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Bogart: increased activity throughout the business

Burford Capital – the leading third-party funder and after-the-event (ATE) insurer – yesterday unveiled a 25% increase in profits before tax for 2013, after recording significant increases in income on both sides of the business.

The company’s £36m turnover was made up of £23m from funding (up 20%) and £13m from ATE (up 29%). Less operating expenses, profit before tax hit £26m. It has increased dividend payouts by 10%.

Burford is currently invested in 35 matters, with a commitment of £159m, having put in £37m during 2013.

Since its inception in 2009, 25 cases have concluded, generating £88m in gross investment recoveries and £30m net of invested capital – meaning a 52% net return on invested capital.

The company’s annual report said the past year saw “continued acceptance and adoption of litigation finance”.

It continued: “Burford’s annual survey showed sharp increases in lawyers’ views of litigation finance as a useful tool, along with an even more dramatic uptick in the views of corporate CFOs favouring its use. Investors are similarly enthusiastic, with hundreds of millions of dollars in new capital entering the asset class – which is a necessary part of continuing the establishment of litigation finance as a normal, mainstream part of litigation.

“Burford’s returns, high and uncorrelated, have delivered on our initial aspirations and have also served to fuel the overall growth of the market.”

The pre-Jackson ‘bubble’ in the first quarter of 2013 meant Burford wrote ATE with around £180m of exposure, more than the previous two years combined.

While the annual report said it was too soon to make any predictions for the future of ATE, “the significant tail of business written during and before 2013 in this business positions it for several years of sustained profitability while we wait for the market to stabilise”.

Chief executive Christopher Bogart said: “2013 was another year of successful progress for Burford, which saw continued significant growth in our income and profits from both the litigation investment and insurance businesses, and increased activity throughout the business. We are excited to be at the forefront of this rapidly maturing and evolving industry.”




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Spencer: employers will believe they can avoid the law

Government hype about its Bill to protect ‘everyday heroes’ will put vulnerable people at risk, the Association of Personal Injury Lawyers (APIL) has claimed on the eve of its second reading in the House of Commons.

Justice secretary Chris Grayling told Saturday’s Daily Telegraph that the Social Action, Responsibility and Heroism Bill – the so-called SARAH Bill – is “out to try and slay the health and safety culture”.

But APIL insisted that it is “a license for have-a-go heroes to cause needless injury, for volunteers who work with children and elderly people to escape proper vetting, and for rogue bosses to dodge their responsibilities to look after their employees”.

The Bill is just five clauses long and applies when the court, in considering a claim that a person was negligent or in breach of statutory duty, determines the steps the person was required to take to meet the standard of care.

Under the Bill, the judge will need to have regard to whether the negligence or breach occurred when the person: was acting for the benefit of society or any of its members; demonstrated a generally responsible approach towards protecting the safety or other interests of others; or was acting heroically by intervening in an emergency to assist an individual in danger and without regard to their own safety or other interest.

APIL president John Spencer argued that the Bill adds nothing to the current law. “But the real danger is that populist government rhetoric about the Bill will lead people to believe they are impervious to the law if they injure someone through their own recklessness while being ‘heroic’.

“Those responsible for vetting volunteers to work with children will feel they can cut corners in the process, leaving youngsters vulnerable to predatory adults, because the law is said to protect volunteers.

“Employers will believe they can avoid the law if they injure workers, provided they are ‘doing their best’. But what if their best is not good enough?”

Speaking in Parliament last week, shadow leader of the House Angela Eagle said the “pleasing sounding but completely vacuous” Bill just replicated Labour’s 2006 Compensation Act. The government was wasting time with a “PR exercise”, she claimed.

Mr Grayling told the Telegraph: “It is about trying to restore common sense to the kind of situations which happen all too often and very seldom get to court – where somebody has an accident at work, it’s entirely their own fault, they have got a perfectly responsible employer who has the normal health and safety procedures in place but that person does something dumb, hurts themselves and sues the employer anyway.”

Acknowledging it as a “populist piece of legislation”, a briefing last week from Steve Thomas, director of market and public affairs at defendant insurance firm Keoghs, said that once SARAH becomes law, “it will be about correct case selection and using the Act to test the new boundaries with the courts”.

Mr Thomas noted that the 2006 Act, which had similar ambitions and introduced the phrase ‘desirable activity’, had proven a damp squib and rarely been used by defendants to defend or mitigate claims.




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Awards

L to R: Perry Austin-Clarke, editor of Telegraph and Argus, Darren Gower, marketing director at Eclipse Legal Systems and a representative from Hays Recruitment.

Eclipse Legal Systems, the Law Society Endorsed provider of legal software solutions, is delighted to announce its recent win in the ‘job creator of the year’ category at the Telegraph and Argus Bradford Means Business Awards.

The gala awards evening, which took place on Saturday 13 June in Bradford, saw an array of local businesses nominated for the 11 award categories. Hosted by BBC Look North presenter, Charlotte Leeming, the evening was a celebration of the success and achievement of local firms and individuals.

Eclipse Legal Systems, nominated for an award by a recent member of staff, was successful in winning the ‘job creator of the year’ crown, beating the other two major shortlisted contenders; Yorkshire Building Society and Provident Financial – both much larger organisations.

Founded in 1987 Eclipse Legal Systems now employs over 160 staff. After making huge investments in expanding its operating premises, Eclipse maintains an enviable local position in providing great employment opportunities for a broad range of skillsets. A raft of new jobs have been created in recent times – on top of the 40 roles filled in 2013, an additional 30 people were employed by the company last year and a further 10 roles have been filled so far in 2015.

Steve Ough, founder and chief software architect at Eclipse Legal Systems, comments:

“We are absolutely delighted, not only to have won this award, but to be in a position to offer such a range of roles to people in Bradford and the surrounding areas. It’s fantastic to be recognised for our work within the community and we see no end to the requirements for motivated and driven candidates!”




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Leading legal expenses insurer DAS has launched its Loss Assistant Business product and Commercial Legal Protection (CLP) products on Acturis.

The products are fully integrated on the Acturis system and offer significant benefits for the broker, including competitive commission rates.

Loss Assist Business’s key benefits include providing a dedicated loss adjustor to assist businesses in making claims for material damage and business interruption. Cover includes claims related to subsidence, heave and landslip; £100,000 limit of indemnity; a 24-hour claims reporting line and a claims review service; legal advice and flexible underwriting.

Business CLP and Business CLP Plus legal protection cover include as standard: legal defence; property protection; personal injury; tax protection; and legal advice lines. The standard product includes cover for contract disputes up to £5,000, with CLP Plus covering contracts up to and over £5,000. CLP offer £100,000 limit of indemnity with CLP Plus having £250,000. CLP Plus also includes: statutory licence appeals, tenancy disputes and debt recovery.




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MasterCard: charges dispute

MasterCard: charges dispute

One of the first and certainly biggest of the new-style opt-out collective legal actions – backed by third-party funding – is to be brought against MasterCard over ‘illegal’ card charges. Damages could reach £19bn.

Funds affiliated with US-based litigation funder Gerchen Keller Capital will provide up to £40m in backing for the case.

Under the regime established by Consumer Rights Act 2015, all UK consumers who have lost out will automatically become part of the group of claimants unless they explicitly opt out.

According to Quinn Emmanuel, the US law firm bringing the action, MasterCard was found, following a long-running legal battle with the European Commission that ended in 2014, to have infringed EU law by imposing charges (known as ‘interchange’ fees) on the use of MasterCard debit and credit cards.

It said MasterCard had the option to accept that its card fees were set at an anti-competitive, high level and reach a settlement with the European Commission to lower its fees.

In a statement, Quinn Emmanuel continued: “It chose not to do that and instead imposed unlawfully high card fees for nearly 16 years and engaged in a legal battle for nearly 10 years. MasterCard lost this battle at every level and showed complete disregard for its cardholders and consumers at large, focusing instead on generating unlawful profits.

“Consumers were unaware of the level of these fees or that they were illegal. The fees were a significant cost for retailers that was then passed on through increased prices of goods and services. All UK consumers, including cash purchasers – not just MasterCard holders – have lost money as a result.

“Because MasterCard’s fees have already been found to be illegal by the commission, this ‘follow-on’ claim need only prove the damage consumers suffered as a result of MasterCard’s anticompetitive behaviour. Based on expert analysis using publicly available data, the total damage caused to UK consumers may be many billions and as much as £19bn. This will equate to hundreds of pounds in damages for every single UK consumer.”

The claim is being brought as Walter Merricks, a solicitor and one-time senior Law Society official who went on to be Chief Financial Services Ombudsman, as the class representative.

He said: “My aim is to get the redress to which UK consumers are entitled and to ensure that MasterCard cannot hold on to the illegal profits it made. This case should send a signal to companies that break competition laws at the expense of UK consumers that they do so at their financial peril.”

Boris Bronfentrinker, the lead partner at Quinn Emanuel and the head of its EU and competition litigation practice in the UK, said: “This is precisely the type of claim for which the new collective action regime was established. This is a landmark case where unlawful anti-competitive conduct has harmed UK consumers. That harm, likely to be in the hundreds of pounds, is not large enough for any individual consumer to bring their own claim.

