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Nash: speciaIised and developing area of legal work

The Association of Costs Lawyers (ACL) has launched its new training regime that aims to ensure that the next generation of costs specialists “are up to the demands of the post-Jackson era”.

Following approval from the Legal Services Board, the ACL has started accepting the first applicants for the new costs lawyer qualification, which it said was designed with what was then the likely outcome of the Legal Education & Training Review in mind.

The three-year course will welcome its first cohort in September this year and applications are open until 30 June. Students can become a trainee from the age of 18 with four GCSEs at grade C or above (including English and Maths).

The programme costs £1,400 plus VAT a year, which includes all materials, tutorial support, seminars, revision courses and exams, as well as student membership of the ACL.

The ACL said becoming a costs lawyer is gaining popularity among graduates looking for a route into the profession, with 50% of the last group of trainees under the old regime already having a degree.

There is a range of exemptions for those who have already completed a law degree, legal practice course, bar professional training course or CILEx Level 6 qualification.

Students take three units, one each year, broken down into various modules. The first two years of the course covers the core elements – from knowledge of procedure to ethics and advocacy – while in the third year there are options to allow for specialisation in the costs of different areas of practice, such as personal injury and clinical negligence, land law, criminal law, company law, and family law.

Delivered by ACL Training, the education arm of the association, the course will be assessed through both written assignments and end-of-unit examinations. Trainees must also demonstrate an ability to reflect on their progress and keep a personal development plan which is aligned with one of the module assessments.

Recognising that many trainees will be in full-time employment, the new qualification uses a customised online learning platform, which is incorporated into the course to enable access to learning materials, tutor interaction and administrative support.

The ACL said that for the first time students will be examined at the end of each year’s course.

Chairman Sue Nash said: “After completing the course, trainees will reach the level of competency and performance required of a costs lawyer and learn valuable transferable skills. Ethical obligations will be to the forefront of the course and trainees will be trained to know where these may impact and be able to apply them in context.

“Costs law and practice is a speciaIised and developing area of legal work and I believe the course will prove to be attractive to both trainees and their employers, as well as those seeking an alternative route to entry to other legal professions.”

For full details, click here.




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Sampson: many people don’t know what their insurer will pay for

Legal expenses insurance (LEI) is a good thing in the post-LASPO world but consumers have little understanding of it, the Legal Ombudsman (LeO) warned today.

In LeO’s 2011/12 annual report – a full account of which can be found here on Legal Futures – Chief Legal Ombudsman Adam Sampson also referred to cases in which customers had brought their complaint to his organisation after losing money on unrealistic ‘no win, no fee’ promises and dubious fixed-fee services.

Mr Sampson said before-the-event LEI is expected to fill the funding gaps left by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. However, the results of a YouGov survey commissioned by LeO to find out how much people knew about LEI are “concerning”.

At least 40% of those surveyed had some type of legal insurance cover. However, 74% of them were unsure or didn’t know what financial cover their policy provided and 89% did not know which legal services were excluded under the terms and conditions.

He wrote: “So, many people don’t know what their insurer will pay for: they may not even realise that their lawyer will be reporting to someone else apart from them.

“This degree of confusion notwithstanding, legal expenses insurance is beneficial for the simple reason that it’ll continue to allow people to take legal action when they would not otherwise have been able to afford it. But it can limit choice when the relationship goes wrong and the lawyer prejudges the view the insurer will take.”

He cited the case of a client who used LEI to obtain an injunction against his neighbour for trespass. The panel firm said he needed a surveyor’s report to prove where the boundary separating his land from his neighbours’ actually lay, but decided not to obtain such a report on the assumption that the insurers would not pay for it. This meant the case was not strong enough and so the firm closed its file.

The client then paid for a surveyor himself and as a result of his findings the firm agreed to take on his case again. The client complained, and LeO found that the firm should not have assumed that the insurance provider would not pay for the report. The firm was ordered to apologise and pay £200 in compensation for the inconvenience he had suffered; the client took his business to another solicitor.

“This case highlights the potential for both lawyers and consumers to become confused over what legal expenses insurance actually covers. It also shows how aspects of a legal service may be circumscribed, meaning not all costs are necessarily covered by a legal insurance policy.

“It is possible, if not likely, that the reliance on legal expenses insurance may further confuse the consumer and further confuse their means to redress.

“In this case the fault lay with the lawyer but it will not always be clear to the consumer who it was who decided to discontinue their case that they feel, rightly or wrongly, was a foregone conclusion.”

LeO highlighted the case of Eileen Dunn, from Leicester, was told to pay a firm £15,000 for a personal injury case that never made it to court, despite instructing them on a supposed ‘no win, no fee’ basis. LeO made the firm waive its charges.

Ms Dunn said: “The firm led me along in the belief I had a legitimate case, changed their minds at the last moment saying it wouldn’t stand up in court, and then tried to bully me into paying £15,000. If they had said from the start I didn’t have a case I wouldn’t have pursued it.”

Other case studies showed instances where what appeared to be transparent fixed pricing failed to give real clarity about the true cost to the consumer, which he ascribed in part to the economic pressures lawyers are facing.

Mr Sampson said: “The arrival of new commercial products is generally to be celebrated as it makes legal services more affordable for most of us.

“However, we’ve seen the damage done to the reputation of the financial sector by the mis-selling of complicated products. The payment protection insurance scandal has cost the banking industry billions of pounds. It would be disastrous if the legal sector exposed itself to a similar risk.”




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Hines: Strategy issue for some claimant firms

A road traffic claim that settled pre-issue for £350,000 was subject to fixed recoverable costs (FRC) because it began in the portal, even though it was later removed because of its value, a regional costs judge has ruled.

The decision by District Judge Jackson in Canterbury has been described as “a consequence of the change in the rules” earlier this year in the wake of the Court of Appeal’s decision in Qader v Esure.

According to Stephen Hines, a barrister at Citygate Chambers who acted for the defendant, the FRC worked out to be £35,930 plus VAT – “not too bad on a swings and roundabouts basis, some would say”.

The claimant, who suffered a brain injury, did make a successful application for an hourly rate assessment under CPR 45.29J on the grounds of value and complexity given the amount of medical evidence.

However, because the claimant did not beat the FRC figure by more than 20% on assessment, Mr Hines said he was “snapped back” to the FRC. The difference between the hourly rate costs and the FRC costs was around £2,000 plus VAT.

At the same time, because of two decisions on disbursements, the claimant nevertheless beat the defendant’s costs offer and so recovered the costs of assessment.

Mr Hines, the recently elected president of the Forum of Insurance Lawyers, said: “This case is a symptom of the change in the rules in April 2017 which followed the Court of Appeal’s decision in Qader v Esure.

“The removal of the thitherto apparent upper limit of £25,000 in CPR 45 IIIA means that, ostensibly, so long as a claim starts in the protocol, drops out and isn’t allocated to the multi-track, the regime will apply to a claim of any value.

“This may affect the strategy of some claimant firms of routinely submitting matters to the portal in the hope of extracting a quick admission of liability. The question of whether the claim was always worth more than £25,000 wasn’t explored in this case but, for future cases where this issue comes up, it probably will be.”

Here the case was never issued, but in Qader, Lord Justice Briggs repeatedly referred to cases being “properly started” in the protocols that then have to transfer to the multi-track.




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Dismore: flawed approach to fees

Any changes to fixed-costs rates should only occur when the decision on the small claims limit has been made and experience gained of what the personal injury landscape looks like afterwards, the Access to Justice Action Group (AJAG) has told the government.

It has also estimated that the Treasury will lose around £100m in VAT from the combination of lower fees and cases not being pursued.

In its response to the Ministry of Justice (MoJ) consultation on the proposed fee rates for the RTA portal and fast-track cases, which closes tomorrow, AJAG said it was concerned at the “piecemeal manner in which changes to the personal injury costs regime are being introduced” without taking into account the impact of potentially raising the small claims limit for PI cases to £5,000.

The MoJ said before Christmas that the decision to delay introduction of the revised portal does not affect this consultation.

The response, written by AJAG co-ordinator Andrew Dismore, said: “The lower-value, simpler-to-investigate on liability, cases form the bulk of the claims presently in the portal, and even after its extension to higher values would still do so, subject to the small claims limit proposals. The fee income generated from those cases in large part cross-subsidises the higher-value and more complex claims under the present portal arrangements and value limits.

“If these lower-value cases are taken out of the costs equation, at the same time (or soon after) as the overall portal value limits are dramatically increased, then even on the present fixed costs rates, there is a real risk that the portal system will be destabilised. With much lower rates such as are now proposed, it is a racing certainty… If the small claims limit is increased, then the fixed costs rates will have to be revisited.”

Mr Dismore argued that while law firms need to make a reasonable profit, access to justice is the bigger concern. “If lawyers cannot see a way to pursuing a case competently and having regard to their professional duties and obligations, they will not do so. Many claimants who presently are able to find a lawyer to represent them will in future find themselves unrepresented, as there will be a drive to the bottom. These fixed costs proposals will reduce access to justice for such injured people.”

He said the economic effects include the loss of revenue to the government from tax receipts – which AJAG put at £100m – and Department for Work and Pensions and NHS recoupment on the one hand, and the expected rise in unemployment in the legal profession on the other, with loss of personal taxation and the payment of out-of-work benefits.

