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Cutting costs: CJC urges patience

The proposed £500 fee for handling RTA portal work may be “unrealistic” and the government should wait until at least next year before setting new fixed recoverable costs (FRC), the Civil Justice Council (CJC) has told the government.

The CJC said that in the meantime fee levels should instead be uprated by inflation.

Its newly released response to the Ministry of Justice’s consultation, the CJC welcomed the Lord Chancellor’s decision to reconsider the implementation date of the extended portal, and recommended a “cautious approach” to the figures set out in the Jackson report.

It said: “In particular the CJC suggests that at the present time the most appropriate revision of those figures should be to update them in the light of any inflationary change since they were formulated.

“Given the nature and extent of the various civil justice reforms which have been and are in the process of being implemented, a full-scale revision of the figures should perhaps best take place when the reforms have had time to work. In that way a proper revision to the figures can take place in, for instance, 2014 which could be based on evidence derived from, and a properly researched impact assessment of, costs from actual work done under the reformed regime.

“Such a revision could then properly take account of the costs of both simple, straightforward cases as well as more complex cases and as a consequence be reflective of more realistic levels of fixed recoverable costs. Adopting this approach is in the CJC’s view more likely to avoid, as far as possible, the prospect of limiting effective access to justice for accident victims due to the introduction of limiting the amount recoverable to the presently proposed figures.”

The CJC argued that the FRC regime should reflect the varying nature of the costs of managing a personal injury claim, rather than the lowest possible cost. “The CJC is conscious that solicitors must comply with a number of regulatory guidelines when opening a file, and that it may be regarded as unrealistic to expect all the necessary work and negotiations to be carried out against a fixed fee limited to £500.”

On referral fees, it said that while the ban meant there was “potential” to reduce costs, “it does not automatically follow that a solicitors’ firm’s marketing costs will consequently be significantly reduced”.

The CJC continued: “In order to maintain their profile in the market place, which is becoming increasingly competitive not least due to the changes effected by the Legal Services Act 2007, firms are likely to have to increase their marketing costs. This is likely to have an impact on their cost base and ought properly to be reflected in the sums recoverable.”

Meanwhile, Post magazine reported yesterday that Steve Maddock, managing director of claims at Direct Line Group, told the All Party Parliamentary Group for Insurance and Financial Services that every day the extended portal is delayed will cost the insurance industry £1m.




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Supreme Court

Lord Sumption: costs ‘could exceed entire assets of estate’

A trustee in bankruptcy considering an appeal to the Supreme Court can go ahead without taking on the risk of having to pay the costs of previous proceedings in the lower courts, five justices have unanimously ruled.

Giving the leading judgment, with which the four other justices agreed, Lord Sumption said that if the trustee lost, and his liability extended to the costs of the proceedings below, it would exceed the entire assets of the estate.

The court heard that the issue arose from a professional negligence action against BPE Solicitors, which resulted in the Court of Appeal awarding a former commercial client a nominal amount of £2 in damages, but making him liable for the firm’s costs of almost £470,000.

A few months after the Court of Appeal’s ruling in 2013, the claimant, Richard Gabriel, was made bankrupt on his own petition and a trustee in bankruptcy was appointed.

Delivering judgment in BPE Solicitors and another v Gabriel [2015] UKSC 39, Lord Sumption said the trustee accepted that if he lost at the Supreme Court, he would be personally liable for BPE’s costs, but not the costs of the proceedings below.

If he decided not to appeal, Lord Sumption said Mr Gabriel’s creditors would recover only between 3p and 5p in the pound, but if he won that figure was expected to rise to between 23p and 25p.

If he lost at the Supreme Court and his liability extended to the costs of the proceedings below, Lord Sumption said Mr Gabriel would be “personally exposed for the balance subject to any indemnity which he is able to obtain from the creditors”, and it was “far from clear” whether any indemnity would be forthcoming.

Lord Sumption said the only authority that dealt directly with the question was the 1882 case of Borneman v Wilson, in which the Court of Appeal extended the personal liability of the trustee to cover costs incurred by the other side before his adoption of the proceedings.

However, Lord Sumption said the Victorian ruling was “no longer good law”, because, at the time when it was decided, costs could only be awarded against a party in the proceedings.

He said the modern jurisdiction to make an order for costs against a non-party was conferred by Section 51(3) of the Senior Courts Act 1981.

Lord Sumption said there could no longer be an “absolute rule” that trustees should be required to pay the other side’s costs, including those relating to a time when the issue was conducted by the bankrupt. Instead courts had a discretion.

“The mere fact that the trustee has adopted the appeal could not possibly justify this court in ordering the trustee to pay the costs which the Court of Appeal has ordered to be paid by Mr Gabriel.

“The trustee is entitled to adopt the appeal to this court without adopting the distinct proceedings below. Indeed, the adoption of proceedings below would be contrary to principle.”

The Supreme Court declared that if the trustee appealed to it, he would not be held personally liable for any costs up to and including the Court of Appeal’s order.




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Cases with experts: case management conference directions set to change

Concurrent expert evidence – known as hot-tubbing – should only be carried out in the “classic” manner where experts are sworn and give evidence at the same time, the Civil Procedure Rule Committee (CPRC) has decided.

Asked to give a steer to the sub-committee redrafting PD 35.11, the committee decided against an alternative approached that treated concurrent expert evidence as “embracing the full range of methods, including back-to-back, issue-by-issue expert evidence, and ‘hybrid’ procedures”.

The sub-committee is redrafting the PD so as to promote the use of hot-tubbing, and also putting forward changes to standard-form case management conference directions, directions questionnaires and listing questionnaires.

The more limited approach, it told the May meeting of the CPRC, has “the virtue of greater linguistic clarity, simplicity, brevity and avoidance of confusion”.

By including procedures where the evidence is not given concurrently at all, but rather sequentially, the wider approach “would lead to more substantial expansion of PD 35.11”, the sub-committee said.

The minutes of the May meeting, released last week, showed that the CPRC “favoured the limited approach”, and also decided that it would not be appropriate within the rules to include signposts to guidance to hot-tubbing.

Earlier this year, the sub-committee – chaired by Mr Justice Kerr – recommended to the CPRC that hot-tubbing should not be made the ‘default’ position, but said it would be beneficial for it to “become, increasingly, a normal feature of expert evidence in all courts”.

In a paper to the April meeting, it said: “It is probably safe to say that hot-tubbing is unsuitable in cases where there is a serious challenge to the expertise or credibility of an expert, at least until that challenge has been determined; beyond that, adoption of criteria or guidelines for determining whether hot-tubbing is suitable, is a preferable approach.”

The moves follow a report by the Civil Justice Council last year that found hot-tubbing improved quality, saved trial time and helped judges determine disputed issues.

It suggested the practice should be used more widely, with a revised PD and a question on it added to the standard form directions and listing questionnaires for cases involving expert evidence.




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Ministry of Justice

MoJ: transcripts have breached reporting restrictions

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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




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One of the north-west's largest law firms – Asons Solicitors – has revealed record growth figures, in a challenging environment for legal services providers.

Founded just 5 years ago, Asons recently employed its 250th staff member; all based at its central Bolton premises.  The firm implemented Eclipse's Proclaim Practice Management software solution at its inception in 2008, when headcount numbered 3 employees (equating to a staff growth to date of over 8,200%).

Proclaim is utilised by all Asons staff, the system providing a core centralised solution for the full range of injury claim types – from complex high-value cases (Asons recently won a 6-figure settlement for a client, after a significantly lower initial insurer offer) through to minor RTA (Road Traffic Accident) claims.