“But by aggregating the claims and bringing them on a collective basis, all UK consumers who lost out will get the compensation they are owed.”

Paul Harris QC of Monckton Chambers and Marie Demetriou QC of Brick Court Chambers have also been instructed.

A MasterCard spokesman said: “MasterCard firmly disagrees with the basis of this legal claim. Electronic payments deliver real value to people online, instore and everywhere. MasterCard is committed to providing ever more convenient, safe and secure payments to all our customers, including consumers, retailers, governments and banks.”

The company added that the European Commission decision applied to interchange fees related to transactions that crossed borders within the EU. “That decision did not touch on domestic UK interchange fees; those were set on very specific market conditions. Attempting to equate those two is like comparing apples to oranges.”




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Bradbury: "it's going to be a rocky road"

Costs budgeting: “It’s going to be a rocky road”

Lawyers are overspending in 89% of High Court and county court cases where costs management orders are made, research has indicated.

Just Costs Solicitors studied 120 of its cases where a breakdown of costs claimed (Precedent Q) was included and where the bill of costs was served after 1 October 2015.

This found that the total amount overspent across all the cases was £456,500, with the largest single amount being over £31,000. “Major overspends” were most prominent at the case management conference and ADR phases.

The type of case included personal injury, clinical negligence and commercial, and the size of budgets ranged from just under £30,000 to over £300,000.

Phil Bradbury, head of costs management at Just Costs, said: “This research shows there is a clear failure to comply with the CPR and keep within the ordered amount on a phase-by-phase basis.

“The costs management process is critical from both a financial and regulatory perspective but our research demonstrates the lack of understanding of the rules by fee-earners.

“It is still a common misconception that if you are within your total agreed budget figure, but out on a phase-by-phase basis, then you are fine to proceed with your case. The rules clearly state this is not correct and fee-earners are now being punished for not taking their approved Precedent H into consideration by individual phase.”

He said one way to stop the figures increasing was to invest in technology and case management systems which, although they could be costly, allowed firms to record time on a phase-by-phase basis and flag up any potential tipping points.

“However, it is obvious to us that firms are not carrying out phase auditing, something we strongly advise on a daily basis that our clients should be doing. Where a costs management order has been made, there is simply no hiding place in relation to agreed costs.”

He added: “It’s been an eye opener both for us and the client. It’s going to be a rocky road.”




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Stock exchange: announcement by City of London Group

City of London Group plc (COLG) is looking to sell its 50% stake in third-party litigation funder Therium Capital Management, it announced yesterday.

Therium’s long-touted international joint venture, which would have been its largest fund, has also been scrapped.

COLG’s acting chief executive, John Kent, said that in line with its operational strategy of focusing on SME lending, it has decided “not to inject further development capital into Therium and, since the end of the financial year, has reached agreement with the management of Therium to initiate a process to identify an alternative partner”.

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

The statement, contained in COLG’s preliminary announcement of its annual results, emphasised that “Therium remains a business with strong management, good growth prospects and an excellent position in the marketplace”.

Over the year to 31 March 2014, Therium has had four litigation cases resolved, winning two and losing one, with one case being withdrawn at a very early stage. These four cases have been relatively small, Mr Kent reported, and many of Therium’s larger cases are still ongoing.

Since the year end, he added, Therium has had four cases resolved in its favour and has lost one.

Therium reported a loss before tax of £600,000 for the financial year, compared to £700,000 in 2012/13.

Mr Kent continued: “Therium has experienced continued delays in relation to its proposed international joint venture, which was intended to provide the scale necessary to generate profits without reliance on performance fees.

“This joint venture will not proceed as negotiations have been terminated by the parties. Other fund raising activities had been curtailed during these discussions and have only recently been resumed.”

In the meantime Novitas, Therium’s 50% owned associate, which extends secured lending to law firms and their clients, has recorded a strong advance, increasing its loan book “substantially” over the year.

Mr Kent said: “The business is profitable and foresees continued growth with the introduction of new products.”




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Jackson: too much money swilling around the system

Solicitors will not abandon large swathes of personal injury claimants if they are paid less than now, Lord Justice Jackson has predicted.

In a sharp retort to a much-publicised report which slated his recommendations for reform of the civil costs system, Sir Rupert again attacked “middlemen who add no value to the process”, such as claims management companies and after-the-event insurers.

The paper – produced for his appearance at a vcp-510 dumps meeting last week of the All-Party Parliamentary Group for Legal and Constitutional Affairs – indicates that the judge took exception to the nature of the criticism in the report by 11 academics, which was published in February.

Professor Ken Oliphant, who oversaw the report, also vmware vcp-510  spoke at the meeting.

Sir Rupert described as “flawed” the assumption in the report that lawyers will reject many cases which are currently contested – meaning claimants will be worse off – if they are paid less than now as a result of his reforms.

The chapter was written by Cambridge academic David Howarth, who was the Liberal Democrats’ shadow justice secretary before retiring from politics at the last election.

The judge explained: “There is currently far too much money swilling around in the personal injuries system and the beneficiaries are not the claimants, but usually the referrers and (when no referral fee is paid) the lawyers…

“Even if no suc

cess fees were payable (and I am not advocating this), solicitors would still do much PI work. There would simply be less surplus to share out amongst claims management companies, ATE insurers, trade unions etc.”

The judge said there is no difficulty in predicting what will happen if his recommendations are adopted, as they broadly reinstate the regime which existed between 1995 and 2000.

In what might be seen as a swipe at the Association of Personal Injury Lawyers – which Sir Rupert described as “now the strongest critics” of his report – he quoted its evidence to Lord Woolf in 1996, which indicated support for how conditional fee agreements were working at the time.

Lord Justice Jackson rejected the academics’ idea that a claimant retaining all of his damages is a “fundamental principle of civil justice”, saying this “recently discovered” principle “makes no sense”.

He said: “A regime in which one party – win or lose – pays nothing in costs, while the other party is exposed to substantially increased costs liability is hopelessly lopsided.”

The academics’ report focused on personal injury, and the judge said they “should, perhaps, be willing to take passing notice of the effect of CFAs in non-personal injury cases. That effect can be devastating”.

Sir Rupert said the “universally hostile tone of every paragraph” was “somewhat unusual in any genuinely impartial or fair academic report”.

He took strong issue with the suggestion that he had presented a “misleading and partial account” of the problems and systematically preferred the evidence of defendant insurers.

Describing the suggestion as “unworthy of the working group”, the judge said the academics had themselves given a “misleading impression” of his preliminary and final report by focusing attention on pro-defendant passages, when both sides were given “equal space and attention”.

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Posted by Richard Burcher, chairman of Burcher Jennings

I’m a New Zealander, so please excuse me if I misunderstand the stereotypes. But I’m led to believe that certain Scots have a reputation for being careful with money. What I find surprising is that this might be considered a matter for embarrassment. Certainly every law firm manager, wherever their firm practices, should have their eyes firmly on the twin issues of pricing and costs.

In April this year, Burcher Jennings was created, bringing together unparalleled expertise in pricing strategy and costs management. I’m pleased to say that being between consenting adults, this marriage did not require the help of any Gretna Green blacksmith.

Nevertheless, flying in the face of three centuries of peaceful Union, in the last few weeks Burcher Jennings has led cross-border incursions. I spoke at a Law Society of Scotland big firms conference on current trends, challenges and opportunities in pricing legal services. I also presented a CPD session north of the border, attended by a broad range of Scottish firms. And alongside other Burcher Jennings colleagues I have been working closely with two significant Edinburgh and Glasgow firms to help them devise pricing strategies and manage costs.

The jurisdiction of Scottish law remains firmly independent from its English and Welsh neighbours, along with a different appetite for liberalisation of regulatory and ownership structures. However, clients’ expectations are moving in the same direction in Edinburgh, Aberdeen and Dundee as they are in London, Cardiff and Manchester.   Contrary to the assumptions of many, credible research suggests that business clients aren’t necessarily looking for the legal services at the cheapest price.

What GCs are looking for is predictability, transparency and value – in other words they desire an honest partnership with those providing professional legal advice and support. The success of such brands as Waitrose and BMW suggests that many consumers also are prepared to pay for quality and service, even in austere times, though increasing promiscuity of the online generation sees those same consumers buying essentials in Lidl and a parking a Dacia alongside the BMW in the drive.

Whatever the outcome of the September 14 vote, it’s clear that the most successful law firms on both sides of the border will be those who adopt effective pricing strategies and manage costs efficiently.  Getting price and costs right is the key to winning and retaining clients, building income and increasing profitability.




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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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Steve Rowley Allianz

Steve Rowley, Business Development Manager, Allianz Legal Protection

Allianz Legal Protection (ALP) and JLT Specialty Limited (JLT) have created Omnium, a specialist After the Event (ATE) insurance solution for Insolvency Practitioners (IP’s).