The response strongly criticised the absence of any indication of how the proposed rates were calculated. “These rates were negotiated and worked out, based on the hours of work needed on average to bring the claim combined with the hourly rate for the level of fee-earner appropriate to the case. In particular, there was no provision in those calculations for any element for referral fees.

“We would suggest that the minister’s proposals would have a better chance of being seen as robust if, instead of just bald headline figures, the MoJ set out the hourly rates they consider should apply and how many hours are needed to deal with a claim competently, on average.

“The suspicion is that all the MoJ has done is take the existing, evidence based, figures, and knocked off an element that they consider represent referral fees. That is a flawed approach. Like any business, including the insurance market which spends millions each year on advertising, lawyers need to market. If it is not to be through referral fees, then they need to market in other ways (which will be more expensive), yet there is no provision in these proposals for an element to represent this.

“This approach is also flawed when comparing the different types of claim. Whilst referral fees may be common in relation to RTAs and some public liability cases, the use of referral fees in employer’s liability is more restricted, with a high proportion of claims passed to solicitors by trades unions with no referral fees paid, but with cross subsidy of other work, such as tribunal representation. To suggest that a referral fee in an RTA case is the same as the value of such arrangements is not evidence based and is wrong.”

AJAG also argued that whilst some RTA cases may be relatively straightforward, the amount of work needed to investigate EL and PL claims is significantly more, and cannot realistically be done properly for the rates suggested, especially higher-value matters. “For those cases that are accepted, the risk will be that the insurers will not be pressed as hard as they should be for a fair settlement: the temptation with low levels of costs will be to recommend earlier acceptance of lower offers than would be fair and appropriate.”

 




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NHS: The more trusts pay to the CNST scheme, the more likely they are to be in deficit

The cost of clinical negligence to the NHS – which has quadrupled over the past decade – will double again over the four years, the National Audit Office (NAO) has found, as it called on the government to take a “stronger and more integrated approach” across the health and justice systems to rein costs in.

With claimant legal costs in lower-value clinical negligence cases the fastest-growing element of the growing tide, it said NHS Resolution should also work more closely with the Solicitors Regulation Authority over firms found to be grossly overcharging.

The NAO found no evidence yet that the rise in clinical negligence claims was related to poorer patient safety, “but declining performance against waiting time standards is one factor which increases the risk of future claims from delayed diagnosis or treatment”.

Spending on the clinical negligence scheme for trusts scheme (CNST) has quadrupled from £400m in 2006-07 to £1.6bn in 2016-17, and is predicted to rise to £3.2bn by 2020-21.

The number of successful clinical negligence claims where damages were awarded has more than doubled in the 10 years, from 2,800 to 7,300.

The fastest percentage rise was in claimant legal costs, which have gone up 533% over the decade – from £77m to £487m – and was mainly due to an increase in both the number of low- and medium-value claims up to £250,000 and their average cost. Defence costs were £122m over the period.

In 2016‑17, the claimant’s legal costs exceeded the damages awarded in 61% of successful claims.

Over the same 10 years, the total damages awarded rose by 316% (from £330m to £1.4bn), mainly associated with the rising damages paid for a small number of high-value, mostly birth injury-related, claims.

In 2016-17, 590 claims with a value above £250,000 accounted for 83% of the total damages awarded.

The NAO said the cost of claims was rising at a faster rate year-on-year than NHS funding, which was “adding to the financial pressures already faced by many trusts, which can have an impact on patients’ access to services and quality of care”.

Between 2010-11 and 2015-16, the average percentage of a trust’s income that went to the CNST increased from 1.3% to 1.8%. The NAO said this figure was likely to rise to about 4% by 2020‑21.

Trusts spending a higher proportion of their income on clinical negligence were significantly more likely to be in deficit – all 14 trusts which spent 4% or more of their income on clinical negligence in 2015/16 were in deficit.

According to the NAO, the Department of Health and NHS Resolution’s proposed actions to contain the rising cost of clinical negligence claims – fixed costs for cases worth up to £25,000 and a new alternative process for birth injuries – “are unlikely to stop this growth”.

Even if successfully implemented, the watchdog said, these would only save some £90m a year by 2020-21.

There was no “coherent cross-government strategy, underpinned by policy, to support measures to tackle the rising cost of clinical negligence”.

The NAO said: “The Department [of Health] and NHS Resolution, working with others including the Ministry of Justice, have identified many of the factors contributing to the rising costs of clinical negligence.

“But some of the biggest factors influencing costs fall within the remit of more than one government department or are largely outside of the health system’s control. These include developments in the legal market, the increasing level of damages awarded for high-value claims, and changes in the discount rate used by courts to calculate lump sum payments for future damages.

“Although some actions have been taken to control costs, such as reforms to ‘no-win-no-fee’ agreements, ensuring that clinical negligence costs have the minimal impact on the NHS’s ability to deliver health services to patients requires concerted and fundamental action across the government, particularly the health and justice systems.”

The NAO’s four recommendations were first that, by September 2018, the Department of Health, together with the Ministry of Justice and others, should “clearly set out a coordinated strategy to manage the growth in the cost of the CNST”.

Second, NHS Resolution should work with its members and other bodies to promote “better and more consistent data for complaints, incidents and negligence claims across the system”.

Third, NHS Resolution “should build its capability to analyse and provide greater insights on the causes of clinical negligence claims”.

The NAO said: “It should work with trusts and the legal firms representing claimants to better understand what motivates people to make a claim, and clarify how it can best provide the information that trusts need and apply its resources accordingly.”

Fourth, it called on NHS Resolution to work more closely with NHS Protect, the Solicitors Regulation Authority and other regulators to ensure that “risks to its claims operations and to NHS resources are shared and addressed systematically”.

It explained: “NHS Resolution has achieved significant savings from contesting unmerited or excessive claims and legal charges. However, data are not always shared with or addressed by relevant regulators. NHS Resolution and the legal services regulators should routinely exchange information on risks identified, and feed back actions taken as a result.”

On excessive costs, the NAO reported that, in 2015-16, NHS Resolution successfully challenged costs in 2,600 claims (but failed in another 2,500), saving £144m, or a third of the costs claimed.

In one case, it successfully challenged an £8m bill from a single firm and settled the payment for £500,000.

The NAO said that part of the reason for escalating costs was cases taking longer to resolve and also budget restrictions.

Between 2010-11 and 2016-17, the average time taken to resolve a claim following notification increased from 300 to 426 days. “Our analysis indicates that, on average, an extra day taken to resolve a claim is associated with an increase in legal costs of more than £40.”

It acknowledged the need to strike a balance between resolving cases quickly and robustly defending unmerited or excessive claims.

“It is not clear whether or not the time taken to resolve cases is optimal. There are no data against which NHS Resolution’s performance can be benchmarked and the optimum time to take will vary on a case-by-case basis.

“Resolving clinical negligence claims is adversarial in nature, leading to differing views on whether the time taken to resolve cases is optimal. NHS Resolution has limited control over some barriers to resolving cases more quickly, such as the time taken by the court to process its cases.

“NHS Resolution is required to remain within its annual cash budget agreed with the department, and so must manage the pace of settlements to remain within this limit.”

Amyas Morse, head of the National Audit Office, said: “At £60bn, up from £51bn last year, the provision for clinical negligence in trusts is one of the biggest liabilities in the government accounts, and one of the fastest growing. Fundamentally changing the biggest drivers of increasing cost will require significant activity in policy and legislation, areas beyond my scope.”




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Thomas: disproportionately adverse impact on SMEs

Thomas: disproportionately adverse impact on SMEs

The senior judiciary and Civil Justice Council (CJC) have outlined their “deep concerns” about the new 5% court fee for all money claims worth £10,000 or more – which will mean an increase on the current levels of up to 622%.

The fee is capped at £10,000 – which will be the fee for any claim worth £200,000 or more – but calculations by the CJC showed how extreme the increase will be on claims.

It peaks at claims for £190,000, where the current fee is £1,315 but under the new regime will be £8,185, an increase of 622%.

For claims worth £15,000, the fee will increase from £610 to £750, a 23% uplift. For £100,000 claims, it goes from £1,115 to £5,000 (348%); for £200,000, from £1,515 to £10,000 (576%); and for £500,000, from £1,920 to £10,000 (421%).

Both were writing last month as statutory consultees of the Ministry of Justice as it decided to press ahead with the proposal first made a year ago. They were only published once the government issued its paper on the way forward last Friday.

Writing on behalf of the senior judiciary, the Lord Chief Justice, Lord Thomas, said there was likely to be a “disproportionately adverse impact” on SMEs and litigants in person.

He said: “It needs to be borne in mind that while the court fee normally represents a relatively small proportion of total litigation costs, it has to be paid up front and in full; whereas for individuals and smaller businesses the funding of litigation is often after the event, post-judgment. And these are significant sums.”

Lord Thomas also highlighted the difficulties of applying the new fee to unspecified money claims, either because the valuation of the claim has not been completed at the start of the case, especially in personal injury cases, or because the primary purpose of the claim is a non-monetary outcome, such as an injunction or other remedy.

