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Osborne: surprise announcement

Osborne: surprise announcement

Chancellor George Osborne’s announcement yesterday that the small claims limit for personal injury (PI) cases will rise to £5,000, and that general damages for “minor” whiplash claims will be abolished, has sent shockwaves through the market.

Such is their seismic impact on lawyers that we have been covering the reforms on our sister site Legal Futures. There you can find these articles:

Autumn Statement: £5k small claims limit and end to general damages in whiplash

Slater & Gordon’s share price collapses in response to Autumn Statement

Breathing space for PI lawyers? General damages reform will not come in until 2017

Blog: Where now for PI lawyers?




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Dyson: urgent and concerted action needed

Dyson: urgent and concerted action needed

A higher threshold for appeals and an end to the right to an oral hearing of permissions to appeal (PTAs) are at the heart of major reforms aimed at bringing the Court of Appeal’s (CA) workload under control.

With the volume of appeals up 59% over the past five years, the current waiting time for full appeals is now up to 19 months, up to six months for PTA decisions on the documents and up to a further six months for oral renewal of PTA applications.

In his introduction to a consultation paper issued by the Civil Procedure Rule Committee, the Master of the Rolls, Lord Dyson, said: “The judges of the court do not regard the present position as acceptable or sustainable.”

Under the plans, the threshold for grant of PTA would rise from ‘a real prospect of success’ to ‘a substantial prospect of success’ on appeal. The consultation explained that it would have to be “seriously arguable that an error has been made (and not merely arguable so that it cannot be said to be fanciful)”.

The right for a litigant to require a refusal of PTA or other application based on the papers to be re-considered at a hearing would be replaced with a discretion for the judge who considers the papers to hold an oral hearing if they think it appropriate as a matter of case management.

The consultation also set out proposals to amend Practice Direction 52C, the principal practice direction governing litigation in the Court of Appeal, to make it “more user-friendly” and to limit the volume of documents before the court.

Lord Dyson said: “In the light of my discussions with the Ministry [of Justice] and in view of the current fiscal constraints, I have no doubt that there is no possibility at the present time of increasing the number of judges in the court.

“Unless urgent and concerted action is taken to ease the pressures on the Court of Appeal we risk damaging not just the international reputation of the court, but its integral role in the proper and efficient administration of justice in this country.”

Other, more minor, reforms are already in hand, such as legislative measures to re-route certain appeals from lower courts to the High Court, and making more use of two-judge courts.

The consultation paper said that until about 18 months ago, the CA managed to absorb the increase in its workload largely by the judges working longer hours. But it is now falling “significantly behind” in dealing with these.

The three main symptoms of the overload were a dramatic increase in waiting time for hearings, an “unacceptable increase” in the amount of work being done by judges out of hours – 48% of the time spent on writing lead judgments was being done out of hours – and greater delay in the preparation and delivery of reserved judgments.

A time and motion study carried out last year showed that, although the number of PTAs and demands for leadership work had increased, “the overwhelming demand upon the time of the members of the court remains the work required for preparing, hearing and judgment writing in connection with full appeals”:

The paper continued: “Although the number of full appeals requiring to be heard has only increased modestly over the last five years, it is probable that the time taken per full appeal has also been rising (albeit there are no statistics from which this can be measured, because there has never before been an attempt to measure the CA’s workload by anything more sophisticated than bare numbers of appeals)…

“The probable reason for this, apart from the ever increasing complexity of the law, is that the court is hearing a smaller proportion of a greatly increased incoming workload as full appeals, and therefore concentrating its attention on the most difficult cases.”

It warned that without reform, the ever-growing case backlog would have grown a further 20% by the end of 2016.




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Posted by Richard Whale, Sales Manager at Litigation Futures sponsor DAS LawAssist

Whale: have your say

Whale: have your say

Recently I spoke at a conference on the proposed consultation and introduction of fixed recoverable costs in clinical negligence claims. The purpose was to address the ‘elephant in the room’, being the potential impact of a planned secondary consultation relating to the further reform of arrangements for ATE insurance premiums.

At present, part of a client’s ATE insurance premium is still recoverable from the losing party in clinical negligence claims where it relates to the risk associated with the cost of the liability and causation reports necessary during the investigation into the merits of a claim.

So what exactly is the Ministry of Justice (MoJ) planning and what impact could its proposed changes to the ATE recovery rules have on solicitors and clinical negligence claimants alike?

The ATE issues

Back in August 2015 I met with Robert Wright (head of civil litigation and costs) and members of his team at the MoJ to discuss their proposals for premium recovery. At that time there were four options tabled:

Introduce a notice period, i.e. no insurance can be obtained until both parties have had a chance to settle.

Given the primary risk in clinical negligence claims is during the investigation period, not being able to seek ATE insurance cover until after the reports necessary to determine the merits of a case have been obtained, puts the solicitor and the claimant at a considerable disbursement costs risk.

Restrict recoverability of the ATE premium to claims valued above the Department of Health (DoH) fixed costs limit.

This is hardly a fair scenario. If the claimant recovers damages of a significant value and arguably can thus afford to pay for the ATE insurance premium, they can get the premium paid by the losing party, but should they recover limited damages and arguably not be able to afford to pay the premium, they must.

ATE insurance premiums not recoverable if no expert evidence has been obtained.

In fairness to the MoJ, we would actually be quite happy with this outcome given it is the basis of our premium model currently, i.e. if no reports are required or obtained then no premium is charged to the defendant.

And the one I believe they are seriously contemplating and the most likely to be introduced:

Abolishing recovery completely.

At this juncture I was going to state that nothing further has been forthcoming from Robert or the MoJ. However, recently I have had a response to a follow-up e-mail and they have confirmed:

  • The four scenarios on the table and up for proposed consideration are still those I described above;
  • The consultation on ATE insurance premium recovery will be run separately to but concurrently with the DoH’s primary consultation on fixed recoverable costs; and
  • The only indication the MoJ is prepared to give as to when these consultations will take place is “by the summer”.

So why do I believe ATE insurance premium recovery will be removed completely?

Firstly we have experience of the MoJ ignoring advice from stakeholders and pressing on regardless, as was seen during the run-up to and implementation of the original Jackson reforms and LASPO in 2013. It is also no secret Lord Justice Jackson is a big fan of damages-based agreements, which are still viewed as the means to soften the blow of success fees and ATE premiums no longer being recoverable from the losing party.

Further, Richard Miller (head of legal aid) of the Law Society is reported to be investigating the viability of setting up a contingency legal aid fund (CLAF) which again is a firm favourite of our friend Jackson LJ. Mr Miller has been quoted as saying: “The CLAF is an idea that has been knocking around for 20 years, but we need to look at whether the issues that stopped it getting off the ground initially can now be overcome.”

What is one of the primary issues Mr Miller is referring to? Well, the following is a direct quote from a discussion paper on the merits of a CLAF produced by the Bar Council back in 2009:

A [CLAF] is unlikely to be able to compete, i.e co-exist, in a world where CFAs operate which entitle a successful claimant to recover in full the success fee and any ATE insurance premium. So if [it is] to be feasible, the right to recover the success fee and ATE premium must be abolished.

The impact

So let’s work on the assumption I am right and the MoJ does do away with ATE insurance premium recovery. What actual impact will this have?

Take away premium recovery and you kill off a large chunk of access to justice. We have already seen many commercial claims being abandoned since premium recovery was removed in that area of litigation due to the value of the claim being disproportionate to the cost of the ATE insurance and the client not wishing to pursue a claim without protection.

When the Jackson reforms were implemented in April 2013, ATE premiums did come down, but this was as a direct result of the introduction of qualified one-way costs shifting, which naturally lessened some of the costs risks associated with clinical negligence claims.

This was almost a sideshow given the largest risk faced by ATE providers remained, that being the costs risks associated with claims for expert reports. Taking away premium recovery now will not bring premiums down. Why? Because the costs risks remain exactly as they are and all the MoJ will achieve is to transfer the full premium liability to the claimant.

“The premiums are too high already, so surely you can bring them down given the profit you must be making?” This is a line heard often but the truth is it is too early to say if ATE providers are making a profit. Being only three years into the post-LASPO world is not enough time to have the full picture. Not enough cases have worked their way through the system in this short period of time and as such our claims history currently shows a high proportion of abandoned/failed claims versus a relatively low volume of cases where the case has settled and the ATE insurance premium received.

This is only to be expected, given that the majority of cases are insured prior to expert reports being obtained and high volume of cases being abandoned during the investigation period. Only time and a considerable increase in the number of successfully concluded cases will enable us to identify if we have priced the book of business correctly, but if you were to look at the loss ratios now, you could be forgiven for assuming we are making a loss.

