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Grant: amended Table B

The government yesterday unveiled its proposals for the new fast-track fixed fees – and with the basic RTA portal fee set to be slashed by more than half, they were even worse than claimant lawyers had feared.

Meanwhile, personal injury cases that fall out of the portal are to be subject to fixed fees in line with Lord Justice Jackson's recommendation but at lower levels than he put forward.

The portal fee for RTA cases worth up to £10,000 will fall from £1,200 to £500 next April depending on the results of a stakeholder consultation released by justice minister Helen Grant yesterday.

Litigation Futures has spoken to several personal injury firms that were modelling the work on the basis of £600, and it remains a possibility that the fees will reach that figure after the consultation.

The fee will be £800 for RTA claims worth £10,000 to £25,000 in the new extended part of the portal.

The planned fees for the horizontal extension of the portal to employer’s and public liability cases (EL/PL) are £900 for cases up to £10,000 and £1,600 for cases up to £25,000.

The current stage 3 fee of £250 for a paper hearing and £500 for an oral hearing will remain, and also apply to EL/PL claims at stage 3.

Ms Grant said that for claims which exit the portal, she has decided to introduce “a matrix of fixed recoverable costs based on Jackson’s Table B but amended both to take account of inflation since the table was first produced (in 2009), and reduced throughout by an amount intended to reflect the forthcoming ban on referral fees”.

This is likely to cause significant anger among claimant lawyers as there was no suggestion that referral fees were built into Lord Justice Jackson’s figures.

Where Table B suggested, for example, that the fee for RTA cases that settle before issue should attract a fee of £800 plus 20% of the damages, the government’s proposal is the greater of £550 or £100 plus 20% of the damages. There are similar cuts all the way along the litigation process, with Table B’s figure of £3,250 plus 20% of damages for an RTA settling post-listing and pre-trial reduced to £2,655 plus 20%. The only fees that have been brought over from Table B without alteration are those for advocacy at trial.

In tweets yesterday, the Association of British Insurers hailed the figure as good news for all motorists. “Reduced legal fees strips the fat from system and strikes a blow to the ambulance chasing compensation culture,” it said.

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Market-leading legal software solutions provider, Eclipse Legal Systems, has announced the latest iteration of its Proclaim productivity and management solution.

Proclaim is used in over 700 organisations by 20,000 individuals, for an increasingly broad range of requirements including case, matter, practice and process management.  This latest Proclaim iteration – v3.3.1 of the solution – will be provided free of charge to all Eclipse clients, under the firm’s standard maintenance agreements.  New clients will also benefit from the solution, be it as a new implementation or as a seamless transition from the current Proclaim version.

Proclaim v3.3.1 carries a brand new look and feel – sporting ‘flat design’ to provide an enhanced user experience.  Users will benefit from even clearer signposting of ‘next actions’, in addition to a cleaner working space and even the choice of a range of colour schemes.  The feature-rich nature of Proclaim has been further enhanced, with new functionalities including:

  • ‘Infinite additions’; enabling system designers to easily create additional data fields ‘on the fly’, resulting in rapid bespoke screen building across the Proclaim desktop
  • Multi-user access; empowering legal teams to work on the same matter at the same time
  • ‘Paragraphs’; a document building tool that provides fee earners with the option to pick context sensitive paragraphs from a pre-defined library of text, when creating bespoke or complicated documents (for example, commercial contracts)
  • Enhanced desktop billing; including the ability to electronically draft bills, all within a user-friendly and intuitive ‘bills guide’ interface

Steve Ough, chief software architect at Eclipse, comments:

“This latest version of Proclaim represents a significant step forward in our product roadmap, providing the kind of fluidity and accessibility that our clients – and the market in general – has come to expect from Eclipse.”

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Parliament: legislation should not merely send a message

A bid by a former Law Lord to deny the controversial Social Action, Responsibility and Heroism Bill – the so-called SARAH Bill – a second reading in the House of Lords failed yesterday after the Labour Party chose to abstain.

Though supporting the sentiment behind the amendment laid by Lord Lloyd of Berwick, Labour frontbench spokesman Lord Beecham said the House is usually “cautious” about defeating a bill so early in its parliamentary progress, adding that such a move would give “a trivial bill far too high a profile for its contents”.

Already approved by the House of Commons, despite criticism, the bill is just five clauses long and applies when the court, in considering a claim that a person was negligent or in breach of statutory duty, determines the steps the person was required to take to meet the standard of care.

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

Led by Lord Lloyd, opponents argued yesterday that the bill does not advance the law beyond the position already stated in section 1 of the 2006 Compensation Act, and that it was not the purpose of legislation merely to send a message.

Former Supreme Court justice Lord Brown of Eaton-under-Heywood said: “I find it difficult to see how a court could find, in any of these clauses, anything which would lead it to a different conclusion on the facts of a case. I await an explanation of how that could arise.

“However, if it is intended to change the law, I respectfully submit that that should be made altogether clearer than it is at present. Just what change is it intended to bring about?”

Former Conservative home secretary Lord Hurd said: “If you are contemplating a brave action which may carry some risk, such as diving into a pool or rescuing somebody from a dangerous situation, you are almost certainly taking a quick decision on the spur of the moment. You are not going to creep away and find a book to memorise the course of a debate in your Lordships’ House. So this is a bad way of sending a message.”

However, other peers backed the bill, expressing concern about the impact of the so-called compensation culture and growth of health and safety restrictions.

Baroness Hodgson of Abinger said: “The effect of the bill will be to encourage our fellow citizens to step forward to participate and to become more active members of their community. It will contribute to inspiring them to help others and to pay something back to society, while at the same time offering them reassurance and a degree of protection when things do not go entirely to plan or, as is inevitably the case, accidents happen.”

Justice minister Lord Faulks said the bill’s core aim was “to provide reassurance to people who act in socially beneficial ways, behave in a generally responsible manner, or act selflessly to protect someone in danger by ensuring that the courts recognise their actions and always take that context into account in the event that something goes wrong and they are sued”.

He insisted that it will change the law: “Clause 3 of the bill requires the court to have regard to whether a person, in carrying out the activity in the course of which the alleged negligence or breach of statutory duty occurred, demonstrated a generally responsible approach towards protecting the safety or other interests of others.

“This represents a change to the law, as case law does not currently require a court to do this. Clause 3 will oblige the court to weigh that factor in the balance when considering a person’s liability for negligence, or breach of a relevant statutory duty. This will reassure organisations, individuals and small businesses who have taken a generally responsible approach to the safety of others during an activity that the law is on their side.”

And while the minister accepted that “one should be very cautious indeed before legislating simply to send a message… on the other hand, I suggest that it would be idle to pretend that part of what we do is not conveying an important message”.

In light of Labour’s position, Lord Lloyd did not press his amendment to a vote. The bill will now go into committee, where Lord Lloyd said he will seek to have the three operative clauses removed, while Lord Beecham promised to try and make some “modest improvements”.

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High Court: Privilege extends to documents that ‘evidence’ legal advice

The High Court has ruled that a set of litigation funding documents were protected by privilege because they inferred the substantive legal advice that had been given in the underlying dispute.

Mr Justice Morgan rejected the submission that “the possibility that one could infer the substance of a party’s legal advice from a document did not suffice to make that document privileged”.

He also said that it was “not part of our law as to disclosure that every conceivable stone must be turned over”.

The arguments arose during unfair prejudice proceedings brought pursuant to section 994 of the Companies Act 2006 and concerning leading hotel company Edwardian Group.

The petitioners own approximately 20% of the shares in the company and want to be bought out. One of the acts of unfair prejudice they allege is the removal of one of the petitioners as a director in July 2009.

However, the petition was presented more than six years later, and the first respondent argued that, because of this, the petitioners should not be granted any relief.

One of the reasons the petitioners gave for the delay was that they spent five years “actively but unsuccessfully” seeking funding to commence the litigation.

The respondent wanted to see proof of this but the petitioners either did not provide the relevant document or heavily redacted them on disclosure, arguing that they revealed “directly or indirectly the nature, content or effect of privileged communications”.

Morgan J said it was clear that this head of privilege was not confined to communications between lawyers and clients, but extended to other material which “evidences” the substance of the communications.