Proclaim has enabled the firm to structure its business so that 88% of staff are revenue generating (fee earning), with only 12% dedicated to 'support' functions.  Future strategic aims include the expansion of its Industrial Disease team to be the UK's largest (it currently numbers 110 staff), and the implementation of a dedicated Clinical Negligence department.

Imran Akram, CEO at Asons, comments:

“Our aim right from day one was to build a sustainable and solid business.  The personal injury sector is fluid and challenging – the right legal software solution, one that is flexible and adaptable, is utterly vital.  Proclaim has provided us with the power to continually enhance our processes, drive out waste and increase margins.

“Proclaim is our 'blank canvas' and has enabled us to create a van Gogh.”




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Harmans Costs have launched ‘Costs Expert’ – a bespoke mobile application which features the first ever interest calculator for the costs industry.  The app, available on both iPhone and android, is free and available to download now and will act not only as a valuable industry resource but also as a tool to help solicitors with their everyday workload.

The key feature of the Harmans app is the unique interest calculator which allows users to input various data such as date of order, amount of offer, costs to date and any payments on account to calculate totals inclusive and exclusive of interest. Previously this calculation could only be done using a complex formula (and some well educated guess work!) so Harmans are very confident that this will prove to be an invaluable tool for users.

Senior partner Matthew Harman said: “We are delighted to launch our app Costs Expert and I’m confident that the interest calculator will prove to be a very useful tool for all costs lawyers and solicitors.  I think it fills a void in the market, in fact I have been using the calculator myself on a daily basis while the app has been in development and it’s a real time saver.”

Other features of Costs Expert include a court directory allowing users to find the nearest county court or civil justice centre to their location along with its contact details and a useful map and directions.  The directory also has a link to the latest court fees.

There is also an interactive book a collection section on the app which interfaces with the Harmans office diary and allows the user to quickly and easily book a file collection using their free courier service.

The Ask a Question section means that wherever you are you can ask one of our costs experts a question via the app, invaluable if you are out and about and unable to lay your hands on your usual references.  Previously answered questions will also be visible in this section meaning it will provide a bank of information on costs queries.

There are also sections providing contact details and more general information on Harmans.

Download Costs Expert now –

iPhone version:  https://itunes.apple.com/gb/app/costs-expert/id875061911?mt=8

Android version: https://play.google.com/store/apps/details?id=com.andr.harmans




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City: commercial clients can look after themselves

The Civil Procedure Rule Committee is wrong to consider introducing automatic costs budgeting to the Commercial Court so soon after implementation of the Jackson reforms, City litigators have said.

A CPRC consultation issued last month said the “Admiralty and Commercial Courts’ blanket exception… may be unnecessary and inappropriate”.

However, the robust response of the City of London Law Society’s litigation committee – chaired by Clifford Chance partner Simon James and comprising lawyers from 17 other top firms – said “there is no evidence that automatic costs budgeting is either needed or wanted in commercial litigation of the sort conducted in the Commercial Court”.

It added: “Indeed, the evidence is firmly in the opposite direction.”

The newly published response said that echoing the findings of the Jackson report – which recommended the exemption – its members “have not experienced any demand from their clients for the Commercial Court to become involved in setting budgets”. It also said that costs are “already usually proportionate” in the court.

Arguing that Commercial Court clients are “well able to look after their own interests” and so do not require the court’s supervision, the committee said: “Absolute certainty of recoverable costs if successful and of costs payable if unsuccessful is not generally as significant in complex commercial cases as it may be for parties in some other types of litigation.

“With the aid of their lawyers, parties can decide how much they wish to spend on litigation, when and on what terms, and can estimate in broad terms their potential liability in costs.

“The parties may, indeed, consider it unacceptable for the court to compel them to reveal their budgets and plans to the other side because of the light the budget may shed on their tactical approach to the litigation.”

The CPRC is concerned that the absence of automatic costs budgeting in the Commercial Court could parties to prefer it over other specialist courts, but the committee said the “proper response” to this was to amend the rules for those courts.

The committee also said it was “premature to make major changes to the implementation of Sir Rupert Jackson’s report” and that there are significant practical differences between work in the Commercial Court and that in other parts of the court system that render automatic costs budgeting in the former “inappropriate”.

The difficulties of predicting at the outset what shape complex commercial litigation will take would lead to parties either submitting budgets as high as possible – “possibly in itself inflating costs” – or include an extensive list of assumptions on which the budget is based in order to ensure that there are grounds for amending it in the future.

This, and the whole costs management process, is likely to be “itself costly and time-consuming”.




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medical negligence

Lawyers accused of “extortionate fees” for low-cost medical negligence cases

Health minister Ben Gummer has announced plans to cap the fees charged by lawyers on medical negligence claims worth less than £100,000, saving the NHS up to £80m a year.

He accused some lawyers of “unscrupulously” loading “grossly excessive costs” onto the NHS and spoke of imposing “financial controls” on legal fees.

“Safe, compassionate care is my upmost priority and to achieve this, the NHS must make sure every penny counts,” Mr Gummer said.

“Unscrupulously, some lawyers have used patient claims to load grossly excessive costs onto the NHS and charge far more than the patient receives in compensation.

“Our One Nation approach is about being on the side of hardworking taxpayers and these financial controls will ensure money is pumped back into patient care.”

In a briefing note, the Department of Health said Mr Gummer had outlined the plans after writing to the Master of the Rolls, Lord Dyson.

The department said claimant lawyers charged the NHS Litigation Authority £259m in legal fees for 2013/14. It said the NHSLA had saved over £74m by challenging excessive costs last year, but “strict limits on legal bills” would help them further.

The department claimed that lawyers could charge “extortionate fees” for low-cost cases because there were no limits. It gave an example of £175,000 being paid in fees for a case where a victim received compensation of only £11,800.

In another case, fees amounted to £80,000 to obtain only £1,000 in damages, though the court reduced the costs to £5,000.

The department said that, under the proposals, the “lawyer’s fee would reflect a percentage of the compensation received by the patient so that it is proportionate.”

Clinical negligence specialist David Marshall, managing partner of Anthony Gold and former president of the Association of Personal Injury Lawyers, said the suggested limit of £100,000 did not sound like a “lower value” medical negligence claim.

“We are talking about serious incapacity, not about something that is over in a few months or even a year,” he said. “We are talking about a permanent condition that needs to be investigated properly.”

Mr Marshall said quite a significant number of medical negligence claims were for less than £25,000, yet there was no portal or fast-track procedure equivalent to those used for other forms of personal injury.

“You can’t just fix costs without changing the process,” he said. “All that would mean is that claims can’t be brought or can’t be brought properly.

“You could come up with a streamlined system for simpler, smaller medical negligence cases. This sounds like running before you can walk.”

Mr Marshall said there had been an increase in medical negligence claims, but the total was still “tiny” compared to the number of other personal injury claims.

He added that the increase in compensation paid out by the NHS was linked to an increase in more serious cases.

A spokeswoman for the Department of Health said the details of the scheme would be developed after a “period of engagement with stakeholders and a formal consultation”.




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Driverless cars: lawyers will need training

Driverless cars: lawyers will need training

The introduction of driverless cars is set to change the shape of defendant legal practice, leading firm Kennedys has said.

It also called for compulsory car insurance to be widened to include product liability to cover the introduction of driverless cars.

Responding to a Department for Transport consultation on how to support the development and use of the new technology – which had a particular focus on the insurance implications – Kennedys said it was too early to redesign insurance law to take account of driverless vehicles, and that amending the Road Traffic Act 1988 to extend compulsory cover to product liability would suffice for now.

