to your customers. We are not going to have recoverable premiums for personal injury ever again and it’s a strong possibility that recoverability won’t be here for clinical negligence in a year’s time.

The reality of the ATE world is;

  • There is a move towards fixed costs, starting with clinical negligence and spreading to all types of litigation.
  • The costs for ATE insurers to insure are reducing. Apart from court fees, there appears to be a continuing downward pressure on disbursement costs as the cost of accessing justice reduces (some would say when accessing justice becomes harder).
  • Solicitors’ practices are consolidating; some firms will cease trading and others will get bigger.
  • If the small claims court limit increases as proposed by the government, there could be some cases where ATE is no longer appropriate.

So let’s look at the positives from these changes:

Fixed costs. This is an opportunity for ATE providers to develop new and innovative products. Markets change is not always a bad thing, so innovation is key to deliver for our solicitors and policyholders.

Reducing disbursement costs. This has to be good for our policyholders. At the moment, the costs we see vary hugely from firm to firm for providing the same service. The changes give us more certainty by gaining more control over costs. So there will be less premium but more certainty. Ask any reputable underwriter which they would prefer to have.

Consolidation. In my experience, this means that solicitor firms are becoming more expert. By more expert, I mean better at developing customer propositions, better at managing costs and more demanding of their ATE provider.

If they are more demanding, it means we have to up our game and provide better products. But those better products will have a longer shelf life as they are built around customer need.

The small claims court limit. OK, so no one has worked out the answer to this one yet. But my money is on an innovative law firm knocking at our door in the next few months with an idea that none of us have thought of.

So is there a downside to this? Yes – let’s face it, with change there will be some losers.

Will ATE be there for any type of dispute? Probably not. Let’s look at noise-induced hearing loss. A combination of increasing costs, low settlement values and having to issue proceedings on all cases means that it is almost impossible at the moment to have a proportionate ATE premium to support claimants.

This can’t be a good thing for claimants, but with a changing market comes innovation and the potential for new emerging models. So you can never say never.

Premiums will be lower. So there is less premium for the ATE provider for each policy. That’s inevitable, but against that there is less risk to manage. For ALP it’s how we diversify into new and emerging ATE markets whilst maintaining our leading position in personal injury and clinical negligence.

So what is the future? The simple answer is that we need to be better at what we do. It is also about working with the right solicitors who also have a compelling vision of the future.

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Vernon: Encouraging growth in willingness to resolve claims without going to court

Claimant legal costs paid the NHS fell by £32m last year as the LASPO reforms finally start to show their impact, and formal litigation has been reduced to the lowest recorded level, NHS Resolution said today.

But its annual report said last year’s revision to the discount rate meant that, despite the numbers of new clinical negligence claims plateauing, the cost of claims rose sharply.

Figures for the past year show that the NHS paid out £1.63bn in damages to claimants in the year to 31 March 2018, an increase from £1.08bn in 2016/17. Nearly three-quarters of the increase (£404m) was due to the discount rate change.

The number of new clinical negligence claims reported in 2017/18 was 10,673, just 13 fewer than the year before.

Claimant legal costs fell 6.4% to £467m, while defence legal costs increased 2.5% to £128m. In her introduction to the report, NHS Resolution chief executive Helen Vernon said the costs reforms brought in by LASPO in 2013 “are starting to impact a greater cohort of settled cases”.

“In addition, our sustained efforts to challenge claimant legal costs, where we believe them to be unjustified, led to some landmark decisions this year which will generate multimillion pound savings for the NHS.

“The reduction in claimant legal costs is a welcome development after years of inflation in this area.”

The report explained how NHS Resolution’s legal costs panel, set up in 2015, has helped to manage expenditure on claimant legal costs: “A single panel firm resolved 5,151 cases for us in the financial year 2017/18. The aggregate amount claimed for claimant legal costs was £430.8m and after negotiation the sum of £300.2m was paid.”

There were 16,338 claims concluded in 2017/18. Some 69.6% of them were resolved without formal court proceedings – the highest level to date – and in 44% of them, there was a damages payment.

By contrast, four in five of the 29.7% of cases that settled after proceedings were issued led to a damages payment.

Just 124 cases went to trial, with the claimant receiving damages in 35% of them.

NHS Resolution set a modest target of successfully mediating at least 50 cases through its claims mediation service over the year but ended up completing a record 189.