The CJC said the new approach could act “as an effective barrier to entry to the justice system through pricing many court users out of the courts”, as well as making alternative to the civil process far more attractive – “thus undermining the very intention behind the court fee increase and thereby risking significantly reduced fee income”.

Both were also highly critical of what they saw as insufficient evidence underpinning the reform.

However, they welcomed the decision not to introduce a higher limit for commercial claims and not to introduce daily hearing fees.

The Association of Personal Injury Lawyers said the increases “could have a profound impact on access to justice”.

“The government’s claim that fees are not a major factor in a person’s decision about whether or not to go to court is completely disingenuous,” said president John Spencer. “This move is bound to discourage people from making valid claims – people who have every right to make them. And the idea that seriously injured people making higher-value claims are more likely to be able to afford the new fees is outrageous.

“The severity of an injury has nothing to do with the injured person’s capacity to pay. This new regime will dictate that some seriously injured people will be expected to pay £10,000 up front to bring their cases to court, and many simply won’t be able to afford it.”

In its consultation response, the Ministry of Justice concluded that the increase would not make it harder to access the courts.

It said: “The research we have undertaken indicates consistently that fees are a secondary consideration in the decision to litigate, with the prospects of success and the likelihood of recovering the debt being primary considerations. Fees represent a small proportion of the overall costs of litigation and can, in successful civil proceedings, be recovered from the losing party.

“In addition, the fee to commence the large majority of money claims will remain unchanged under these plans [as] 90% of money claims are for sums of £10,000 or less; the fee is proportionate to the sums in dispute and is capped at £10,000; fee remissions are available for those who qualify; money claims can be brought under a ‘no win, no fee’ conditional fee agreement; and in limited circumstances legal aid remains available.”




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Posted by Neil Rose, Editor, Litigation Futures

The one and only time you will see my picture on this website!

Welcome to Litigation Futures. The first spin-off from Legal Futures, this site reflects my longstanding involvement in the world of costs and funding, first as editor of Litigation Funding magazine for 10 years and latterly as editor of Costs Lawyer, the monthly magazine of the Association of Costs Lawyers.

Although up to now I have put costs and funding stories through Legal Futures, there is so much happening that it more than justifies a dedicated website. We are nine months away from the implementation of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, bringing with it huge cuts to civil legal aid and many of the Jackson reforms. These are matters of concern to many in the legal world, and it is no surprise to me that the tag ‘Jackson report’ is the single most-clicked on tag since I launched Legal Futures more than two years ago.

The aim of Litigation Futures is to be the first independent, online, news-driven resource for those in this part of the market. No more waiting for monthly or bimonthly magazines to find out what is happening – things are moving too quickly to wait. We will work to the same standards of high-quality journalism that have marked out Legal Futures, breaking the stories that the market needs to know (and for convenience we have transferred over much of Legal Futures' archive of costs and funding stories).

I hope you bookmark this site and visit regularly as we intend to update it several times a week, if not every day, with news, along with supporting analysis and features on key points of practice, procedure and the latest cases. I hope also that you make use of our unique Find a Funder facility, which is growing every day, and we have other useful databases in the pipeline.

I would also be very pleased to receive news, articles and other contributions – e-mail me on neil.rose@legalfutures.co.uk.

To some the world of costs and funding may seem dark, niche and arcane. But it goes to the heart of access to justice and Litigation Futures aims to become the home of all you need to know about it.




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Personal injury representation has, for some smaller firms, become a less attractive business than it was only a year ago following the effects of the April 2013 Jackson Reforms, which called for increased settlement speed and a new fixed recoverable costs regime, compressing solicitor profitability substantially. While some firms have exited the personal injury business, others have begun to see the Jackson Reforms as an opportunity for growth, provided they can live within the new regulations.

At a time when the Law Society is forecasting a 15 to 50 per cent drop in claimant solicitor income in the next three years – which could require a wave of industry consolidation – Insurance Services Office (ISO) has released a new White Paper which looks at the issues facing claimant solicitors in more detail. Here ISO offers clear advice for those firms looking to adapt to this new business environment and turn the Jackson Reforms into an opportunity to restore profitability per case.

The Paper explains how automating and digitising the claims negotiation and settlement process will help significantly in reducing costs per case and restoring profitability, thanks to a drop in claim life cycles of as much as 40 days, freeing solicitors to handle more cases simultaneously and invest more time in generating new business, as well as ensuring better decision-making in less time.

The White Paper is available from ISO for free download here.

Since 1971, ISO has been a leading source of information about property/casualty insurance risk. For a broad spectrum of commercial and personal lines of insurance, the company provides statistical, actuarial, underwriting, and claims information; policy language; information about specific locations; fraud-identification tools; and technical services. ISO serves insurers, reinsurers, agents and brokers, insurance regulators, risk managers, and other participants in the property/casualty insurance marketplace. ISO is a member of the Verisk Insurance Solutions group at Verisk Analytics (Nasdaq:VRSK). For more information, visit www.iso.com and www.verisk.com. If you would like more information about ISO services, please contact : Mark Strang, Tel: 01252 761055 mstrang@iso.com




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

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

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

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

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

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

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

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

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

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

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

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




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Supreme Court: February hearing

Applications for adjournments of costs assessment until the Supreme Court’s decision in Coventry v Lawrence are rightly being given “short shrift”, the Senior Costs Judge has said.

Andrew Gordon-Saker also suggested that the future of guideline hourly rates could be in doubt if there is insufficient enthusiasm for a second ‘expense of time’ survey.

In February the Supreme Court in Coventry will consider whether the pre-Jackson regime of recoverable additional liabilities was incompatible with the Human Rights Act.

Speaking at the Association of Costs Lawyers’ conference in Manchester last week, Master Gordon-Saker said: “Inevitably in a considerable number of the detailed assessments that have taken place since the end of July [when the Supreme Court flagged up the issue], paying parties have been asking for an adjournment of the assessment of any additional liabilities claim until the Supreme Court’s decision is made. Similarly parties ordered to pay costs at the end of a hearing have been asking for the question of their liability to pay additional liabilities to be adjourned.

“These applications, I understand, have been given short shrift. Additional liabilities are recoverable under primary legislation. If that primary legislation is incompatible with the Human Rights Act, that should not affect recoverability as between the parties, although I know that there are arguments to the contrary.”

The judge said he suspected there would only be another survey of solicitors – to inform new guideline hourly rates – if a better response rate could be guaranteed this time around; it was the failure to gather sufficient evidence that meant the Master of the Rolls decided not to accept the Civil Justice Council’s costs committee’s recommendations to increase the rates.

Supporting the existence of the rates, Master Gordon-Saker said: “In the meantime, we carry on with the 2010 rates, with the important but limited changes approved by the MR. If we do not have another survey, then the future of guideline rates is questionable.”

In a wide-ranging speech, the Senior Costs Judge said fixed costs for all fast-track cases were “inevitable” but he felt it would be too hard to set fixed costs for the wide range of cases at the lower end of the multi-track.

He also revealed that the Senior Courts Costs Office is turning around provisional assessments in around 18 weeks, with little prospect of it being able to hit the six-week target because of court resources.

He said: “You will still get a bill provisionally assessed before you would get a detailed assessment, so you may think that’s something of an advance. Our experience is that there are few requests for an oral hearing, so generally provisional assessment is it.

“The vast majority of cases the parties are accepting the figure allowed on provisional assessment. So to that extent, despite the delays, it could be said that the system is working.”




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RCJ

Richards LJ: “Commonplace” for clients to give instructions via agents

A solicitor’s retainer is not rendered “impossible of performance” simply because a claimant loses mental capacity and cannot give instructions personally, the Court of Appeal ruled today.

Upholding the High Court’s ruling this time last year, Lord Justice Richards said it was “commonplace” for clients to give instructions through agents, such as accountants or spouses.

The court heard that Diann Blankley lost capacity, regained it and then lost it again during a clinical negligence claim.

Richards LJ said that in the case of Ms Blankley, the parties “must have contemplated” that there would be a further period of incapacity where instructions would be given by a litigation friend or deputy.

“The fact that supervening incapacity prevented the claimant from giving instructions personally did not render the contract of retainer impossible of performance,” he said.

“It simply gave rise to a short period of delay pending appointment of a receiver/deputy who could continue the conduct of the proceedings on the claimant’s behalf and give instructions to the solicitors for that purpose.”

Delivering judgment in Blankley v Manchester NHS Trust [2015] EWCA Civ 18, Richards LJ said that if the claimant was under an obligation to give instructions personally, and later lost capacity, the situation would have been covered by the express terms of the conditional fee agreement (CFA).

He explained that this entitled the solicitors in that situation to terminate the contract and demand payment of their basic charges.

Richards LJ said the “unattractiveness of such a result” was “further indication that it cannot have been the intention of the parties that the claimant had to give instructions personally”.

The lord justice said he agreed with the reasons given by the High Court for concluding that the CFA was not frustrated.

He dismissed the NHS trust’s appeal. Lord Justice McCombe and Lady Justice Sharp agreed.

Sue Nash, chairman of the Association of Costs Lawyers, commented: “This is a common sense decision that recognises the practicalities of the situation where a client loses capacity.