But the firm predicted: “In time, highly or fully autonomous vehicles will be considered a different class of vehicle requiring additional compulsory cover. It is most likely that one go-to entity will provide all necessary cover – rather than a set of entities.” The requirements would be in a single piece of legislation, it thought.

Looking at how driverless cars might impact defendant legal practice, Kennedys said it would need to invest in capabilities to better understand the technology, and training for its motor lawyers in other areas of insurance litigation – most notably product liability law – so they could deal with “new and potentially complex liability arguments”.

“In turn, our bills to clients will contain higher amounts for disbursements for use of engineers and other experts – required to interpret in-car and other data in ascertaining share of liability between driver and vehicle manufacturer and others when collisions or damage occurs.”

The firm said it anticipated, in time, far fewer lower-value third-party claim instructions.

“The focus is likely to shift to a smaller subset of more serious injury road accidents (which will fall in frequency too) and an increase in related litigation between AVT [automated vehicle technology] motor manufacturers, software houses and manufacturers of autonomous systems, as well as manufacturers and maintainers of connected road systems and street furniture.”

With regard to those lower value claims that are pursued, the response said there was no reason why the online claims portal could not be adapted to accommodate RTA claims that involve a vehicle with AVT.

It said: “The defendant’s default positon would be that the portal should continue to apply to all low value RTA claims (up to £25,000) to try to pre-empt any mischief by claimant firms to remove such claims from the process for cost purposes.”

More generally, Kennedys backed the government’s intention to keep regulatory reform under constant review as the technology evolves.

It said: “Providing for an ongoing and agile regulatory review means that, as far as is possible, long-term technological change is anticipated. This will ensure that future regulatory change is seamless and occurs only when necessary to reflect a major leap in technological advancement.”

The firm said it would encourage the formation of an industry working group of manufacturers, insurers, lawyers and major fleet operators. “The objective of such a group should be to reach a consensus on what type of vehicles are likely to arrive on the UK market over the next 10 years. This would greatly assist the government with regulatory planning.”

Niall Edwards, head of the motor insurance group and partner at Kennedys, said: “The government wants the UK to be at the forefront of this emerging technology and is taking a sensible approach to regulatory reform – too much, too soon could be damaging. This is an exciting time and promises in the long run to change the shape of the motor industry – and those who advise them – forever.”




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Neuberger: litigants-in-person changing role of judges

If a career on the bench is not made more attractive financially, the rule of law could be undermined, and with it lucrative industries vital to post-Brexit economic prosperity, the departing president of the Supreme Court has warned.

He also reported that the rise of litigants-in-person (LiPs) in civil and family cases was pushing judges to adopt an ever-more “inquisitorial, civil law function”, leading to longer hearings and delays.

Lord Neuberger, who is due to retire from the bench in the autumn, sounded the alarm during a speech earlier this month reflecting on his two decades as a judge – the Neill Lecture 2017.

He said the number of barristers who shunned a career as a judge was growing. While appointment to the senior judiciary was still “immensely rewarding”, the heavy workload together with “the increasing gap between judicial pay and the reward of successful private practice means that appointment to the High Court is significantly less attractive than it was”.

Figures released recently by the Bar Council – first highlighted by Legal Futures – showed that more than 2,500 of the nearly 16,000 practising barristers earn more than £240,000 a year gross. High Court judges take home an annual salary of around £180,000.

Lord Neuberger continued: “The proportion of refuseniks is increasing, and while it is not yet, it could become a real problem if it continues.

“The concern is not only that it will undermine one of the two fundamental pillars of our society, the rule of law, if we do not have a first-class judiciary.

“It is also because a first-class judiciary underpins the whole financial and professional services industries which are so vital to the fortunes of this country, perhaps particularly in the post-Brexit world.”

He recommended the judiciary should look beyond the independent Bar and recruit from among “solicitors, employed lawyers, academics and any other group where one could realistically expect to find potential judges”.

However, while “the serving judiciary should be encouraging members of under-represented groups… to apply”, merit should remain the “ultimate standard” for selection as judges. He added: “To dilute the quality of our judiciary would be to erect a milestone on the road to perdition.”

Lord Neuberger warned that the rise in LiPs in civil and family cases, as a result of shrinking legal aid and high litigation costs, presented a “real risk of this reducing access to justice, the quality of justice, judicial well-being and court efficiency”.

He went on: “It remains to be seen what the long-term effect of the increase in [LiPs] will be, but it has already started drawing judges into assisting or at least focusing on [LiPs], but this involves getting off the umpire’s chair and stepping onto the court.

“This leads to longer hearings, which in turn leads to more delays in other hearings.

“Furthermore, with the Woolf and Jackson reforms and their equivalents in the Family Division, judges in this country may be developing an ever-increasing inquisitorial, civil law, function.”

He questioned the value of disclosure of documents and cross-examination of witnesses to the final result of cases, given how much they added to the cost of litigation. But he admitted his scepticism was founded on “impression and experience”, and expressed the hope that “statistically reliable analysis” might support the proposition if a “practically feasible experiment” could be devised.

In a wide-ranging speech beginning with recollections of his earliest days after elevation the bench, Lord Neuberger said that while he found the transition from “poacher to gamekeeper” straightforward, it was lonelier than being a barrister in chambers.

Running a trial required qualities such as “grip, authority, politeness, fairness, and an ability to simplify and an ability to express yourself”. He added: “In many ways, running a trial is like chairing a rather tense and rather formal meeting.”

He stressed that the Supreme Court had been careful to maintain “an appropriate balance between judicial intervention and judicial restraint”. In particular, in the recent Miller case on Brexit, among other cases, it had been “at pains to emphasise the fundamental importance of parliamentary sovereignty in the UK’s constitutional arrangements”.

He also highlighted the value to the Supreme Court of legal arguments between judges out of court, even suggesting that where all the judges appeared to agree on a case, it may be worth appointing a judge as devil’s advocate to produce a draft dissenting judgment – “for the purpose of maximising the quality of the ultimate judgment of the court.”




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Grayling: Act restores balance

Grayling: Act restores balance

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

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

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

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

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

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

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

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

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




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NIHL claims: insurer lobbying

NIHL claims: insurer lobbying

The Ministry of Justice has asked the Civil Justice Council (CJC) to investigate the number and cost of claims for noise-induced hearing loss (NIHL), it has announced.

There has been a concerted lobbying effort from the insurance industry to raise the issue, describing deafness claims as “the new whiplash” and as a “cash cow” for claimant lawyers.

A spokesman for the ministry said: “In response to ongoing concern about the number and cost of noise-induced hearing loss claims, we have asked the Civil Justice Council to consider the issue and to make recommendations.

“This builds on the recent substantial civil justice reforms designed to control costs and discourage unnecessary litigation while allowing access to justice for meritorious cases.”

According to figures published last month by the Association of British Insurers (ABI), NIHL claims notified to insurers increased by 189% between 2011 and 2014. It said that since 2012, more than 200,000 claims for NIHL have been submitted but less than a fifth have been eligible for compensation, “mainly due to the poor quality of evidence provided because the claimant’s hearing loss cannot be linked to the workplace. The flood of claims is slowing down the time it takes to get compensation to genuine claimants”.

The ABI, which has called for fixed costs in NIHL cases, argued that “excessive legal costs” meant that on average for every £1 paid in compensation to the successful claimant, £3 is paid out in legal costs to the claimant’s lawyers.