Ms Vernon said the new early notification scheme for cases of brain injury at birth has “transformed” its approach to such cases “and will provide a test-bed for the government’s proposals in relation to Rapid Resolution and Redress”.

She explained: “We now hear about these incidents from the outset (rather than five to six years later, as had been our experience). For the first time, we have been able to admit liability and provide much-needed financial support to families when it can make a difference, within months of the birth.”

More generally, she said: “The growing interest both from our NHS members and those who act for injured patients in working together to resolve claims for compensation without going to court has been very encouraging and we hope to build on this so that mediation is no longer seen as novel in healthcare.”

But Ms Vernon said that, with the cost of clinical negligence at an “all-time high” – the total provision for all of NHS Resolution’s indemnity schemes was up £12bn to £77bn – there was “a renewed urgency to efforts across government to tackle the drivers of that cost”.

Brett Dixon, president of the Association of Personal Injury Lawyers, said: “NHS Resolution is complaining about the discount applied to large compensation payments.

“That makes very bleak reading because now, finally, injured people are getting what they need. The NHS has been undercompensating for its negligence for many years. It is now simply paying what it always should have.”

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Arden LJ: judges cannot “put some factors on one side”

Courts must consider “all the circumstances” before deciding whether it would be unjust to impose costs penalties on claimants who fail to beat offers made under part 36, appeal judges have ruled.

Lady Justice Arden said judges could not “put some factors on one side”, particularly circumstances “so obvious” as those relating to the defendant’s offer.

She went on: “Suppose that a person to whom a Part 36 offer had been made had asked for clarification or more relevant information and been refused it, or the answer misrepresented the position.

“If that information was material and might reasonably have altered his view on whether to accept the offer, and was information within the offeror’s organisation, the court might well find that it would be unjust to order that the normal consequences should follow from non-acceptance.”

Arden LJ said she accepted that the purpose of part 36 was to provide an incentive for parties to make offers and settle cases, but said a “subsidiary purpose must be to prevent injustice from the normal consequences as a result of non-acceptance of a Part 36 offer”.

She was ruling a challenge by MGN (Mirror Group Newspapers) to a costs ruling by Mr Justice Mann, who decided to make no order for costs following a phone-hacking trial involving Alan Yentob, former creative director of the BBC.

Mann J held that, despite obtaining a judgment which found that MGN’s wrongdoing was “far more extensive” than it had admitted, Mr Yentob had not beaten MGN’s offer by obtaining a damages award of £85,000.

Delivering judgment in Yentob v MGN [2015] EWCA Civ 1292, Arden LJ said the trial judge “applied the right test” and the factors he took into account were “circumstances to which he was bound to have regard”.

Mann J held that, under CPR 36.17(5), the relevant circumstances could include a comparison between the terms of the offer and the terms of the judgment, and there might be cases where a party was justified in continuing to trial even though he had received a favourable offer.

Arden LJ said Mr Yentob’s counsel, Simon Browne QC, directed his submissions to the question of discretion.

“He emphasises the procedural history and submits that Mr Yentob was justified in pursuing his claim. For example, MGN had admitted that hacking took place over a two and a half year period as opposed to the period of seven years found by the judge.

“Moreover it only emerged during the trial, from, we are told, the judge’s own questions to a former employee of MGN, Mr Evans (the claimants’ witness), that vital documents, such as private investigator faxes and journalists’ notebooks, had been destroyed.

“Only then did it become clear that Mr Yentob would not be able to have a clear statement of the extent of the hacking he had suffered or obtain an order for post-trial disclosure.”

Agreeing with Mr Browne that Mann J was entitled to look at all the circumstances, including those “pertaining to the offer”, Arden LJ granted permission to appeal, but dismissed MGN’s appeal.

Lady Justice Rafferty and Lord Justice Kitchin agreed.

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Lord Briggs: Transparency will have to be improved

Commercial courts may have to use their new right to determine issues of market importance by declaration if Brexit leads to a boom in arbitration, Lord Briggs has warned.

While agreeing with Lord Neuberger that Brexit would “if anything” make English commercial law “more attractive as the chosen law”, Lord Briggs made no attempt to hide concerns over the enforceability of judgments.

The Supreme Court justice said that if Brexit or “other moves away from sharing jurisdiction” led to private arbitration and ADR taking over from public courts as the main means for resolving cross-border commercial disputes, “ways will need to be found to remedy the deficit in transparency” that resulted.