“It will lead to swifter access to justice in that there will be no need to enter into a further funding arrangement and it should also avoid further satellite litigation.”




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Ashton West

West: shared success

Ashton West, chief executive of the Motor Insurers’ Bureau (MIB) since 2003, has been awarded an OBE for services to road safety.

Mr West was a founder member of the Civil Justice Council and is a member of the Association of British Insurers’ motor committee and personal injury panel.

He was a member of the working party which developed the personal injury pre-action protocols and the code of best practice on rehabilitation. He was also involved in the negotiation of agreements on the resolution of large-scale industrial disease claims.

A spokesman for the MIB said that since 2005 the number of uninsured drivers had dropped by 50% to around one million, while the cost of claims involving uninsured or ‘hit and run’ drivers had fallen from £417m in 2008 to £247m in 2014.

The spokesman said a “key factor” in the success was investment in the Motor Insurance Database. He said that since 2011, MIB had worked in partnership with the DVLA to introduce ‘continuous insurance enforcement’, which systematically matches records of vehicle keepers with insurance records on the database.

Steve Maddock, chairman of MIB and managing director of claims and business services at Direct Line Group, said the bureau was using technological advances and work with enforcement agencies to remove “drivers who flout the law” from the roads.

“Under Ashton’s guidance, the MIB has transformed itself and while it may not be visible to everyone, its impact is far-reaching.”

Before joining the MIB, Mr West had management roles in the insurance industry at Iron Trades Insurance and Rubicon Limited, was chairman of ReIntra and a claims consultant at Bavarian Re UK.

A law graduate, he described the award of an OBE as a “shared success”.




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Djanogly: still working on third-party claims

There is to be no means test to benefit from qualified one-way costs-shifting (QOCS), the government has announced.

In a statement to Parliament today that follows advice given by the Civil Justice Council, justice minister Jonathan Djanogly said there will also be no minimum payment required of a losing party.

He said QOCS protection will be lost if the claim is found to be fraudulent on the balance of probabilities; the claimant has failed to beat a defendant’s part 36 offer to settle; or the case has been struck out where the claim discloses no reasonable cause of action or where it is otherwise an abuse of the court’s process (or is otherwise likely to obstruct the just disposal of the proceedings).

Mr Djanogly added that QOCS protection will apply in relation to claims that are discontinued during proceedings (subject to the fraud exception) and for all appeal proceedings “as the requirement for permission to appeal controls unmeritorious appeals”.

Part 36 will override QOCS, but only up to the level of damages recovered by the claimant. There is to be an additional sanction of 10% of damages (or 10% of costs for non-damages claims) where judgment for the claimant is more advantageous than a defendant’s part 36 offer. This will be subject to a tapering system for claims over £500,000 so that the maximum sanction is likely to be £75,000. Also, there will only be one sanction applicable for split trials.

The minister said the Ministry of Justice is still considering the practicality of QOCS protection not applying to elements of a claim for personal injury that are pursued for the benefit of a third party, such as a property damage insurer or a credit hire provider.

As revealed by the Master of the Rolls, Lord Neuberger, in May, the new rule on proportionality has been agreed by the Civil Procedure Rule Committee. “The senior judiciary are considering revisions to the Costs Practice Direction to give effect to the new rule,” Mr Djanogly said.

He concluded: “Changes to the Civil Procedure Rules will be considered by the committee in the autumn, in order for the necessary changes to come into effect for April 2013.

“The Ministry of Justice will continue to engage with key stakeholders throughout the implementation stage and will also work closely with the senior judiciary on other aspects of Lord Justice Jackson’s reforms, which are due to come into effect at the same time.”

Law Society president Lucy Scott-Moncrieff said: “It’s good that the government has listened to the concerns expressed by solicitors.

“The mooted means test applied to the new qualified one-way costs shifting rules, introduced into personal injury cases by the Jackson reforms, would have undermined the logic of the reforms and been an administrative nightmare.

“It might have led to further litigation about the scope of the rules themselves. We also took the view that access to justice would not be served by claimants having to make a minimum payment on losing a case.

“The society welcomes the government’s decision to amend their original  proposals and looks forward to continued collaboration with the Ministry of Justice and the Civil Justice Council in the implementation of the rest of the civil justice changes.”




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Disney: Prevention is always better than remediation

Posted by David Disney, director and head of the south-west region of Litigation Futures Associate John M Hayes

Have you been caught out by fixed costs on a high-value RTA or EL/PL claim that settled prior to allocation to the multi-track? Over the past couple of months, we have seen this issue arise on a number of occasions.

So, in what circumstances do fixed recoverable costs (FRC) under part IIIA of CPR 45 apply to high-value claims?

Pursuant to CPR 45.29A and the decision in Qader v Esure [2016] EWCA Civ 1109, FRC apply if a claim was submitted through the portal but no longer continues under the relevant protocol and the matter is not allocated to the multi-track.

The application of fixed costs is therefore quite straightforward. If a seemingly low-value claim is started under the portal but later becomes more complex and/or increases in value, and subsequently exits the portal, it will be subject to fixed costs if settlement is reached before allocation to the multi-track.

This is the scenario we are finding to be quite common in practice and something which practitioners should become familiar with in order to avoid the pitfalls of fixed costs.

To avoid fixed recoverable costs before/during the claim, prevention is always better than remediation.

There are two immediate and obvious ways in which FRC can be avoided, although both require more case management. The first is not to submit the claim via the portal in the first place (if there is reasonable justification), the second is to ensure the claim is allocated to the multi-track as soon as possible (CPR 45.29B) or, if possible, delaying settlement until after allocation.

The first method will likely require time to be spent by senior fee-earners assessing the potential quantum of claims at the outset, in an effort to avoid incorrectly submitting claims through the portal. It also carries an element of risk in that the defendant may be ordered to pay no more than FRC if “the court considers that the claimant has acted unreasonably… by valuing the claim at more than £25,000, that the claimant did not need to comply with the relevant protocol” (CPR 45.24).

Although costly, it will arguably be time well spent when hourly rates costs are obtained.

The second method should not be relied on as a standard practice as it is not always within the claimant’s control. For example, the defendant could make an acceptable part 36 offer, more than 21 days prior to the initial case management conference, which would almost certainly result in settlement.

Even if the claim did not settle and was later allocated to the multi-track, the defendant could still raise the argument that had the claimant accepted the offer within the relevant period, fixed costs would have applied.

What can you do if fixed costs apply?

If fixed costs apply once the substantive claim has settled, then the claimant has a couple of possible avenues.

They could make an application pursuant to CPR 45.29J – which allows the court, if it considers there are exceptional circumstances, it summarily assess the costs or make an order for an amount of costs which is greater than fixed costs.

Whether a case is exceptional or not will turn on its own facts as ‘exceptional circumstances’ is not defined and there has not been any case law to determine what the threshold is. We do, however, know that the threshold for proving exceptional circumstances was quite high under the previous FRC provisions (which are now covered under CPR 45.13 – please click here for a previous article on this point) and therefore one would assume the threshold will be at a similar level.

Another possibility is making an application pursuant to CPR 46.13(a): “Where the court is assessing costs on the standard basis of a claim which concluded without being allocated to a track, it may restrict those costs to costs that would have been allowed on the track to which the claim would have been allocated if allocation had taken place.”

If the claim would have been allocated to the multi-track, there may be an argument that fixed costs would not apply. However, due to the clear wording of CPR 45.29B, there is no ambiguity as to the costs that should apply: “For as long as the case is not allocated to the multi-track, if, in a claim started under the RTA Protocol, the Claim Notification Form is submitted on or after 31st July 2013, the only costs allowed are the fixed costs in rule 45.29C.”

It may therefore be that this argument is used in support of an application made pursuant to CPR 45.29J rather than as a standalone application.

If the court is persuaded that exceptional circumstances exist, it will either summarily assess the claimant’s costs or make an order for detailed assessment of the claimant’s costs.

However, you should beware that there is a possible sting in the tail. If the claimant’s assessed costs are not 20% more than the fixed recoverable costs they would have received had they not obtained an order for hourly rate costs, the court will only allow the lower of assessed costs and fixed recoverable costs, and may order that the applicant pay the costs of the assessment (CPR 45.29K and CPR 45.29L).

It will therefore be necessary to undertake an analysis of the likely recovery under assessed costs before making such an application.

Take time to assess claims upon receiving initial instructions and consider whether a letter of claim is more appropriate than submission through the portal; the costs implications of these initial steps are significant.




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Rowles-Davies: quadrupled funding facility

Recession-related litigation is growing, new figures have shown, with the number of contract claims in the High Court soaring by nearly half in 2011.

In all 982 contract claims were issued in the Chancery Division 2011, compared to 683 the year before, a rise of 44%, with breach of contract and debt the main causes of action, according to the Ministry of Justice’s recently published annual court statistics.

There were similar trends in other courts – breach of contract claims in the Queen’s Bench Division also rose 44% to 969, while breach of contract/agreement/debt claims in the Commercial Court rocketed 49% to 722.

The sharp rise compared with a more gentle 6% increase in Chancery Division cases overall (to 35,238). This hid significant variations, however, including a 19% jump in intellectual property litigation (to 667 claims) and a 10% rise in Bankruptcy Court applications (to 12,121), as well as a 17% drop in professional negligence cases (to 184), the majority of which were against solicitors.