The test to apply, he concluded, was laid down in the 1884 case of Lyell v Kennedy, restated by the then Lord Justice Bingham in Ventouris v Mountain in 1991.

Bingham LJ said: “The ratio of the decision is, I think, that where the selection of documents which a solicitor has copied or assembled betrays the trend of the advice which he is giving the client the documents are privileged.

“[Counsel] for the plaintiff put this forward as an exception to what he claimed was the general rule, that non-privileged documents do not acquire privilege simply by being copied. If the ratio I have given is correct, the authority is consistent with the fundamental principle underlying the privilege.”

Morgan J said he could also “derive assistance” from Australian cases, which drew a distinction “between a case where there is a definite and reasonable foundation in the contents of the document for the suggested inference as to the substance of the legal advice given and merely something which would allow one to wonder or speculate whether legal advice had been obtained and as to the substance of that advice”.

Applying this to the facts, Morgan J – who had not seen the documents – said the description of the documents provided by the petitioners’ solicitor “would satisfy the test set in Lyell as to giving a clue as to the legal advice given and the test in Ventouris v Mountain as to betraying the trend of the legal advice”.

He added: “I also consider that [the] description of the basis of the claim is on the right side of the line between documents from which a party’s legal advice can be inferred and documents which allow one to wonder or speculate as to whether legal advice had been given and as to its possible substance.”

Thus he rejected the application for an order.

He also rejected an application relating to the disclosure of documents from the petitioners’ former solicitors, Magwells.

Morgan J said: “The information before me as to the Magwells Documents does not allow me to form a clear view on many of the large number of disputed matters of fact.

“Overall, I think it is likely that disclosure of all of the Magwells Documents would result in massive duplication of documents which have already been disclosed by one or other of the parties and that any new documents which might be disclosed would be few in number.”

Morgan J added: “I recognise that this means that in relation to disclosure there may be a stone which has been left unturned. However, it is not part of our law as to disclosure that every conceivable stone must be turned over.”

Morgan J said he was “not persuaded” that the petitioner’s solicitor had “not properly applied the test for privilege” when making the redactions, “although it is possible that he has not done so”.

He went on: “Therefore, I am not ‘reasonably certain’ that the claim to privilege has not been properly made.

“In addition, I consider that if it appeared that [the solicitor] had not correctly carried out the redaction exercise first time around, the court might not (on the ground of proportionality) require him to carry it out a second time.

“The advantage to the respondents of the redaction exercise being reviewed and redone is likely to be slight. Further, the time between now and the trial in January 2018 is limited and it would be very undesirable to lose the trial date to allow time for a second redaction exercise to be carried out.”

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Etherton: Decision remitted back to Senior Costs Judge

The Senior Costs Judge was wrong to apply the new proportionality test to additional liabilities in a case that began before LASPO took effect on 1 April 2013, the Court of Appeal has ruled.

However, it did not offer any hoped-for guidance on the new test, although it is understood that three conjoined cases raising the issue are due to be heard soon.

In BNM v MGN, a privacy case, the defendant media group agreed to pay damages of £20,000 plus costs.

The claimant sought costs of £241,817, including a 60% success fee for her solicitors, Atkins Thomson, 75% for both counsel, and an after-the-event premium of £58,000 plus insurance premium tax of £3,480 from Temple Legal Protection.

At the detailed assessment, Senior Costs Judge Gordon-Saker ruled that, subject to proportionality, all the success fees would be allowed at 33% and the ATE premium allowed as claimed. On the line-by-line assessment, the costs were reduced to £167,389, including base solicitor costs of £46,000 and base counsel fees of £14,000.

Master Gordon-Saker decided that the new proportionality test applied to the additional liabilities and concluded that it demanded that he halve the costs he had allowed.

Giving the judgment of the Court of Appeal, the Master of the Rolls, Sir Terence Etherton, said: “It seems perfectly clear that… subject to specific saving and transitional provisions in the 2012 Act, the recoverability of success fees and ATE insurance premiums in an order for costs was abolished by the 2012 Act and, where they remain recoverable by virtue of those saving and transitional provisions, they are recoverable in accordance with the old costs rules, including those relating to proportionality, reasonableness and assessment”.

He continued: “If it had been intended that the new proportionality test was to apply to funding arrangements to which the statutory saving and transitional provisions applied, that would have been made clear in the statutory provisions or the new costs rules or both and it was not.”

Both the Senior Costs Judge and the parties had referred to the Jackson report in seeking to interpret the new rules, but Sir Terence said the fact that the 2013 reforms did not entirely reflect all the recommendations made the report “an unsound basis for undermining what I consider to be the clear intention of the drafters of those provisions, rules and practice direction”.

The court remitted the case to the Senior Costs Judge to consider the proportionality of the costs again.

It also partially upheld MGN’s cross-appeal over whether it was reasonable for BNM to issue the proceedings without giving prior notice, when the publisher said they could have reached an agreement without the need to issue and increase the costs.

Master Gordon-Saker found it was, but the Court of Appeal said there were certain factors he had not taken into account in reaching that decision.

But Sir Terence said: “The Senior Costs Judge is highly experienced. Notwithstanding the points I have mentioned, I do not consider that it would be right for us to say on the appeal that there is only one answer to the question [of whether BNM acted reasonably].

“I consider that the appropriate course would be to remit the matter to the Senior Costs Judge to re-consider the issue of prematurity, making it explicit that he has taken the matters I have mentioned into account.”

Francis Kendall, vice-chairman of the Association of Costs Lawyers, described the ruling as “sensible”, adding: “Even now, four years on, it is a decision that will impact a significant number of cases.”

But he said it was “disappointing” that the court chose not to give any guidance on the application of the new proportionality test.

“But we understand that three conjoined cases are set to come before the court shortly that will hopefully be a vehicle for such guidance. The disputes caused by the continuing uncertainty are not helpful and we urge the Court of Appeal to give the profession the strong steer it needs.”

In an obiter point of note for costs specialists, the appeal court rejected MGN’s argument that ATE insurance premiums were ‘expenses’ rather than ‘costs’ under the definition of costs in the new CPR 44.1(1).

It said: “They have nothing to do with the cost of issuing and progressing the litigation, any more than the premiums on a householder’s or car owner’s insurance which contains litigation cover.

“Both before-the-event insurance and after-the-event insurance offset the risk of a person’s financial exposure as a result of litigation but they are not expenses of the litigation itself.”

Simon Browne QC and James Laughland of Temple Garden Chambers, instructed by Atkins Thomson, acted for the claimant, with Alexander Hutton QC and Jamie Carpenter of Hailsham Chambers, instructed by Reynolds Porter Chamberlain, for the defendant.

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Costs sanction: appeal court sends a message

The Court of Appeal yesterday sent out a stark warning to parties which fail to engage with a “serious invitation” to take part in alternative dispute resolution (ADR).

“Modestly” extending the guidance in the well-known Halsey ruling, it established the principle that silence in response to an invitation to participate in ADR is itself unreasonable regardless of whether it amounted to a refusal, or whether there were reasonable grounds to refuse.

As a result, the court upheld a costs sanction against the offending party, even though Lord Justice Briggs said it was “a little more vigorous than I would have preferred”.

The decision operates “pour encourager les autres”, he said.

“This case sends out an important message to civil litigants, requiring them to engage with a serious invitation to participate in ADR, even if they have reasons which might justify a refusal, or the undertaking of some other form of ADR, or ADR at some other time in the litigation. To allow the present appeal would, as it seems to me, blunt that message.”

In PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288, the claimant’s ADR invitation was “met with complete silence”, Briggs LJ recorded.

After the case settled with the claimant’s last-minute acceptance of the defendant’s part 36 offer, the trial judge, Mr Recorder Furst QC, sitting as a deputy judge of the Technology and Construction Court, penalised the refusal to mediate by depriving the defendant of the costs to which it would otherwise have been entitled under part 36.

However, he declined to take the further step of making the defendant pay the claimant’s costs over the same period. The judge decided first that the defendant’s silence amounted to a refusal and secondly, applying the Halsey guidelines, that its refusal had been unreasonable.