“This may perhaps include the newly created – but as yet unused – jurisdiction in the Business and Property Courts to determine by declaration legal issues of strategic market importance without there being an underlying dispute.

“It may call for a freeing up of routes of appeal from arbitrators on questions of law of general public importance, or some relaxation of privacy which might, for example, permit the publication of anonymised awards.”

On enforceability, Lord Briggs said the “available choices” appeared to be a Danish-style solution, by which the UK would voluntarily join the Brussels Regulation regime, a Lugano-type solution or a “reversion to common law rules, only slightly fortified” by rejoining the Hague Convention.

In a speech entitled Dispute resolution in uncertain times, delivered at the PRIME finance conference at the Hague, he said: “The current thinking of the UK government, which largely concurs with the view of the House of Lords EU committee, favours a Brussels-type regime in principle.

“But its implementation faces the formidable obstacle constituted by the probable demand of the EU 27 that the CJEU retain its suzerainty, while at the same time deprived of UK involvement, either in the form of members of the court (including advocates general) or the locus standi of the UK government to make submissions, which it has traditionally done with great vigour.

“That is what Denmark and (to a lesser extent) the non-EU members of the Lugano convention have signed up to.

“The current form of the Lugano Convention critically lacks the benefit of improved recognition of party choice of jurisdiction now to be found in the recast Brussels Regulation.

“An attempt to join either of those regimes will require the other members’ consent to the terms. Meanwhile, a reversion to the common law rules, coupled with the loss of EU wide reciprocal enforcement of judgments, has been described by commentators as a recipe for confusion, expense and uncertainty.”

Lord Briggs said almost 40 years of involvement in financial dispute resolution in court, through arbitration and ADR, had “quietly imbued me with the settled perception that, in this field, there was an unstoppable move towards what I will loosely call globalism”.

However, he doubted whether in 2018 most people “would still take the further onward march of globalisation in dispute resolution as a given, in quite the same way as we may have done in the past”.

Along with Brexit, Lord Briggs mentioned the “advance in several countries” of “what may be described as an ‘us first’ approach to national engagement with global problems”.

He said this was called ‘America First’ in the USA, and manifested itself in its decision to withdraw from international trade, environmental and diplomatic agreements.

“These changes may not impact directly upon dispute resolution, but they may herald a worldwide retreat from an earlier ambition to find global solutions to global problems, with adverse consequences for the continuation of the current view that a global approach to dispute resolution is a Good Thing which can safely be taken for granted.”

Lord Briggs said the UK’s membership of the EU had been seen as the “essential glue attaching the mainly civil law jurisdictions of the other member states to the common law world, including for this purpose the USA”.

He said the common law had in some respects benefited from its “enforced exposure” to European jurisprudence.

He added: “I have no reason to think that European jurisprudence will not continue to play an important part in the further development of the common law, as it has always done.”

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Ministry of Justice

MoJ: transcripts have breached reporting restrictions

The Ministry of Justice (MoJ) has “escalated dramatically” the timetable for introducing a new transcription service and said it wants new contracts to be in place by January 2016, it has emerged.

In an informal discussion paper for the June meeting of the Civil Procedure Rule Committee (CPRC), the MoJ said it was currently looking with HM Courts and Tribunals Service into procurement of the new contracts to provide transcription services.

At same time, the ministry said it was carrying out its own “policy review” into issues relating to the ownership and publication of court judgments, as at present there is no “official concept or definition of what constitutes a transcript that has been approved for publication and/or use on appeal”.

The MoJ said it understood that there had been incidents when “content of a transcript or judgment have been published in breach of a reporting restriction” and asked the committee if this was a rare or frequent occurrence.

The ministry said it would be interested to know how widespread was the practice, particularly in complex and high-value High Court cases, of the courts using a non-panel transcription provider.

Further questions for the CPRC concerned members’ experience of court transcriber Merrill Legal Solutions – which publishes a “large selection” of judgments – and views on the efficiency of free judgments website BAILII.

The ministry added that to meet the January 2016 deadline, secondary legislation would need to be passed by December this year.

According to minutes of last month’s CPRC meeting, members complained of delays in receiving transcripts of judgments, which had a “knock-on effect on the timing of the hearing of appeals”. One member mentioned that some law firms employed their own transcriber to avoid delays.