There was overall a 16% fall in proceedings issued in the Queen’s Bench Division (to 13,928). Of those started in the QBD of the Royal Courts of Justice, a quarter related to debt and around one in five related to breach of contract.

Nick Rowles-Davies of leading third-party litigation funder Vannin Capital said the trends showed how recession-related litigation, such as debt and breach of contract, is playing an increasingly significant role in the courts.

“Our own experience – from the ever-growing number of approaches for funding we receive – matches the trends identified by these statistics. The kinds of disputes the courts are seeing are often caused by the difficult situations people find themselves in during a recession; this is compounded by the fact that, by definition, they struggle to get the money together to take their case to court.

“That, of course, is where we come in and the demand we are seeing is in part why we recently quadrupled our funding facility to £100m for the coming year. This is litigation funding providing access to justice for people who might very well not be able to afford it otherwise.”




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A skeleton argument yesterday

The Court of Appeal has hit out at lengthy and complex skeleton arguments, describing them as the “bane” of commercial litigation and warning that failing to comply with the practice directions on them will result in costs sanctions.

Lord Justice Moore-Bick said it is important that both practitioners and their clients understand that skeleton arguments are not intended to serve as vehicles for extended advocacy.

The comments came in a postscript to Standard Bank plc v Via Mat International & anor [2013] EWCA Civ 490, an appeal against summary judgment for the first defendant against the claimant and setting aside service of the claim form and particulars of claim on the second defendant out of the jurisdiction in Hong Kong.

Lord Justice Moore-Bick said: “Although there were two applications before the judge, they were complementary and in substance this was a relatively straightforward application for summary judgment.

“The hearing before the judge was completed within a day, as was the hearing of the appeal and although a large amount of evidence was filed, it proved possible as a result of co-operation between the parties to produce a single core bundle of moderate length which included all the important documents.

“In those circumstances it is a matter of concern that the skeleton arguments produced for the appeal run to a total of 116 pages, of which by far the greater part (93 pages in all) is made up of the appellant’s skeleton and supplementary skeleton arguments.”

Moore-Bick LJ referred to three cases in the last five years in which the appeal court addressed the issue, in one of which he said Sir Anthony May, then the president of the Queen’s Bench Division, “sounded a clear warning about the risks to our tradition of oral advocacy posed by excessively long skeleton arguments”.

The judge continued: “It is important that both practitioners and their clients understand that skeleton arguments are not intended to serve as vehicles for extended advocacy and that in general a short, concise skeleton is both more helpful to the court and more likely to be persuasive than a longer document which seeks to develop every point which the advocate would wish to make in oral argument.

“In this context I wish to draw attention to the provisions of Practice Directions 52A and 52C, both of which apply to proceedings in this court. Each of those practice directions contains important provisions relating to the nature and content of skeleton arguments. Practice Direction 52C, in particular, contains specific provisions governing their length and presentation.

“The court will expect the requirements of both practice directions to be rigorously observed. Failure to comply with them is likely to be penalised in costs.”

Lord Justice Aikens endorsed Moore-Bick LJ’s postscript. “Overlong pleadings and written submissions – the true ‘skeleton argument’ of bye-gone days no longer exists – which are manufactured by parties and their lawyers have become the bane of commercial litigation in England and Wales,” he said.

“This prolixity only adds unnecessary costs; it does nothing to clarify and simplify the issues or to shorten proceedings, which aims should be the objectives of both pleadings and written submissions.”

The judge said “this is not a new problem”, referring to a reported case from 1595 in which a miscreant was imprisoned “until he paid a fine of £10 (a huge sum) to Her Majesty and 20 nobles to the defendant”. The court also ordered him to be led around Westminster Hall whilst the courts were sitting, with the offending submissions around his head.

Lord Justice Aikens concluded: “That sanction against prolix pleaders and submission authors may not be available today, but failure to comply with the letter of the practice direction on written submissions and the failure to heed the need for brevity in pleadings may well lead to strict adverse costs orders.”




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In a new feature, Litigation Futures is publishing a monthly summary of key costs-related court decisions. These are provided by CaseCheck

Royal Courts of Justice: key costs rulings

Davies v Watkins [2012] EWCA Civ 1570
Appeal concerning the approach to costs of a Beddoe application on the ground that the trustee was entitled to an indemnity out of the estate.

Held: The normal rule for costs of the application for direction that, absent improper conduct, the costs of the trustee and of the beneficiary defendants will be paid out of the trust fund applied. The judge erred in exercising the court’s general discretion as to costs in ordinary litigation instead of starting from the special position of an application for directions by a trustee, with the special rules and practice that apply to such proceedings.

Full ruling here.

 

Connell v Mutch [2012] EWCA Civ 1589
Appeal against an issue-based order for costs dismissed.

Held: It would have been better for the judge to make an order that the claimant/appellant recover only a proportion of his costs and to have made no order for costs in favour of the defendant/respondent, as contemplated by CPR 44.3(6)(c). Such an order is usually in the interests of both parties as minimising the need for further argument at the assessment stage.

However, the judge’s approach did not fall outside the ambit of reasonable decision-making and the litigants would not benefit from an interference with the order. It would be costly and set a bad precedent if the matter were remitted to the judge to craft a proportionate recovery order: ‘No encouragement should be given to appeals of this nature’ (at [28]).

Full ruling here.

 

Webb Resolutions Ltd v Waller Needham & Green [2012] EWHC 3529 (Ch)
Pursuant to the acceptance of a part 36 offer, the court was asked to make an order as to costs where the claimant failed to comply with the professional negligence pre-action protocol by refusing to disclose documents.

Held: The normal rule is that the claimant gets costs up to acceptance by the defendant of the offer unless the defendant can show that it would be unjust to do so taking into consideration all of the circumstances of the case, including those expressly set out in CPR 36.14(4), whether or not there has been substantial compliance with the protocol and whether sanctions might be appropriate (SG v Hewitt [2012] EWCA Civ 1053 followed).

In the present case, a normal order under CPR 36.10(4) would be unjust: the claimant’s refusal to provide documentation necessary for the defendant to assess its liability was not reasonable and consistent with the expressed aim of the protocol. Claimant awarded costs up to the date when it refused to disclose but ordered to pay the defendant’s costs incurred thereafter.

Full ruling here.

 

Ryder plc v Beever [2012] EWCA Civ 1737
Appeal concerning an application for relief from the sanction of strike-out for failing to serve a costs schedule.

Held: The delay in providing the costs schedule had not caused any real prejudice to the defendant, nor had it delayed the progress of the action. There was no justification for striking out the action when its overall effects were not grave, considered together with the potentially severe prejudice which would be caused to the claimant if relief were refused.

In any event, the powers of the court on making a costs order are wide and allowance can be made at the part 36 offer stage for any prejudice that a party has suffered as a result of the delayed service of a costs schedule.

Full ruling here.

NB We have not included Henry v NGN as it has been extensively reported on Litigation Futures already




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costs

Claimant to pay costs of trial and application

Insurer Admiral has claimed victory in a whiplash case where its customer claimed there was no contact between the two vehicles.

District Judge Dudley said there was “absolutely no doubt whatever in my mind” that the claimant had been “fundamentally dishonest” in the evidence he gave during the trial at Southend County Court.

This meant that the claimant lost the protection of qualified one-way costs shifting (QOCS) and was ordered to pay the costs of the trial, which Admiral said were £6,000.

He was also ordered to pay an additional £1,000 to cover the costs of the application DJ Dudley required before he was prepared to make the “fundamental dishonesty” ruling.

A spokesman for Admiral said its customer was accused of driving into the back of the claimant’s car after he performed an emergency stop to avoid a collision with a motorbike.

The spokesman said the claimant “alleged he had suffered neck and back whiplash injuries which persisted for months and even went so far as to get GP reports for himself and his passenger”.

At the trial DJ Dudley dismissed the application, but asked for a separate application to be made to determine the issue of fundamental dishonesty.

Under QOCS, successful defendants can only recover costs against claimants in limited circumstances, including fundamental dishonesty.

Lorna Connelly, head of claims at Admiral, said: “We are understandably delighted with this significant ruling. The third party involved brazenly lied about the circumstances, putting our customer through undue stress and inconvenience so we were determined to prove they were fundamentally dishonest.

“We hope it sends a warning that a dishonest individual could have a very significant cost liability should they pursue a case against us, as the judiciary are willing to make findings of fundamental dishonesty.

“It will also hopefully make solicitors think twice before bringing these cases to court in the first place.”

Admiral was represented by Horwich Farelly.




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Brennan: looking to the future with optimism

Third-party funder Juridica has generated £52m from five cases that concluded in the first half of 2014, a 44% rise on the same period last year, its interim results have shown.

All the cases were in its antitrust portfolio, but a further antitrust case was lost, while two of the cases in Juridica’s commercial portfolio “continue to show indications of enhanced risk”, meaning their value has been written down.

At 30 June 2014, the company has invested or committed approximately £91m across 16 live investments, mainly commercial and patent infringement matters as all but one of its antitrust cases have now reached some sort of conclusion.