If we have no idea of the true impact of the 2013 reforms, given all the data available to us, how can the DoH and MoJ be in any position to state there has been no decrease in costs to the NHS and that further reforms are required? Maybe I am being naïve in thinking the best course of action would be for all parties to reassess once sufficient claims have passed through the system.

The true savings impact from the LASPO reforms will not be realised until we are into 2017, given the average settlement time for clinical negligence cases is three years plus. Simply put, it’s too early to say to what extent the NHSLA has enjoyed costs savings.

We are also seeing more demand, post LAPSO, for elements of cover which were never factored into the original pricing model. No account was ever made for instances where claims are presented for pagination costs far exceeding the actual spend on the expert reports they relate to.

In addition, more and more requests are coming in for the fees associated with external costs draftsmen to be covered as a disbursement in a failed case. Now is not the time to argue the findings in Crane v Canons Leisure [2007] EWCA Civ 1352 as to whether they are a solicitor’s profit cost, but more to reiterate the fact they were never deemed part of the cover required.

These additional requests for cover all increase claims costs, increase loss ratios and have a detrimental effect on both an individual solicitor firm’s and our overall clinical negligence book of business.

Taken as a whole, this all leads to one overarching reality: if firms want ATE insurance premiums to come down if recovery is removed, then there needs to be a decrease in the number of claims on the policy and/or fewer costs associated with those policy claims. I’m afraid it is a stark reality and a view all ATE providers would admit to if they were being honest.

So where does this leave us?

Simply put, we can’t afford to wait for the consultations to take place before we try and work out where we go from here, especially if the latest rumours – that the consultations won’t start until the EU referendum is concluded – are to be believed.

Despite not knowing the detail relating to the introduction of fixed costs, we need to be taking action now to re-model cover and premiums ensuring we are ready to deliver new ATE insurance product options should my assumptions be correct and implemented by 1 October 2016.

In order for us to do this, we have been and will continue to ask clinical negligence specialists for their assistance in formulating our plans to shape the future of ATE insurance and maintain access to justice for all claimants, regardless of the quantum value in question.

Over the past few weeks, we have been running a survey to help us understand how the proposed DoH/MoJ reforms will affect how solicitors will run clinical negligence cases, their attitude towards risk and ATE insurance, together with what cover is seen as crucial, regardless of premium price, in the fixed costs world.

We have been tempting solicitors with three product options which we have asked them to consider and provide feedback on in terms of suitability, looking at both the cover provided and indicative client premium costs.

The results of this survey are now in and I would like to take this opportunity to thank those who took the time to complete it and provide us with their valuable feedback.

The results of this survey are now being used to fine-tune the product options and we will be looking to re-engage stakeholders and gain further feedback on the ‘tweaked’ versions to ensure they meet the requirements.

During this whole period, we will be seeking to meet with individual firms to gain an understanding of their ATE requirements and determine if specific pricing can be considered and modelled based on their post-LASPO experience with clinical negligence cases.

Do have your say

The potential implementation of fixed recoverable costs is now at the forefront of everyone’s mind and until we know the quantum value affected and the new rules, the market is going to be full of uncertainty.

I would urge you not to lose sight of the fact ATE insurance plays a major part in whether clinical negligence claims are viable. Is it fair a fatal claim can’t proceed because removing ATE premium recovery makes the overall costs disproportionate to the claim value? Perversely if your plane or train is delayed, the government is quite happy for you to claim compensation but seemingly not for the death of a family member due to NHS negligence.

The MoJ is not talking or listening to the ATE providers but they might just listen to you. I would urge you to put pressure on them by completing the consultation and getting your thoughts across on what impact removing ATE premium recovery could have on victims of clinical negligence. It will have a huge impact on us all if they take it away.

We are actively engaging with solicitors to develop market-leading products whatever the outcome of the above. If you have any thoughts or concerns over the future of ATE insurance, we would love for you to get in touch. Please visit our website or call 0370 241 1345.




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Augusta 200 x 200Augusta Ventures – the specialist litigation funder targeting the sub-£1m funding market – continues its expansion with the appointment of a business development director and four associates to investigate potential investments.

The recruitment drive – which takes Augusta to 18 staff – comes in direct response to growing demand among law firms and their clients to secure finance for their litigation.

Business development director Rebekah Weiler is a New York-qualified lawyer with an LLM in International Law from University College London.

She joins from specialist broker TheJudge, where she was an associate director focused on high-value commercial litigation and arbitration cases, and after-the-event (ATE) insurance broking. She will work closely with Augusta’s three other business development directors – Louis Young, Robert Hanna and Jeunesse Edwards.

The four new associates will be supporting the management team in a range of supporting roles. They are:

  • Marianne Manongdo, who joins from the Financial Ombudsman Service, where she was an adjudicator in the SME division;
  • Tasnim Rahman, previously in the compliance team of credit insurance business Euler Hermes;
  • Sandeep Reayt, former operations manager at Hillcroft Residential College For Women; and
  • Grace Reohorn, who joins from The Help Agency, where she was junior project manager.

Augusta engagement director Jeunesse Edwards says: “We’re delighted to have five new faces at Augusta. Since launching in January 2014, we’ve financed 68 cases and provided almost £16m in funding to individuals and companies that might not otherwise have had the means to access justice, despite having a good case to bring.

“We’ve had a successful year and as litigation funding continues to move into the mainstream, we expect to recruit more people to ensure that we are able to quickly assess leads and finance the cases we know have a good chance of success.”




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Spencer: combative speech

A legally qualified Lord Chancellor would not have put in place the recent personal injury changes and court fee reform proposals, the new president of the Association of Personal Injury Lawyers (APIL) has claimed.

John Spencer told last week’s APIL annual conference in Newport that it was “a sad day when lord chancellors stopped being legally qualified”.

He said: “While there is no doubt that legally trained lord chancellors haven’t always got it right in the past, I find it hard to believe that a lawyer would have allowed the relentless de facto attack on injured people and indifference to access to justice we’ve seen over recent years.

“And I really find it hard to believe a Lord Chancellor with a grounding in the law would ever countenance the suggestion that court fees should actually generate profit in civil cases, as has been suggested in a recent government consultation.”

Mr Spencer said he hoped this proposal is “allowed to run into the ground”, adding: “Justice for government profit rather than justice at cost is a line which should not be crossed. The government should be ashamed of itself for contemplating it.”

Mr Spencer – who is the first APIL president to have previously been chairman of the Motor Accident Solicitors Society – also urged practitioners to take a step back from the business of law to ensure they do not forget why they became PI lawyers in the first place.

Recalling his own career, he said that “somewhere along the line I realised I’d majored on being a businessman”.

He continued: “I became embroiled in ambitious plans for business growth and was immersed in that, and so focused on the daily work of making a practice grow that I forgot what really mattered. But then I had an opportunity for a rethink – to stop and take stock. I knew I wanted to build something more worthwhile – a professional, ethical practice which put the vulnerable, the injured person, at its centre.”

In a combative speech, Mr Spencer criticised the government and the Association of British Insurers for vilifying injured people and their representatives, using the new mesothelioma scheme as an example.

“Why shouldn’t people with mesothelioma who are forced to use the scheme because their insurers can’t be traced have to give up some of their damages? … Why can’t insurers who’ve taken and invested profits from premiums over decades do the right thing and pass on some of that profit to ensure these people receive 100% of their compensation? It should be socially unacceptable for them even to consider not so doing…

“Political debate during the passage of the Mesothelioma Bill made it very clear that 75% was about the best ‘deal’ the government could get from the insurers. But this shouldn’t be about doing a deal. It should be about doing what’s right.”

Nonetheless, Mr Spencer said he believed “the worst of the reform agenda is behind us”. However, he highlighted a host of issues on which APIL will be campaigning, including improving and widening the law of psychiatric harm after the death or injury of a loved one, and opposing the Medical Innovation Bill, devised by Lord Saatchi.

This seeks to protect doctors from litigation when they use innovative techniques on their patients. “Who could be more vulnerable than some patients in the care of the NHS?” Mr Spencer demanded.

“So how dangerous would it be to remove the protection the law provides for such vulnerable people? … What evidence is there that a cure for cancer has not been found because doctors are so afraid of litigation that they won’t use innovative techniques?”

“It has captured the imaginations of patients who have no idea that it is effectively a license for doctors to play God.”




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Linetime200Freeths LLP has contracted with Linetime to implement their Liberate litigation software. The system will support the firms growing Commercial Recoveries team.