Briggs LJ said: “In my judgment, the time has now come for this court firmly to endorse the advice given in chapter 11.56 of the ADR Handbook, that silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable, regardless whether an outright refusal, or a refusal to engage in the type of ADR requested, or to do so at the time requested, might have been justified by the identification of reasonable grounds.

“I put this forward as a general rather than invariable rule because it is possible that there may be rare cases where ADR is so obviously inappropriate that to characterise silence as unreasonable would be pure formalism.

“There may also be cases where the failure to respond at all was a result of some mistake in the office, leading to a failure to appreciate that the invitation had been made, but in such cases the onus would lie squarely on the recipient of the invitation to make that explanation good.”

The judge said that had he been free to do so, he would have concluded that despite the ADR failure, “the overall responsibility for the expenditure of a further £500,000 odd in costs during the relevant period nonetheless still lay primarily with the claimant” and would only have disallowed a proportion of the defendant’s costs. But he found the decision was within the first-instance judge’s discretion.

Briggs LJ added: “The court’s task in encouraging the more proportionate conduct of civil litigation is so important in current economic circumstances that it is appropriate to emphasise that message by a sanction which, even if a little more vigorous than I would have preferred, nonetheless operates pour encourager les autres.”

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Scully: MoJ is putting the cart before the horse

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Thomas: sustainable infrastructure for the future

The government has announced an investment of up to £375m to modernise HM Courts & Tribunals Service over the second half of the decade.

It is central to a “programme of reform” that will deliver savings in excess of £100m per year by 2019/20.

Acknowledging that “the system is currently configured in a way that perpetuates delays and costs as staff time is wasted on manual data entry and paper-based processes”, the Treasury has agreed a one-off package of investment averaging up to £75m per annum over the five years from 2015/16.

The current range of “outdated” computer systems will be replaced with a single integrated system which will allow electronic case management, while there will be an online self-service system, which will allow legal professionals and other users to complete court and tribunal forms and make payments digitally for court fees or to initiate claims for debt repayment, personal injury or housing disputes.

There will also be an increased use of videolinks, digital presentation of documentation in court and WiFi for legal practitioners.

The announcement said the estate of 500 court and tribunal buildings would be modernised to improve facilities and reduce costs, for example by enabling hearings from different jurisdictions to occur in the same building.

There will be “more effective use of courtrooms to ensure that all cases that are scheduled to be heard are not delayed when other hearings overrun”, an upgrade of facilities for victims and witnesses, and a refurbishment of advocates’ rooms.

“Once more services are made available online, users and the legal profession should only need to attend a court or tribunal when it is absolutely necessary,” it said.

Justice secretary Chris Grayling said: “Technology will be updated and replaced in courts and tribunals across the country, working practices will be speeded up and modernised, and the court and tribunal estate will be significantly refurbished, making better use of buildings, reducing the ongoing cost of maintenance and providing improved services for court and tribunal users, particularly vulnerable victims and witnesses. Justice will continue to be delivered locally, and access to justice maintained.”

In a joint statement, the Lord Chief Justice, Lord Thomas, and Senior President of Tribunals, Sir Jeremy Sullivan, said: “Individuals and businesses, domestically and internationally, rely upon our justice system to enforce their rights in a timely manner and to uphold the rule of law. This investment in our courts and tribunals administration, with a programme of reforms to IT, working practices and estates, will uphold this most fundamental function of the state and maintain the international reputation of our justice system.

“The reform programme will provide the administration of justice with a sustainable infrastructure for the future, meeting the needs of the public, legal profession and justice agencies.”

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Neuberger: litigation funding is not without risks

“Quick and rough justice” may be a better solution for relatively small claims than invoking the full force of the Civil Procedure Rules and requirements such as disclosure and cross-examination, the president of the Supreme Court has suggested.

Delivering Harbour Litigation Funding’s first annual lecture in London – ostensibly charting the history of barretry, maintenance and champerty to litigation funding – Lord Neuberger expressed concern over access to justice for small claims where legal aid has been withdrawn and the economics do not work for conditional fee agreements (CFAs), damages-based agreements (DBAs) or third-party funding.

He said the responsibility for addressing the problem does not just lay with the government: “All those involved in the legal system, that is litigators and judges, have a vital role to play in improving access to justice. And that means cost-effective justice. The reforms propounded by both Woolf and Jackson are based on the need for proportionality. So far as is consistent with it being even-handed, principled, and clear, justice must be practical and realistic…

“Quick and rough justice is better than no justice, and for many people with relatively small claims, no justice may be all that is on offer, unless one is prepared to take a disproportionate risk. And, in ordinary cases, quick and rough justice, whose costs are commensurate with the issues involved, may actually mean better justice than would be achieved by incurring cost and delay by invoking the full force of the Civil Procedure Rules.”

Echoing comments he first expressed more than a year ago, the judge continued: “Disclosure and cross-examination may alter the outcome in a few cases, but I do wonder how cost-effective they are in the great run of average cases in which ordinary citizens are involved. But these general comments are much, much easier to express than they are to put into effect.”

On litigation funding, Lord Neuberger said the original, medieval rationale for maintenance and champerty – as a means to help secure the development of an inclusive, pluralistic society governing by the rule of law – had turned full circle and “the exact reverse of the prohibition is justified for the same reason”.

He recognised that it is still early days for the Association of Litigation Funders and said developing and promoting any form of litigation funding is “not without risks”, such as being used to bring unmeritorious claims in the expectation that, once the opposing side is aware of the existence of funding, they are more likely to be brought to settle in order to buy off the claim.

“The problems which arose after the 1999 [Access to Justice] Act’s amendments to CFAs could be replicated if less than scrupulous funders provide funding… The ethical pressures on lawyers to which any of these funding arrangements may give rise must also be acknowledged. The pressures will presumably be heavier with CFAs and DBAs where there is a real opportunity for conflict of interest for the lawyers, as they have a financial stake in the outcome of the litigation concerned…

“Third party litigation funding does not give rise to such problems, but the commercially driven pressures from expert serial litigation funders on lawyers could be significant.”

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Niemczewski: working party needed

The government needs to look at the underlying problems of the RTA claims process before extending it, or risk as many as 80% of cases falling out of it, the head of leading liability adjuster Garwyn Group has warned.

The Ministry of Justice is expected to announce the findings of its evidence-gathering exercise on the proposed RTA process extension in the next few weeks, with the aim of extending it to road traffic cases worth £25,000 and to employer’s and public liability (EL/PL) claims, by April 2013.

Artur Niemczewski, CEO of Garwyn Group, referred to the review of the process undertaken by Professor Paul Fenn and commissioned by the MoJ – published in July, this found that half of cases fall out even though liability is clear cut, which is less likely to be the case in EL and PL claims.

Mr Niemczewksi said: “Serious questions must therefore be asked about the effectiveness of the process in delivering its stated aims. If the government does not address the underlying issues before extending the process to EL and PL, we anticipate a much higher proportion of claims – possibly up to 80% – will drop out, and the process simply won’t work.

“Our experience is that the main reason claims leave the motor process is that the defendant is unable to respond on liability within the prescribed timescale, often because of inadequate information in the claim notification. There should therefore be a direct correlation between the mandatory content of the letter of claim and the period that the defendant is allowed to respond on liability.

“We call upon the government to recognise this fundamental principle and form a working party of practitioners to define content and timescales to allow the proposed portal extension to achieve its objectives.”

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Hunt: early settlement of cases

The NHS Litigation Authority is to be renamed NHS Resolution as part of a “radical change” of approach to handling claims, health secretary Jeremy Hunt has announced.

It comes in the wake of government plans for a new administrative compensation scheme for birth injury cases that aims to significantly reduce the amount of litigation that currently takes place.

Speaking in the House of Commons yesterday, Mr Hunt said it was “part of our ambition to make the NHS the safest healthcare system in the world”.

He said: “I can inform the House that the NHS Litigation Authority will radically change its focus from simply defending NHS litigation claims to the early settlement of cases, learning from what goes wrong and the prevention of errors. As part of those changes, it will change its name to NHS Resolution.”