Omnium is an exclusive scheme which:

  • provides relevant adverse costs and disbursement coverage across 5 key stages of insolvency action
  • protects IP’s when bringing legal action to secure assets owed on behalf of creditors
  • £100k limit of indemnity provided as standard, with additional indemnity available as required.

Once IP’s have been appointed as office holder for a business or individual as part of an insolvency procedure, Omnium will provide access to ATE insurance to cover potential litigation risk and financial protection against adverse costs and disbursements.

The Omnium scheme will be distributed and managed by JLT’s Restructuring & Recovery team.

Allianz Legal Protection’s business development manager, Steve Rowley, commented: “In the provision of insurance solutions for insolvency practitioners the expertise of JLT’s Restructuring & Recovery team is renowned throughout the market. I’m delighted that we have been able to work with JLT to deliver a unique legal expenses solution for this sector. This provides a competitive and innovative solution to protect an insolvency practitioner’s personal liability against defendant costs and disbursements when legal action is necessary.

“In a legal market experiencing uncertainty and change, ALP continues to focus on its core business model of delivering appropriate, valued and timely legal expenses solutions to meet the needs of clients.”

Ed Brittain, head of Restructuring & Recovery at JLT commented: “Omnium is an innovative risk transfer solution for Insolvency Practitioner firms that will assist firms to pursue litigation on a new basis. We are delighted to be working with Allianz Legal Protection to both develop and launch Omnium.”




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Keith Hardington, Managing Partner, Walker Foster

Walker Foster operates from offices across West Yorkshire, North Yorkshire and Lancashire, and prides itself on its reputation as leading, local firm of expert solicitors. With an objective to provide clients with high quality and value-for-money legal services, fee earners strive to achieve pragmatic solutions to all client requirements.

The firm recently replaced its incumbent system with Eclipse’s Proclaim Practice Management Software solution, and rolled it out to 50 staff across its Conveyancing and Probate departments.

Walker Foster’s Managing Partner, Keith Hardington, spoke to Eclipse about the firm’s choice in legal software, the implementation process, and how staff are benefiting from a fully centralised system.

What was the reasoning behind replacing your previous practice management system?

Having looked at our practice as a whole and our plans for the future, it became clear to us that our demands had changed since our initial decision to implement a practice management system.

The law – and as a result, our firm – is constantly evolving, so we needed a reliable and robust legal software solution that would scale with us, and one that possessed the capabilities to streamline our processes to allow us to gain efficiency and reduce costs.

Why was Eclipse your chosen provider?

We had always been aware of Eclipse via its presence within the legal market, so we knew it would be included in our selection process.

As expected for an established firm, we were quite rigorous within our initial research period, and as part of this, spoke to a number of other firms – many of which referred us to Eclipse, which reinforced what we already knew.

Interestingly, it was our staff that chose Proclaim. Our management team wanted to form a working group of fee earners and support staff, as they would be the ones to use the system on a daily basis, and therefore were best placed to make the decision.

After looking at a number of providers – including the system we were using at the time – Proclaim was chosen for a range of factors, namely for its flexibility across the board but specifically in regards to amending documents; its ability to improve our processes firm-wide; and the fact that it would enable us to digitise everything possible!

How do you find our Support and Relationship Management services?

We’ve built a good relationship with the Support team over the last few months – mainly because, as with anything new, we’ve been getting used to the system and finding out the full scope of what it can do! Our experience with the team has been great, and we’re happy in the knowledge that we have them on the other end of the phone should we need anything.

In addition to the Support team, we’ve found our dedicated Relationship Manager to be absolutely excellent. She’s visited our offices at request and ensures we are getting the best from our system, in addition to answering any queries we might have – that personal service is a fantastic addition to Eclipse’s support portfolio.

What are some of the benefits to using Proclaim?

The overriding benefit for us is the elimination of paper-usage. Prior to Proclaim we were a very paper-heavy practice which necessitated numerous files and filing cabinets by way of organisation. Following the implementation of Proclaim, we’re seeing significant savings on paper, postage, ink and printing, and we’re now able to offer our clients a greatly reduced turnaround time!

Proclaim is also helping us to enhance our risk management strategy throughout the firm. In our line of work, more often than not mistakes made by law firms come from a process going wrong somewhere down the line, as a result of incorrectly set up case management software. Thanks to Proclaim’s extremely capable workflows and high-level automation, it means steps are taken to reduce risks, but with minimal input from our staff.

Essentially, we couldn’t work the way we do now without Proclaim!

How are you benefiting from the KPI toolset?

It’s great – we initially took Eclipse’s off-the-shelf package, but thanks to the configurable dashboard, we were able to develop it to display KPIs bespoke to Walker Foster.

Unusually for a law firm, we didn’t actually set targets until recently, but the staff absolutely love it.

The KPI toolset itself is proving to be a fantastic visual aid and a great motivational tool for our fee earners, who now know what they’re trying to achieve month by month, and what they need to do to get there.

It’s also great for management as it provides us with an overview of practice performance. The viewing options allow us to drill down into any statistic, and for specific fee earners, teams, or all staff, which in turn enables complete transparency. Taking this further, we can also view the values for a particular month, week or day, as well as make comparisons against previous targets, serving to boost efficiency across all of our practices.

How well does Proclaim suit your on-going requirements?

Very well!

The scope of data and range of capabilities available to us is incredible – so much so that we are still discovering just how powerful the system is, and how much more we can gain from it.

Obviously our key purpose is to operate as efficiently as we can, not only to ensure streamlined processes internally, but to pass on these efficiencies to our clients. With Proclaim we now have the opportunity to do this – and it’s something we could not have achieved using our incumbent software solution.

It’s still early days with Proclaim, but we’re thoroughly impressed with the scope of it, and as a result of Eclipse’s competency, professionalism and expertise, we have the confidence to know that, when we’re ready, we can seamlessly integrate some of the complementary toolsets and that they will enhance our processes and service offering even further.




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Dyson: fixed cost figures may be controversial

Dyson: fixed cost figures may be controversial

The senior judiciary agrees with Lord Justice Jackson that fixed recoverable costs should not be introduced in clinical negligence cases in isolation, but as part of their extension across the entire fast-track and ‘lower’ end of the multi-track, it has emerged.

Newly released minutes of the February meeting of the Civil Procedure Rule Committee (CPRC) recorded that the Master of the Rolls, Lord Dyson, told members “that the senior judiciary, through the CJC, and Lord Justice Jackson in his costs reforms, have continued to press for the introduction of FRC for the fast-track and lower reaches of the multi-track. The principle of FRC was not at issue but the fixed cost figures may be controversial”.

It continued: “The Master of the Rolls felt that it is the wrong approach to cherry pick selected areas for reform and a FRC scheme should apply to all areas of litigation. The views of the judiciary have been made clear to the Government, but whatever our views… when the government reaches a decision, the committee’s obligation is make sure the rules implement the policy.”

Earlier this year, Jackson LJ spoke out against what he described as the “Balkanisation” of fixed costs.

Lord Dyson added that the government, “which is under-resourced”, has asked the CJC to assist with a consultation paper on FRC in clinical negligence.

The minutes said that member Amanda Stevens – a one-time president of the Association of Personal Injury Lawyers – took the CPRC through a number of issues a sub-committee on the issue had considered.

These included: limiting witness reports and experts at the pre-action stage; use of guideline hourly rates; transitional arrangements; procedure for cases that fall out of the FRC regime; insolvency of private providers of services; group litigation orders; mixed claims; disclosure and provision of health records.

The minutes continued: “District Judge Hovington expanded on his thoughts on the application of parts 26-29 [of the CPR, dealing with preliminary case management and the three litigation tracks] and deemed allocation of cases to the multi-track. There was discussion on how the cases could be streamlined once in the court process, including docketing, shared jurisdiction, reduction of steps and use of standard directions.”

A draft protocol produced by the sub-committee is to be passed to the Department of Health for inclusion in its consultation on FRC in clinical negligence, which is expected to be published quite shortly after the EU referendum – although the plan to introduce them in October 2016 now looks almost impossible to achieve.




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Coming to London? Higher hurdle imposed

Coming to London? Higher hurdle imposed

Parties that want to transfer cases to London will need to provide a much fuller explanation as to why, the Civil Procedure Rules Committee (CPRC) has decided.

However, it said there was no need to make it clear in the rules that where hearings are heard in the capital, costs will be payable with reference to where the work is done, after the Senior Costs Judge assured members that costs judges always do this anyway.

Newly released papers from the CPRC’s December meeting said that it agreed to amend practice direction 29 and part 30 so that there was a requirement for parties who wanted the case to be heard in London to state “much more fully than now” how and why the case was suitable for trial there.

A new clause will be inserted in the practice direction to say that if the claim falls within a specialist list or area of work and concerns a dispute arising in a region outside London, “the parties are required to explain in their directions questionnaire how and why the case is not suitable to be heard in the appropriate regional specialist court.

“Those regional specialist court centres have been set up to deal with appropriate cases out of London, so the parties will need to state in detail why, despite the availability of a regional specialist court, they wish the case to be heard in London.”