Freeths LLP have 700 staff operating from 11 cities, offering a wide range of services for businesses and individuals.

Graeme Danby, head of creditor services at Freeths, said: “We already had a system in place handling the core of our day to day case loads. As part of our plans to grow the business unit, we undertook a review of our supporting technology. After researching the leading providers we selected Linetime’s Liberate system. It will assist in the provision of a streamlined, efficient and consistent service for our clients.”

The team will benefit from greater systems support and clients will have online access via the Liberate web portal to real time case information.

Freeths Recoveries team acts for Invoice Finance Providers, Insolvency Practitioners, Local Authorities and Finance Companies.




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Clinical negligence: notice of some sort needs to be given

Clinical negligence: notice of some sort needs to be given

A law firm legitimately switched its client from legal aid to a conditional fee agreement (CFA) even though a notice of discontinuation was not served on the Legal Services Commission (LSC), a costs judge has ruled.

Master Rowley also said that where it is clear that public funding will not cover the entirety of a case, a decision to change to another option “must be a reasonable step to take”.

Hyde v Milton Keynes Hospital NHS Foundation Trust [2015] EWHC B17 (Costs) was a clinical negligence case where liability was agreed but a dispute over quantum continued for a further 18 months, during which time the LSC refused to increase the funding limitation on the claimant’s certificate. As a result, the claimant and her solicitors, Ashton KCJ, entered into a CFA and took out after-the-event insurance.

The solicitors did not apply to discharge the certificate. They did serve an N251 on the defendant, however.

The defendant argued that this failure meant the claimant could not recover the costs generated under the CFA, but Master Rowley disagreed. This was not, he found, a ‘topping-up’ case where the legally aided party’s solicitor seeks to recover more money than he is entitled from the public purse, while a solicitor should not be expected to act knowing that, if unsuccessful, all future work would be irrecoverable as against either the defendant or the LSC.

He continued: “Where a party has exhausted the costs that can be claimed under a certificate so that it is ‘spent’, they can in principle establish a discharge by conduct in the same manner as certificates in which all of the work up to a limitation of scope has been carried out. The effect of that discharge is to end the services funded by the LSC and enable a private retainer to fund the remainder of the proceedings.

“The notification of the new funding arrangement in form N251 satisfies the need for formality in notifying the opponent of the ending of costs protection. Mr Mallalieu [for the claimant] sought to persuade me that notification was not necessary in any event but I take the view that it was required to deal with the costs protection aspect.”

He moved on to decide that it was reasonable to move on to the CFA. “It is no doubt the case that claims are often successfully concluded in a way which renders the overspend as against the certificate irrelevant.

“But I do not think this means that a claimant and her solicitor who keep an eye on the costs being incurred and so are aware of the limitation problem should be obliged to continue to use the certificate come what may. Parties are encouraged to consider their legal spend prospectively and, where it is clear that the available public funding is going to be insufficient, a decision to change to another option must be a reasonable step to take.”

Though the case straddled implementation of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, Master Rowley found that the reform were not a feature of the solicitors’ decision. However, it was relevant in the other recently reported ruling of his on a solicitor who moved her client to a CFA.

Litigation Futures understands that Hyde is being appealed.




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RPC: complaints reflect "aggressive approach to litigation"

RPC: complaints reflect “aggressive approach to litigation”

Complaints about misconduct made against solicitors by solicitors, barristers and other professionals have increased by a third in the past five years, it has emerged.

City law firm RPC said the Solicitors Regulation Authority (SRA) received over 2,500 complaints of this kind last year, compared to 1,850 in 2011.

The firm said that during the same five-year period, the total number of misconduct reports remained static at around 10,900 a year.

RPC said that “rather than indicating worsening behaviour in the legal profession, the one-third rise may reflect an increasingly aggressive approach to litigation, with one legal team launching complaints against their opposition, often on the instruction of their clients”.

Common complaints included litigation behaviour, including delaying tactics, errors of fact – which could trigger claims of misleading the court but were “very unlikely” to rise to the level of misconduct – and “intemperate language”, where a “robust tone of correspondence” was perceived to be rude or threatening.

RPC said complaints were “often made at the request of clients who may misunderstand what constitutes misconduct, misconstrue the meaning or intention of the other party’s solicitor, or seek to exploit an opportunity for tactical advantage”.

Graham Reid, legal director of professional regulation at RPC, commented: “This is not about solicitors’ standards slipping. Litigation tactics are getting tougher. My experience is that more and more complaints appear to be filed in order to gain a tactical advantage in court cases.

“Major litigation can have millions of pounds at stake, and can be transformational for the businesses and individuals involved. That some might want to gain a small advantage through use of tougher tactics is understandable.

“However, it is questionable whether pursuing this tactic is actually a good idea for clients, especially if it increases their costs.

“Of course, solicitors remain under a conduct obligation to report to the SRA any serious misconduct on the part of another solicitor or firm. It’s not always easy to strike a balance between discharging this duty and client objectives.”




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Bushnell: 14-day deadline

Bushnell: 14-day deadline

There should be tight deadlines on all parties to an injury claim – solicitors, insurers and rehabilitation providers – to ensure that rehabilitation achieves as much as it can, according to one well-known rehabilitation case management company.

HCML said the IUA-ABI rehabilitation working party has a one-off chance to make the “dysfunctional” Rehabilitation Code fit for purpose.

HCML chief executive Keith Bushnell said he wanted the working party to tackle round two of consultation on the voluntary code with a mission to cut delays over assessments, treatment and care – he said fewer than a quarter of those out of action for more than six months ever return to work.

“The point of the code is to allow early intervention even when liability is unclear. Yet time after time we see necessary rehabilitation held up by delays in agreeing liability.

“The code needs a mechanism for the injured person to get care when it is needed, and when liability cannot be agreed promptly, the only mechanism currently is single instruction for the most serious injuries.” The code also needed to address treatment for mental health issues, he added.

Mr Bushnell said there should be a 14-day deadline for responses to assessment and recommendations for all parties – insurers, solicitor and rehab providers.

“While integration with NHS and state social care provision should be the default position for rehab intervention, delays at key points of recovery sometimes make private care the best choice to accelerate recovery. A stop-start approach to client care does more than delay recovery. It can reverse progress to recovery.”

While welcoming plans that create separate arrangements for fast-track cases and all other cases – including catastrophic injury – Mr Bushnell said the concept of immediate needs assessments should be reserved just for catastrophic injury, where there is a clear difference between immediate needs and ongoing, long-term care and where outcomes are much less predictable at the outset.

“In all other cases, the expectation should be that treatment, care and return to work support will naturally follow on from the assessment.

“In fast-track cases rehab should proceed through accredited providers with immediate medical assessments by qualified clinicians taking a stepped-care approach with the number of treatments decided on solely clinical need allowing early intervention to proceed smoothly.

“Car repair and hire is agreed immediately in these cases – rehab should be no different. A high proportion of cases can be effectively resolved through well managed self-help programmes.”

He added that HCML supports moves to introduce compulsory standards for accredited case managers, overseen by the appropriate professional bodies.




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Dyson: doing nothing is not an option

The Civil Procedure Rule Committee (CPRC) looks set to introduce an exemption from costs management for all civil cases that are worth in excess of £10m – even though Sir Rupert Jackson himself is opposed to any exceptions.

Newly released papers from the 6 December meeting of the CPRC reveal that it fell into line with the joint recommendation of the Master of the Rolls, Lord Dyson, and the deputy head of civil justice, Lord Justice Richards.

In a note put to the committee, the pair said the current £2m threshold was a temporary fix. “Although it has helped to reduce the problem of forum shopping, it does not provide a uniform regime and in our view it sets too low a threshold for any general exclusion to costs management”.

The options of doing nothing – “notwithstanding the support for it among consultees” – or allowing the parties to opt out, were “unacceptable”, they said.

Allowing no exception accorded best with Jackson principles “and it now has the support of Sir Rupert Jackson himself”, the judges said. “We would have no hesitation in favouring it, were it not for the concerns expressed so strongly by so many consultees that a requirement for costs budgeting would risk deflecting high-value cases away from London and the UK.

“We share the doubts that members of the committee have voiced about these concerns, but we do not feel in a position to dismiss them out of hand.”

That left the “pragmatic” fall-back position of applying costs management to all cases across all courts, except those where the amount in dispute exceeds £10m, unless the court ordered otherwise. There would be a discretion to apply costs management to cases above that level and there may be a ‘certification of value’ that would cover the likes of intellectual property claims where there may be no monetary claim but the amount at stake may be very large.

The existing exception for proceedings subject to fixed or scale costs would continue, while part 8 claims would also be excluded.