“The two methods of recording judgements – tape recording and digital – lead to inconsistencies in the quality of recording and consequently the transcription,” the committee heard.

“It was reported that the process and responsibility for making sure the recording equipment was running varied between courts. This could lead to cases not being recorded, particularly where deputy district judges are sitting or where the judge is sitting in an unfamiliar court.”

Judges also complained of the difficulties of being asked to check transcripts to tight deadlines from a judgment given “some time previously”, particularly when no case file was available.

“They reported that quotations are unchecked and that sections are marked ‘inaudible’, general inaccuracies also hampered the checking the judgment. As a result it is a much more time-consuming job than if the judgment had been prepared and checked straight away. It is an inefficient use of judicial resources.”

The CPRC also noted the imbalance in the costs of judgments, with some available free from BAILLI, while parties in the lower courts had to pay a transcription fee.

One committee member suggested that an “off-shore supplier” should be brought in to cut costs and increase speed.

Mr Justice Coulson told the committee he did not believe his comments had fed into the last MoJ procurement exercise and he “felt the current contract did not favour the court”.

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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.”

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Bogart: “strong demand driving dramatic growth”

The UK is well ahead of the USA in the litigation finance, a survey of law firms and in-house lawyers has found, with 41% of UK respondents having used, compared to only 32% in the US and 40% in Australia.

UK lawyers and companies were also the most likely to say they had increased their use of litigation finance over the last two years – 70% in the UK, compared to 52% in the USA and 48% in Australia.

A total of 180 lawyers, mainly at larger law firms, together with 151 corporate counsel and finance professionals in the three countries took part in the poll commissioned by Burford Capital.

The company did caution that some of the figures appeared out of kilter with reality, however.

“Some respondents may reflect the well-known research phenomenon of social desirability bias, insofar as they perceive litigation finance as cutting-edge and may therefore have overstated their experience,” it said.

“We offer this caveat given the incongruence between some survey results and external data around capital flows and market size. Nonetheless, we are confident that as a whole, the research provides ample evidence of the ongoing growth and increased relevance of litigation finance to the business of law.”

The most critical business challenges for companies using litigation finance in the UK were managing legal risk and uncertainty, the need to find new ways of financing litigation and other legal costs, and the need for external counsel to show innovation (88%).

Other important reasons were ongoing legal expenses lowering financial results and increased pressure on legal budgets, staff and spending.

For law firms, there were multiple motivations, in particular the pressure to be more competitive in bringing in new business, and increased client pressure on legal budgets, staffing and spending.

The UK had the lowest proportion of respondents saying their organisation had been forced to “forgo claims” because of the impact of legal expenses – only 17%.

The main obstacles to the use of litigation funding identified in the UK were perceived cost, concerns about control of litigation and the time required to obtain litigation finance.

Litigation finance was mainly used in the UK for single-case funding (86%), followed by expense funding (58%). However, use of portfolio funding was significant at 28%, with 16% using finance for judgment enforcement and asset recovery.

In terms of size of investment, the average sought by companies in all three countries was $3.4m, and by law firms $2.8m.

The most important perceived benefits of litigation finance were pursuing claims that brought value to the business, bringing or sustaining proceedings regardless of the organisation’s cash position and preserving capital to pursue other opportunities.

Christopher Bogart, Burford’s CEO, commented: “Burford’s latest research affirms our own experience: More and more often, clients and law firms are turning to litigation finance as a solution to some of the intractable challenges and pressures of managing legal cost and risk, and that strong demand is driving dramatic growth.”

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Houses of Parliament

Grayling denied “banging head against wall”

Andy Slaughter, the shadow justice minister, has promised that if Labour wins the general election in May it will “restore judicial review to its rightful place in the constitution and as an effective weapon against bad governance”.

His promise came as the judicial review curbs contained in the Criminal Justice and Courts Bill comfortably passed a further ‘ping pong’ debate in the Commons last night, after what Mr Slaughter described as two “nugatory” government concessions.

Justice secretary Chris Grayling mocked Mr Slaughter’s promise: “It was interesting to hear the shadow minister say that if, heaven help this country, Labour finds itself in government in May, it would restore judicial review to its current position.

“I did not hear him commit to introducing primary legislation to reverse our measure.

“I would wager the usual fiver that, in the unhappy event of the Labour party being in government again, it will not seek to reverse our reforms.”