James Dalton, the ABI’s director of general insurance policy, said: “Today’s announcement by the Ministry of Justice is a positive development. The skyrocketing number and cost of industrial deafness claims is a significant issue that the insurance industry has highlighted for some time…

“The insurance industry looks forward to working with the CJC to develop a practical and deliverable framework that seeks to make legal fees more proportionate and ensure that genuine claimants receive fair compensation in a timely and efficient manner.”

Jonathan Wheeler, president of the Association of Personal Injury Lawyers, said: “We hope the CJC considers the amount of work involved for claimant lawyers to get these complex cases off the ground, and the importance of ensuring that the ability to perform that work on behalf of claimants is not restricted.

“Above all, any reforms must not compromise the rights of workers to investigate whether their former employers are responsible for their hearing loss. Members have suggested in the past that with multiple defendants often involved, co-operation from defendants is the key to a faster and more cost-effective process.”

Meanwhile, the CJC has set up a working group on property disputes chaired by Siobhan McGrath, president of the property chamber of the First-tier Tribunal, to explore further specific areas where the deployment of judges between the county court and tribunals would enable the proportionate resolution of disputes and the better use of judicial and administrative resources.




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Clark: meeting of minds, skills and resources

Firstassist Legal Expenses – the UK arm of top litigation funder Burford Capital – will now operate under the Burford brand, it has been announced.

The ‘brand integration’ comes one year after the completion of Burford’s acquisition of Firstassist in February 2012.

Burford recently described the acquisition as “an unqualified financial success in addition to the substantial strategic benefits it has brought”, prompting it to make an early payment of the earn-out for former shareholders.

As well as third-party funding, Burford UK will continue to provide stand-alone after-the-event insurance (ATE), the company confirmed.

Ross Clark, Burford’s chief investment officer in the UK, said: “Burford’s acquisition of Firstassist and its subsequent integration has involved a great meeting of minds, skills and resources, and we are delighted to be able to bring our work together under one brand.

“As we approach the deadline for implementation of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, Burford is perfectly positioned to provide solutions for all litigation finance requirements. We look forward to helping solicitors and their clients in these challenging times.”

Burford’s global chief operating officer Andrew Langhoff added: “We see enormous opportunity for Burford in the UK, and are very pleased with the progress of our operations here to date. The economics of litigation in this country will change dramatically with the implementation of the Jackson reforms in April, and we believe that our now fully integrated operations are uniquely positioned to offer a comprehensive suite of products to meet the changing needs of this market.”




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Hayman: welcome news

Hayman: welcome news

A claimant who switched from legal aid funding to a conditional fee agreement (CFA) on the eve of the introduction of the Jackson reforms acted reasonably, a costs judge has decided.

Master Leonard made the ruling despite finding that the solicitors, London firm Bolt Burdon Kemp, had not provided enough information to the client about the pros and cons of the move.

He said: “One does have the impression that the solicitor, having reached a conclusion, more or less nudged the client towards the conditional fee agreement arrangement. In saying that, I emphasise that I do not and I should not speculate as to what the thinking might have been behind that.

“Of course it has been pointed out to me that it is likely to be advantageous to a solicitor to have the client into such an arrangement but, equally, it seems to me that at that particular time, with changes in the funding regimes coming and raising real issues which did bear consideration, a solicitor would be anxious to ensure that he did not expose himself to potential complaint from a client who had not been given the opportunity to consider the funding options and to take the best option from the client’s point of view.”

AMH v The Scout Association concerned a claim for damages in relation to childhood sexual abuse and the claimant had the benefit of legal aid from March 2012. On 23 March 2013 he chose to discharge the legal aid certificate and replace it with a CFA dated 26 March, ahead of the introduction of the LASPO reforms on 1 April.

His solicitor had concluded that the Legal Services Commission (as was) would not provide sufficient funding to take the case to trial and that there was a possibility the client would obtain employment, thereby ending his eligibility for legal aid.

He also thought it unlikely that the impending 10% increase in general damages would defray the cost of irrecoverable success fees and that it was in the best interests of the client to switch funding.

This was followed up with a “brief” telephone conversation with the client.

The defendant argued that this was not a reasonable choice and the success fee and after-the-event insurance premium should be disallowed.

Master Leonard decided that the solicitor was obliged to consider the risk of losing legal aid funding in the circumstances of the case, but found that the advice he gave the client was “incomplete” because it did not go into the more positive aspects of the new regime, such as qualified one-way costs shifting and capped success fees.

However, the judge continued: “I am unable to accept that a choice must be unreasonable if it is not made on the best available information. I think one has to consider… whether the choice was reasonable in all the circumstances. It is… possible to make the right choice for, here, not so much the wrong reasons as an incomplete set of reasons.”

This was particularly the case given that the client was being offered a CFA Lite, meaning he would not lose any damages to meet unpaid costs. “The fact this was a CFA Lite arrangement was crucial,” said Master Leonard.

He concluded that the solicitor had been obliged to put the question of funding to the client given the impending change of regime. “So notwithstanding the fact that I do accept that the advice given was too brief and not as detailed and complete as it should have been, it does seem to me to have focused upon a genuine key issue in relation to the preservation of the client’s damages.

“The solicitor gave it in the knowledge that if he did not give that advice, it was possible that the client might lose out financially at the end of the day.”

Sam Hayman, senior costs advocate at Bolt Burdon Kemp, said: “This claim dealt with the difficult issue facing many practitioners two years ago, with the availability of legal aid dwindling, ever more emphasis on the costs benefit ratio and the new CFA and ATE regimes coming into play.

“The findings of Master Leonard show that the SCCO is appreciative of the need and desire by claimant solicitors to preserve client damages as much as possible and that success fees and insurance premiums will be awarded where the claimant has acted reasonably in making their funding choices.

“It is welcome news that claimant solicitors have persuasive guidance on the issue from the SCCO, which will be tasked with hearing the majority of claims with such issues.”

For the full ruling, click here: Approved Judgement




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Malla: two-stage process

Malla: two-stage process

The government has outlined two approaches to setting the discount rate in its long-awaited consultation on whether it needs changing

This is the first of two Ministry of Justice (MoJ) consultations on the issue, it has emerged

The discount rate is the rate of return to be expected from the investment of a lump sum award of personal injury damages for future loss, and applied to the lump sum to ensure a claimant is not over-compensated

The rate has been 2.5% since 2001, largely by reference to yields from index-linked government gilts (ILGS). This is on the basis that claimants would seek low-risk investments

The MoJ has been under pressure to act on this, with the Association of Personal Injury Lawyers last year launching a judicial review over the failure to reconsider the rate.

The consultation paper said: “Yields on ILGS have been declining for some time and there is a risk that the present rate may now be too high.

“This would mean too much being taken off claimants’ damages; on the flip side, a lower discount rate would mean defendants and their insurers having to pay more.”

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

“Identifying the appropriate methodology will not of itself have any direct effect on awards of damages, but, depending on its size, a change in the discount rate may significantly increase or decrease the sums payable in awards of damages for personal injuries.

“This follows inevitably from the application of the principle of full compensation. However, the consequences for defendants of paying awards are not a matter to be taken into account in setting the discount rate.”

The consultation gave the real-life example of a claimant who was awarded a lump sum of £5.5m following the application of a discount rate of 2.5%. Had the discount rate been 1.5%, the award would have been £6.4m and £7.5m had it been 0.5%.

“Whether a change in the discount rate leads to an increase or decrease in the size of awards will depend on how rates have changed since the rate was last set. Any methodology will therefore be capable of producing increases or decreases on different occasions.”

The consultation also raised the possibility of having more than one discount rate to apply to different types of case, and asked for specific rates that respondents would recommend.