“If the threshold is set sufficiently high, it can reasonably be said that the risk of litigation being conducted at disproportionate cost diminishes to an acceptable level,” the note said. “In our view, however, a threshold of £10m, rather than the figure of £5m suggested by some, is needed for that purpose.”

The position was supported by Mr Justice Coulson, who chairs the CPRC sub-committee charged with looking at the exemption. The minutes of the December meeting said he thought it important to note that judges in the Rolls Building responsible for costs budgeting would welcome this option, particularly in light of judicial resources available.

The minutes said solicitor member Qasim Nawaz maintained that budgeting “should be applied across all jurisdictions, that lack of resources was not a compelling argument for limiting it, and that any monetary value set would be of an artificial nature.

Nonetheless, the committee was largely in favour of Lord Dyson and Lord Justice Richards’ solution – although a number of members were in favour of a £15m threshold. “It was agreed that £10m should be the starting point, subject to review of that figure.”

Issues then discussed by the CPRC centred on how the threshold should be expressed to ensure that it was clear to the profession how the limit would be applied, without the necessity of coming to court for direction; framing the rules to deter forum shopping; setting out explicitly the case management power of the court to order costs budgeting on a discretionary basis by way of a practice direction; identifying types of claims, such as intellectual property cases which may require particular rules; clarification of the trigger points for filing a costs budget; and bringing more flexibility to Precedent H to deal with under- and over-spend in separate categories.

The sub-committee was charged with drafting rules and a practice direction to guide the exercise of discretion and to accommodate concerns expressed about those cases that fall into the £10m-£15m range.

Mr Justice Ramsey, the judge in charge of Jackson implementation, was added to the sub-committee for this task, and a first draft was due to be presented at this month’s CPRC meeting.




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Walton: independent report

Creditors face losing more than £150m per year if the exemption from the Jackson reforms for insolvency litigation ends as planned next April, according to an independent report commissioned by the insolvency profession.

However, the report also acknowledged that success fees and after-the-event insurance premiums are “rarely paid in full and often not paid at all” at the moment.

The Association of Business Recovery Specialists, known as R3, has launched a press and parliamentary campaign to call for a permanent exemption for insolvency litigation.

It commissioned Professor Peter Walton of the University of Wolverhampton to research and write the report, with the support of the Association of Chartered Certified Accountants, the Insolvency Practitioners Association, the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants Scotland, claims specialists JLT Specialty, solicitors Moon Beever, and accountants Moore Stephens.

R3 said that without the ability to recover costs fully, legal action to reclaim debts from directors would be unaffordable in most cases.

Using 2010 figures from the Insolvency Service and a survey of R3 members, the research estimated that insolvency litigation conducted under conditional fee agreements (CFAs) realises £150-160m a year. A majority of claims realise £50,000 or less, and it said practitioners believe such “relatively small” claims are generally unlikely to be pursued if the exemption comes to an end.

But it also admitted that “in reality, the CFA uplift (and ATE insurance premium) are rarely paid in full and often not paid at all (even where the insolvency litigation has been successful)”. But the report continued that nonetheless, “the existence of the risk to defendants of having to satisfy such claims, does concentrate their minds. The current system does encourage a large majority of claims to settle.

“The view of practitioners is that Jackson would lead to fewer cases being brought and of those that are brought, fewer would settle. Those that would still settle would settle for a lesser amount.”

This meant that “wrongdoers are more likely to ‘get away with it’, and further culpable behaviour will be encouraged”.

Phillip Sykes, deputy vice-president of R3, says: “Insolvency litigation is absolutely in the public interest, and it is absurd that the government is considering making it all but impossible for such cases to continue. The Jackson reforms were supposed to protect exactly this type of case.”

“The government’s only justification for ending the exemption is that it would make the Jackson reforms consistent across the board, regardless of the consequences. It’s just lazy thinking.”

The report argued that insolvency litigation differs from ordinary civil litigation in a number of ways that should continue to be recognised by the law.

“Insolvency litigation is in the public interest and claims brought are not frivolous nor do they have disproportionate costs. For example, when a public body is sued successfully public funds are reduced, yet when insolvency litigation is successful, it is often public funds that benefit, through returns from the insolvent estate to HMRC. Alternative funding, whilst available has a high acceptance threshold and a high cost.”

Further, it said disproportionate costs are not a problem in insolvency litigation.




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Medical reporting: new service standards

Medical reporting: new service standards

The number of high-volume national medical reporting organisations (MROs) registered with MedCo is set to fall after some failed the auditing process, it has emerged.

There are currently 14 so-called tier 1 MROs and according to a MedCo spokeswoman, it has advised “a number” of them that they have failed to meet the qualifying criteria and are to be reclassified as tier 2 non-national MROs.

MedCo is now dealing with appeals against its decisions, and the spokeswoman said that “on completion of the appeal processes MedCo will be able to advise on the number of [tier 1] MROs that have been reclassified”.

The recent PI Futures conference heard that in all there were 175 MROs on the MedCo system.

Meanwhile, Richard Mason, deputy director for civil justice at the Ministry of Justice, has admitted that the government had seen “business practices from the MRO side that we weren’t expecting”.

Speaking at last week’s Bond Solon expert witness conference, he said some MROs registered as tier 1 and then registered again, while others “argued that they had more capacity than they have”.

Mr Mason said the MoJ had estimated that there would only be six MROs in tier 1.

Also last week, MedCo introduced minimum service standards which must be met by medical experts and tier 2 MROs. Tier 1 MROs are already bound by their own minimum standards and service levels as defined by MedCo.

A statement explained: “It has been brought to MedCo’s attention that some authorised users of the MedCo system are not receiving consistent and reasonable standards of service from all registered providers of medical reports.”

Under the standards, experts have to acknowledge their initial instructions within 24 hours, provide an appointment date within 14 days, identify a clinic that is no more than 30 miles from the claimant’s home or work, and deliver the report within 14 days of the appointment or, where relevant, receipt of all the claimant’s medical records. Any further comments or amendments must also be made within 14 days.

Failure to meet these minimum service standards would result in enforcement action and potential suspension, MedCo warned.




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Leeds County Court: lawyers becoming scarcer

Leeds County Court: lawyers becoming scarcer

The number of defended non-family county court cases where both parties had legal representation fell in 2014, government figures have shown.

Meanwhile, in the High Court, the number of personal injury claims is increasing rapidly, but Commercial Court actions are declining.

Provisional figures from the Civil Justice Statistics Quarterly revealed that both claimant and defendant had legal representation in 62% of the 232,004 cases where there were defences in 2014, compared to 65% in 2013. Neither party was represented in 19% of cases, up from 17% in 2013.

Defences with either the claimant or defendant only represented were 15% and 4% respectively, compared with 13% and 4% in 2013.

The statistics highlighted considerable variation depending on the type of claim. While both parties were represented in 97% of unspecified money claims, the figure fell to 35% for specified money claims (with the claimant alone represented in a further 26% of such cases).

Neither party was represented in half of mortgage and landlord possession cases – and both sides had lawyers in just 16% of defences – while in other non-money claims, 61% of defences had lawyers on each side.

Changes to legal aid in April 2013 removed eligibility for some civil cases and the report said the government “will be carrying out further work to look in more detail at the emerging trends within these data”.

In the High Court, the statistics recorded that the number of personal injury claims issued at the Royal Courts of Justice jumped by more than half (53%) in 2014 to 1,449, while there was a 17% increase in clinical negligence claims issued, to 1,326.

At the same time, the Commercial Court saw a 19% fall in cases started in 2014, down to 1,085. Of these, 21% related to arbitration applications and appeals, and a further 20% to general commercial contracts and arrangements.

The Court of Appeal saw an 11% increase in applications, to 1,269.

The figures also showed a sharp spike in workload at the Senior Court Costs Office. It received 15,230 assessments in 2014, an increase of 23% on the previous year.

Of these, 47% were Court of Protection assessments, and 30% legal aid assessments.




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Costs: criteria for determining whether they are disproportionate are obscure

Litigators from many of the City’s top firms have expressed deep concerns about the impact of the Jackson reforms, saying they have increased the cost of litigation without improving its efficiency.

The litigation committee of the City of London Law Society was particularly critical of costs budgeting and the impact of the Mitchell ruling.

Publishing the paper it has submitted to the Civil Justice Council’s review of the first year of Jackson, the committee – which is chaired by Clifford Chance partner Simon James – said it was concerned that the reforms “may have an adverse effect on the international perception of litigation in England”.