Introducing two amendments, Mr Grayling said the government proposed to put a limit on the level of contributions to judicial reviews which would trigger the requirement to identify those involved.

The justice secretary said the government had committed to a consultation on where the threshold should be set, and would approach the issue “with a suggested figure of £1,500 in mind”. It would also consider a further test of 5% of all funds.

Mr Grayling said the government had also agreed that judges could allow a judicial review to continue, even though it was “highly likely” that the outcome would not have been substantially different for the claimant without the disputed decision, on the basis of “exceptional public interest”.

The minister had earlier apologised to the House for “mixing up my highly likelies and my exceptional circumstances”.

Former Attorney General Dominic Grieve said he remained “unpersuaded” that the government’s ‘exceptional public interest’ amendment would not “excessively fetter judicial discretion”. As a result he could not support it.

Former solicitor general and Conservative MP Edward Garnier asked the government to “have another think” on the issue and accused Mr Grayling of “banging of his head against the wall”.

The justice secretary replied: “I do not accept that I am banging my head against the wall. I think we have struck a sensible balance.

“We have seen important development projects delayed by judicial reviews brought on technicalities. It is important that judicial review not be used as a tool for delay, rather than a genuine way of holding public bodies to account.”

The government amendments were passed by comfortable majorities of 300 to 232 and 301 to 227.

The bill will now return to the House of Lords, but since this is the second time during the ‘ping pong’ stage that the Commons has overturned amendments made by peers intended to restore judicial discretion, the upper house may be reluctant to try again.



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Proportionality: Not just a calculation of costs to damages

Proportionality involves more than simply comparing budgets with the size of the damages claimed, a High Court judge has made clear in deciding that costs management should be applied in a case worth £350m.

Ruling in the group litigation brought by thousands of investors against former directors of Lloyds Bank over its takeover of HBOS in 2008, Mr Justice Nugee said the defendants’ costs budgets, at £24m, amounted to only about 7% of the claim.

The defendants said that this meant proportionality did not need to be considered, but the judge disagreed.

He said this was only one test of proportionality and judges should look beyond “the overall cost of the proceedings compared to the overall amounts at stake and the complexity of the issues and the like [to] whether the proposed spending of money of that level is proportionate to the work that was involved”.

Nugee J went on: “So I am not satisfied that it is simply an answer to the proportionality challenges to say that the overall budget is not out of line with the amounts at stake”.

He said the application by the claimants for a costs management order (CMO) should not be determined on a “narrow textual construction” of CPR 3.15(2), but on whether litigation could be “conducted justly” and in accordance with the overriding objective, without an order being made.

In Sharp v Blank and others [2017] EWHC 141 (Ch) – a decision from January that has only just been published – Nugee J had previously ordered the production of budgets but not costs management.

He said it became “quite difficult” to distinguish reasonableness from proportionality, but he accepted that something could be reasonable, without being proportionate.

He said the claimants’ application should be determined on “whether the making of a costs management order would be something that is likely overall to save expense and thereby enable the court to deal with the case more justly and more in accordance with the overriding objective or whether it would really be a waste of money and not achieve anything that was worth the money that had to be spent on it”.

Nugee J said both parties agreed that the risk of the claimants having to pay the costs of the defendants, which “may well come in” at more than the £14.75m covered by the claimants’ after-the-event insurance, should be dealt with.

Otherwise, the individual claimants were exposed to the risk of having to contribute to the uninsured costs, while the defendants would be left with having to collect what could be relatively small sums from a very large number of individual claimants, given the terms of the group litigation order said they were not jointly liable for costs but only severally liable proportionate to their shareholdings.

Nugee J said the “real question” he had to grapple with was whether the claimants’ desire “to bring more certainty to the quantification of that risk” outweighed the inevitable cost of making a CMO, which could be around £250,000.

“I accept that that is a real and substantial cost… which would be avoided if the costs management order was not made.”

But Nugee J said a CMO could bring “much greater clarity” to the exposure the claimants faced, with a current costs budget of £24m, of which £14.9m was still to be incurred.

The judge acceded to the claimant’s application and directed that a costs management process should be undertaken by the Chief Master.

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Dismore: government does not understand how people think

Almost three million people have used ‘no win, no fee’ agreements in the past five years but the government’s proposed reforms of the system will mean they are no longer an option for many people, major research released today has claimed.