Rule 30.3 deals with the criteria for a transfer order for, amongst other things, the transfer between the RCJ and the district registries, with one of the criteria listed as “the availability of a judge specialising in the type of claim in question”.

This will be amended to read: “The availability of a judge specialising in the type of claim in question and/or the availability of a specialist judge sitting in an appropriate regional specialist court.”

On costs, the CPRC felt that there were number of cases which already make plain that issues such as where the work was done will be considered by the costs judge, and the current position was reinforced by Senior Costs Judge Andrew Gordon-Saker when asked his views.

He told the sub-committee: “CPR 44.4(3) provides that in assessing costs the court will ‘have regard to… (g) the place where and the circumstances in which work or any part of it was done’. I can give you my absolute assurance that no costs judge or costs officer would allow a higher hourly rate simply because the case is heard in London.

“The only relevant geographical factor is the location where the work was done. The guideline hourly rates are based only on the location of the solicitor, not the location of the hearing. I really do not think that a change in the rules is necessary, because it is already there.”

The sub-committee’s report concluded: “Finally, it will be recalled that there was a suggestion that the approach to costs management might explain a preference for London. There is no evidence of that, although there are concerns about inconsistencies in costs management from one court centre to another, and from one judge to another (whether in London or outside London). This is not therefore something we can take forward at present.”




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Google: surprising level of costs

The High Court has refused to make a costs-capping order in a case against Google because the case was so close to trial and so much had already been spent at a level which made detailed assessment inevitable.

However, Mr Justice Edis slashed three items of Google’s budget for the trial, while expressing his surprise at just how much the company had already racked up.

Hegglin v Person(s) Unknown & Google Inc [2014] EWHC 3793 (QB), whose trial is listed for next Monday, involves a claim over untrue allegations of serious criminal behaviour made against the claimant, which appear prominently on Google searches.

Though it appears both sides know the author of the allegations, this person – the first defendant – is not uninvolved in the proceedings.

The judge said the facts of the case were simply although there was scope for argument about what the law of England requires Google to do, which is why the trial is listed for five days.

The claimant’s total budget came in at £604,000, split between costs incurred of £283,000 and costs estimated thereafter of £321,000. Google’s budget was nearly £1.7m, with £910,000 already incurred.

“I find the figures provided by the second defendant surprising,” said the judge. “This is a five-month period and a factually simple (although legally complex) case. It seems to me that the difference between the two budgets raises a concern about the proportionality of the second defendant’s overall figure and that that figure itself, viewed in isolation, also suggests that it is not proportionate to the true nature of the dispute.”

He identified some areas of the budget “where money may have been spent in a way which means that if any order for costs is ever made against the claimant significant parts of the second defendant’s costs should be disallowed”.

While acknowledging the arguments for a cap, the judge noted that the claimant could have acted more quickly in applying for one – between Google’s budget being served and the hearing, the incurred costs had risen to £1.25m. “This feature of the case limits the power of the court to act prospectively to ensure that costs are properly budgeted and managed.”

He accepted Google’s argument that the stage of the proceedings has been reached where no costs capping order should be granted because it could only affect future costs and the bulk of the costs have already been incurred. Further, the threshold criterion in rule 3.19(5)(c)(ii) could not be overcome by the claimant because detailed assessment would provide effective control over the risk of the expenditure of disproportionate sums.

Edis J said: “I am anticipating that the costs judge on any detailed assessment will start with the same level of astonishment as I felt when reading the costs statement supplied by the second defendant. The sums appear to me to be so high that the detailed assessment in this case will be conducted in such a way that it will represent a real protection to the claimant against having to pay disproportionate costs if he should lose at trial.”

However, he was more sympathetic to the claimant’s application for a costs management order amending Google’s budget to match the claimant’s. “This is not a costs cap by another route, because the status of any such order is defined by CPR 3.18. It does not limit the costs recoverable unless varied. It is, instead, a matter to which the court on the detailed assessment will have regard and from which it will not depart unless satisfied that there is good reason to do so.”

By rule 3.15, such an order must be made unless “the court… is satisfied that the litigation can be conducted justly and at proportionate cost in accordance with the overriding objective without such an order being made”.

Edis J said: “I am far from satisfied that this litigation has been, or will be, conducted at proportionate cost by the second defendant.”

He therefore reduced Google’s budgeted brief fee of £247,000 to match the claimant’s £98,000, which he described as “a very significant outlay” as it was.

He cut Google’s solicitors’ costs for the trial from £237,000 to £125,000, as against the claimant’s solicitors’ budget of £100,000, and reduced Google’s £59,000 budget for dealing with the claimant’s expert report – a 50-page document where there is no application or evidence in reply – to £25,000. The judge emphasised that he was not approving any other item of the budget.

“Of course, I do not criticise the second defendant or its lawyers for agreeing these terms: I am concerned about what level of costs might be recoverable from the claimant should he lose at trial, which is a different question. Large commercial organisations are free to agree whatever terms they like when they retain lawyers.”

He awarded the claimant 75% of his costs of the application because although the costs cap application was “optimistic”, “he persuaded me that he was right in his principal complaint, which was that the costs of the second defendant were disproportionate”.

 




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Cash flow: case eminently suitable for some degree of control

Cash flow: case eminently suitable for some degree of control

The chief Chancery master has ordered that a case be cost-managed after its £13m value was not disclosed in the claim form, finding that anyway there were “positive reasons why cost management is desirable”.

With estimated costs of more than £4m, Chief Master Marsh said it was “plain that issues of proportionality are engaged”.

He was ruling in Signia Wealth Ltd v Marlborough Trust Company Ltd & Anor [2016] EWHC 2141 (Ch), what he described as a complex and hotly contested case about the departure of the second defendant from her role as CEO of the claimant. The first defendant was the trustee of a trust which held shares in the claimant beneficially for the second defendant and for other family members.

As a preliminary matter, the master was asked whether the case should be subject to costs management. At the time of the hearing, the claimant had incurred costs of £967,000 and forecast expenditure up to the end of the trial of £1,374,000. The defendants had incurred costs of £776,000 with forecast costs being slightly in excess of £1m.

Master Marsh said though there was initial uncertainty, it was now not in doubt that the claim was within the costs management regime, even though it exceeded the £10m threshold for compulsory costs management. “That is so because neither the claim form nor the additional claim mentioned the value of £13m, which is said to be the value of the shares which were held by the first defendant.

“Had the figure been mentioned in the additional claim form, then the costs management regime would not have applied.”

He then went on to look at whether the case should be taken outside the regime, applying the test in CPR 13.15(2).

Master Marsh highlighted five relevant factors. First, the ill-feeling between the parties, serious allegations levelled against the second defendant and the manner in which the litigation was being conducted – “where all proper points are being taken” – made it “eminently suitable for some degree of control by the court”.

Secondly, “on any view, a claim which may be conducted through to a trial lasting ten days with a total cost of £4.14m is an expensive piece of litigation.”

Thirdly, with around £2.4m in costs yet to be expended, it “cannot be said that the court’s ability to control costs would be entirely wasted or largely wasted with such figures involved”.

Fourthly, there was some concern about inequality of arms between the parties, and finally he had regard to the difference in the budgets.

Master Mash concluded: “It is not possible for me to be satisfied here that this litigation can be conducted justly and at proportionate cost without costs management. Although a cost management order will be made at a later stage of the claim than is generally desirable, there are significant future costs to be incurred.

“Indeed, it seems to me that there are positive reasons why cost management is desirable here. The court has power in appropriate cases, and this may well be such a case, to make observations about costs which have been incurred. Without having formed a concluded view on that subject, such observations may be useful here given the size of the incurred costs…

“Overall, it seems to me that there is likely to be a real benefit for the parties if there is a cost management order.”




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Gordon-Saker: misdirected himself

Gordon-Saker: misdirected himself

The Senior Costs Judge fell into the trap of considering an individual after-the-event (ATE) insurance premium rather than the basket of risk when he slashed a premium by 60% because he considered it unreasonably high, a senior circuit judge has ruled.

HHJ Karen Walden-Smith, the designated civil judge for the county court in London, said Master Gordon-Saker failed to follow the Court of Appeal’s guidance in the leading case of Rogers v Merthyr Tydfil CBC in 2006.

Banks v London Borough of Hillingdon concerned a claim for damages and loss after the claimant slipped on compacted snow and ice in Uxbridge town centre. Her solicitor acted on a conditional fee agreement and arranged ATE through DAS. At trial the claimant was awarded damages of £6,890.

Costs were agreed except for the ATE premium, for which the claimant sought £24,694. On provisional assessment, Master Gordon-Saker ruled that this was disproportionate.

He said: “It would be unreasonable to assume that the estimated maximum liability would exceed £15,000. The risk at trial would be no greater than 50%. The burn premium would be 0.5 x £15,000 = £7,500. Adding 25% for expenses and overheads produces £9,375.”

HHJ Walden-Smith – sitting with District Judge Lethem as assessor – said Rogers supported the ‘book-based’ approach to the calculation of premium. “There is not a determination of risk on a case-specific basis but on a ‘basket of risk’ with the successful cases supporting those that are lost.”