Christopher Malla, a partner at leading defendant law firm Kennedys, welcomed the consultation, adding: “I understand from the MoJ that this consultation is a two-part process.

“The methodology is under review in this consultation, with a separate consultation to follow in the autumn to review the present legal basis for the setting of the rate and to seek views on whether the restrictions imposed by the present law on the factors that can be taken into account in the setting of the rate are still appropriate.

“We look forward to working with all parties with a stake in this important issue with a view to achieving a fair and balanced outcome.”




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Court of Appeal: costs judge misunderstood meaning of “equal footing”

A social worker involved in the Baby P case can recover £300,000 in costs from a successful libel claim against The Sun after the Court of Appeal ruled that she had good reason to depart from the court-approved costs budget, the Court of Appeal has ruled.

Overturning the decision of the Senior Costs Judge, Peter Hurst, the court said today that it could not accept that compliance with all the costs budgeting rules is essential before a party can ask the court to depart from the approved budget.

Lord Justice Moore-Bick, who at the time of the hearing was the deputy head of civil justice, said: “Costs budgeting is not intended to derogate from the principle that the court will only allow costs as have been reasonably incurred and are proportionate to what is at stake; it is intended to identify the amount within which the proceedings should remain capable of being conducted and within which the parties must strive to remain”.

But he emphasised that a budget is not intended to act as a cap: “[Budgets] are intended to provide a form of control rather than a licence to conduct litigation in an unnecessarily expensive way. Equally, however, it may turn out for one reason or another that the proper conduct of the proceedings is more expensive than originally expected.”

Henry v NGN is the first major ruling in relation to budgeting and the result is something of a surprise as many observers had expected the Court of Appeal to uphold the tough line taken by Master Hurst ahead of the practice becoming standard in multi-track cases from 1 April.

At the same time, Lord Justice Moore-Bick pointed out at the end of the ruling that the rules coming into force on 1 April differ “in some important respects” from those of the defamation costs management pilot under which this case was conducted.

“In particular they impose greater responsibility on the court for the management of the costs of proceedings and greater responsibility on the parties for keeping budgets under review as the proceedings progress. Read as a whole they lay greater emphasis on the importance of the approved or agreed budget as providing a prima facie limit on the amount of recoverable costs… although the court will still have the power to depart [from it] if it is satisfied that there is good reason to do so.”

London media firm Taylor Hampton acted for Sylvia Henry, who was one of the individuals named in the newspaper’s high-profile and prolonged campaign against Haringey Social Services following the death of Baby P.

It sent a pre-action protocol letter to News Group Newspapers (NGN) on 2 March 2010, the budget was approved on 20 September 2010 under the defamation costs management pilot, and the case settled on 4 June 2011, shortly before both a costs management hearing and then the trial. Ms Henry received a prominent apology in the newspaper and “substantial” damages.

Her approved budget, excluding trial costs, was £381,305, but the final bill came in nearly £300,000 over budget because of extra disclosure and witness statement costs, which her solicitors argued was because of the way the defence was conducted. Master Hurst accepted this, but he said the sole question was whether there was good reason for the claimant to depart from the court-approved budget. Given that the claimant had “largely ignored the provisions of the practice direction”, he “reluctantly” concluded that there was no “good reason” to depart from the budget, which was the test set out.

The Court of Appeal said Master Hurst had misunderstood the reference in the pilot scheme that an objective of costs management to keep parties on an “equal footing”. It said this was concerned with the unfair exploitation of superior resources rather than the provision of information about how expenditure was progressing. Taylor Hampton’s failure to observe the requirements of the pilot did not put the newspaper at a significant disadvantage, nor were the costs incurred unreasonable or disproportionate.

As a result, the court said that Master Hurst had taken too narrow a view of what amounted to “good reason” to depart from the budget.

Taylor Hampton partner Daniel Taylor said he was delighted with the verdict. He said: “Crucially, the Court of Appeal made reference to the fact that, immediately prior to settlement, The Sun had asked for details of the total costs of the action. Having been informed of the costs incurred, it failed to register and protest with regard to the figures and ‘armed with that knowledge’, had agreed to pay those costs subject to assessment.

“As Lady Justice Black commented during the appeal hearing, prior to settlement The Sun had something better than any updated costs budget required under the new pilot scheme: it was in possession of the actual figure of costs being sought.”




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Attu: helping to minimise the impact of crises

Legal expenses insurer ARAG has teamed up with a public relations firm specialising in crisis communications to offer interested customer groups media relations support as part of their policies.

Responding to a number of enquiries from customers for immediate assistance in dealing with the intrusion and disruption of press at the time of an insured event, ARAG has become the first legal expenses insurance provider to launch this service.

Helping to protect businesses or individuals who may be susceptible to a crisis that could damage their reputation, the service from Chelgate provides a rapid and discreet response for practical and professional support that will manage the risk of poor communications and may be capable of limiting adverse publicity.

Whether dealing with a single press enquiry or a gathering media circus, the crisis communication service can be accessed 24 hours a day, 365 days a year. Chelgate can be asked to provide advice, take over media relations responsibilities, and undertake a range of activities to assist the insured ranging from preparing statements, messaging and information in print, video and voice formats, to representing the insured when facing the media or intervening to assure privacy.

Available to individuals and businesses, the crisis communication service will be built into ARAG LEI insurance packages as they renew. It is particularly suitable for potentially vulnerable customers, for example care homes, day nurseries, foster carers and high net-worth individuals, where they lack the resources and experience to cope with unexpected and unwanted attention.

Working with Chelgate and the intermediary, ARAG will tailor the service to each customer based on their specific risks ensuring that it meets their demands and needs.

ARAG product development manager Lesley Attu said: “We begin with the premise that even the best-managed organisations can face acute issues, whether of their own or others’ making.

“The risk to reputation comes not because the situation arose in the first place. It comes from the behaviour and communications witnessed in a crisis situation, and it is here that Chelgate’s expertise and very broad experience will be available to policyholders in order to help them minimise the impact of such crises. We see this as a recognisably valuable add-on to legal advice.”

 




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Shirley Rothel with her award for compliance officer of the year

Shirley Rothel (director of finance and operations) of Just Costs Solicitors has been named as compliance officer of the year at the 2014 Modern Law Awards.

The award, for the individual who has demonstrated the most outstanding contribution to embracing the new regulatory framework of the SRA through legal practice, was presented to Shirley by writer, broadcaster and actor, Gyles Brandreth at the ceremony held at The London Hilton, Park Lane on Wednesday, 15 October 2014.

Shirley took up her role as COFA (compliance officer for finance & administration) in 2013 when Just Costs became the first legal services provider specialising in costs to be granted an ABS licence.  Within the role, Shirley has successfully implemented a culture of compliance throughout the firm whilst acting as a key point of contact for the identification of risk.

In addition to Shirley’s award, Just Costs were also highly commended in the ABS of the Year (over 100 employees) category, having won the ABS of the Year (50-100 employees) accolade at the 2013 Modern Law Awards.

 




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Rolls Building: Brexit cases expected

The financial markets test case pilot scheme is to be extended in time and scope because senior judges have seen its value – even though not a single case has gone through it in nearly two years.

It could prove especially useful in dealing with issues that arise from Brexit, it is said.

The scheme is due to end in September but the Civil Procedure Rule Committee has decided to extend it for a further three years and align it with the Financial List – currently it only applies to some of the matters covered by the list.

Both the Financial List – for claims linked to the financial markets and worth over £50m – and the pilot were introduced on 1 October 2015 in the Rolls Building as a single specialist list in the Chancery Division and the Commercial Court together.