The Department of Health said the move would bring the NHS closer to becoming “the world’s largest learning organisation so when things do go wrong, lessons are learned quickly, shared across the system and ultimately, patient care is improved”.

There is currently no more detail on this, and Linda Millband, national practice lead for clinical negligence at national law firm Thompsons, said it needed to be “more than just another name for the same vastly under-resourced service”.

She continued: “We are all for resolutions but the NHS cannot not pay out when it is negligent – whether that is to patients or to their staff. Call us cynical but we will not be holding our breath for seismic change that really helps those injured by the NHS unless and until the health secretary publishes details of a more proactive protocol for medical negligence and work-related cases.”

Emma Hallinan, director of claims policy and technical at the Medical Protection Society, said: “The NHS’s provision for clinical negligence claims has increased dramatically in recent years, so a fresh and more preventative approach to managing claims is timely, and will hopefully reduce the number of costly court cases.

“The fact remains, however, that last year alone £1.5bn was spent on clinical negligence by the NHS at a time when it is under significant pressure. We desperately need a system which ensures compensation is reasonable for patients who have experienced clinical negligence, but is also affordable to society.

“The case for a whole package of legal reforms which tackle the root of the problem is becoming ever more pressing.”

Earlier this month, foreshadowing this change, the Department of Health issued a consultation on introducing a ‘rapid resolution and redress scheme’ (RRR) for severe, avoidable birth injuries. This would introduce a system of “consistent and independent investigations… along with access to ongoing support and compensation for eligible babies through an administrative scheme”.

It said the main aims were to reduce the number of severe avoidable birth injuries by encouraging a learning culture, improve the experience of families and clinicians when harm has occurred, and make more effective use of NHS resources.

The consultation said: “Evidence tells us that the current system for providing redress for these birth injuries is not working as well as it could. Currently when substandard care occurs during labour and delivery which results in the most severe forms of birth injury (cerebral palsy/brain damage), the only means by which families can secure compensation is through the adversarial and often lengthy process of litigation.

“The average length of time between an incident occurring and an award for compensation being made is 11.5 years. This process takes time because the court has to wait until the injured child’s prognosis is clear in order to decide a full and final compensation settlement.

“This is amplified by the adversarial culture associated with litigation, and adds further uncertainty and stress for the families involved.”

The NHSLA settles around 100 multi-million pound maternity cases a year. Over the past decade, the size of average awards has risen by around 9% per annum; the average settlement for a severe neurological birth injury case equates to a value of £6.25m, including costs paid out over the injured person’s lifetime.

The compensation package for eligible cases under the RRR scheme is likely to involve three elements: an early up-front payment of about £50-100,000 issued around the age of four, periodical payments, and a lump sum award.

Before the early payment, families of babies who are suspected to have been avoidably harmed would receive access to counselling, legal advice, and a case manager to direct them to appropriate state services. There would also be the potential for interim payments where avoidability is established earlier.

Following the early payment, families would progress through the compensation scheme to receive a further lump sum award and periodical payments, calculated in line with need. The lump sum and any periodical payments would be provided on average a year earlier than they would via the court route, the consultation said.

Periodical payments and associated care provision would undergo “a sensitive reassessment when appropriate to ensure they meet ongoing need”. This would be in line with key developmental milestones at around ages 5, 12 and 18. It is proposed that, compared to current court awards, a greater proportion of overall compensation (around 50%) will be made available through periodical payments.

The NHSLA would administer this part of the scheme, and put together a panel of independent experts for each claim, with access to legal support if required.

The consultation said: “It is important to note that this scheme is a voluntary alternative to the tort route, and does not remove a family’s ability to go to court if they were unsatisfied with the decision of the eligibility panel, or any other reason.

“This would therefore provide a route of appeal if a family is unhappy with the panel’s decision. However, any compensation already received by the family under RRR would be off-set against the final court award to prevent double recoverability.”

The impact assessment accompanying the consultation did not really consider the effect of RRR on claimant law firms. It said there were no “direct outcomes that are forced upon legal firms” – as the scheme would be voluntary.

On legal costs more generally, the assessment said: “Those in receipt of compensation from RRR no longer have defence and claimant legal fees that need to be paid as a result of lengthy litigation (note that there will still be an option to receive legal advice under the scheme).”

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Size isn’t everything in litigation funding

Posted by Chris Deadman, director of operations at Litigation Futures Associate Invicta Capital Funding

Until recently, litigation finance enjoyed a public profile that would make Thomas Pynchon nod with approval. But acres of copy over the past couple of years has brought the industry into the limelight.

The idea that funders are only interested in the largest claims, however, endures like the myth that Joseph Kennedy made his fortune bottlegging (he didn’t, he sold legal medical alcohol). Whilst the big-ticket cases will continue to attract the press coverage, it is the ability to finance smaller claims that shows litigation funding finally arriving as a mainstream option for claimants.

The smart lawyers know that small and medium-sized cases are quite simply nuggets of gold hiding in plain sight. All that is required is for lawyers to change their mind-set away from thinking in terms of big numbers and instead adopt a more flexible and innovative approach. Don’t think Bond Street, think High Street.

The law firm that promotes finance to clients involved in small and medium-sized claims will reap significant rewards in terms of increased profitability, deeper market share and higher volumes of business. Those who stop thinking about third party funding as a distressed purchase and instead regard it as a business development tool will quickly see the benefits in hard number terms.

Put the effort in. Go to market and tell your clients that they can now put a floor on their litigation risk. Tell them they can now litigate matters which they would otherwise have been unable to afford. Seize this opportunity to stand out from the crowd.

But this is all very well, I hear you mutter, what does a third party funder regard as a ‘small’ case?

The overwhelming majority of specialist financiers set an entry limit of £3m in damages. This is because their models operate on attracting a handful of large claims each year. The way in which their returns are typically calculated also makes it impossible for financing to work unless there is a significant gap between the costs and the likely returns, hence the small number of large-value cases financed in the UK each year.

For Invicta though, ‘small’ has no precise definition; ‘small’ is whatever you want it to be. Use your imagination. Blow away the cobwebs. Get creative.

Under the Invicta model, a matter is either commercially attractive to all parties or it isn’t. This means that any sized commercial claim is potentially eligible for finance provided the costs involved are rational. It is all too easy to blame a funder for being unable to finance a matter whilst conveniently overlooking the fact that legal fees account for 75% of the damages sought.

All parties must be prepared to be realistic about the amount of work involved in running a smaller claim and be prepared to share the some of the risk as well as the spoils. But it can be done provided there is a willingness to think outside of accepted conventions.

So the next time a client presents you with a ‘small’ claim, consider whether finance might be appropriate. Pick up the phone or drop us an email. This information will make it easier for your client to make an informed choice on how or indeed if they wish to proceed with a matter.

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Cardiff: HHJ Keyser adds to the costs management obiter dicta

The High Court is at odds over the relationship between budgeting and indemnity costs, after one judge expressly disagreed with the view of another that the costs management order (CMO) should also be the starting point for an assessment of indemnity costs.

His Honour Judge Keyser QC, sitting as a High Court judge in Cardiff, said that CMOs are designed to set out the probable limits of the costs that will be proportionately incurred – but proportionality does not apply to indemnity costs.

He was considering the costs in Kellie & Anor v Wheatley & Lloyd Architects Ltd [2014] EWHC 2886 (TCC), ran under the pre-Jackson costs management pilot in the Technology and Construction Court.

The defendant had put in a budget of around £140,000, but the CMO was for £91,700. After winning at trial, the defendant submitted that its total costs were £166,469, and sought indemnity costs over the claimant’s conduct.

“In short, what is at stake in the defendant’s application for an award of costs on the indemnity basis is the opportunity to recover costs significantly greater than those likely to be considered proportionate on a standard assessment,” the judge observed.

He then considered in depth obiter dicta of Mr Justice Coulson in Elvanite Full Circle Ltd v AMEC Earth & Environment (UK) Ltd [2012] EWHC 1643 (TCC), which was also run under the pilot.

Coulson J said a logical analysis of rule 3.18 – on assessing costs under a CMO on the standard basis – led to the conclusion that the CMO should also be the starting point of an assessment of indemnity costs, even if the ‘good reasons’ to depart from it are likely to be more numerous and extensive.