One notable new investment is £2.1m in ProSports IP, a new joint venture with the National Football League Players Association in the US which has been established to develop and monetise a large portfolio of patents in the technology and sports market.

The company said it expects several investments to be completed over the next 12 to 18 months. To date Jurdicia has received net proceeds from all its cases of £109m.

Lord Brennan QC, Juridica’s chairman, said: “During the first half of the year the company has continued to manage its maturing portfolio of antitrust and commercial claim investments, whilst developing its patent activities through its partnership with ipCreate.

“Taken together with the recently announced returns on investments, we look to the future with optimism and expect the portfolio to continue maturing, delivering attractive dividend income and net asset value growth.”

Meanwhile, plans by City of London Group plc to sell its stake in third-party funder Therium are progressing, it emerged this week.

John Kent, the group’s acting chief executive, told its annual general meeting earlier this week that “it is now in advanced discussions around the sale of Therium”.




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Lord Neuberger

Lord Neuberger: Contract-based claims “pre-eminently suitable”

Lord Neuberger has said that the compulsory mediation information and assessment meetings (MIAMs) introduced for separating couples should be extended to “smaller civil cases”.

The president of the Supreme Court said the USA, Australia, New Zealand and Scandinavia all had mandatory mediation for some types of civil case.

Rather than arguing that the extension of compulsory mediation “ought to happen”, Lord Neuberger stated that “there plainly must be a lot to be said” for the move.

He said that, according to the Ministry of Justice information service, just under 70% of the MIAM mediations introduced this time last year had successfully resulted in settlement.

In a speech to the 2015 Civil Mediation Conference, Lord Neuberger said another way of encouraging mediation was to get compulsory mediation clauses included in ordinary contracts, just as commercial contracts had compulsory arbitration clauses.

“The government has tried to enforce mediation for boundary disputes which seems to me to be a good thing, but such disputes do not arise out of contracts and therefore cannot be catered for by the parties in advance.

“But there are contract-based claims of a similar nature which are pre-eminently suitable for mediation.

“Thus, there would be much to be said for extending mediation to similar sorts of dispute, such as possession claims based on nuisance and annoyance.

“So might it not be a good idea to include a clause requiring mediation at least in some types of case in every council or Housing Association tenancy agreement – or indeed in standard form private sector tenancy agreements?”

Lord Neuberger said service charges “may be another good area for contractual mediation agreements”, provided experienced mediators could be instructed.

“I think that there must also be a lot to be said in favour of the Department of Health encouraging mediation pretty promptly after any medical procedure goes wrong in a relatively minor way.

“Very often in such a case, an apology, simply saying sorry, may be all the patient or the patient’s family, want. Without a formal mediation, the doctors will be reluctant even to say sorry because of a fear that it will be construed as an admission of negligence.”

To deal with the concern that mediations could be worse than useless if they did not result in a settlement, Lord Neuberger said a procedure could be agreed where mediators could impose a settlement if parties did not agree by a certain time.

“No doubt, the knowledge that the mediator will suddenly convert to an arbitrator at a certain moment, like Cinderella turning into a pumpkin at midnight, helps concentrate the parties’ minds on a settlement before that moment arrives.”

Lord Neuberger added that “as a matter of melancholy fact” the combination of legal fees, court procedures and government cuts made it “difficult if not impossible” for many people to get access to the courts, and mediation “appears in practice to be the only alternative”.




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Injury claims: everyone recognises that QOCS won't work, says Deboray Evans

The Association of Personal Injury Lawyers (APIL) will next week launch a final attempt to challenge the Jackson reforms by setting out a new negotiating position that drops outright opposition to the changes.

However, while the Law Society said the proposals deserve “serious consideration”, another claimant lobbying group attacked APIL’s move, while defendant lawyers rebuffed any suggestion of compromise over the Legal Aid, Sentencing and Punishment of Offenders Bill.

APIL is currently consulting with its 5,000 members over a package that would see fixed recoverable success fees – ranging from zero if a binding admission is made in the protocol period to 50% at trial – non-recoverable after-the-event (ATE) insurance premiums, the bid to introduce qualified one-way costs-shifting (QOCS) abandoned, and legal aid retained for clinical negligence work.

The APIL executive committee will finalise its proposals next week before taking them to the Ministry of Justice and defendant insurers and lawyers.

Chief executive Deborah Evans said APIL had always planned to reflect on what happened during the committee stage of the bill’s progress through the House of Lords before setting out “a sensible alternative” to float at the report stage, which is scheduled for early March.

While still opposed to the reforms in principle, Ms Evans said APIL was taking a “realistic” view of the prospects of securing wholesale changes. “I hope [the proposals] are sufficiently aligned with the government’s intentions to be given serious consideration.”

Making ATE unrecoverable rather than success fees meant claimants would only suffer “one hit, not two”, while creating a competitive ATE market where prices will go down and so reducing the portion of a claimant’s damages that will be eaten up by the premium. She said the ATE market is currently a “false” one because recoverability means there is no pressure on prices.

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The government seems entrenched in its current position, but Ms Evans said APIL’s ideas offered a way out of QOCS. “Everyone recognises that QOCS doesn’t work,” she said. “There has been a deafening silence from the government on [how it will operate].”

Law Society chief executive Des Hudson said: “The government appears determined to force through changes. Blunt opposition seems unlikely to halt the reforms so the Law Society has been considering pragmatic alternatives. For several months the society has been working behind the scenes with other stakeholders to discuss possible ways forward.

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“We remain opposed in principle to the government’s changes but alternative proposals from APIL deserve serious consideration. We look forward to serious discussions with government and the insurance industry.”

However, Nigel Muers-Raby, chairman of the anti-Jackson lobbying group the Consumer Justice Alliance, expressed “grave concerns” at both the content and the timing of the compromise.

He argued that it would leave the injured victim “in a worse position than do the Jackson proposals”, while “its circulation and use at a time when the Lords are showing such strong opposition to the bill is little short of catastrophic”.

In an open letter to Ms Evans, he said the alliance particularly opposed the attempt to reach a common position with the Association of British Insurers and the Forum of Insurance Lawyers (FOIL).

In any case, FOIL chief executive Laurence Besemer told Legal Futures: “There is no need for a Plan B – Plan A will deliver both a sustainable and balanced civil justice system and the government should stick the course on these reforms.

“There are no divisions in the defendant camp and our position is clear – that the Jackson reforms, provided that they are brought in as a package and at the same time, as Lord Justice Jackson intended, will deliver access to justice for those that want it and bring proportionality and balance back into the system, to the benefit of wider society. There is simply no credible evidence of risk to innocent victims.”

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Shenton: potential professional negligence issue

Shenton: potential professional negligence issue

Commercial litigators are busting their budgets without seeking court approval to revise them upwards, new research has shown.

According to the survey by Just Costs Solicitors of 912 commercial litigation partners at the top 200 law firms, some 73% of respondents said they had prepared a Precedent H budget which was either agreed between the parties or approved by the court.

But even though every single one of them said they monitored the costs they incurred to ensure they remained within the budget for each phase, 69% said they had exceeded a budget at some point. This meant there are “obviously flaws” in the process, the survey said.

Of these, just 11% had made an application to revise the budget upwards. Six in ten said they did so because of significant developments in the litigation – which is what the rules specify as the reason for revision – 10% described it as “simple overspend”, and the rest cited both.

Paul Shenton, managing director of Just Costs, said: “This research suggests that the majority of solicitors are either unaware that a mechanism exists for budgets to be revised or believe that any such application will automatically fail so there is no point in pursuing it.

“It is very difficult for solicitors to recover an overspend without applying to revise the approved costs budget upwards. If clients are paying win or lose, this is a potential professional negligence issue – and if law firms are limited to what they recover then they are effectively working for free.”

In a judicial roundtable hosted earlier this year by the Association of Costs Lawyers, District Judge Chris Lethem – a member of the Civil Procedure Rule Committee and Judicial College trainer on costs – said he “hardly ever” saw applications to vary budgets.

He said: “I am deeply uneasy about that desert of applications, because either I have achieved a crystal vision which I thought I did not possess, or the parties are storing up a heap of problems later on down the line because they did not apply to vary, and when they get to the end of the process they are suddenly going to find they have overspent.”

However, Francesca Kaye, a partner at Russell-Cooke and immediate past president of the London Solicitors Litigation Association, said she was “positively avoiding” making applications to vary.

She said: “The risk of making an application to amend or vary a budget is firstly that the proposed amendment, depending on why you are applying to amend, might not be allowed; secondly, we have heard some horror stories of making an application to amend, and the judge taking one look at the budget that previously had been granted, and taking it as an opportunity to have another go at it.”




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Nash: step in the right direction

Nash: step in the right direction

Costs lawyers are well placed to help out judges by taking on the role of delegated judicial officers (DJOs), their representative body has told the Briggs review.

In his review of the civil courts structure, Lord Justice Briggs is tasked with making recommendations for the deployment of DJOs, and the Association of Costs Lawyers (ACL) said its members were keen to support this “as a way of improving the quality and efficiency of the costs regime”.

However, the association cautioned that there would need to be investment to ensure the robust selection, supervision and review of DJOs.

DJOs would not be judges themselves, and their performance of low-level judicial functions would be under judicial supervision and subject to litigants’ rights of review by a judge.