The purpose of the test case scheme is to provide a procedure which enables issues to be brought before the court by interested parties without the need for an underlying dispute.

In a newly published report to last month’s rule committee meeting, Mr Justice Birss said that despite the lack of cases, a meeting of Financial List users in February considered the availability of the scheme to be “important and useful”.

Further, the senior judges responsible for the Financial List – the Chancellor of the High Court, Sir Geoffrey Vos, and the judge in charge of the Commercial List, Mr Justice Blair – supported widening the scope of the scheme “as a matter of urgency” and in time implementing it on a permanent basis.

The report said: “The market test case scheme was recently considered, but not ultimately used, in a very serious potential piece of litigation. The details of it cannot be explained because they are highly confidential, but the Chancellor has said that the possibility of its use in that situation demonstrated to him its potential and its importance.

“Had it been used, it would have offered a solution to a very delicate financial situation. The fact that another route ultimately commended itself to those affected does not detract from the utility of the process having been available – quite the opposite, it served to highlight the fact that the current scope of the scheme is too narrow and that successful take-up of the scheme would depend on its expansion.”

Birss J added that the senior judges were agreed that the Brexit process was “likely to throw up the need for speedy market test case determinations, such that the future utility of the test case scheme is not in question.

“Accordingly, it would be a big mistake to abandon the pilot now, just when people are becoming aware of its existence and looking at the possibility of making use of it. The procedure involves quite a culture change, so cannot be expected to show its value immediately.”




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Dismore: hard to comment without access to all information on the reforms

A leading claimant law firm has challenged the government’s constitutional right to lay down policy on the new post-Jackson protocols, amid a raft of concerns raised about the scheme’s implementation by stakeholders.

Among the concerns, the Chartered Institute of Legal Executives (CILEx) warned that the tight timescale for extension of the portal scheme threatens to undermine the amended pre-action protocol and draft protocols for employers’ liability and public liability (EL/PL).

Further, a top insurance defendant firm criticised the draft protocols for having anomalies that needed removing to prevent satellite litigation and a claimant lawyers’ group condemned the consultation on the changes as “piecemeal”.

Responding to a limited Civil Procedure Rule Committee (CPRC) consultation on the changes, launched in October by the Master of the Rolls, leading personal injury firm Thompsons objected to his statement that aspects of the protocols were not open to adjustment. Lord Dyson said the level of costs, the exclusion of certain claims from the scope of the protocols, and the response period within stage 1 of the protocols, were government policy and so not up for grabs.

There is “no statutory or other basis” for the government taking precedence over the CPRC, the firm argued. “This is a constitutional issue of fundamental importance. It raises questions as to the independence of the courts from government, particularly on matters of procedure before the courts.”

CILEx said the protocols and the scheme itself could be undermined by the government’s “rushed implementation”, which will “compromise the process”. Lord Dyson’s statement had not included a guarantee that the technology underpinning the scheme would be ready by the April 2013 start date.

Unless the IT system is “fully functioning” by then – which many practitioners consider unlikely – the protocols “will not deliver the objectives or efficiencies envisaged in the extended scheme”, it argued.

Equally, said CILEx, the “timescale is too short for stakeholders and lawyers (whether claimant or defendant) to adapt their business models to cater for this significant change”.

It said the protocols were “clear and easy to follow” but if they were to work judges would need to use case management powers in a “robust but fair way”. Further, the burden on a litigant in person “appears to be disproportionate and may bring equality of arms issues”.

Defendant firm Kennedys praised what it said was the government’s “commitment to a more streamlined system”.

But partner Tracy Head, an EL/PL claims specialist, also said an extension of the scheme to EL/PL claims should not happen until the consequences of exiting the portal were dealt with: “The protocols need to ensure that any potential loopholes to easily bypass the portal are closed and that corresponding costs consequences apply and are fair.”

She added: “The draft protocols currently appear to contain a number of anomalies or difficulties which need to be resolved in order to avoid satellite litigation. Provisions around medical evidence need to be considered closely, in particular.

“For example, the proposed expectation that medical records will not be required in RTA claims below £10,000 is not repeated in the draft protocol for EL/PL claims… In reality… it should be expected that the medical experts will need to see the claimant’s medical records in all cases.”

The claimant lawyers’ body that lobbied hard against the Jackson reforms during passage of the Legal Aid, Sentencing and Punishment of Offenders Bill, the Access to Justice Action group (AJAG), complained that the consultation on protocol changes was “being carried out piecemeal”.

Noting that it opposed the extension of the portal to higher-value RTA cases and EL/PL in any case, the AJAG coordinator, Andrew Dismore, said it was hard to comment without access to all information on the reforms, such as the awaited new claims notification form.

In detailed criticism of the EL/PL protocol, the group challenged the definition of disease as excluding illness as a result of an accident. “This needs rewording,” it said. Also, multiple defendant claims should be outside the scope of the protocol

 




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Clarke: insurers urge him to act

The Ministry of Justice has indicated that it will not take action over the Court of Appeal’s ruling to uprate damages by 10% next April, despite the concerns of defendant insurers.

Last month’s ruling in Simmons v Castle is seen as a key part of the Jackson reforms, but has been criticised for the unfairness and confusion it potentially causes.

The court said the 10% will apply to all cases begun before 1 April 2013 but settling afterwards, raising the prospect of claimants dragging their heels until after that date and then receiving ‘double bubble’ as they will still also be able to recover their success fee and after-the-event insurance premium.

It is also not clear how the ruling will interact with part 36 where an offer is only beaten because of the uprating.

The Association of British Insurers (ABI) has written to Lord Chancellor Ken Clarke following the decision. A spokesman said: “Our concern is that the judgment creates an imbalance by the retrospective impact of 10% uplift without the implementation of fixed costs, and as such could cost motorists in higher premiums and others, such as the NHS.

“The judgment upsets a carefully balanced package of reform and we have raised the implications of this judgment with the government.”

The ABI is understood to have urged Mr Clarke to obtain legal advice on the impact of Simmons and consider measures to manage its impact, including bringing forward other reforms contained in the Legal Aid, Sentencing and Punishment of Offenders Act 2012.

It warned that unless he acts to ameliorate the effects of the change, the cost of motor and liability claims could rise by hundreds of millions of pounds, with corresponding pressure to increase insurance premiums.

However, a Ministry of Justice spokesman indicated that the government sees the issue as one for the judiciary to deal with. He told Litigation Futures: “The government has prioritised reforming the costs of civil litigation, and in particular no-win, no-fee conditional fee agreements. The reforms will rebalance the costs of civil litigation, and have major benefits for defendants who will face reduced costs as a result.

“We have always said that the increase in damages for claimants was for the judiciary to take forward, in line with a Court of Appeal ruling in 2000 [Heil v Rankin].”

See feature: Things fall apart – Jackson, 10% and the Court of Appeal




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Parliament: final ping pong stage begins today

The government will today try and invoke a controversial parliamentary rule that will bypass efforts by peers to hold on to their amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO).

The bill begins the ‘ping pong’ stage today, during which the Commons and Lords have to agree on the exact wording of the bill. The Commons will begin by focusing on the 11 defeats that peers inflicted on the government.

The Ministry of Justice has confirmed to Legal Futures that it will invite the House of Commons to invoke ‘financial privilege’ to overrule eight of the amendments.

The rules on financial privilege, used each year in relation to the Budget, mean the House of Lords is not allowed to change or reject tax and other financial proposals agreed by the Commons. The government used this tactic recently to push through its welfare reforms, to the anger of both Labour and peers who had spent weeks debating them.