Commissioned by the Access to Justice Action Group (AJAG) and the Association of Personal Injury Lawyers (APIL), the research found that half of those who had used conditional fee agreements (CFAs) earn less than £25,000 a year, below the national average wage, and would not be able to fund their claims any other way.

Women would be hit hardest, with the survey finding that the average female CFA claimant earned just over £19,000.

With the government set to publish legislation next month to implement the Jackson reforms, the research marks an escalation in efforts to build opposition to them among MPs.

Earlier this month ICD Research spoke to 15,441 people, of whom almost a quarter had made a legal claim in the past five years, and 7% (1,033) had done so using a CFA. Extrapolated across the population, this means nearly three million claims in that time.

The vast majority of the CFA cases were personal injury claims, half of them leading to payouts of under £5,000. Campaigners argue that once various deductions are made from damages under the planned changes, many cases will no longer be economic to run.

APIL chief executive Denise Kitchener said the government’s CFA reforms will mean “a huge number of people will lose their right to the compensation to which they are entitled, and which they need and deserve, as they will not be able to afford the legal help they need to bring a claim”.

AJAG co-ordinator Andrew Dismore added: “The government’s plans are Draconian and will end access to justice for the less well-off. The system we have now works well and has huge satisfaction rates from those who use it.”

He told Legal Futures that neither Lord Justice Jackson nor the Ministry of Justice understood that people would be put off from bringing a claim if they had to put any money up front – such as for disbursements – or if there was a risk of having to pay anything to the other side.

A separate poll commissioned by AJAG earlier this year found that 77% of people would not bring a claim if they were at risk of paying a defendant’s costs.

Though the Ministry of Justice plans to introduce qualified one-way costs shifting, so that normally a personal injury claimant will not be at risk of paying the successful defendant’s costs, it is considering whether there should nonetheless be a minimum payment in order to prevent speculative claims.

ICD said that a third of people found their solicitor through advertising/the Internet, while 31% used a personal recommendation (including trade union referrals). Some 16% went to their existing solicitor and 14% were referred by their insurer.

Nearly a quarter (23%) of cases went to court, while 67% settled pre-issue. Four out of five respondents were satisfied with the ‘no win no fee’ outcome and process, and a similar number were satisfied with the amount of settlement.

Almost a third of those who lost their case were still satisfied with their solicitor’s advice and performance.

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Stark: demoralised group of people

Claimant personal injury lawyers have painted a grim picture of what life will be like after the Jackson reforms, with less work, redundancies and firms looking to move away from this type of work.
Nobis Jackets Men

A snapshot survey conducted by the Association of Costs Lawyers also found strong opposition to government plans to extend the RTA claims process to higher-value and other PI cases.

Some 78% of the 50 respondents predicted that they would have less work after part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 comes into force next April, with 84% believing it will reduce their profitability too – most (90%) expect competition to drive down success fees once they are no longer recoverable from the losing side. More than two-thirds (70%) think the reforms will make their firms less willing to take on riskier cases.

There was uncertainty about who would pay for after-the-event insurance if it is needed – 28% said the client, 24% the solicitor and 38% reckoned it would be a mixture of the two.

Some 62% of firms expect to make staff redundant as a direct consequence of the Jackson reforms, while 28% did not know at this time – only 10% said for sure that they would not. Nearly six in ten firms (58%) are now looking to move away from personal injury and diversify into other areas of law.

On the RTA claims process, the majority (72%) said that it falls short in some areas (22% said it delivers what it is supposed to). Asked what improvements or changes they would like to see, 32% wanted it easier to use, 22% higher fixed costs, and 16% for fewer cases to fall out – the majority of respondents (54%) said that between a quarter and a half of cases they deal with fall out of the process, which is consistent with other findings.

Four in five solicitors opposed both vertical and horizontal extension of the process, citing the increased complexity of such cases as the main reason and the fact that one size cannot fit all; the lack of an insurer database was also highlighted in relation to employer’s liability claims specifically.

A third of respondents said they were likely to move to contingency fees/damages-based agreements for non-portal cases once allowed under the Act.

Iain Stark, chairman of the Association of Costs Lawyers, said: “It is easy for the public and policymakers to be indifferent to the impact of the Jackson reforms on claimant lawyers, but the responses to our survey indicate a demoralised group of people who will not be able to hold open the door so that injured people can access justice.