Among a myriad of complaints about budgeting, the committee said the cost of preparing a budget commonly exceeds the recoverable allowance for doing so – “often by a large margin” – that the approach of the court to budgets is “uncertain and inconsistent” and that “the criteria for determining whether costs are disproportionate are obscure and, in practice, are likely to depend upon the predilections of the individual judge”.

The paper said: “The committee is also concerned that some judges have a limited understanding of what is required to run a major commercial case. Conducting large-scale litigation is a significant exercise in project management, an exercise that many judges will never have undertaken.”

It argued that judges who consider that the budgeted costs are too high rarely look to cut down the steps required to take the case to trial, and instead set a budget “merely reflecting the judge’s underlying but largely unexplained view of what aggregate figure the losing party should pay in costs”.

The problems with budgeting were exacerbated by the Mitchell ruling, the committee continued. “The committee is concerned that this represents a punitive and formalistic – even anachronistic – approach to litigation that is out of kilter with the pre-eminent need for justice to be both done and seen to be done.”

The potentially penal sanctions for breach of a rule will increase compliance costs for solicitors and, as a result, their clients, it said, and will lead to the courts facing lots of applications for time extensions.

“This is not to say that courts should never be strict with time limits. It may be, for example, that unless orders should be enforced more strictly than has traditionally been the case. But what might have been undue leniency in the past risks turning into undue rigidity now.

“Courts should be able to recognise when a party is genuinely trying to progress a case and when it is stalling unnecessarily or jeopardising a trial date, and act accordingly.”

The submission also questioned why the regulations effectively prevented firms agreeing hybrid damages-based agreements (DBAs) with clients, with full DBAs “little, if at all, used in commercial litigation”.

It also recommended scrapping disclosure statements on the basis that they added to the cost of litigation but “have little material effect on the disclosure order made by the court”.




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Courts around the world are cracking down on costs yet the complexity of complying with disclosure rules is increasing, especially where multiple languages are involved. Drew Macaulay of Consilio looks at the major challenges facing litigators when dealing with multi-lingual disclosure

Macaulay: how do you know which languages are present?

Large companies today are more likely than ever before to operate on a global basis, dealing with parent and subsidiary entities, suppliers, customers and joint venture partners in other countries, aided by workforces that are able to communicate using more than just their native language.

This ability to do business across borders and in multiple languages brings significant competitive benefits. However, for companies faced with litigation or regulatory investigation, the existence of documents in multiple languages creates a major headache. Not only does this bring increased risk and delay to an already unpredictable investigation or disclosure process, but the additional costs can be significant at a time when corporate budgets are tight and courts in common law jurisdictions are expecting tighter cost control..

Deploying the right process and technology

The process of collating, searching, reviewing and disclosing documents is common to many forms of legal matter, from regulatory and internal investigations to litigation and arbitration. What is less understood is the additional complexity caused by the existence of documents in multiple languages and the risk they pose to legal practitioners.

It is relatively common to collate large sets of data (such as the e-mail archives of relevant company employees) and perform keyword searches across these data sets to identify documents which are potentially relevant to the matter at hand. If the data sets contain multiple languages, then any keywords that are language-specific need to be translated into all the relevant languages for an effective search to take place. This in turn raises another issue: how do you know which languages are present?

Continuing this theme, certain languages are written using non-Latin characters, for example the Hangul script is used for Korean and the Kanji characters for Japanese. If the methods used to collect and search documents in these languages involve computers which do not have the relevant language packs installed, a scrambling of characters occurs, again compromising the search process.

Speaking the same language

For a law firm undertaking a multilingual document review exercise the issues do not finish there. Many major law firms boast staff proficient in a range of languages, but they may not be available in sufficient numbers to complete the review process within the required deadline, and getting documents in a specific language in front of the right reviewer is not always straightforward.

Translation is the traditional method for dealing with this issue, but is frequently inefficient in this context as the process is very labour-intensive (and therefore expensive), and the precise relevance of a document has not yet been established. It is therefore quite possible to spend thousands translating documents which will be discarded as irrelevant almost immediately.

Thankfully, as the problems of undertaking multilingual document disclosure exercises have become more common, so have the potential solutions. In some cases just planning for the existence of these documents can mitigate significant risk. In others, more technical solutions may need to be considered. As with many problems, the best approach lies in breaking down the process into individual tasks, and using the most appropriate combination of human resources and technology to achieve the goal of each task.

Starting at the beginning, simply being aware of the risks that are posed by incorrect collection of documents will help enormously. In many cases, external assistance is used at the collection stage to guarantee the admissibility of evidence, and if there is a chance that non-Latin characters will be an issue in your case, it is worth enquiring as to whether your selected service provider has experience in dealing with these languages. Similarly, if the provider is going to be undertaking the searching of these documents, then confirmation that their software can handle searches in all the relevant languages should be sought.

If the languages present in the data to be searched are not known, then the use of automated language identification software can be extremely helpful. As its name suggests, this can automatically identify the language in which an electronic document is written, even where that document (such as a chain of e-mails) may contain two or more different languages. This enables the review team firstly understand which languages are present and in what numbers, and to then collect documents together by linguistic group for subsequent human review or translation.

Blending the efforts of automation and skilled staff

If reviewers with the required language skills are not available within the firm, then two further options to avoid the expensive and time-consuming human translation are the use of multilingual document reviewers or machine translation.

Machine translation is frequently a good option for documents in Latin-based languages, as the linguistic structures of these languages are often very similar, so the output can be reasonably accurate – at least enough to identify whether the document is relevant. With non-Latin based languages the quality may be less good, and it is usually worth asking the provider to undertake a test using a sample document before any final decisions are made to use this approach.

As an alternative, or where machine translation is not an option, it is possible to engage multilingual contract lawyers to undertake the review. The availability of contract lawyers proficient in rarer languages can however be a challenge, particularly at short notice, and it can be helpful to engage the services of a specialist sourcing firm with a large network of contract staff to avoid delays in getting the review up and running.

Determine the best outcome

Given the potential obstacles involved, the early implementation of the right combination of the above solutions for a specific case is essential. Once this has been accomplished, the application of modern workflow methodologies and technologies should mean that the process can be completed efficiently and accurately, ensuring that you and your clients remain on the right side of the courts.

Drew Macaulay is managing director at e-disclosure and managed review provider Consilio 




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HarmansThe 86th Update to the CPR which came into force on 3 October 2016 extended the new bill of costs pilot scheme by a year and was modified to alleviate concerns raised about the existing form’s reliance on J Codes. The parties are able to file their new format bills in electronic format to assist the Court in assessing the bill, as any adjustment made by the Court to say the rate or hours claimed, would automatically be carried through to all relevant parts of the bill.

Practice Direction 51L relates to the new bill of costs pilot scheme. Although the new format bill remains voluntary at the moment, there is an express plan in Practice Direction 51L that the preparation of the new format bill will become mandatory.

The Rule committee are currently monitoring and reviewing the Pilot Scheme with an aim to fix the mandatory form of the new bill of costs at its meeting in May 2017.  The Pilot scheme was put in place with a view to establishing a mandatory form of bill of costs to apply to all work done after 1 October 2017.

The new bill of costs means the bill of costs in Precedent AB annexed to Practice Direction 51L as a “pdf version” together with an electronic spreadsheet version of the same bill in the form provided in paragraph 1.4 of Practice Direction 51L.

In order to utilise the new format bill to its full potential, firms of solicitors will be required to record their fee-earning time with reference to phase, task and activity. The use of J-Codes is recommended but not mandatory. Schedule 1 which is attached to Practice Direction 51L defines the phases, tasks, activities and expenses to utilise when preparing the new format bill.

We still await a decision on exactly when the new bill of costs will become compulsory and whether there is a transitional period between the use of the old format bill and the new one. There is still a lot of uncertainty with regard to how to deal with costs of long running matters.

A point to note is there is currently no new statement of costs (N260) in the pipeline as the Hutton Committee is concentrating on getting the new format bill right. I anticipate that there will be some form of new statement of costs in the future to reflect the changes to the new format bill.

With the above in mind, Harmans utilise CostsMaster to produce all of their bills of costs which is already geared up to prepare the new format bills.

To read more on the Harmans cost brief click here.




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

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

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

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

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

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

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

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

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

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

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

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

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




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RCJ

Judge Purle: “plain words” cannot be ignored

The High Court has rejected an appeal against a Master’s decision to hold that a liquidator was “personally responsible” to pay his solicitors and barristers’ fees under a conditional fee agreement (CFA).

Judge Purle QC, sitting as a High Court judge, held that Crawley law firm Stevensdrake had achieved a “success” in insolvency proceedings against two administrators, by securing Tomlin orders in settlement.