His first reason was that the budgets are simply an estimate of likely costs and so should be the starting point for any assessment.

Secondly, he argued that if an order for indemnity costs allowed a receiving party to ignore the CMO, that would encourage successful parties to argue for indemnity costs every time, which “would leave an unacceptable doubt hanging over even approved costs budgets”.

HHJ Keyser expressed his “respectful disagreement with that approach”. He argued that CMOs are designed to set out the probable limits of the costs that will be proportionately incurred. “It is for that reason, and not because of any quirk of drafting, that rule 3.18 refers specifically to standard assessment and not to indemnity assessment. Proportionality is central to assessment on the standard basis and it trumps reasonableness…

“However, proportionality is not in issue if costs are to be assessed on the indemnity basis; see rule 44.3(3). I therefore find it difficult to see why logical analysis requires importing the approach in rule 3.18 into assessment on the indemnity basis.”

He continued that Coulson J’s first reason would only have force if an approved budget reflected the costs that the receiving party says it expects to incur. “However, the present case is an example precisely of the proper use of costs management in approving a budget at a lower figure than that proposed by the receiving party, on the very ground of proportionality.

“To suppose that the imposition of a budget… would create some sort of presumption as to the limits of reasonable costs would be to ignore the fact that the approval of costs budgets is done on the basis of proportionality, not mere reasonableness.”

In relation to Coluson J’s second reason, HHJ Keyser said the costs management regime is not intended to give litigants an expectation that they will not incur a liability for disproportionate costs pursuant to an order for indemnity costs.

“Any such expectation must rest on a party’s own reasonable and proper conduct of litigation. It is no objection to an order for costs on the indemnity basis that it is likely to permit the recovery of significantly larger costs than would be recoverable on an assessment on the standard basis having regard to the approved costs budget; that possibility is inherent in the different bases of assessment, and costs on the indemnity basis are intended to provide more nearly complete compensation for the costs of litigation.”

He said the proper way of addressing the concern identified by Coulson J is “first, by ensuring that applications for indemnity costs are carefully scrutinised and, second, by the proper application of the well understood criteria of assessment in rule 44.3(3) to the facts of the particular case”.

On the facts of the case, however, HHJ Keyser decided not to make an award of indemnity costs.

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Walton: independent report

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Court of Appeal: appeal does not create any new risk

A successful claimant cannot recover the cost of after-the-event (ATE) insurance taken out before an appeal to cover the risk of the original ruling and costs order being reserved, a divided Court of Appeal has decided.

The first time this point has been decided on, Lords Justice Rix and Etherton, with Lord Justice Patten dissenting, said the unsuccessful defendant would be unfairly prejudiced if this was allowed, especially as the claimant had not had the benefit of ATE cover in the original proceedings.

In Hawksford Trustees Jersey Ltd v Stella Global UK Ltd & Anor [2012] EWCA Civ 987, the Court of Appeal rejected the defendants’ appeal. While accepting the normal order for costs following the event, they raised a discrete point of principle over the recoverability of the £394,638 ATE premium, which was taken out on the eve of the appeal hearing – much of this was to cover adverse costs for the trial and appeal.

The respondent’s costs aside from the ATE premium were £63,650 and the appellants’ costs £68,502. The policy was brokered by TheJudge.

The case turned on the interpretation of section 29 of the Access to Justice Act 1999 and specifically whether, when it talks about a party taking out insurance “against the risk of incurring a liability in those proceedings”, those last two words referred to just the appeal or to the entire case.

Lord Justice Rix said it could be either – while it would be natural to think of an appeal as arising from and being part of the same proceedings, “it is nevertheless clear that trial and appeal have been treated as separate proceedings for the purposes of costs”.

He concluded that this should be the case here and that to allow the premium to be recoverable in relation to the trial costs would increase those costs retrospectively, “to the prejudice of the opposing party”.

Lord Justice Etherton said that the risk of paying the costs below was one that the claimant accepted at the time; “in that respect an appeal does not create any new risk” and so it was hard to see what “meritorious or logical policy” would be served by allowing recovery of the premium.

Giving the lead, but ultimately dissenting, judgment, Lord Justice Patten argued that it was “most unlikely that Parliament intended to lay down a rule ab initio that proceedings at first instance and those in the Court of Appeal should be treated as separate ‘proceedings’ within the meaning on section 29 to the end that it should be impossible to recover any part of ATE insurance against having to meet the costs below as part of the consequences of being an unsuccessful respondent to an appeal”.

He said he was sympathetic to the potential injustice of this position, “but they are, I think, inherent in many aspects of the 1999 reforms” and are in part behind the Jackson reforms.

Roger Stewart QC and Roger Mallalieu, instructed by Clifford Chance, acted for the appellants, and Nick Bacon QC, instructed by DLA Piper, for the respondent/claimant.

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Simler: Cannot assume there was negligence

Employment tribunals should generally give the benefit of doubt to a legal representative facing a wasted costs applications where their client refuses to waive privilege, the president of the Employment Appeal Tribunal (EAT) has decided.

Mrs Justice Simler warned judges to “proceed with care” when making wasted costs orders.

Her comments came as she allowed an appeal by claims management company KL Law, against a wasted order imposed by an employment tribunal after finding “negligent failure to comply with disclosure obligations”.

The EAT heard in KL Law v Wincanton Group and another [2018] UKEAT 0043_18_0105 – decided in May but only just published – that Mr Kozik at KL Law was representing Ms Marzec, who was claiming direct race and sex discrimination, along with constructive dismissal, against Wincanton.

On the third out of four days listed for the hearing, during questioning by an employment judge, Ms Marzec revealed that she had a diary entry recording an “important conversation with her manager”.

Asked whether she had other diary entries or notes about important meetings, Ms Marzec said she had, but they had not been disclosed.

Shortly afterwards Ms Marzec said she wanted to withdraw her claims, which were dismissed in March 2017.

Following the withdrawal, Wincanton applied for costs against Ms Marzec on grounds of unreasonable conduct in bringing and conducting the proceedings, which were misconceived, and against KL Law on grounds that the claim was both misconceived and because disclosure had been handled negligently.

The tribunal rejected Mr Kozik’s request for an adjournment, because of Ms Marsec’s imminent return to Poland, allowing only two more days to hear the matter.

Simler J recorded: “The tribunal found that there was conduct in relation to the duty of disclosure which did not meet the standard of competence reasonably to be expected of an ordinary member of the claims management fraternity, particularly one with a solid legal background.

“The tribunal regarded it as commonplace for employees to keep diaries or other contemporaneous records and concluded the missing documents could not be regarded as obscure or unusual.

“Moreover, the failure amounting to negligence was aggravated in this case, the tribunal held, by reason of the fact that the claimant did in fact provide some diary entries which would have put any reasonably competent representative on enquiry that there might be other relevant entries.”

The tribunal concluded that a wasted costs order should be made against KL Law to reimburse the defendant with £6,300 out of its total costs of £16,000.

Mr Kozik appealed, arguing that he was hampered in defending the claim of breach of duty because privilege had not been waived by the client.

Simler J said that where a wasted costs application was disputed, “save in the most obvious case, whether conduct is unreasonable, improper or negligent is likely to turn on what instructions the client gave and what advice the representative provided”.

She went on: “Both are covered by legal professional privilege that can only be waived by the client. Where it is not waived, privilege may make it difficult or impossible for a legal representative to provide a full answer to the complaint made against him or her.

“Where there is doubt in such cases, the legal representative is entitled to the benefit of that doubt.”

Simler J said it could not “simply be assumed” that where there had been a failure in disclosure, there was negligence on the part of the lawyer or breach of duty to the court.

“It is as likely as not that the claimant would have proceeded, notwithstanding negative advice about her prospects, and that even if disclosure had been given at an earlier stage, the respondent would have been put to the cost and expense of defending these proceedings in any event.”

Simler J said a wasted costs order should only be made after “careful consideration”.

She continued: “A wasted costs order is a serious sanction for a legal professional. Findings of negligent conduct are serious findings to make.