“It is often said that, like water, lawyers will find a way to continue, but at what cost? As one respondent said: ‘Lower fees means less-qualified fee-earners representing clients and less compensation recovered. The actual cost of providing the professional Rolls Royce standard service which clients expect will be out of proportion to the Mini costs recoverable.’”

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High Court: part 36 hurdle

A case in which £7m in legal costs were racked up over a dispute worth £904,000 is “an appalling state of affairs which brings no credit to modern commercial litigation”, a High Court judge declared yesterday.

Mr Justice Eder’s ruling also highlighted the “formidable obstacle” that a party has to climb to upset the usual consequences of failing to beat a part 36 offer.

He said the costs in Ted Baker Plc & Anor v AXA Insurance UK Plc & Ors [2014] EWHC 4178 (Comm) had “spiralled both in absolute terms and out of all proportion to the amount which was then in dispute”.

The trial had been in two parts, with part 1 establishing the defendants’ potential liability but part 2 then rejecting the claimants’ case. This ruling dealt mainly with the cost consequences of a series of part 36 offers made by the defendants and whether the fact that the claimants were successful in part 1 and on some elements of part 2 should change the usual order that would be made.

Adopting the observations of Briggs J in Smith v Trafford Housing Trust [2012] EWHC 3320, Eder J said that “where a claimant fails to beat a defendant’s part 36 offer, the court is, in effect, required to make the order specified with regard to costs and interest unless it considers it unjust to do so; and although there is no limit to the types of circumstances which may, in a particular case, make it unjust that the ordinary consequences set out in part 36.14 should follow, the burden of showing such injustice is a ‘formidable obstacle’”.

He continued: “It follows that the real question, in my view, is whether the claimants can show any relevant ‘injustice’ so as to displace the general rule, bearing fully in mind that the burden of doing so is a ‘formidable obstacle’.

“In this context and without seeking to lay down any hard and fast rules, it seems to me that where a claimant fails to ‘beat’ a part 36 offer made by a defendant, the mere fact that such defendant may fail on certain issues would not necessarily of itself make it ‘unjust’ to displace the general rule under part 36 and to require the claimant to pay the costs from the date on which the relevant period expired and interest on such costs under part 36.14(2).

“However, on the other hand… it seems to me that the fact that a defendant may make a part 36 offer does not give such defendant carte blanche to run any defence whatsoever so as to entitle such defendant necessarily to expect that the CPR part 36 consequences will automatically to apply to those issues on which such defendant lost.”

In this case he decided that it was unjust within the meaning of part 36 to require the claimants to pay the entirety of the costs of part 1. The central issue in part 1 concerned the proper construction of the successive insurance policies which could and should have been dealt with during a short trial of perhaps one or two days.

“Instead, the defendants pursued an approach which… left ‘no stone unturned’ and seemed to ignore all sense of proportionality.” As a result, the trial took an “inordinate” seven days.

Eder J ruled that the defendants should be entitled to only 25% of their costs of part 1. But the claimants did not overcome the “formidable obstacle” to reduce their liability in relation to part 2 of the case.

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Radford: Film dispute

The Court of Appeal has upheld a decision that a leading media law firm could not recover hundreds of thousands of pounds in costs because its conditional fee agreement (CFA) did not cover much of the work it undertook.

Giving the unanimous ruling of the Court of Appeal in Radford & Anor v Frade & Ors [2018] EWCA Civ 119, Lord Justice McCombe said he rejected the appeal “not without regret”.

London firm Taylor Hampton (TH) was acting for individual and corporate defendants in an action brought by Oscar-nominated film director Michael Radford over a project to make a Spanish film called La Mula.

Mr Radford was retained to direct the film but in time the parties fell out and the director left the shoot and was replaced.

In July 2010, Mr Radford and the partnership through which he traded started legal action and obtained injunctions, which included prohibiting the defendants from using or publishing film footage he had shot without his authority.

Taylor Hampton and Augustus Ullstein QC were instructed under CFAs to set aside the injunctions and also dispute the jurisdiction of the English court and service of the proceedings.

According to Mr Justice Warby’s ruling in the High Court: “The initial objective was substantially achieved by a consent order made by Tugendhat J on 23 May 2012… By this point the substantive proceedings against the individual defendants were over. But they continued against the corporate defendants.”

Though the case continued for another 26 months, when TH successfully applied for summary judgment, Master Haworth at first instance ruled that the work done after May 2012 was outside the scope of the CFA, which was meant to cover only procedural issues such as service and jurisdiction.