Judge Purle said the order against the first administrator, for £125,000, was paid, but the order against the second, for £1.9m was not. Under the terms of the CFA, Stevensdrake demanded just under £1m in costs and success fees from their client, liquidator Stephen Hunt.

Counsel for Mr Hunt argued that both the law firm and its counsel’s fees were, according to the retainer, “recoveries-based”.

However, giving judgment in Stevensdrake v Hunt [2015] EWHC 1527 (Ch), Judge Purle said that one of schedules to the CFA with Mr Hunt contained the following statement: “You are personally responsible for any payments that you may have to make under this agreement. Those payments are not limited by reference to the funds available in the liquidation.”

Judge Purle said that, on the evidence before him, Chief Master Marsh was entitled to enter summary judgment against Mr Hunt, and order him to make an interim payment to Stevensdrake of £75,000, in respect of counsel’s fees.

“Whatever the starting point, the plain words of the schedules to this CFA cannot be ignored. Correspondence from two years previously, or subsequently, cannot override those words.

“Mr Hunt’s responsibility under the CFA and its schedules was to pay the disbursements as well, as was conceded below.”

Judge Purle concluded that there was “no basis” on which he should set aside the order granting summary judgment. He went on to rule that on other issues regarding the fees, the action should proceed to trial.

He decided that the parts of the defence pleadings struck out by the Master should remain struck out.

“The Master, though he was plainly unimpressed by the defences advanced, allowed most of them to proceed upon condition of a payment into court of £100,000. It seems to me that he was plainly entitled, for the reasons I have given, to be unimpressed by the defences, and to proceed in that way.”

Judge Purle advised that “matters might look different” if a counterclaim for breach of fiduciary duty or undue influence was properly pleaded.

“Undue influence one thinks of as being there to protect the vulnerable and weak, but it is also there to protect those to whom fiduciary duties are owed, and the consequence may be, if the complaint is made good, that the CFA will be set aside, or compensation will be ordered.”

However, Judge Purle dismissed the defendant’s current appeal “in its entirety”. He said the “appropriate course” for defence counsel would be to reconsider his pleas in this light and for the revised pleading to be considered at a further hearing.




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hearing aid

CMC accused of making “millions” of calls over noise-induced hearing loss

The Claims Management Regulator (CMR), based at the Ministry of Justice (MoJ) has fined a claims management company £220,000 for making nuisance calls about claims for noise-induced hearing loss – the first fine of its kind.

A spokesman for the MoJ said The Hearing Clinic was responsible for “bombarding people with millions of nuisance calls” even though many of those called had subscribed to the telephone preference service. He said “hundreds of people” had complained about the calls.

He said additional conditions had been imposed on The Hearing Clinic, based in Derby, including restrictions around calling numbers registered on the preference service and using data from third-party companies.

“The Hearing Clinic could face further sanctions including suspension and, where necessary, closure if they break the rules again,” he warned.

Kevin Rousell, head of claims management regulation at the MoJ, said: “The new fines mean we have greater powers to crack down on claims management companies that make nuisance calls.

“Companies should be in no doubt that if they break the rules then we won’t hesitate to fine them in addition to the tough action we already take.”

The fine is the first to be issued by the CMR since the fining power was introduced in December 2014.

Firms found breaching the regulator’s rules of conduct now face fines of up to 20 per cent of their annual turnover, as well as having their trading licence suspended or removed.

Justice Minister Lord Faulks QC said: “The government has taken action to help people who are having their time wasted by the unscrupulous practices of some claims firms out to make themselves a profit at others’ expense.

“The new fines we introduced mean that companies who break the rules will pay the price.”

The latest figures show that the number of claims firms registered to handle personal injury claims has fallen from around 2,300 at the start of 2013, to 959 at the end of July 2015.

The MoJ asked the Civil Justice Council to investigate the number and cost of claims for noise-induced hearing loss at the end of last month.

This followed lobbying from the insurance industry over the issue, describing deafness claims as “the new whiplash” and as a “cash cow” for claimant lawyers.




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Hurley:  professional indemnity claims on the rise

Hurley: professional indemnity claims on the rise

Nearly three-quarters of personal injury specialist solicitors say the 10% uplift in general damages introduced to compensate for the LASPO changes is insufficient to cover the additional costs that claimants now have to meet, according to a survey.

Challenging the view of former Forum of Insurance Lawyers president Andrew Parker, who in December claimed the Jackson reforms had “improved access to justice”, almost two-thirds said a claimant’s access to justice has been significantly restricted by the reforms in the nearly two years since they came in.

Predictably, the survey of 100 senior soliciors – carried out late last year by MSS for legal expenses insurer ARAG – found that seven out of 10 reported the reforms had had negatively impacted on their practice, while not one indicated a positive impact.

Just 11% thought they were routinely securing the additional 10% uplift on all successful cases and only one solicitor said the extra 10% fully covered the extra cost of after-the-event (ATE) premiums and success fees.

Although 83% of practices surveyed offered ATE insurance, just half offered it on all cases. ARAG argued that the shortfall risked higher premiums due to adverse selection, as firms cherry picked the more certain cases.

ARAG’s head of ATE, Paul Hurley, said: “Where firms don’t insure, the client is often left holding the risk unless the firm agrees to carry the risk themselves. This leaves the firm vulnerable to professional indemnity claims from disgruntled claimants, an area we know is on the rise…

“The reforms should have ensured that a claimant is returned to the position they were in prior to the injury, without penalty and this is not the case. In fact, for many without the means to fund a case themselves, access to justice is simply not available.”

He called for an “urgent review” of the reforms by whichever government was in power after the general election to ensure changes were “fair to all sides in the claim, not just the defendants”, adding: “With legal aid only available in exceptional cases, ATE insurance is the only recognised form of protection that can safeguard the claimant against adverse costs in pursuing a claim, and so the cost of premium should be recoverable from the losing party.”




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Just Costs posterTo celebrate their 10th Year, Just Costs Solicitors will tour the UK and deliver a series of influential seminars in 10 major cities.

These half-day seminars will be presented by an expert panel of speakers including Barristers, Judges, and Costs Specialists, and are suitable for all litigation practitioners.

Important updates will be provided on changes to costs guidelines; leading case law; judicial perspectives; market trends; and the emergence of game-changing costs software.

Confirmed speakers include:

  • His Honour Judge Pearce
  • Paul Shenton – Managing Director, Just Costs
  • Tim Walker – Barrister, 7 Bedford Row
  • Nick McDonnell – Director, Just Costs
  • Neil Fawcett – Barrister, St Philips Chambers
  • His Honour Judge Havelock-Allan QC; and more

These events also offer the opportunity for attendees to put questions directly to our speakers, and to network with fellow practitioners.

Just Costs advise Solicitors to book before 23rd September to receive 1/3 off the standard ticket price!

Tickets can be purchased through www.justcostssolicitors.eventbrite.com

About us:

Just Costs Solicitors is the UK’s leading Solicitors’ costs practice. We specialise in Claimant Personal Injury, Clinical Negligence and Commercial Litigation costs.

We offer a complete costs recovery service that includes: drafting of bills and costs budgets, negotiations, detailed assessment hearings and the collection of costs monies from the insurers. We do not outsource any of this process, including assessment hearings.

There are a number of benefits to using Just Costs for all your cost recovery requirements, which include:

  • Increased Profitability
  • Unique and Considerable Experience
  • Reduced Administration
  • Free file collection and delivery
  • Weekly electronic MI reports
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  • In-house CPD Accredited Training Seminars



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Etherton: Effective disclosure a key attraction of English law

A “wholesale cultural change” in the approach to disclosure in the Business and Property Courts is needed, a judiciary-led working group has said, which will be brought about by a completely new rule and guidelines applying to the majority of cases.

The group, chaired by Lady Justice Gloster, has put forward a pilot which will include a duty to disclose known adverse documents, irrespective of whether an order to do so is made.

The plan is for a two-year pilot across the Business and Property Courts in the Rolls Building and in the centres of Bristol, Cardiff, Birmingham, Manchester, Leeds, Newcastle and Liverpool.

The proposed scheme should be submitted to the Civil Procedure Rules Committee for approval in March/April 2018, to commence “as soon as reasonably practicable thereafter”. There will be further consultation with judges, lawyers and users between now and then.

The review was commissioned in May 2016 by Sir Terence Etherton when he was Chancellor of the High Court in response to widespread concerns about the perceived excessive costs, scale and complexity of disclosure.

The working group has concluded that the standard disclosure test introduced in the CPR to reduce the volume of disclosure, and its cost, has not been fulfilled; rather, volume of data that might disclosed has reached “unmanageable proportions” in many cases.