“Furthermore, even a modest costs order can represent a significant financial obligation for a small firm. Tribunals should proceed with care in this area.

“Although I can understand this tribunal’s desire to avoid an adjournment or hold a future hearing in circumstances where it was possible or even certain that the claimant would be returning to Poland, it seems to me the interests of justice mean it would have been preferable to allow an adjournment here.

“This would have enabled the appellant to prepare to resist the application, produce evidence and consider its position, together with any potential conflict it had so far as the claimant was concerned.”

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Rai: over-inflationary pressure on claims values

The widespread expectation that claimant firms would diversify away from road traffic accident (RTA) work into other, potentially more lucrative areas of personal injury (PI) has not proved to be the case, according to new research.

The report from national law firm Weightmans also said that the government’s plan to introduce a tariff for low-value RTA damages would remove the “inflationary involvement of the judiciary”.

The analysis of the PI market, based on claims portal data from 2015 and 2016, said that “on the basis of the available data, what is clear is that claims volumes are falling across the board which goes against assumptions that claimant firms are exiting the RTA claims sphere for the more lucrative claims generated in the EL/PL/disease arena.

“It could be that the focus for claimant firms is migrating to areas where fixed costs don’t apply, such as travel claims, professional negligence claims, etc.”

However, the research found that while claims volumes continue to decline across PI, general damages are going up.

The average value of road traffic accident claims rose by an above-inflation 3.4% over the period to £2,673, even though claims numbers dipped by 6.8%.

Pay-outs for small employers’ and public liability (EL/PL) claims increased by 10% and 12% respectively in the past two years, climbing to an average value of nearly £4,000 by the end of 2016.

But the number of EL claims fell by almost 8%, to fewer than 50,000 between January 2015 and December 2016, while PL volumes dropped by more than 12% to 64,000.

Weightmans said the figures were in line with the upward trend for personal injury claims values seen in recent years, although previous years had seen rapid, double-digit increases in claims values, so growth is slowing.

Bavita Rai, insurance partner at Weightmans, said: “The continuing, high increases we are seeing in the pay-outs awarded for injury claims is a cause for concern, indicating that an over-inflationary pressure on claims values remains an issue for insurers and their customers.”

But he added: “The overall decrease in claims volumes is encouraging and points to both the portal having its intended impact on claims-farming and the effect of improved health and safety practices across UK workplaces.”

Looking at the RTA figures, Weightmans’ head of motor, Chris Ball, said: “Whilst dysfunctional behaviours remain very much a daily issue for defendants, the reduction in claims volumes, whilst modest, could indicate that we are starting to see a positive impact of the LASPO changes.

“The proposed whiplash and small claims track reforms may well see claims volumes decline further. However, we are likely to see a spike in claims volumes immediately prior to the introduction of any new claims regime.”

The proposed introduction of a tariff system for RTA general damages “would undoubtedly result in a significant reduction in average general damages in the future”, the report said.

“A tariff-based system would be more transparent and readily understood by litigants in person, whilst at the same time removing the inflationary involvement of the judiciary in determining levels of damages in pre-litigation matters.

“The portal figures reflect increases in the [Judicial College Guidelines[, which are produced by reference to awards that have been and are being made by the courts in other cases. This goes to the heart of what drives the inflation behind the figures and is the reason why cutting the judiciary out of the equation should help to halt the upward trend.

“The tariffs will presumably be subject to future review but that is likely to be a more considered, collaborative and controlled process as opposed to the current ‘damages creep’.”

The figures showed that disease claim numbers for 2016 halved, which Weightmans speculated may indicate a “substantial decline” in noise-induced hearing loss (NIHL) notifications.

This reflected the wider trend in NIHL cases, whether they go through the portal or not. “Whilst final figures have yet to be collated by the insurance actuarial deafness working party, it is estimated that the market received 40,000 to 45,000 NIHL notifications in 2016 compared to approximately 85,000 notifications in 2015”.

The reasons included a crackdown on claims management companies and cold calling, the high ‘nil’ settlement rate that has led “several leading players either to diversify their business models into different areas outside NIHL and in some instances to relinquish their attachment to NIHL claims”, and possibly a shrinking pool of claimants.

The report added: “NIHL claims remain difficult to prove on all grounds – limitation, breach of duty and medical causation. Additionally, claimant law firms also face an insurance market which is essentially well marshalled to defend such claims.

“’Softer’ targets do exist – whether this is for claims for flight delays, travel sickness, financial mis-selling or vehicle emission failures.”

Further, general damages are falling in industrial disease portal cases, by 11% in 2016 to £3,760.

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Houses of Parliament

MPs said the government should consult with “all interested parties”

MPs on the transport select committee have called for caution in the introduction of independent medical panels for whiplash cases, while demanding a complete ban on pre-medical offers by insurance companies.

In its fourth report on the cost of motor insurance, published today, the committee said it welcomed the government’s “obvious desire to get on with establishing independent medical panels” but was concerned that “numerous detailed matters are being decided hastily and, in some cases, without much consideration of different options.

“We recommend that the government publish for consultation comprehensive proposals for how medical panels will work, in time for the new system to be introduced by next Easter.” The current timetable is for them to be introduced in October.

The committee said details such as the qualifications doctors needed to have in order to be accredited or how medical reports would be audited remained unclear.

MPs said they strongly agreed with the MoJ’s announcement that pre-medical offers by insurance companies would be restricted, but they called for an outright ban.

“We are in no doubt that fraudulent and exaggerated claims have been encouraged by the insurers’ practice of paying out for whiplash claims without requiring a medical examination”.

The committee said that although the government had recently restated its “intention generally to prohibit pre-medical offers”, it was consulting on whether they should be allowed where a claimant had obtained their own report outside the system of independent panels.

The MoJ’s consultation on medical reports for whiplash claims, which also proposed a 10% cut in fixed fees, was published in May.

“It is unfortunate that the ABI should argue that action to tackle fraudulent and exaggerated claims, by insisting on medical examinations, will increase premiums,” the MPs said.

“We would have hoped for a firmer commitment from the industry to driving out fraud. In our view, money saved from reducing fraudulent and exaggerated claims should more than compensate for any extra costs resulting from more stringent requirements for dealing with whiplash claims.”

As we report on Legal Futures, the report also called for the Solicitors Regulation Authority o crack down on law firms “playing the system” by commissioning “unnecessary” reports on psychological injuries.

The transport select committee concluded the government should engage with “all interested parties, rather than just the insurance industry”, as had been the case in the past.

“It must all make sure that its reforms lead to a sustainable reduction in motor insurance premiums, which must not be allowed to bounce back to the extraordinarily high levels of the turn of the decade.”

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Emily Thomas, Senior In House Solicitor, Acasta Europe Limited

With court fees rising and litigation becoming increasingly expensive, third party litigation funding continues to grow. There are various reasons clients may want to consider litigation funding, such as the need for a cash injection to enable them to get their case off the ground or the desire to take the litigation risk off their balance sheet and avoid having funds tied up in lengthy legal battles. Litigation funding can also be a useful tool for solicitors as it can provide payment of their fees where a client does not have the funds to continue with the litigation.

Where once third party litigation funding was banned under English Law, it is now a growing and constantly evolving industry with more and more options for clients to consider.

Unfortunately obtaining litigation funding can still be a complex and lengthy process but at Acasta Europe Limited the process has been designed to be as straightforward as possible. Whilst many clients also require After the Event insurance in conjunction with litigation funding, if this has been obtained elsewhere we can still assist with the funding element of the claim and are happy to look at providing assistance at all stages of the litigation process.

Acasta is able to offer funding for a variety of commercial disputes in conjunction with Sparkle Capital. Our in house legal team is actively involved in assessing and considering the merits of any funding proposal. We also offer a funding facility that has been specially designed to provide assistance for lower value claims as we understand that such claims cannot often be pursued due to lack of finance.

For more information click here, call 0800 668 1350 or email Emily at

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Holgate: Use of a Hamid-type procedure should only be exceptional

The president of the Upper Tribunal’s Lands Chamber has warned expert witnesses that it could refer them to their professional bodies if they break the rules on conditional fees.