The ACL said: “We support the broad principle that qualified and regulated legal professionals with expertise in particular areas of the law should be considered for appointment as DJOs to deal with matters within those specialist areas.

“Our members are particularly interested in this proposal, as they see themselves as ideally suited to perform the more routine, simple functions currently performed by costs judges. Our members have different levels of qualification and experience in all aspects of the costs environment. More importantly they have chosen to specialise in costs as their area of expertise, therefore they are passionate about the subject.

“Too often we hear reports of district judges who have no interest in costs, and that lack of interest follows through to the decisions made.

“Furthermore, costs lawyers have a breadth of experience across the wide range of areas in which our solicitor clients practice. Subject to training and supervision, there is no reason why suitably qualified costs lawyers could not be given general case management powers.”

ACL chair Sue Nash said: “We are conscious of the fact that to utilise costs lawyers in this way may be considered a radical step but would venture to suggest it is no more radical than some of the other reforms being contemplated. It would, in our opinion be a step in the right direction to creating a fairer and more efficient costs environment.

“Indeed, costs lawyers’ experience in case management is such that we would be well placed take on a broader role as DJOs dealing with matters beyond costs.”

The ACL said DJOs should have authority to resolve live issues, but that their authority to do so should be subject to training and to supervision and review. Supervision could be by a panel of regional costs judges, it added.

On other issues raised by the review, the ACL broadly supported the introduction of online courts – also recommending the inclusion of conciliation as part of the process – and said any restructuring of the civil courts, including the possible unification of the county court and High Court, should be delayed until the impact of DJOs and the online court could be assessed.




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Glynn-Jones: new opportunities

Glynn-Jones: new opportunities

City law firm Berwin Leighton Paisner (BLP) has won what it believes to be the first contested application to use predictive coding as part of a substantial document review exercise.

Predictive technology – which learns from human document reviewers and prioritises and categorises documents automatically using algorithms – is growing in importance, with Master Matthews allowing its use in England and Wales for the first time earlier this year, in the case of Pyrrho.

Already in use in America, the Irish courts gave the technology their approval last year.

According to BLP, the case is an unfair prejudice petition in which the petitioner is seeking a buy-out of his minority shareholding. The respondents strongly contest the allegations, and the valuation suggested by the petitioner. The parties agreed most case management directions in advance of the first case management conference, with the respondent’s approach to disclosure the most substantial point of dispute.

BLP said the respondent’s preference for a ‘traditional’ approach to document review would be excessively costly, and that superior results could be achieved at a more proportionate cost using predictive coding technology.

It was estimated that a traditional linear review would cost more than two and a half times the cost of predictive coding, partly because BLP is unusual in having in-house data processing, hosting and document review capabilities, and – it said – “virtually unique” in having in-house predictive coding technology.

BLP argued that almost all of the factors set out by Master Matthews in favour of using predictive coding applied in this case, with the lack of agreement between the parties the main one that did not. The court agreed and ordered the respondent’s solicitors to use predictive coding.

The firm said the ruling was a clear demonstration that predictive coding technology was not only suited to handling claims with exceptionally large datasets – there were three million documents in Pyrrho – but could also be “critical” to achieving proportionality in smaller claims involving more typical datasets (there are approximately 500,000 documents in this case).

Lead partner Oliver Glynn-Jones, head of commercial dispute resolution at BLP, said: “The technology will not only reduce the cost of e-disclosure, but also operates at a higher level of accuracy than a traditional human review. It also opens up new opportunities such as early case assessment, since it enables lawyers to quickly identify the most highly relevant documents at a much earlier stage than through a traditional review.”




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SRA: proportionate outcome

A solicitor who failed to comply with court orders has been rebuked by the Solicitors Regulation Authority (SRA) after the judge complained to the regulator.

Paul Ireland, a sole practitioner in Warrington, accepted his sanction in a regulatory settlement agreement that means he avoids a referral to the Solicitors Disciplinary Tribunal.

The court told the SRA that Mr Ireland appeared at a county court by telephone, representing the defendant in a civil dispute. An order was made requiring him to file a perfected order, but he did not do so.

Three months later, court wrote to him, requiring him to file it within a week, but again he did not comply.

A further order was made, stating that unless Mr Ireland filed the perfected order by the following week, he should attend the court to explain his failure. Mr Ireland neither filed the order nor attended court as required.

Mr Ireland attributed his failures due to administrative errors at his office. The agreement said: “He confirmed that by the time he became aware of the orders it was too late for him to take action. He did not contact the court to inform it of the reasons for his failures.”

He wrote to the Court some months later apologising for his conduct.

Mr Ireland admitted that he failed to uphold the proper administration of justice in breach of principle 1 of the SRA Principles 2011 and failed to achieve outcomes 5.3 and 5.6 of the code of conduct – you must comply with court orders that place obligations on you, and you must comply with your duties to the court.

The SRA said the agreed outcome was “a proportionate outcome in the public interest” given that the conduct was “neither trivial nor justifiably inadvertent”.

It took into account that Mr Ireland had a clean record up to this point, has put systems in place to avoid future breaches, and has apologised for his misconduct.

Mr Ireland will also pay costs of £300.




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Denis-Smith: costs risk

Denis-Smith: costs risk

It is a mistake to think that putting forward a budget that looks acceptable overall means the court will not look at the individual phases and costs within them, litigators have been warned.

The decision in King & Anor v Thipthorp & Ors is “contrary to the intended approach of the court, which is to adopt a global approach when considering reasonableness”, one costs specialist said. 

The Technology and Construction Court ruling, which has yet to be reported, involved a construction dispute. According to John Denis-Smith, who acted for the successful party, the budgets were approved subject to alterations to individual items which were deemed unreasonable and disproportionate.

The dispute related to alleged defects in the building of a leisure centre and had been listed for a six-day trial with about 10 factual witnesses and eight expert witnesses. While the first and second defendants’ costs budget of £195,000 was accepted by the other parties, they took issue with the costs budgets proposed by the claimants and the third defendant of around £392,000 and £322,000 respectively.

Mr Denis-Smith said the court held that on one view, the correct approach was to look at the parties’ overall budgets and decide whether they were reasonable and proportionate without any further investigation. Considering proportionality, here the sums in issue were not large, particularly by TCC standards, the litigation was not complex but was typical of a defects claim, and there was a question of reputation involved.

“There was nothing to justify expenditure over and above what was the norm for a six-day trial of this type,” he reported. “However, the court had no indication of what a normal sum for such a trial would be. In those circumstances, it could not conclude simply by looking at the bottom-line figures that the claimants’ and third defendant’s budgets were unreasonable and disproportionate.”

Further, the court found that even if the overall budget figure was not unreasonable, it could still consider the objections raised in relation to individual items claimed in those budgets. Here some items did appear disproportionate and were reduced.

The court also made a costs order against the parties whose budgets were amended.

Mr Denis-Smith said the case showed “that a party whose cost budget cannot be justified in terms of hours and disbursements proposed may find that it has to pay the costs of the party which challenges the budget, as well as incurring its own irrecoverable costs of the challenge”.

In a blog on the case, Sue Fox, head of costs budgeting at Leeds law firm Clarion, said the decision ran “contrary to the intended approach of the court, which is to adopt a global approach when considering reasonableness. Furthermore the CPR is to be amended with regards to this global approach, confirming that hourly rates within budgets should not be set”.

This referred to changes to the costs practice direction approved by the Civil Procedure Rule Committee, but yet to be introduced, that will say: “The making of a costs management order under part 3.15 concerns the totals allowed for each phase of the budget. It is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget. The underlying detail in the budget for each phase used by the party to calculate the totals claimed is provided for reference purposes only to assist the court in fixing a budget.”

Ms Fox said the case, and another amendment that will require parties to submit an agreed budget discussion report – setting out the agreed and disputed areas for each phase and a brief summary of the grounds of dispute – meant that negotiations around costs budgets “have never been so important”.




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Vara: legal services still offer excellent value for money

Vara: legal services still offer excellent value for money

The government has dropped plans for ‘enhanced’ court fees specifically for commercial cases, but is now targeting increased fees for the hundreds of thousands of general civil applications made each year.

Enhanced fees are those that are above cost price, and the Ministry of Justice (MoJ) said that after last year’s general court fee increases failed to raise as much as expected, it needed to find another £55m from enhanced fees.

In finally announcing the way forward on proposals first published a year ago, the MoJ first confirmed that it would press ahead with a new enhanced fee to issue money claims of 5% of the value of the proceedings for claims worth £10,000 or more.

This would be capped at £10,000, the fee payable for a claim of £200,000, with a 10% discount if lodged electronically.

The MoJ rejected concerns expressed in last winter’s consultation that its proposals could make it harder for people to access the courts, or that they would harm the competitiveness of the country’s legal services in attracting international litigation.

It said only 10% of claims would be affected by the new fee – while remissions remain available for those who qualify – and that research consistently showed that the level of court fee is a secondary or non-existent consideration in the decision to litigate, especially in big-money international cases.

But the MoJ decided against introducing a higher maximum fee (of £15,000 or £20,000) or a higher hearing fee of £1,000 a day specifically for commercial litigation, saying there were “practical difficulties” in implementing them – particularly defining ‘commercial litigation’ and ensuring that lower-value and/or non-commercial cases in the Rolls Building were not caught.