The government is to accept amendments that ensure the independence of the new director of legal aid casework, retain legal aid for welfare benefit appeals on a point of law to the upper courts, and widen the definition of domestic violence for the purposes of legal aid eligibility.

Among the changes it will seek to overturn are retaining legal aid for children claiming clinical negligence, requiring that the new telephone gateway for legal aid is not compulsory, and excluding asbestos and industrial disease cases run under conditional fee agreements from the end of recoverability.

With campaigners making their last stand against the bill, a wide range of groups have spoken out against various aspects of the legal aid and Jackson reforms, including a coalition of 20 charities and legal organisations – such as Disability Rights UK, Mind, Shelter, Scope and Mumsnet – as well as Citizens Advice, the Children’s Society, and Amnesty International.

The JustRights coalition said figures obtained from the Ministry of Justice under the Freedom of Information Act show that 6,000 (or 13%) of children who currently receive legal aid each year would no longer be eligible under the reforms.

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Clark: 20 years with Firstassist

Litigation funding business Burford has appointed Ross Clark as its chief investment officer (UK), replacing Peter Smith.

Formerly head of underwriting and pricing at Firstassist, Burford’s legal expenses insurance arm, in his new role Mr Clark will oversee Burford’s UK insurance and litigation finance investment portfolio.

Mr Clark is a well-known figure in the after-the-event (ATE) insurance market. He joined Firstassist in 1992 and has played a key role in the company’s development since, and has been Firstassist managing director Peter Smith's long-standing number two. Mr Smith is leaving the company after 22 years.

Mr Clark graduated in Law in 1990 and joined Guardian Royal Exchange as part of its graduate scheme, majoring in liability underwriting. Since joining Firstassist, he has had experience of a number of areas, including product development, relationship management, systems design, statistical analysis, contract negotiation and underwriting.

He has also worked extensively with the Association of British Insurers, the Civil Justice Council and in the wider legal expenses market to address issues of common concern. He obtained his MBA in 2005 and is a chartered insurer.

Mr Clark will report to Jonathan Molot, Burford’s chief investment officer. Mr Molot said: “Ross’s extensive knowledge and track record in the market will be invaluable in helping Burford create a unique litigation funding and legal expenses insurance platform in the UK market.

“I would like to thank Peter Smith, one of ATE’s genuine pioneers, for his significant contribution to the firm and wish him every success in the future.”

Last month Burford announced a trio of new appointments, including Mike Payne as head of operational underwriting, and Mark Thomson – formerly a partner at Nottingham law firm Freeth Cartwright – as litigation funding manager.




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Phone hacking: clear direction on what should be in Precedent H

Phone hacking: clear direction on what should be in Precedent H

Costs budgets should not include any sums for additional liabilities, the High Court has ruled in the latest stage of the phone-hacking litigation against Mirror Group Newspapers (MGN).

It also outlined the detailed budgeting plans that have been put in place for the cases.

Recoverability still exists in privacy and confidentiality cases, and the judge said that Precedent H specifically excluded success fees and after-the-event (ATE) insurance.

“That seems to me to be a clear direction as to what is not to be included,” Mr Justice Mann ruled. “The omission of the relevant matters is emphasised by the underlining of the word ‘excludes’, which occurs in the original of precedent. The guidance notes go on to indicate what should and should not be included. None of them begin to suggest that anything should be included in respect of additional liabilities.

“While it is true that this precedent is only a form, it is a form which is mandated by the practice direction and so its express contents as to what the form should not include has the force of the practice direction.”

Mann J said additional liabilities should also not be included in the assumptions.

On how the budgeting process would proceed, the judge said the parties have agreed that there should be separate budgets for common costs and for the costs relating solely to individual claims, and they have agreed how individual claims should be categorised for costs budgeting purposes.

So far as individual costs are concerned, the parties have agreed on a system of template budgeting. Rather than preparing budgets for each individual case – currently numbering more than 30 – the parties have agreed three template budgets.

Each of the cases is to be treated as falling into one of three categories, depending on the number of articles on which the claim is based and/or the level of dispute between the parties judged by reference to the number of articles which are or are not agreed by the defendant as having a source in illicit information gathering.




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Hogan: punish insurers for non-compliance

The law of unintended consequences could lead to costs – or at least profitability – increasing at some law firms post-Jackson, a well-known costs barrister has suggested.

Andrew Hogan of Ropewalk Chambers in Nottingham identified eight features of the new legal world that could run contrary to the stated intent of the reforms, starting with alternative business structures.

“Any insurance company or claims management company or trade union which wishes to stay in the business of receiving a steady stream of income from claims should now be seeking to package up claims capture capability with the provision of litigation services,” he wrote on his blog.

“This in turn has the potential to generate further costs savings through economies of scale and the removal of transactional costs with increased profitability. The ban on referral fees is thus a powerful motor, driving forward in the personal injury field, the move to ABS.”

Mr Hogan said that since April there has been no race to the bottom on success fees; instead solicitors are looking to charge their clients.

He said: “Given that the average success fee is now routinely pitched at 100% – subject to the statutory cap of 25% of general damages and past special damages – the quantum of success fees, which in the majority of cases, ranged in the past from 12.5% to 62.5%, has actually increased, albeit that it is the client who is now liable to pay them.”

Then there is “punishing the insurance industry for non-compliance” in line with the courts’ new focus on the rules. “Non-compliance generates more costs, through dropping out of portal schemes, the reasonable issue of proceedings, and applications for sanctions for non-compliance,” he said.

“Conversely, the claimants’ solicitors can and should have their claim ready, with documents, and statements in place to force the pace once issued.”

Mr Hogan continued: “The costs budgeting rules represent a clear opportunity for the likely receiving party’s costs to be ratcheted up at the start of the case. First, as they have no application at all to pre-issue costs, a solicitor is free to spend what he wants prior to the issue of proceedings and will do so, to avoid any potential strictures of budgeting. Something like two-thirds to three-quarters of all costs are incurred pre-issue.

“Second it gives an excellent opportunity to establish hourly rates, document time and overall levels of costs anchoring expectations for a detailed assessment, promoting unease in the mind of the likely paying party.”

The barrister argued that the fixed-fee matrix for fast-track cases “positively encourages claimants to issue proceedings, and to run them to as late in the day as possible as the longer the case goes on, the higher the costs recovered, per case”.

Similarly, qualified one-way costs shifting introduces an incentive for claimant lawyers to run every case, he said.

“Moreover, even if a defendant successfully couches a part 36 offer which it succeeds on at trial, as its own costs can only be set off against the claimant’s damages, not damages and the claimant’s costs, the situation will arise where a claimant’s damages are wiped out to zero, but his solicitors will still recover substantial costs, up to the point in time that the part 36 bites.”

Still with part 36, Mr Hogan said that if a receiving party can couch a part 36 offer in detailed assessment proceedings accurately, then they will receive not only 10% of the costs of the bill, but part 36 interest on the costs on the bill, indemnity costs of the detailed assessment and part 36 interest on the detailed assessment costs.

“Thus, with one stroke, the £1,500 cap on assessment costs prescribed by provisional assessment can be made otiose.”

His final prediction came around damages-based agreements (DBAs), before-the-event insurance (BTE) and the small claims track.

“If the small claims track limit is raised to £5,000 for personal injury claims, then those claims will not disappear. Instead, the 70% of motorists who have BTE, will have a positive incentive to use it and those who don’t have BTE, or if BTE is withdrawn in its current form, will have an incentive to use DBAs or appropriately drafted CFA Lites with waivers, to continue to litigate the case: which would mean lower damages for claimants, but potentially higher fees for solicitors than those prescribed, by for example, the portal scheme.”