Sir David Holgate said experts owed the same “duty of candour” to the court as solicitors, and, following the example set by the High Court, the Upper Tribunal would if necessary require them to provide written explanations for their behaviour.

He said that it was “well known that the finite resources of courts and tribunals” were under great pressure.

“If an expert fails to declare a conditional fee arrangement from the outset of his involvement in proceedings before the tribunal, there is a clear risk of the resources of other parties and of the tribunal being wasted.”

Sir David was ruling in Gardiner & Theobald v Jackson (VO) [2018] UKUT 253 (LC), a case involving the rating of a number of properties, including an office block on Tottenham Court Road in central London.

The expert involved, Damien Clarke, head of London rating at Colliers International, was not paid on a conditional fee basis for his work as an expert witness at the Upper Tribunal or Valuation Tribunal.

However, Sir David said Colliers was entitled to a “success-related fee” if the firm secured a reduction in the properties’ liability for rates.

Although Sir David did not make any “adverse findings” about Colliers or Mr Clarke, he said the case raised concerns about independence, in that it gave the expert a “direct financial interest” in the assessment of rateable value, which could undermine the “independence and impartiality” required for the tribunal hearing.

Sir David added that the tribunal had decided to send a copy of its decision to the president of the Royal Institution of Chartered Surveyors, to see if the ruling had implications “for its practice statement, or more generally”.

In cases where there was an undeclared conditional fee agreement, he said some relief could be given to the other parties by a costs award, but that would not “address the adverse effects of delay”.

However, he said the tribunal could “consider what further action should be taken” where an expert may have abused the tribunal’s procedures through a serious failure to comply with the rules or related breach of a professional code of conduct.

“That may involve requiring a written explanation to be given by the professional concerned, holding a hearing to examine the issues involved, and referring the matter to the relevant professional body for further consideration, whether in relation to an individual case or more generally.”

Sir David said that “regrettably” this approach had been introduced in the High Court, following the ruling in 2012 of the then Lord Chief Justice, Lord Thomas, in Hamid.

Sir David said the Hamid procedure, refined this year by the High Court in Sathivel, usually involved a requirement that the person involved explained why the case should not be referred to the professional body.

“The Hamid procedure provides an opportunity for the person or practice concerned to put forward an explanation for what occurred, to identify what lessons have been learned and what action has been taken, and to give assurances about steps that will be taken in the future to prevent similar issues arising again.

“A statement of that nature may satisfy the court in some cases. A similar approach will be applied in this tribunal.”

Sir David went on: “This tribunal relies heavily on the independence, diligence, expertise and skill of the wide range of experts who appear before it.

“The great majority of these experts discharge their obligations to the tribunal impeccably. Accordingly, use of a Hamid type procedure should only exceptionally be necessary.

“However, the availability of this option, does reinforce the importance of all professional representatives and experts complying fully with their obligations to the tribunal.

“Any notion that, by way of example, the inclusion and signing of an expert’s declarations in his or her report is a mere formality, or something which may be dealt with perfunctorily, needs to be completely dispelled.”

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Egan: Judgment is good news for our members

The Law Society has encouraged solicitors to consider taking action against insurers who settled personal injury cases directly with their clients without paying their fees.

It comes following yesterday’s Supreme Court ruling, which upheld the Court of Appeal ruling that Haven Insurance should pay Gavin Edmondson Solicitors what it was due.

The Law Society intervened in the Supreme Court, making written representations.

President Joe Egan said solicitors “may now wish to consider whether they have any claims against insurers who took action similar to Haven”.

He added: “The society intervened in this case because we believed this was an important point of principle for the profession.

“This judgment is good news for our members. It confirms that solicitors will have a remedy to recover their costs in these circumstances where an insurer has tried to avoid payment by going to the claimant direct.

“It will also be good for consumers as it reduces any incentive for insurers to go directly to claimants, cutting solicitors out and therefore losing the protection a solicitor brings in representing the client in a claim.

“The case is also a useful confirmation given the expected broader application of fixed recoverable costs regimes in the future.”

Haven issued a bullish response to the decision, urging claimants to come to it directly without solicitors.

Claims director Joe O’Connell said: “While we are naturally very disappointed by the decision, this case was not about whether insurers should settle directly with claimants. It was only about the claimants’ solicitors’ costs and it turned on a technical analysis of their retainers.

“The court did not criticise Haven in any way and there has never been any suggestion that the underlying claimants received any less than the compensation to which they were entitled.

“In fact, Haven believes that they received more than they would have received had they settled their claims through solicitors.”

He made these comments even though the Supreme Court said that once an insurer knew that a claimant was represented by solicitors acting under the RTA protocol, “they have the requisite notice and knowledge to make a subsequent payment of settlement monies direct to the claimant unconscionable”.

Mr O’Connell added: “Haven has always acted fairly towards claimants and will continue to do so. We believe that it is in claimants’ interests to settle directly with us and we will continue to provide an excellent service to those who choose to do so.

“Claimants who deal directly with Haven will resolve their claims more quickly and are likely to receive more in compensation than they would if they involved solicitors, particularly as solicitors will deduct up to 25% from claimants’ damages to cover success fees and other legal costs.

“Haven strongly believes that every claimant has the right to decide how to deal with their own claim and that claimants should not be forced to use solicitors. We encourage any claimant to speak to us before committing themselves to instructing solicitors.”

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Halevy: DBAs promise to alter the marketplace for litigation funding dramatically

City law firm Lewis Silkin yesterday signalled its intention to work under damages-based agreements (DBAs) after unveiling a partnership with leading broker TheJudge so that clients using them are supported by third-party funding and after-the-event (ATE) insurance.

Known as LS ACCESS, the firm said it was the first offering of its kind.

It comprises a dedicated panel of leading third-party litigation funders and ATE insurers, including Vannin Capital, Elite Insurance and Therium Capital Management.

They are committed to providing Lewis Silkin’s clients with funding proposals and insurance quotations within five working days, “whereas on the open market it can take many weeks to obtain funding offers”, the firm said. The panel will be reviewed regularly “to ensure clients receive offers on highly competitive terms”.

Lewis Silkin said DBAs provide a useful alternative to conditional fee agreements and taken together “provide more choice and flexibility than ever before for claimants wishing to pursue litigation, but who face either liquidity and cash-flow constraints or are keen to manage risk”.

Tamar Halevy, a partner in Lewis Silkin’s litigation team, explained: “The advent of DBAs promises to alter the marketplace for litigation funding dramatically, and third-party funding and ATE insurance will no doubt remain vital as options within the changing litigation funding landscape.

“We are therefore delighted to be able to offer our clients this first-of-its-kind solution, as evidence of our commitment to delivering the full range of cutting edge litigation funding options. LS ACCESS will provide the utmost in terms of quality, flexibility and efficiency when it comes to funding potential litigation, and will be particularly relevant for high-value cases such as trust disputes, investment disputes and professional negligence claims.”

James Blick, a director at TheJudge, added: “In the litigation funding market, there is no ‘one size fits all’ solution. This new scheme from Lewis Silkin represents real innovation when it comes to how claimants with good cases are paired with potential funding solutions to meet their needs.

“Because panellists will be tendering on competitive terms but on a pre-screened and preferred basis, clients will benefit by receiving better, faster and more tailored solutions than ever before. Lewis Silkin’s bold step forward in terms of alternative funding will no doubt set the standard for the wider industry, as it takes its first steps into uncharted territory.”

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Kain Knight, one of the UK’s largest professional firms of costs lawyers, is holding a quiz night for lawyers and barristers in early February as a fundraiser for the Alzheimer’s Society.

The event is open to any law firm or barristers’ chambers who wish to support Kain Knight’s charity evening.  Hosting the evening will be Kain Knight’s Chief Executive Officer, Peter Petyt.

The pop quiz night will be held on Wednesday 5 February from 6.30pm at the Minster Exchange in Mincing Lane in the City, and will finish around 11.00pm.

Food and drink will be served, and there will also be a pay bar.  Team entries cost £50 for a team of up to six people.

All profits from the event will be donated to the Alzheimer’s Society.