It also dropped its plan to raise the fee for an application to issue a divorce from £410 to £750 after strong opposition in the consultation.

Instead, the MoJ started a fresh consultation – ending on 27 February – which proposed increasing the fees charged for county court possession proceedings from £280 to £355 (or £325 if using the Possession Claims Online facility), from which it expects to raise £17m a year.

Secondly it proposed increasing the cost of applications without notice or by consent (which account for around two-thirds of the total) from £50 to £100, and from £155 to £255 for an application on notice which is contested. This would raise £38m a year.

There would be exemptions for applications to vary or extend an injunction for protection from harassment or violence, applications for a payment to be made from funds held in court, and applications made in proceedings brought under the Insolvency Act 1986.

The MoJ said around 700,000 general applications are made each year, the large majority of which are in civil proceedings.

In his introduction to the consultation, justice minister Shailesh Vara said: “Increasing court fees will never be popular or welcome. But I am sure that those who choose to litigate in our courts will continue to recognise the outstanding qualities our legal services offer and the excellent value for money they provide.”




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Nash: would consider joining actions

Members of the Association of Costs Lawyers (ACL) have an “absolute right” to conduct costs litigation and act as advocates in costs proceedings – including when working in conjunction with unregulated costs specialists – counsel’s opinion has confirmed in the wake of what the ACL described as several “malevolent” court challenges.

Roger Mallalieu, a well-known costs counsel at 4 New Square, said the right was conferred upon costs lawyers by statute to conduct all costs proceedings within the limits of their statutory powers, regardless of the circumstances in which they are retained or employed.

The ACL said the challenges have arisen where costs lawyers are working in organisations that are not themselves regulated and so not authorised to conduct litigation or provide advocacy – mainly because the Costs Lawyer Standards Board does not yet have a scheme of entity regulation in place.

However, Mr Mallalieu said the Legal Services Act 2007 specifically exempts costs lawyers from having to work in authorised bodies until entity regulation is introduced. The Costs Lawyer Standards Board is currently consulting on introducing a scheme of entity regulation next year.

In order to ensure their position is as robust as possible, Mr Mallalieu advised that costs lawyers should have systems in place to ensure that any non-authorised persons they work with are not engaging in reserved activities.

In relation to the right to conduct litigation specifically, the advice said that costs lawyers are entitled to use unregulated persons to assist them with tasks such as drafting, correspondence, secretarial services, general advice and assistance, without fearing that their litigation rights could be successfully challenged. What amounts to the conduct of litigation is likely to be narrowly construed, he said.

Mr Mallalieu acknowledged, however, that until entity regulation is introduced, challenges could continue and judges may have concerns until the position is properly explained to them.

ACL chairman Sue Nash said: “We decided to take advice after several malevolent challenges to costs lawyers’ right to appear in court. These challenges go to the very heart of our raison d’etre.

“We are keen to hear from any costs lawyers who have, or are currently experiencing, any challenges to their audience rights. If appropriate, the Association would consider being joined as an interested party to the relevant proceedings. It is important that a clear legal precedent is established to prevent further unwanted satellite litigation of this kind.”




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Landman: lessons from Wales

Posted by Robert Landman, CEO of Litigation Futures sponsor Spencers Solicitors 

In early December, I wrote about the new HMRC policy doing nothing but stifle access to justice for asbestos victims. And my opinions on that side of things still hold true.

However, since the post went live, there have been significant steps forward in this legal space.

This month saw the opening to debates in the House of Commons regarding the Mesothelioma Bill, and points very similar to mine were raised by the Labour MP Kate Green. In a letter to the Exchequer Secretary, Ms Green requested clarification of the factors driving the new HMRC policy change, and further details on any impact assessments done pre its introduction.

Unfortunately there had been no response to the letter at the time of the debate; however, it was declared that Ministry of Justice officials have been meeting with the Treasury to discuss the matter. I can only interpret this response as positive and I look forward to hearing any further updates.

Improved legal process for UK asbestos claims

On 4 December, courts minister Shailesh Vara announced new plans to “improve the legal process for handling claims from victims of mesothelioma”.

His announcement followed a government U-turn on proposals to introduce an insurer-designed protocol known as the mesothelioma pre-action protocol (MPAP). This was a proposed substitute for the existing pre-action protocol for disease and illness claims (DPAP), designed by the Association of British insurers to help streamline out-of-court settlements.

After reviewing the MPAP consultation in depth, the government decided not to go ahead and implement the protocol. John Spencer has emphasised that the “devil was in the detail” and it became apparent that with the MPAP in place, asbestos sufferers would receive less compensation than they deserved.

With the MPAP cast aside, the government is focusing on how to realistically improve the asbestos claims process. And part of the plan is to introduce a pool of £350m, which will help pay compensation to mesothelioma sufferers, who contracted the disease but cannot trace the responsible employer/insurer.

The pool will be funded by insurers and the Department for Work and Pensions.

Still, there is cause for concern. As John says: “[Asbestos sufferer] claims need to be settled as quickly as possible, for their sake and that of their families. And so, as much as we should welcome this particular U-turn, let’s hope it doesn’t lead to a cul-de-sac, and that the best possible means of giving redress to mesothelioma claimants is put in place as soon as possible.”

Further to John’s apprehension, the Association of Personal Injury Lawyers has taken a cautious stance after Mr Vara also announced changes to no win no fee asbestos claims.

Basically, these will be brought in line with road accident cases – meaning that controversial rules implemented by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) will now apply to mesothelioma claims.

This could mean a lawyer’s success fee would be taken directly from the victim’s. That fee could be up to 25% of their total damages, though some lawyers will take a lower percentage. In turn, there is a worry that this could lead to victims ‘shopping around’ for the cheapest lawyer.

This point was raised by Labour MP Paul Goggins, at the same parliamentary debate that I mentioned earlier. The politician is hopeful that Parliament will continue to be against the idea of a fee being taken directly from a sufferer’s compensation award.

A lesson from Wales …

On the night of 20 November, the Welsh Assembly voted in favour of a law to allow the country’s NHS to recover funds for the treatment of those with asbestos exposure – from negligent employers and insurers.

The Recovery of Medical Costs for Asbestos Diseases (Wales) Bill, will be used to cover the extensive cost of treating sufferers of mesothelioma. With the provisions estimated to raise £1m every year, the Welsh NHS will finally be able to comfortably shoulder that cost.

The costs of treating a road accident victim are usually compensated by the guilty driver’s insurer. There is no reason why asbestos cases shouldn’t work in the same way, and so it is hugely positive to see Wales moving in this direction.

It’s overdue – but it’s happening.

Kristy Price goes into more detail on this comparison with road traffic accident claims here. In her piece, she points at the elephant in the room – why is this law only being applied to Wales and not the rest of the UK?

Well, that’s for the politicians to answer but there looks to be positivity on this front emerging in another form…

If you have your own opinions on these changes in law, positive or negative, please have your say in the comments below.




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Documents: more than 100 pages given to non-English speaking LiP at door of court

Documents: more than 100 pages given to non-English speaking LiP at door of court

The High Court has issued a warning to lawyers over dumping legal documents on litigants in person (LiPs) at the door of the court.

Though Mr Justice Peter Jackson’s ruling was in the Family Division, it has clear resonance with the civil courts too.

Re B (Litigants In Person: Timely Service of Documents) [2016] EWHC 2365 (Fam) – which was published with the approval of the President of the Family Division – arose from a recent final hearing in a child abduction case. Counsel’s 14-page position statement and four law reports totalling 100 pages were given at the door of the court to the mother, a non-English-speaking LIP.

This is unfortunately not an unusual occurrence, and it calls for a remedy,” said the judge.

He continued: “Where one party is represented and the other is a LIP, the court should normally direct as a matter of course that the practice direction documents under PD27A are to be served on the LiP at least three days before the final hearing, especially where the LiP is not fluent in English.

“The method of service, usually email, should be specified. Where time permits, the court should consider directing that the key documents are served with a translation. In cases where late service on a LIP may cause genuine unfairness, the court should consider whether an adjournment of the hearing should be allowed until the position has been corrected.”

Peter Jackson J observed that many LiPs, because of their inexperience, were hesitant to complain about matters such as late service. He noted that the “possible unfairness” arising from the imbalance of one party being represented and one not “have been repeatedly stressed” by the family courts.

“It might be added that late service of documents further weakens the position of LIPs by removing any opportunity they may have to seek advice and explanation ahead of the hearing from those who may be more familiar with the system and the language.

In the case before him, the judge said the position statement was of real assistance to the court and, had she had it sooner, could only have helped the mother, even though it was in English.

“As it was, time was wasted before the hearing could begin, with the mother studying the documents with the help of the court-appointed interpreter. That help was kindly provided even though the core function of the interpreter is as an interpreter and not a translator.”

He said the minimum service requirements set out in the Family Procedure Rules “should be adapted in individual cases to protect the rights of LIPs. The need for earlier preparation and service places obligations on advocates and those who instruct them, but that is necessary to prevent the intrinsic unfairness to LIPs that may arise from late service”.