She said it was not for the master to re-calculate the premium without access to the whole basket of risk, and that he “misdirected himself in determining that Rogers permitted him to judge the reasonableness of the premium in very broad brush terms”.

The evidence before Master Gordon-Saker was clear that the premium was calculated on the basis of the basket of risk, and so by considering instead the prospects of success, he had taken the wrong approach.

HHJ Walden-Smith said: “The fact that a party has the benefit of a staged ATE insurance premium does not mean that the court is prohibited from intervening in determining the reasonableness of the costs of such insurance. However, as is clear from the judgment of Simon J (as he then was) [in the 2010 case of Kris Motor Spares v Fox Williams], it is necessary for there to be some evidence upon which the district judge or master can rely…

“In this case, the defendant, as the paying party, failed to adduce any evidence to support a challenge to the size of the premium, despite being challenged to do so by the claimant. In the absence of that evidence, the costs master did not have the evidence upon which he could resolve the challenge in the defendant’s favour…

“The master had fallen into the error of considering the individual case rather than the basket of risk.”

She ordered the parties to submit an appropriate agreed order for consideration and sealing, or she would give directions leading up to trial.

Costs firm A&M Bacon acted for the claimant on behalf of DAS.




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Sir Ernest Ryder (l) and Lord Thomas: dedicated work

The senior judiciary is “very concerned” about the slow recruitment of judges from a black, Asian or minority ethnic (BAME) background, and the downward trend of new judges who are not barristers, new figures have shown.

In his introduction to the judicial diversity figures for the courts and tribunals at 1 April 2017, Lord Chief Justice Lord Thomas said: “Despite the leadership that has been demonstrated over the last year, progress is not as fast as we would wish.”

The report showed that in the three years to April 2017, the percentage of female judges increased from 18% to 24% (nine out of 38) in the Court of Appeal; 18% to 22% in the High Court (21 out of 97) and 24% to 28% in the courts judiciary.

The percentage of BAME judges increased from 6% to 7%, but for non-barristers, it has decreased from 37% to 34%.

Non-barristers made up nearly three-quarters of district judges, but hardly any higher court judges, except for posts like masters and registrars. As of 1 April 2017, there were no non-barrister High Court judges.

Non-barristers were in the majority in every category of tribunal judge except Upper Tribunal judge.

In the last four years the proportion of female judges in the tribunals has increased from 43% to 45%, and the percentage of BAME judges has increased from 9% to 10%.

The figures indicated, however, that the demographic changes in the legal profession were starting to have an effect on the make-up of the judiciary: 49% of court judges and 62% of tribunal judges aged under 40 were female.

Similarly, BAME representation was highest among those aged under 40, at 10% for courts and 14% for tribunal judges.

There were also regional variations – while 36% of court judges were women in the South East, it was just 21% in the South West.

Women were best represented in the lower courts, making up 38% of district judges in the county court.

Speaking also for Sir Ernest Ryder, Senior President of Tribunals, Lord Thomas wrote: “We remain very concerned about the slow recruitment of BAME judges and the downward trend of new non-barrister (solicitors and legal executives) judges, despite the dedicated work undertaken by the judicial diversity committee.

“The committee, formed in 2013 and chaired by Lady Justice Hallett, has each year pursued more initiatives to explore what might be done to accelerate progress. It has been strongly supported by judges from all backgrounds across the courts and tribunals in England and Wales.”

These include outreach events and application workshops; to attract more solicitors and legal academics to the senior judiciary, eligibility for the High Court application programme was extended this year to those without litigation experience.

There has been a continuing reduction in the number of magistrates, falling 36% from 25,104 to 16,129 over the five years to April 2017. Some 54% of magistrates were female, and 11% declared themselves as BAME.




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Harrison: Best value for clients

A commercial firm based in St Albans, Hertfordshire, has invited litigation funders to tender for a panel, in a pioneering move to cut costs for clients.

Luke Harrison, head of litigation and dispute resolution at Debenhams Ottaway, said that cutting out brokers’ fees could make the difference in deciding whether a claim was viable.

Mr Harrison said a “plethora of intermediaries” had set themselves up to broke litigation funding, often those who had previously worked in the after-the-event insurance market.

“The litigation funding market is small – there are only a handful of players. I want to get best value for our clients by going to them directly.

“A broker will get a percentage commission on the return the funder is going to achieve. For claims from £500,000 to £1m, once lawyers’ fees are taken into account, things can be quite tight as to whether they are viable.”

Mr Harrison gave the example of a claim for £1m, which settled at £750,000 shortly before trial. With legal fees of £150,000 for solicitors outside London, a litigation funder might be looking for a return of between £300,000 and £400,000 – a “large chunk” of damages.

“We want to make claims more economically viable for clients. There is no additional benefit in going to a broker, and if we put a lot of cases through a particular litigation funder and they have a bigger basket, we could reduce the cost.”

Mr Harrison said Debenhams Ottaway sent out invitations to tender to more than a dozen funders this week.

The firm’s panel will be divided into three sections – the first for claims of up to £1m, the second for claims between £1m and £5m, and the third for claims of over £5m in value.

“The point of going through a procurement exercise is so clients can see we’ve put together a panel to give them better value,” Mr Harrison said. “We’ll be looking at adequacy of funding and procedures. We don’t want to have to reinvent the wheel every time a client needs funding.”

Mr Harrison said there was now more litigation funding in the market than there were cases, and it was no longer a situation where funders could cherry pick cases.

He described Debenhams Ottaway as a “boutique litigation team within the wrapper of a multi-service commercial law firm” and said it was growing rapidly, with 11 partners, a turnover of £8.5m and former City lawyers joining the litigation team.

He added that the firm carried out a mixture of commercial work, commercial and residential conveyancing, insolvency, IP and had a strong private wealth team.




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Blanc: one-year time limit to file claim

Blanc: one-year time limit to file claim

Many consumers back the notion of replacing cash damages for accident claims with medical rehabilitation as a way to crack down on the activities of claims management companies (CMCs), according to a survey commissioned by leading insurer AXA.

The Populus survey of 2,131 people found that 52% supported the idea. The government is set to consult shortly on removing the right to claim general damages for ‘low value’ personal injury claims, and on raising the small claims limit for ‘minor’ whiplash cases to £5,000.

There was a significant disparity depending on the age of respondents, however, with 38% of 18-34 year-olds backing rehabilitation instead of damages, compared to 70% of those aged 65 or more.

AXA’s third annual report CMCs found that the number of cold calls received by consumers, and their unhappiness with the practice, both continue to be high. Three-fifths of respondents had received an unsolicited communication from a CMC in the previous week, and a similar number thought they should be made illegal.

With the government currently consulting on introducing a 15% cap on how much CMCs can charge consumers, the survey found strong support for the principle, with a cap of 6-10% favoured.

Amanda Blanc, the chief executive of AXA Insurance, said: “This report clearly highlights that despite the firmer stance being taken by government and regulators, CMCs continue to bombard consumers with communications.

“Key regulatory changes should include a one-year time limit to file a claim, mandatory caller line identification and a ban on automated voicemail messages. A fee cap is also clearly supported by the public and we propose a maximum fee of 10%… We believe that this package of reforms would significantly disincentivise fraudulent behaviour.”

Professor Chris Parsons of Cass Business School, who was brought in to provide independent commentary on the findings, said: “It is evident that there is strong support for the regulatory measures recommended in this report and that the government still has a long way to go in curbing the worst aspects of CMC activity.”

Meanwhile, Aviva said today that it detected more than 3,000 organised crash for cash claimants last year, with one in four of them occurring in Birmingham, while one in every nine whiplash claims is “tainted by fraud”.

While the number of induced accidents remained high, the insurer said that the number of staged and bogus accidents fell by 40%, “as tougher fraud prevention tools at the point of sale have stopped fraudsters accessing Aviva’s products”.

Aviva said motor fraud remains the largest source of fraud it detects, representing 60% of all claims fraud with a value of £58m. It said it has more than 17,000 suspicious whiplash claims under investigation, with 4,000 motor injury claims linked to “known fraud rings”.

However, Thompsons – the claimant firm leading the charge against the insurance industry – dismissed Aviva’s statistics as “bogus and politically-motivated”.

The firm said that when it conducted its own survey of police forces in 2014 using freedom of information requests, it could find no evidence of fraud on the scale claimed by the insurance industry.

Of seven forces contacted, six could not provide data or explain what the insurer allegations were based on and even the industry’s fraud bureau could not substantiate the figures, later admitting they were based on ‘suspicions’.

Tom Jones, head of policy at Thompsons, said: “Aviva is claiming that it is being hit by a motor fraud ‘pandemic’ and yet the industry’s own figures show motor accident claims costs have fallen 29% in the last five years saving the insurers an aggregate £6.68bn.

“What the government and the insurers are doing is whipping up a storm about fraudsters scamming the system, creating the impression of a fraud crisis – when there is no evidence to justify it – in order to get out of paying up when honest motorists suffer an accident.”