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

Both lawyers and judges were also to blame, the group said: “Neither the profession, nor the judiciary, has adequately utilised the wide range of alternative orders under CPR 31.5(7). In practice, standard disclosure has remained the default order for most cases.

“Searches are often far wider than is necessary, and disclosure orders are not sufficiently focused on the key issues. This often results in the production of vast quantities of data, only a small proportion of which is in fact referred to at trial.”

There was also “inadequate engagement” between the parties prior to the first case management conference (CMC).

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

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

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

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

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

“It is not intended to be an onerous process and there are a number of exceptions where the provision of basic disclosure can be dispensed with entirely.”

After close of statements of case, the parties would be required to complete a joint disclosure review document – replacing the existing electronic disclosure questionnaire – that would “provide a mandatory framework for parties and their advisers to co-operate and engage prior to the first CMC with a view to agreeing a proportionate and efficient approach to disclosure”.

Where ‘extended disclosure’ was required, there would be five models for the court to order, ranging from an order for no disclosure in relation to a particular issue, through to the widest form of disclosure, requiring the production of documents which may lead to a train of enquiry.

Precedent H cost budgets in relation to disclosure would be completed after an order for disclosure has been made rather than before. “Parties will, however, be required to give estimates of the likely costs of disclosure when filing the completed DRD in order that the question of proportionality may be considered at the CMC before an order for disclosure is made.”

There would be express sanctions for non-compliance.

Sir Terence, now Master of the Rolls, said: “It is imperative that our disclosure system is, and is seen to be, highly efficient and flexible, reflecting developments in technology. Having effective and proportionate rules for disclosure is a key attraction of English law and English dispute resolution in international markets.”

Rosemary Martin, group general counsel and company secretary at Vodafone Group UK and chair of the GC100 lobbying group that pushed for the review, said: “The GC100 members are delighted that the working group has taken the task of revising the disclosure rules so seriously and with a much more radical attitude than many were expecting.

“If, collectively, we can get behaviours to change too – which is the difficult bit – then this initiative will be enormously valuable for the future.”

The subcommittee that drafted the pilot rules comprised Chancery Division Chief Master Marsh, Mr Justice Robin Knowles, Simmons & Simmons partner Ed Crosse, who is president of the London Solicitors Litigation Association, and Vannina Ettori, legal adviser and private secretary to the Chancellor of the High Court.




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Neuberger: neuroscience will have a role in the law too

Judges will have to learn how to use artificial intelligence (AI), the president of the Supreme Court has said, but there is “little point” in them worrying about the possibility of being replaced by it.

“The take-over of legal work by IT is very interesting to read and think about and it presents very important medium and long-term strategic issues for the legal profession,” said Lord Neuberger.

“However, for the moment at least, I think that there is little point in the judges making plans for the possibility of being replaced by AI.

“We should be concentrating on learning how to be as good at our judicial roles as we can, and that includes making best use of IT and in due course no doubt of AI.”

In a speech to the Royal Society on science and law, Lord Neuberger said the influence of AI on the law was “fascinatingly discussed” by Professor Richard Susskind and his son, Daniel, in their book The Future of the Professions, reviewed by Legal Futures here.

Lord Neuberger said everyone knew that IT was “developing techniques to deal with the more humdrum side of law”, such as disclosure of documents.

He said computer programmes were now “being developed which not only outplay the human world chess champion and outperform human winners of TV quiz shows, but which can apparently outperform IP law experts in predicting the outcome of US Supreme Court patent litigation”.

Lord Neuberger said developments in neuroscience could also “provide vital assistance within 20 years to the making and application of the law”.

He went on: “As studies on the brain develop, no doubt we will start to learn about the way we react to events, to people and to ideas, and how we make decisions.

“So neuroscience will assist a judge not merely with assessing information and evidence which is coming into her brain through her eyes and ears, but also, and rather unsettlingly I suspect, with an insight as to how she processes that information and evidence once it is in her brain.

“Her conscious and unconscious biases and assumptions will be factors which she will have to know about and no doubt which she should allow for.”

Lord Neuberger concluded that law and science could not “afford to be complacent” and each “have to strive” to keep ahead.

“So, here in the UK science and the law should be reinforcing each other – excellence reinforcing and learning from excellence.”




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Taussig: Broadhurst provided the answer

Taussig: Broadhurst provided the answer

A successful part 36 offer in a provisional assessment removes the £1,500 costs cap, the High Court has ruled.

Overturning a decision of Master Whalan in the Senior Courts Costs Office, Mrs Justice Laing followed the reasoning of the Court of Appeal earlier this year in Broadhurst v Tan, when it ruled that a party who beat a part 36 offer in a case where fixed fees applied was eligible for indemnity costs,

The thus-far unreported case of Lowin considered whether CPR 36.17(4) – indemnity costs on beating an offer – dislodged the £1,500 cap set out in rule 47.15(5) for the costs of a detailed assessment that concluded at provisional assessment stage.

According to a blog by Gurion Taussig, a barrister at 9 Gough Square who acted for the successful party, the master agreed that her costs should be assessed on the indemnity basis, but ruled that the cap remained intact. He drew a distinction the Broadhurst case.

Mr Taussig, who was instructed by Boyes Turner, said that on appeal, Mrs Justice Laing held that there was a conflict between rules 36.17 and 47.15(5), because the latter derogated from the entitlement to costs on the indemnity basis conferred by part 36.

“In resolving the conflict, the scheme of reasoning contained in Broadhurst provided the answer. If the draftsman of the rule committee had wished part 36 to be modified so that the cap would remain, then that would have been stated. The court further stated that the dislodging of the cap would incentivise parties to accept reasonable costs offers because, if they did not, they would be at risk of adverse cost orders pursuant to part 36.”

The matter was remitted to Master Whalan to re-assess the appellant’s costs of the detailed assessment on an indemnity basis.

Mr Taussig added: “The decision represents an important extension of the Broadhurst principle, and one that potentially affects all cases that proceed to provisional assessment of costs in part 47 proceedings.

“Parties should indeed be incentivised to make reasonable cost offers, but equally they must be aware that a failure to accept a reasonable part 36 offer is likely to have cost consequences if the offeror achieves a better result on provisional assessment.”




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Tony Dyas

Dyas: ups and downs

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

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

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

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

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

The reality of the ATE world is;

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

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

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

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

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

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

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

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

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

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

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

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




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money

Costs: Jackson LJ’s lecture will “inform debate”

Lord Justice Jackson has been carrying out ‘research’ into the operation of costs budgeting in advance of a lecture next month, the Judicial Office has confirmed.

Colin Richmond, a barrister at Zenith Chambers, gave a detailed account on the chambers website of one of a “series of meetings across the country” held by Jackson LJ to gather views from lawyers on which aspects are working well, which are not, and which of the rules may need to be changed.

Mr Richmond, who attended a meeting in Leeds last month, said the judge had made it clear any views he expressed “were preliminary views only and that his opinion may change once he has completed the review process”.

A spokesman for the Judicial Office said: “Lord Justice Jackson has been conducting some research into the operation of costs budgeting ahead of delivering a lecture next month on the topic.

“This is not a formal review as such, but clearly the lecture will help inform the debate and any future review and evaluation that takes place. The details and conclusions of this work will be reflected in the lecture, and more details of that will be available soon.”

Highlighting the “main points” discussed at the meeting, Mr Richmond said: “There was general agreement that there is a lack of consistency in the way different court and judges at local level deal with costs budgeting.

“Some judges have embraced the process, whereas others give the impression of being keen to avoid budgeting if at all possible.

“Some judges scrutinise budgets very carefully, with others taking a much more broad-brush approach, to the extent of simply providing an overall figure for the whole budget on the basis that a party should then divide it among the phases as it sees fit.

“Jackson LJ suggested that there appeared to be a real need for greater training of judges on the budgeting process.”

Mr Richmond said there was a further problem with lack of consistency as to the orders made following the filing of directions questionnaires, with some courts requiring “very little” to be filed in advance and others “very large amounts of paperwork”.

Jackson LJ was reported to have suggested that a set of standard directions to be used by courts across the country could be useful.

Mr Richmond went on: “The date when budgets should be filed was raised. Jackson LJ initially suggested that, in his view, seven days before the hearing was appropriate, allowing the parties to file the most up-to-date budgets possible while still having time to try and agree them.

“Some practitioners felt that seven days left too little time to come to any agreement and 21 days would be more appropriate. Jackson LJ questioned whether or not 14 days might be a sensible compromise.”