An implied agreement to pay after that period was a CFA, and “TH failed to take the precaution of ensuring that this CFA was reduced to writing”, he said.

TH had submitted a bill in the sum of £805,500, most of which Warby J said related to that post May 2012 period.

As the clients were not liable for the fees of either solicitors or counsel, the indemnity principle meant they were not recoverable from the claimants.

Master Haworth had also ruled that the defendants could not recover any fees for work done by counsel after 23 May 2012, because his CFA was made with TH, and the clients had no liability to pay TH.

He further found that, in any event, no fees could be recovered for work done by counsel in respect of the corporate defendants, who were not identified as counsel’s clients in his CFA with TH. There was an attempt to address this second problem with a deed of rectification in July 2015 during the assessment proceedings.

His ruling was upheld by Mr Justice Warby, and in agreeing with them, McCombe LJ said he found it “impossible” to accept TH’s argument that the initial conventional retainer continued after the CFA was signed so as to pick up such items of work by the solicitors as were not covered by the CFA.

“In my judgment, it only makes sense that the solicitors and clients understood that the CFA superseded the original conventional retainer which had been entered into in circumstances of urgency and before the viability of a CFA could be assessed.”

He found that TH’s conduct indicated that it was “carrying on as usual” after 23 May 2012 and nothing had changed. “The misfortune was that the continuing willingness to work on a conditional basis only was not fully recorded in writing.”

In relation to counsel, McCombe LJ held that “the making of the retrospective variation of counsel’s CFA, after the making of the costs order in favour of the appellants, cannot be effective to increase the liability of the respondents as paying parties under that order”.

Taylor Hampton partner Daniel Taylor said: “While we are obviously disappointed by the judgment, it is clear that this was a very finely balanced decision.

“Unfortunately on this occasion the judges ruled, to quote the judgement ‘not without  regret’, to dismiss our appeal.”

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Bogart: Commitment to Burford has only intensified

The founders of the world’s largest litigation funder, Buford Capital, each became nearly £60m richer this week after selling some of their shares for the first time since launching the company in 2009.

Chief executive Christopher Bogart and chief investment officer Jonathan Molot sold a third of their holdings – respectively 4.4m and 4.3m shares at a price of £13.50.

These shares represent around 4.2% of the company’s total issued share capital.

Burford’s share price has spiked recently on the back of positive financial news; a year ago, the shares were trading at £8.

Mr Bogart said: “Jon and I have not sold a single share of stock in the more than eight years we have been running Burford, and it is with some reluctance that we sold some now given our enthusiasm for the future of the business.

“However, given that we preach the benefit of a diversified portfolio strategy for Burford, it seemed imprudent for us not to create some liquidity after all this time, although we are continuing to hold a considerable majority of our stock even after this sale.”

“Our commitment to Burford has only intensified: we have entered into new employment agreements (with significant non-competes) through the end of 2020; we are personally investing significantly in Burford’s investment funds; and we have agreed to a full year lock-up on all our remaining stock.

“We love what we do and intend to keep on doing it.”

Before setting up Buford, Mr Bogart has been executive vice-president and general counsel of US media giant Time Warner, where managed one of the largest legal functions in the world, with more than 350 lawyers.

He was previously at leading US law firm Cravath Swaine & Moore, although he began his professional career as an investment banker with what is now JPMorgan Chase.

Mr Molot was and is a professor of law at Georgetown University Law Centre. He is a former senior US government official and experienced litigator at top New York firm Cleary Gottlieb Steen & Hamilton.

Buford has been much in the news of late, launching an insurance company, selling an unrealised £9m investment for £77m, and issuing spectacular annual results.

It reported income more than doubling to £245m, net profit after tax up 130% to £190m and new investments just last year totalling nearly £1bn.


A golden opportunity for the ATE market to innovate

Enrique Gomez Head of ATE DAS UK Group

With the key judgement in the BNM v MGN case not expected until the end of the year, and decisions in the fixed recoverable costs arena not due until 2019, the after-the-event (ATE) insurance sector – already burdened by ever-changing regulation – is playing something of a waiting game. But this could be a golden opportunity for the ATE sector – the chance to take advantage of what might otherwise be a relative lull in activity period to set in motion a time of self-analysis and transformation, to develop plans for what the future of ATE insurance will look like.

July 16th, 2018