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Overly long skeleton arguments in the firing line

The Court of Appeal has hit out forcefully at unnecessarily long bundles and skeleton arguments that are anything but.

Lord Justice Aikens warned that “a wholesale failure to comply with the practice direction on written submissions and, I would add, failure to use common sense in working out more precisely what bundles are needed for the appeal, may well lead to strict adverse costs orders”.

Caldero Trading Ltd v Leibson Corporation Ltd & Ors [2014] EWCA Civ 935 was an appeal against an order made in the wake of an unfair prejudice petition presented under section 994 of the Companies Act 2006.

Lord Justice Rimer recounted that the appeal was listed for three days, but in the event the argument lasted for only about four hours.

“We were presented with some 17 lever arch files of documents and authorities. Only one authority was actually cited to us and I doubt if we were referred to more than about 24 of the thousands of pages that were copied. I regarded the skeleton arguments on both sides as too long, the appellants’ (which included a schedule and four appendices) occupying 72 pages, and Caldero’s (with no schedule, but also four appendices) 67 pages.”

He pointed out that the requirements of paragraph 31 of practice direction 52C are that skeleton arguments should not “normally” exceed 25 pages; though Caldero defended the length of its skeleton by saying that this was not a ‘normal’ appeal, the judge said he still regarded both skeletons as having been too long.

“It is a travesty to call such written submissions ‘skeleton’ arguments,” he said.

Aikens LJ endorsed the comments. “There are far too many appeals where the parties simply copy all the trial bundles without thinking out what is actually needed for the appeal hearing,” he complained.

“This is not only costly and wasteful but it demonstrates that the parties have not actually thought about the issues on the appeal and how to deal with them.”

Not only were very few documents in the bundles actually referred to, but there was also no attempt to produce a ‘core bundle’, “which at least would have helped”, he said.

Aikens LJ continued: “The authorities bundles were also produced without any proper thought as to what actually might be needed in an appeal on fact, not a point of law. The so-called ‘skeletons’ of both sides were disgracefully long and showed a disdainful regard for CPR PD 52C paragraph 31.

“In my view there was nothing in this appeal that required that the ‘normal’ length of 25 pages to be exceeded by either side. It also seems that the parties had not given sufficiently serious thought as to how long the appeal would take. It is the duty of both parties to consider the time estimate, not just the appellants.”

Such failures “may well lead to strict adverse costs orders”, and he said this is “something we shall have to consider carefully in this case”.

Aikens LJ referred to a previous judgment of his, in which he noted “somewhat ruefully” that the punishment for prolix pleadings imposed on the miscreant in the 1596 case of Mylward v Weldon may no longer be available today – they were hung around his shoulders and he was led around the courts in shame.




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Panama: unregulated insurance company set up

A personal injury solicitor who set up an unregulated offshore insurance company to provide after-the-event policies for clients has removed himself from the roll after making an unusual deal with the Solicitors Regulation Authority (SRA) that means it is the equivalent of being struck off.

Godfrey Harry Rutter Morgan, 44, of Norfolk, admitted eight of the 16 allegations made against him before the Solicitors Disciplinary Tribunal. As well as admissions about the insurance company, he admitted to allegations of dealing with an intermediary who worked on a contingency fee basis, and to letting a client use his client account as a banking facility and lying to that client’s creditors.

An agreement reached by Mr Morgan’s counsel and the SRA, and approved by the tribunal, allowed him two months to hand over his practice – Godfrey Morgan Solicitors, also known as GMS Law – in an orderly fashion before voluntarily removing himself from the roll and paying the SRA £45,000 in costs.

It was accepted that Mr Morgan was not an immediate risk to the public, while at the time of the hearing in April, he was a patient at the Priory Hospital.

His counsel, Marc Beaumont of Windsor Chambers, told the tribunal that no clients had complained about the matters under investigation, and that the solicitor had facilitated access to justice. While the insurance scheme had been “misconceived”, he said the intention was benevolent and only three cases had been unsuccessful, with no losses suffered by clients.

The insurance company, called variously GIRY and NIC, was registered in Panama and operated from an office in Bulgaria. It was not regulated to provide insurance, and Mr Morgan also admitted to failing to account to clients for the pecuniary award he received from it. Other allegations relating to the inappropriate nature of the insurance were ordered to lie on the file.

There were 237 policies issued, which had a £5,000 excess. Mr Morgan said this made clients more cautious, although the tribunal said clients would have needed full advice on whether this was right for them.

The tribunal said that its usual order in a case like this would have been a strike-off. Though it emphasised that it did not want to set a precedent or give the impression that it was possible to “do a deal with the SRA which the tribunal would agree”, in the circumstances it was in the public interest to agree to the deal. The company had accumulated around £467,000 in its account.

The tribunal directed that any application to be readmitted – which would not be for at least six years – should be treated as if he had been struck off and should take into account that Mr Morgan had admitted dishonesty.

There is no suggestion of any wrongdoing by GMS Law or anyone else working for the firm. GMS Law director Richard Clegg did not return a call for comment, but was quoted in the Eastern Daily Press as saying: “I would like to stress nothing in the judgment affects any current clients or would affect any potential new clients. I have recently set up a new relationship with an established insurer so I can offer my clients the best possible no-win, no-fee cover.”




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Posted by Tony Walton, managing director of Litigation Futures sponsor Questus
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Walton: small claims should be through the portal

Have you ever been to a six-a-side Masters Football tournament? Retired professionals turn out for their former clubs, still recognisable, but a few years older, a couple of inches on the waistline and with more huffing and puffing than you remember.

The tackles still fly in, though. You’re never sure whether the ones that really hurt are caused by innocent clumsiness, or whether they’re a long-anticipated, much-rehearsed opportunity to avenge some never-to-be-forgiven injustice dating back to the 1990s.

Bearing no resemblance whatsoever to that, of course, the oral evidence session of the transport select committee on the cost of motor insurance and whiplash took place on 17 June. On a couple of occasions, the witnesses were asked about the possibility of “a new market” being created to handle road traffic accident (RTA) claims valued below £5,000 in the event that the small claims limit (SCL) rises to that figure.

Some said no such market will arise and that access to justice will suffer as a result. An equal number said that all the current players – insurers, solicitors and claims management companies (CMCs) – would seek to represent those claimants in return for a share of damages.

What united the otherwise partisan witnesses and their committee inquisitors was the hope that legitimate whiplash victims would continue to be entitled to pursue claims and receive compensation (to some degree) for proven injuries. In announcing the reduction of the typical RTA portal fee to £500, the government stated that it felt the lower fee to be enough to permit “efficient and effective claimant solicitors” to continue to represent those claimants to a satisfactorily high standard.

For those who now take 25% of damages to fill the gap left by the reduction, a typical pre-April fee of £1,350 including a success fee has dropped to about £917 on a typical £2,000 claim. A heavy blow, but, it seems, not fatal to the majority of personal injury practices. The second blow of removing £500 of recoverable costs from that figure by raising the SCL to £5,000 may well prove fatal for many more.

The government now needs to be asked whether this second slash at lawyers’ fees will still permit “efficient and effective” representation. Everyone will have their own answer to that question. One key contributor to the improved handling of low-value RTA claims in the last three years has been the claims portal. Without forgetting its early teething troubles, it has undoubtedly, with laudable effort on the part of those responsible, achieved its intended aim, namely to streamline the processing of this category of claims.

During the course of the hearing on 17 June, there was only the briefest of references to one major consequence of raising the SCL to £5,000. Doing so will remove at least three-quarters of all RTA claims from the value band captured by the portal. The introduction of employer’s and public liability claims, which are, at least for now, not affected by the proposed rise in the SCL, will go nowhere near making up the numbers.

Assuming a degree of sincerity in insurers’ stated wish to continue to pay compensation to genuine victims and a commensurate wish on the part of the government to support whoever seeks to assist claimants in this field to be “efficient and effective”, surely provision must be made to ensure these hundreds of thousands of claims a year continue to be handled in the portal?

Anticipating numerous intakes of breath at what would be required, let us acknowledge the need for:

  • An amendment to the Civil Procedure Rules (although this will be required in any event to increase the SCL);
  • An adjustment to the workings of the portal itself to ensure that the correct sum of costs, or no costs at all, are paid depending on the sum of damages agreed, (although a comparable exercise is already in hand with the introduction of EL/PL claims into the portal); and
  • A review of how the portal is funded, anticipating future users may be a more diverse congregation than claimant solicitors and insurers alone.

In some quarters, simply to give consideration to these issues might be seen as some sort of admission of defeat to those in favour of the increase to £5,000. But at a time when the future and quality of representation of claimants in the overwhelming majority of personal injury claims is, for some, at stake, it seems only good common sense that plans are made now to ensure that claimants, in person or via a new market of representatives continue to benefit from exactly the kind of modern, hi-tech solution so often wished for by those dealing with lawyers and insurers. A return to the Dark Ages beckons as the alternative.