On guideline hourly rates, despite Lord Dyson’s announcement that they would remain the same indefinitely in the absence of funding for an in-depth survey, Jackson LJ is reported to have suggested that a “full review” was necessary and mentioning the possible use of a “complexity uplift”.

Lord Justice Jackson’s lecture will be delivered on 13 May alongside the Master of the Rolls, Lord Dyson.




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Email: failure to comply with CPR

A High Court master has allowed a party’s bid to withdraw a part 36 offer ahead of the new discount rate coming into force on Monday, even though they used a defective method to deliver it.

In Thompson v Reeve & Ors, the claimant – who suffered a road traffic crash and then negligent treatment of her injuries – valued her case at £347,000 and last August made a part 36 offer of £340,000.

On 28 February 2017, her solicitors emailed the defendants to withdraw it and Master Yoxall said it was “no secret” that this was because of the announcement of the new discount rate the day before, as a result of which the claim would be worth about £602,500.

On 2 March, the defendants tried to accept the part 36 offer, again because of the new discount rate.

CPR 6.20 only permits service by email where the receiving party has indicated in writing that it is willing to accept service by email, which was not the case here. The claimant submitted that rule 3.10 – which gives the court a general power to rectify matters where there has been an error of procedure – could be used to validate service.

Master Yoxall said the case law showed that rule 3.10 has a “wide effect” and could be applied in this case.

He said: “I accept that it has no application in certain circumstances, eg rule 7.6(3) which specifically describes the only circumstances in which the time for service of the claim form can be extended. Likewise I accept that rule 3.10 cannot be invoked to extend a statutory time limit or to avoid service of a document required by statute.

“In the present case, the claimant gave notice in writing of the withdrawal. It is not disputed that the notice was actually received. The notice provides the defendants with all the information necessary… It is the method of service which is defective. In my judgement, rule 3.10 can be invoked to cure the defect.”

While accepting that part 36 was a self-contained code, the master said it was “not completely freestanding”.

The final question was whether to exercise the discretion to make an order under rule 3.10. Saying it would be just to do so, Master Yoxall concluded: “In my view, it would not be consistent with the overriding objective that a technical breach of the rules should impede the proper assessment of damages in this case.”




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Parliament: SI laid

The so-called ‘buffer direction’ – allowing parties to agree 28-day time extensions without seeking permission from the court – will come into force on 5 June, it was announced today.

The statutory instrument giving effect to the change – The Civil Procedure (Amendment No. 5) Rules 2014 – has been made and laid before Parliament.

However, the Civil Procedure Rule Committee has included safeguards. The change to rule 3.8 of the CPR provides that where a rule, practice direction or court order requires a party to do something within a specified time, and specifies the consequences of failure to comply, the parties may, by prior written agreement, extend up to a maximum of 28 days the time for doing the act in question, provided that any hearing date is not put at risk as a result.

The CPRC’s move comes as a result of the Mitchell ruling on relief from sanctions for non-compliance and a similar direction that was initially adopted by QB masters in clinical negligence cases.

A commentary released with the 73rd update of the CPR, which incorporates the change, said courts’ “more robust approach… have prompted practitioners to abide by the rules and submit formal applications to the court for extensions of time.

“This has placed a disproportionate burden on court resources and has implications for listed trials which may be delayed whilst applications are determined.”

The secondary legislation also rectifies an omission from the statutory instrument which established the Planning Court, namely that specialist planning judges to deal with significant Planning Court claims will be nominated by the President of the Queen’s Bench Division.




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Parliament: last-ditch bid to make insolvency exemption permanent

Parliament: last-ditch bid to make insolvency exemption permanent

After-the-event (ATE) insurer Elite has collaborated with broker TheJudge to offer a product aimed at helping insolvency practitioners (IP) when they do not recover what they expected from litigation.

In a joint statement, TheJudge said it had received lots of feedback from IPs and insolvency lawyers over the years about insurers’ reluctance to take a reduction on their premium even when all other stakeholders are accepting a reduction on the fees due to them.

“Elite used this feedback constructively and the result is a unique, innovative ATE facility for insolvency litigation,” it said.

The insurance policy contains a payment waterfall which ensures the IP and the law firm receive payment for their own fees – excluding success fees – before the premium is paid to the insurer.

Elite and the creditors then make up the second tier of the waterfall, with insurers receiving 80p in the £1 parri passu, with the creditors taking 20p in the £1, in the event that the ATE premium cannot be fully discharged.

The balance is then for the lawyer’s success fee and the creditors.

“This is the only policy TheJudge is aware of that states from the outset that the IP’s and lawyer’s base fees are paid first before the ATE premium and also provides the creditors with a guaranteed recovery in the event that the full ATE premium cannot be discharged. In these circumstances it has been very well received by IPs so far.”

The policy is only available in the run-up to 1 April 2015 – when the LASPO exemption from the end of recoverability for insolvency litigation ceases – and only law firms can apply.

The government is currently considering a last-ditch effort to make the exemption permanent after Conservative peer Lord Flight sought to introduce an amendment to this effect during the committee stage of the Small Business, Enterprise & Employment Bill last month. Business minister Baroness Neville-Rolfe said she would discuss it with the Ministry of Justice before announcing a final decision during the bill’s report stage in early March.

She said: “I note the concerns that litigation brought on behalf of insolvent estates has some differences in principle to other types of litigation. I also note the concerns about the potential impacts on litigation practice on behalf of insolvent estates.”




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Taking a percentage: greater risks involved in contingency fees, says research

The introduction of self-regulation for third-party litigation funding may not be sustainable in the long term, a team of leading academics has warned.

They also highlighted the risks that contingency fees pose in the new world of litigation funding, and suggested that lawyers should not be allowed to fund cases themselves if third-party funding (TPF) is available.

The in-depth study into TPF highlighted the importance of “effective regulation” to ensure clients have control in funded disputes.

While it indicated that the current self-regulatory regime for TPF in England and Wales is sufficient at the moment, full regulation may become essential if individual consumers start to access funds, rather than just businesses as now, or if funders with different models enter the market.

The report was written by Professor Christopher Hodges, head of the Centre for Socio-Legal Studies at Oxford University; Professor John Peysner, head of the law school at Lincoln University; and Dr Angus Nurse, now of Birmingham City University.

It said: “A voluntary scheme does not fully address the requirements of the developing market and any potential harm caused by the emergence of new funders who may develop new litigation funding products and alternative business models that fall outside the scope of the code.

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“A voluntary code is also inadequate to deal with rogue funders and lacks sufficient penalties for bad practice… The experience of the claims management company industry indicates that there is scope for abuse in a litigation system that might otherwise appear robust but which develops and mutates as it grows.”

Nonetheless, the report suggested that TPF may be preferable to lawyers funding disputes through contingency fees because of the lower risks of conflict of interest.

Contingency fees – known as damages-based agreements (DBAs) – are being introduced in the Legal Aid, Sentencing and Punishment of Offenders Bill.

It said: “Where the roles of adviser and funder are fused, it is easy to see the potential for conflicts of interest to arise between the two functions, such as over how much work to invest or when and how much to settle for.”

This appears to be accepted in the US, but the research pointed to American findings that because US lawyers maintain a portfolio of cases, incentives to act inappropriately in any one case are lessened. This is unlikely to be the case in England and Wales, where DBAs will just be one source of funding litigation.

It acknowledged that lawyers will argue that having a stake in a case does not in practice suborn their behaviour, as witnessed by the history of conditional fee agreements, but questioned whether there was enough evidence to say this.

“This suggests that private litigation funding, if it is subject to adequate constraints, is theoretically preferable to lawyers’ funding. It also raises the issue of whether lawyers’ funding should be prohibited – in some situations or totally – if private funding is available.

“There should be further independent review of whether conflicts are of concern in particular types of cases, such as where there are large fees at stake, in large commercial of collective actions. Is the ethical regime within the legal profession in England and Wales strong enough to withstand the conflicts that are likely to arise?”

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Professor Hodges said: “A third party funder should be kept at arm’s length in the litigation process. For instance, funders should not determine the terms of a settlement. There is the danger that funders might opt for a lower settlement than the client might want in order to resolve a case quickly. Similarly, we do not want to see a situation where the third party funder and a lawyer’s firm are in collusion against their client’s best interests.

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“This does not appear to have happened yet in the UK, but we want to ensure that any risk of it happening in the future is removed. Clients need more legal protection as otherwise there is potential for third-party funders to control claimants’ cases for their own advantage.”

The research said it appeared that TPF has helped access to justice for SMEs and that there was no evidence that its availability has encouraged unmerited litigation.


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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