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Linetime200Linetime are pleased to announce they will once again be sponsoring this year’s Alternative Legal IT Conference to be held at The Oxford Belfry Hotel on the 13th & 14th September.

As headline sponsor we see the value law firms receive from an event that is educational and at the same time provides networking opportunities for individuals involved in legal IT.

The conference focuses on the needs of mid-tier firms and the two day event provides the opportunity to listen to a number of the sectors leading speakers and to be involved in a series of roundtable discussions on a wide range of legal IT related topics.

Some of the topics on discussion include:

  • Technology horizon scanning: What are the technological trends on the horizon and how are these trends likely to affect the workplace?
  • Cyber security update for legal leaders – the threat landscape, the latest attack vectors and compliance
  • What does the youthful lawyer want from IT?

Linetime will have a number of staff on hand for anyone wishing to discuss their legal software requirements on a one to one basis.

For more information and to register visit the Alternative Legal IT conference website at www.alternativelegalit.com.

Alternatively, if you are attending and would like to arrange to speak to one of the Linetime staff please contact Kathryn Holmes on 0113 250 0020 or email kathrynh@linetime.co.uk to arrange a suitable time.




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Godwin: docketed judge should be more than capable of performing PA

The introduction of docketing should mean that judges are “more than capable” of handling provisional assessment (PA), the new president of the Association of District Judges has said.

Meanwhile, Litigation Futures has divined some explanation for the shock trebling of the PA limit from £25,000 in the pilot phase to £75,000 for the roll-out this week, which specialists warn will catch a lot of bills.

Costs Lawyer, the magazine of the Association of Costs Lawyers, asked District Judge Harold Godwin about district judges’ readiness for PA, especially those who are not regional costs judges.

He said: “One of the objectives of the Jackson reforms is that cases should be case managed and tried, wherever possible, by the same judge (or a team of judges, ie circuit judge and district judge). For cases issued after 1 April, the judge will perform the cost budgeting exercise, which will set the parameters for the final bill in any event. Accordingly, the docketed judges will have a handle on the costs from the outset of the proceedings.

“In gaining that handle, the degree of complexity in any given case will have been apparent. The docketed judge should then be more than capable of performing the PA. If he considers that it should be referred to a costs judge, then he could still do so.

“If the PA is undertaken by the docketed judge, then he will have the benefit of the points of dispute, replies etc, through which both/all parties will have opportunity to explain any complex issues. The explanation will, I anticipate, likely to be fuller than might presently be prepared where an oral hearing is anticipated.

“If the parties’ don’t agree the PA, then they can still call for an oral hearing but on risk of the penalties imposed by the rules as to costs.”

Though there has not been an official explanation for the change in the PA limit, Litigation Futures understands that in the pilot – where the limit was £25,000 in base costs – in practice additional liabilities were also being considered, which meant the total costs being considered were often £60-75,000.

Because costs of this level were being considered at PA without problems, the rule committee decided that the overall limit should be increased to £75,000. The new rule does not mention base costs.




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ARAG 200x200In April 2014 court fees for most civil cases were increased to “near recovery” level meaning that the fees payable almost covered the cost of service provision.

In April 2015 the MoJ commenced its consultation on introducing “enhanced fees” for recovery of money and possession claims. Enhanced fees are set so as to deliver court and tribunal services at a profit to the state.

Hot on the heels of yesterday’s announcement that the Justice Select Committee is to undertake an inquiry into the effects of the introduction and levels of employment tribunal and civil court fees http://www.parliament.uk/business/committees/committees-a-z/commons-select/justice-committee/news-parliament-20151/courts-tribunals-fees-charges-inquiry/, the MoJ has today published its response the consultation on enhanced fees for possession claims and general applications in civil proceedings.

Today’s response document also seeks comment on further proposals for wider increases.

In summary despite 92% of respondents to its consultation being opposed to increasing fees to the levels proposed and just 8% expressing agreement, the Government confirms that proposals

  • to increase fees for possession claims from £280 to £355 and
  • increase fees for applications in civil proceedings from £50 to £100 for uncontested applications and from £155 to £255 for contested applications will go ahead.
    These increases will raise additional revenue of £52m a year.

In relation to divorce proceedings fees will be increased from £410 to £510 raising £12m for the treasury. (Original proposal was to increase fees to £750).

In addition to announcing these increases the Government wishes to consult about further opportunities to increase revenue through the operation of court and tribunal services.

  • Proposals include introducing fees in relation to tribunals which do not at present charge fees – for example the property chamber, tax and regulatory chambers of the Tribunal Service. These will initially be set to achieve around 25% cost recovery.
  • A 10% increase is proposed in relation to a wide range of fees in civil courts. Examples of the type of fees that will be impacted are fees for assessment of costs, judicial review proceedings, Court of Appeal fees, enforcement proceedings and civil cases that are dealt with through the magistrate’s courts.
  • The cap on court fees for money cases is currently £10,000. The Government proposes increasing this cap to £20,000. This proposal will impact claims where the sum in dispute exceeds £200,000.
  • The chink of light is that the cap on court fees for personal injury claims will remain at £10,000 and remission rules will be adjusted to introduce additional bands of disposable income and an increase capital threshold for claimants aged over 61.

 

 




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Whitehead: third-party investment is increasingly attractive

Competition between London-based investors in litigation will bring down prices and loosen up investor criteria, although the outlook for funding smaller cases is bleak, a leading broker has predicted.

Matthew Amey, a director of the insurance and litigation funding broker TheJudge, said London was entering a “golden age for commercial litigation funding options in sizeable cases”.

There were more options for funding in the capital than anywhere else in the world, he estimated. Even Australia, “the birthplace of litigation funding”, does not have such a diverse funding market or such wide-ranging expertise.

He told the Law Society civil justice section conference that competition between third-party funders was “very healthy”, with “more and more funds coming into the market all the time”, although the threshold for funding cases was set quite high.

But “over time, because there is a lot of capital in the market, the investor criteria will come down and there will be more offers being made… and competition will increase such that prices will start to come down. But it will take time.”

The Jackson reforms meant that “for smaller cases the future is more bleak”, Mr Amey added. While historically the legal merits of a case and the probability of being paid at the end have dominated funding calculations, “now it’s all about the ratio between damages to costs” – which in general needs to be at least five to one – and the damages to funding required ratio, and the ratio of risk to reward.

He described the launch of the Association of Litigation Funders as a “real milestone for the market”, whose code of conduct had brought “a lot of credibility” and was “an important kitemark for quality and reliability”.

Fraser Whitehead, practice group leader of Russell Jones and Walker’s group litigation and commercial services department, part of Slater & Gordon, told the conference that third-party investment was increasingly attractive in an era of growing pressures on law firm funding.

But he argued for a spotlight on the social dimension of litigation funding: “It could be a real asset if the focus of at least some investors is on the benefit of delivering access to justice, by which I mean the rights of the majority of people, not just a minority.”

At the same conference, litigation funder Harbour revealed that it is considering using alternative business structures to make funds available to law firms that work under damages-based agreements from next April.

 




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Posted by Neil Rose, Editor, Litigation Futures

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

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

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

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

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

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

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

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

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


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The increasing appetite for third-party funding in Europe

Ross Nicholls

Although investors in common law jurisdictions have for sometime recognised litigation as an asset worth investing in, litigation funding remains less prominent in the civil law jurisdictions of mainland Europe. However, the European appetite is beginning to shift in favour of litigation funding, and many large dedicated funds active in common law jurisdictions such as the US, UK and Australia are starting to provide third-party capital to claimants with strong cases.

April 10th, 2018