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Bogart: innovative arrangement

Burford Capital has raised a further £25m for its litigation funding warchest, the AIM-listed company announced today.

The issue of contingent preference shares by a wholly-owned subsidiary of the company has been fully subscribed.

This means institutional investors agree on demand to provide up to £25m in additional capital.

The completion of the offering is contingent on the admission of the units to the Channel Islands Stock Exchange, for which application has been made and is expected to occur later this week. Burford said it has privately consulted a number of its shareholders and received support for the move from shareholders representing a clear majority of the ordinary shares in the company.

In a statement, Burford said: “Litigation finance investments tend to be medium term in duration and come with some uncertainty around the timing and quantum of their cash inflows and outflows, which means there is potential for a substantial gap between cash committed to investments and cash actually deployed.

“As it is inefficient to reserve dollar for dollar against future commitments, the company believes that the facility offers an innovative alternative to manage the uncertainty around cash flows.”

Chief executive Christopher Bogart added: “We are delighted to have expanded our available capital with this £25m facility, and continue to appreciate the tremendous support of our shareholders for our efforts to grow the business while enhancing value.

“This facility is an innovative arrangement and enhances our flexibility while also continuing our move towards a more mature capital structure for the business.”

Burford’s annual report in September said that it had £164m committed to 29 live investments.

Andrew Langhoff, chief executive of Burford UK, explained the rationale of having a ‘callable’ facility with a “simple” example.

He said: “Burford signs up to do a case for up to £10m. However, that money will be spent over time – probably three years – as the case proceeds through the court system. So the company doesn’t need all that money on hand at once, or even soon.

“However, Burford can’t very easily predict when other cases are going to resolve and pay it, so it is risky to rely on being able to fund the £10m from other wins. Historically it has tended to put much of the £10m aside to be safe. That means it can do less with its capital than it should be able to because it has a lot of cash sitting around just waiting to be called in a case – £70m at last report just sitting in the bank.

“This solves that problem. Burford can now put less money aside and invest more money now, without waiting for cases in progress to resolve, because we know we can call on our shareholders to fill a funding gap if one ever occurs.”

“It can now invest more money in cases without becoming less financially conservative and without paying for the extra money. This innovative financial structuring has taken a year to develop working closely with [financial adviser] RBC and Freshfields. It even has a name – COPPS – because we suspect other businesses in other industries will copy it.”




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Lord Dyson

Lord Dyson: A “deeply unsatisfactory” situation

Lord Dyson, the Master of the Rolls, has rejected recommendations for new guideline hourly rates (GHR) because of a “fundamental” shortcoming in the evidence.

The Civil Justice Council (CJC) costs committee proposed changes to the GHR which would have the combined result of a net reduction in fee-income of 2.2% for qualified fee-earners and by just over 5% for all fee-earners.

Rejecting the proposals, Lord Dyson went on to rule out any inflation-based increase in the rates, which have been frozen since 2010.

Describing the situation as “deeply unsatisfactory”, he called for “urgent discussions” with the Law Society and the government to see what steps could be taken to obtain evidence on which the GHRs could “reasonably and safely” be based.

However, there was good news for Chartered Institute of Legal Executives (CILEx) fellows and costs lawyers.

Lord Dyson accepted the committee’s recommendation that CILEx fellows with eight or more years post-qualification experience should be included among Grade A fee-earners.

He agreed with the committee that qualified and regulated costs lawyers should be paid at GHR rates B or C, depending on the complexity of the work.

The Master of the Rolls rejected the idea of creating an additional Grade A star category for fee-earners with 20 years or more PQE or introducing a new Grade E category at the bottom end of the scale for paralegals with less than four years’ experience.

Lord Dyson said he found two concerns expressed by the costs committee itself about the lack of evidence “particularly compelling”.

He said two of the surveys on which the report was based, the Law Society’s Law Management Section Survey and the committee’s own survey were based on “self-selection”.

The other concern was that all of the surveys were based on “the responses of a very small part of the large community” of civil litigation solicitors.

“I have reached my conclusions after the most careful consideration and with considerable regret,” Lord Dyson said.

“But it would be wrong to make decisions as to appropriate GHRs which are not based on sufficiently robust evidence.  It is imperative that sound and reliable evidence is obtained.”

Mr Justice Foskett, chairman of the CJC costs committee, attacked defendant law firms earlier this month for failing to respond to its survey.

In a letter to the Master of the Rolls, Foskett J said the committee had “no resources” with which to launch a comprehensive and statistically reliable evidence-gathering exercise.

“We have had no means of compelling responses to our own survey,” he said.  “I should, perhaps, emphasise that I did warn the profession in some well-publicised observations before our own survey went ‘live’ that criticisms of the outcome of our work would be hollow if the critics had not responded to the survey.”

Foskett J said the committee’s concerns meant that a majority felt comfortable only with a phased implementation of the new rates, while others thought there should be capping and a phased approach.

He added that there was a “strong feeling” in the committee that a “different approach” to evidence-gathering would be needed when the next exercise was undertaken.




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Tonks: claimants should not be forced to take the same risks as a speculative stock market investor

The stark choice facing the Lord Chancellor over how to set the discount rate was laid out yesterday as the Ministry of Justice consultation closed.

While claimant lawyers argued in their response to the consultation that injured people should not be forced to invest in “volatile stock markets”, defendant lawyers said using a mixed portfolio of investments as the benchmark matched the reality of how claimants deal with their damages.

The discount rate is used to reduce an injured person’s lump sum compensation to factor in income from investment of those damages in future years. In 2001, the then Lord Chancellor set it at 2.5% by reference to index-linked government stock (ILGS). However, the low return from ILGS in recent times has prompted calls from claimants, led by the Association of Personal Injury Lawyers (APIL), to cut the discount rate and thus increase the damages they receive.

The consultation sought views on the methodology to be used in setting the rate, putting forward two broad options: to use an ILGS-based methodology applied to current data; and to move from an ILGS-based calculation to “one based on a mixed portfolio of appropriate investments applied to current data”.

APIL president Karl Tonks said: “If the discount rate is not set accurately a victim of a catastrophic spinal injury, for instance, who may need round-the-clock nursing care for the rest of his life, could be short of hundreds of thousands, if not millions of pounds, and left unable to finance his future needs.”

He said the mixed portfolio approach is far more risky. “It is simply unacceptable and inconceivable that a vulnerable, injured person, who needs every penny of his damages to work hard for his future should be forced to take the same risks as a speculative investor on the stock market.

“If an investment goes wrong, an injured person can’t simply cut back on his medical or care needs. Unlike an ordinary investor, it’s money which he simply cannot afford to lose. The government must understand the seriousness of this situation for injured people. It must change the discount rate as a matter of urgency to stop people being under-compensated, and the rate must be based on low-risk government stock.”

APIL illustrated its case with the example of a 61-year-old left tetraplegic by a car crash who in January 2012 was awarded £5.5m in compensation after the 2.5% rate had been applied. But it said at the start of 2012, yields on ILGS stood at around 0.5% – had this been the rate applied, the claimant would have received £7.3m, it said.

However, Christopher Malla, a partner at City firm Kennedys, which acts for defendants and has been campaigning on the issue, said: “To assume a claimant only invests in ILGS is to ignore what actually takes place and this could over-compensate the claimant. Ultimately this could lead to higher costs for defendant bodies, such as the NHS and local authorities, and have a detrimental impact on already reduced public sector budgets.

“The reality is that claimants put their damages in a mixed portfolio of investments, and there is good evidence that claimants have been able to achieve real rates of return, net of tax, of up to and above 2.5% that way.”

He said the Ministry of Justice also had to adjust its assumptions around the return from ILGS to allow for an increase in the ILGS yield as the current financial crisis eases. “Otherwise, the basis upon which any decision is made today will be unfairly distorted by recent investment behaviour.”

The Kennedys response said there was a risk that if the discount rate falls and lump sums become attractive as a result, claimants may stop settling their cases by way of a periodical payment order, which it described as “clearly the fairest and most appropriate way of ensuring adequate funds are available over what can be a very long period of time”.

The Ministry of Justice is expected to publish a separate consultation before the end of the year to review the present legal basis for the setting of the rate and to seek views on whether the restrictions imposed by the present law on the factors that can be taken into account in the setting of the rate are still appropriate.

 




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Medical reports: system not designed for direct contact with litigants

MedCo issued 337 warning letters to users – and went on to suspend two-thirds of them – over the past year for behaviours such as circumventing the random search selection process and influencing medical experts’ opinions on diagnosis/prognosis, it has emerged.

Other behaviours that prompted MedCo to take action include undertaking medical examinations in inappropriate circumstances, increasing market share of instructions in breach of government policy, and failing to upload case data, the company behind the system has revealed.

The figures came in MedCo’s submission to the justice select committee for its inquiry into the government’s personal injury reforms, both of which have now been dropped because of the election – although they could re-emerge afterwards.

MedCo said that in the year to 31 March 2017, it sent 337 warning letters sent, suspended 235 users – medical reporting organisations, direct medical experts and ‘authorised users’, mainly claimant lawyers – although 84 of them were reinstated after modifying their behaviour. In all, 134 user agreements were terminated.

Since its implementation in April 2015, there have been 882,000 searches resulting in the selection of an MRO and over 123,000 searches resulting in the selection of a direct medical expert, MedCo said.

MedCo said the proposed increase in the small claims limit – and likely increase in litigants in person – could have a “major impact” as the system was not designed for direct contact with litigants. “Significant changes to MedCo processes will be necessary.”

The proposed ban on pre-medical offers would also likely result in an increase in the use of MedCo, it said.

“The reforms will require increased monitoring of behaviours by MedCo and a review of procedures to deal with the challenges of identifying trends which attempt to circumvent legislation and government policy.

“For example, there is a high risk that there will be attempts to influence medical experts to increase prognosis periods to achieve higher damages awards. MedCo may also need to review its constitution to include representatives from claims management companies and litigants in person/McKenzie Friends.”




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Judge: biggest claim was “false as regards the majority of fees charged”

The High Court has described a law firm’s claims for unpaid fees as “largely dishonest” and dismissed them as “wholly without merit”.

However, Alpha Rocks Solicitors (ARS), based in south London, hit back, saying the decision of Murray Rosen QC “grossly undermines equity and justice”. It intends to appeal.

Mr Rosen, sitting as a deputy High Court judge, said Alpha Rocks “appeared to demonstrate a high level of ineptitude”.

He went on: “Much of its argument might be described as perverse, naïve or even preposterous.

“But it is important not to conflate or confuse such characteristics with dishonesty and fraud, nor to let the deficiencies in ARS’ records and personnel, and the conduct and presentation of its case, detract or divert from, or obscure or cloud, a measured or objective legal analysis…

“However, after five days of trial… I must conclude that many of its shortcomings in dealing with and for [former client Benjamin] Alade were not the result of negligence or eccentricity, however gross”

Rather, he said, in particular in relation to the law firm’s two biggest claims against Mr Alade, an 89-year-old retired barrister, the bills were “variously false… in the most basic ways”.

These were a claim for £131,500 for fees and disbursements said to have been incurred in defending a county court action in the ‘Rufus’ matter, and a claim for fees and disbursements of over £21,500 for a Land Registry claim in the ‘Catherine’ matter.

Delivering judgment in Alpha Rocks Solicitors v Alade (HC13 D00617), Mr Rosen ruled that the Catherine claim was “false” and the Rufus claim was “false as regards a majority of the fees charged”.

Mr Rosen dismissed a further claim for £15,170 “said to have been agreed” for a freezing order in the Rufus matter since it was based on an “alleged agreement for which there is no proper factual or legal basis”.

He said a fourth claim of £3,500, referred to as the ‘landlord matter’, failed entirely on liability.

The judge concluded that many of the shortcomings of Alpha Rocks in its dealings with Mr Alade could only have resulted from a “dishonest plan to charge for sums to which it knew it was not entitled on the basis claimed, or was at least reckless as to the same”.

He ruled that the law firm’s claims were “largely dishonest” and dismissed them as “wholly without merit”. Mr Rosen gave judgment for Mr Alade’s counterclaim against Alpha Rocks for £65,370 plus interest.

The Court of Appeal ruled this time last year that the High Court had been wrong to strike out the claims made by Alpha Rocks on the grounds of exaggeration and inaccuracy, because the then judge, Kevin Prosser QC, had not sought to hear oral evidence before reaching his conclusion.

In a statement, Alpha Rocks said: “We are extremely disappointed with the judgment delivered by Mr Murray Rosen QC, which does not reflect the standard of service we give our clients or indeed the commitment and passion with which members of staff carry out their functions.

“The decision grossly undermines equity and justice as it suggests that a client can avoid paying for professional fees rendered. More so when the outcome of his instructions to us was successful and that evidence was proffered at court.

“We would point out that was a rare incident involving one out of our many clients and the work as well as the claim against the client was initiated by former partners who have since left the firm.

“An earlier decision was in fact successfully overturned by the Court of Appeal in our favour and we can confirm that we are appealing this current decision.”




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Interest: costs process is rough and ready

The High Court has given a strong steer that successful parties can rarely expect to recover interest on the fees they have already paid to their solicitors.

Mr Justice Dingemans suggested it was simply part of the cost of litigation.

Schumann & Anor v Wasbrough [2013] EWHC 4070 (QB) saw professional negligence cases brought against a law firm and barrister dismissed after various preliminary issues were determined.

The successful defendants then asked the judge to exercise his discretion to grant interest of 1.5% on the pre-judgment costs, from the date of payment until that of the judgment.

Noting that “the making of such orders is not usual”, Dingemans J said: “This is not necessarily a reason for not making such an order, but it suggests that there might be proper reasons for not making such an order.”

The judge said the exercise of the costs jurisdiction has “always been rough and ready”. He continued: “For example, it is well known that an order for payment of costs on the standard basis rarely provides a complete indemnity to the winning party. The parties have always had to accept that there is a cost of being involved in litigation.”

He was also concerned that such an order would complicate the costs assessment process and itself increase costs. “The generation of further costs creates barriers for parties litigating in the courts.”

Further, there were other routes – such as interim payments on account of costs – that ensure parties who have paid costs to their lawyers are not kept out of pocket for long periods and would avoid the need for careful calculations and evidence about payment dates.




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Scully: MoJ is putting the cart before the horse

Claimant personal injury lawyers have launched a strong attack on the government’s bid to expand the RTA claims process while also cutting legal fees for work done under it.

Responding to the Ministry of Justice’s (MoJ) call for evidence, the Association of Personal Injury Lawyers (APIL) said the “aggressive timetable” of introducing the changes next April “appears to be compromising the process”.

The Motor Accident Solicitors Society warned that encompassing cases worth up to £25,000 “brings complexities rarely seen in cases valued up to £10,000”.

The government wants to raise the £10,000 limit of the current road traffic scheme to £25,000, and create new processes for employer’s and public liability claims. It also wants to reduce the £1,200 currently paid under the process in light of the impending referral fee ban; the Association of British Insurers has suggested a figure as low as £150.

Neither body was willing to specify what levels fees should be at given that the revised rules have not yet been set, although MASS said its data analysis said the current £1,200 fee “has proved an accurate reflection of the cost of carrying out necessary work” – and better than the £1,787 it had originally estimated as being the right figure.

APIL’s research said that profit on an average portal case is currently 14%, but ending the recoverability of success fees – and the likelihood that solicitors will not seek them from clients – will reduce that to just 4%. Further, figures show that more than half of personal injury firms do not pay referral fees, it added.

Both said it would be uneconomic to agree a single fixed fee for road traffic cases worth between £1,000 and £25,000, with APIL suggesting either staged fixed fees or fees as a proportion of damages.

APIL was particularly critical of the process the MoJ is undertaking. It said: “Lawyers at the MoJ have already drafted protocols and rules for consideration by the Civil Procedure Rule committee in advance of the consultation period closing.

“The meeting at which these rules will be considered by the committee is in advance of the deadline for this submission. This important meeting is occurring independently of the consultation process and will not have the benefit of wider input before committee members draw conclusions.”

It was also highly critical of the failure to publish Professor Paul Fenn’s report on the full effects of the portal, which freedom of information requests have failed to elicit; the MoJ says it will publish the report in the summer.

“Without this report confirming that government objectives have been met, namely, settlement times have reduced and the level of damages has not reduced, the government has not made out its case for reform…

“Worryingly the government is not delivering what it has promised; there is also a blatant disregard for the detail. The government appears to be acting irrationally and unreasonably failing properly to consult and is embarking on what appears to be a cost fixing exercise at the request of insurers.”

APIL added that MoJ plans to raise the small claims limit for personal injury cases from £1,000 to £5,000 would change the dynamics of the portal completely as most cases that currently go through it fall into that bracket.

APIL president Karl Tonks said: “None of the groundwork has been done properly and we are seriously concerned that most of the decisions appear to have been taken before the consultation has ended.”

MASS chairman Donna Scully told Legal Futures that she too was concerned that the MoJ is “putting the cart before the horse” and not listening to all of its stakeholders. “Our message is that as you’re intent on doing this, act with caution.”

However, in its response, the Forum of Insurance Lawyers (FOIL) has called on the government to introduce a fixed-costs regime for fast-track claims which are not handled in the portal.

President Don Clarke said: “FOIL sees the portal as being an ideal single point of entry to the claims process for all claims up to £25,000, giving claimants a simple process with which to start their claims… It should not be seen as a one-size-fits-all process and where claims need to drop out of the portal, which is more likely with employer’s liability and public liability claims, this should not be perceived as a cause for concern.

“These claims should fall into a fixed-cost fast-track regime. We believe this dual approach would offer access to justice to both parties at reasonable cost.”

The Association of Costs Lawyers is canvassing views from claimant personal injury lawyers on the impact of the Jackson reforms. To take part in a short survey, click here


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The misleading claims behind the campaign to lower the discount rate

Matthew Best Temple Legal Protection

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

February 9th, 2018