To book a table, or for further information, please contact

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Gordon-Saker: no reason for pessimism as to the outcome of any mediation

Gordon-Saker: no reason for pessimism as to the outcome of any mediation

Newspaper group Mirror Group Newspapers has been hit with indemnity costs after the Senior Costs Judge ruled that it had unreasonably failed to engage in efforts to use alternative dispute resolution instead of going to detailed assessment.

In the latest significant ruling to arise from this piece of phone-hacking litigation, Master Gordon-Saker found MGN’s conduct unreasonable “to a high degree”.

MGN was actually the party to first raise the possibility of finding an alternative method to assessing costs. The claimants’ solicitors were initially lukewarm about the idea, expressing “serious concerns that agreeing to mediation could well, in our view, achieve nothing for the claimants except delay and incur costs”.

However, their response continued: “For that reason, we are not prepared to stay the assessment process pending any such attempt at ADR. That said, we would of course be happy to engage in a considered and genuine ADR process if one could be had.”

They suggested using the former Senior Costs Judge, Peter Hurst, as a mediator, and said that if he was acceptable, “please let us know which type of ADR your client would agree to and if the latter (mediation), whether it would meet the entire costs of the process”.

The defendant did not respond to this or when it was repeated subsequently on three occasions.

Master Gordon-Saker said: “It seems to me that there has been a blanket refusal by the defendant to engage in any process of discussing alternative dispute resolution.”

He rejected explanations for the defendant’s solicitors’ behaviour, such as the request for the defendant to pay the costs of the process.

“It seems to me that request was not a reason simply to ignore the suggestion of ADR. It could have been dealt with, possibly suitably robustly, by a response that there was no reason why the defendant should pay for it, but that the defendant would nevertheless be willing to engage in the process. That was not done.”

The master ruled: “I have no hesitation in concluding that the defendant has behaved unreasonably in failing to engage in the process of discussing at least the possibility of alternative dispute resolution, and mediation in particular, and given that the common costs base costs have been agreed [at £2m], it seems to me that there was no reason for pessimism as to the outcome of any mediation.

“It seems to me, therefore, that the defendant’s conduct is unreasonable to a high degree and is such as to justify an award of costs on the indemnity basis. Accordingly, save insofar as the parties have agreed that the defendant should pay costs on the standard basis, it seems to me that the claimants are entitled to the costs of the assessment of the common costs bill and of the four individual claims on the indemnity basis.”

Simon Browne QC of Temple Garden Chambers, instructed by James Heath of Atkins Thomson and Philip Daval-Bowden of Masters Legal Costs Services, was counsel for the claimants. Jamie Carpenter of Hailsham Chambers, instructed by RPC, represented the defendant.

Matthew Smith, a costs barrister at Kings Chambers, commented: “Mediation is a process which has been looked upon increasingly favourably by judges, a development that has led to an increase in the demand for specialists in this area.

“This ruling is proof that judges will take action where they believe that it has been unreasonably dismissed as an option, and is likely to make parties think twice before dismissing mediation out of hand.

“They know that if they do, they may find themselves landed with substantial costs, so we can expect the option of mediation to be considered very seriously in light of this ruling.”

Kings Chambers has recently set up its own costs ADR service and members have also joined CADR, the specialist costs ADR offering.

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Djanogly: small claims limit for PI is cisco 640-816 out of date

The “eyes of government” and of MPs will be on the insurance industry to see that it delivers lower premiums following the civil justice reforms, according to the man who piloted the Legal Aid, Sentencing and Punishment of Offenders Act 2012 through Parliament. 642-444 exam

In his first interview since returning to the backbenches last September, former justice minister Jonathan Djanogly told Litigation Futures that he had no regrets about the reforms he introduced.

Mr Djanogly said that “when I became a minister, I spent most of my time arguing that there was a compensation culture”. He added that “10 Downing Street were very keen that insurance premiums should be brought down and they saw that the compensation culture was part of that”.

Pointing to statistics such as accidents falling by a quarter as claims rose by a third, he insisted that it is now “a rare lawyer who argues there’s not been a compensation culture”.

The acceptance of this led to a series of “incremental reforms”, starting with ending the recoverability of success fees and after-the-event insurance premiums, and moving on to the referral fee ban, the “criminal aspects of whiplash”, spam texting and finally the civil aspects of whiplash.

Despite recent warnings from the likes of Direct Line that the reforms in total may not make a difference to premiums, Mr Djanogly said: “The eyes of government are going to be on the insurance industry. Government expects them to respond and I think that’s the general feeling among MPs. We are looking for changes.”

While he was “convinced” that a large proportion of the RTA portal fee related to referral fees, Mr Djanogly said it should be kept under review. “If firms can make a good case that their marketing costs are such that a higher level is going to be needed in the future, then I don’t think that should be overlooked.”

The MP for Huntingdon also brushed aside the attacks he faced over his personal interests during the passage of LASPO, which led to some changes in ministerial responsibilities. “It didn’t bother me at all,” he said. “When people switch towards attacking you personally, you’re generally winning the policy argument. I took a lot of comfort in that.”

He said: “In retrospect the provisions of the Access to Justice Act were a disaster and created an unreal market place… and just detached the client from the advocate. Once you had a situation where the client did not care what his representative was earning, the situation was always going to get out of control.

“We are the only country in the world so far as I know where there were people arguing that a lawyer shouldn’t take a fair fee from his or her client for fair work done. I was very pleased to go to a conference recently and see the Law Society now recognise that. Lawyers should be proud of the work they and should expect to be paid a fair price for the work that they do. And lawyers in every other country work on that basis too.”

Mr Djanogly acknowledged that the issues around whiplash are more often criminal rather than civil – “it’s not realistic to assume that amending the civil law is going to cure whiplash”. At the same time, “there are aspects of whiplash where there are marginal claims being made that should not be made under a fairer system and will not be made” after the impending changes.

The government consultation suggested that only 7% of whiplash claims were fraudulent, but Mr Djanogly said his “personal instincts” were that it is much more.

He argued that the £1,000 small claims limit for personal injury cases is “out of date”, saying: “I think most people rationally say that is too low a figure… There must be a level at which it is wrong to be using lawyers.”

One benefit of the small claims track is the assumption of mediation, Mr Djanogly added.

While some of the details have been slow to emerge, and the implementation timetable was “always going to be tough”, the solicitor noted that practitioners have now had a year since LASPO was passed. “This has not come out of the blue,” he said. “Practitioners have to understand that and respond to the new environment that now exists.”

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viridian-housingViridian Housing has chosen to implement the Proclaim Matter Management Software solution from Eclipse Legal Systems, the Law Society’s sole Endorsed software provider.

The ambitious housing association provides social housing to over 30,000 residents spanning across London, the south east, the Midlands and West Sussex.

Having experienced tremendous growth since inception, the association now owns around 16,000 homes and works in partnership with local authorities, organisations and residents to create safe, sustainable communities.

In order to streamline its processes and enable its lawyers to maximise matter management efficiency, Viridian Housing decided to invest in a flexible software solution for its in-house legal team. Eclipse’s Proclaim solution is being implemented to automate routine tasks and enable staff to benefit from enhanced regulation of their working practices.

As part of the implementation of Proclaim, Eclipse will be conducting a data migration of existing and historical matters from Viridian’s incumbent system.

The housing association has also opted for Eclipse’s Task Server tool which will automate a number of routine tasks and enable staff to automatically schedule and distribute reports to relevant stakeholders, colleagues and third parties.

Katrina Robinson, head of legal at Viridian Housing, comments:

“As a rapidly expanding housing association, we need our core Matter Management solution to not only be as efficient as possible, but also as flexible as possible. It was clear to us from the outset that Eclipse offered the best solution within the legal software sector, allowing us to successfully build upon our new process improvement strategy, and concentrate on what we do best – providing a best-in-class legal service for our stakeholders.”

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John O'Connor WebSpecialist after the event (ATE) insurance division DAS LawAssist, part of the DAS UK Group, has appointed John O’Connor to the role of commercial risks development manager.

John will help drive new business as well as encourage the development of the DAS ATE product proposition, ensuring solicitors and intermediaries have a choice of highly competitive and tailored products.

John brings over 20 years’ experience in business development to the role, joining from LawSure Insurance where he was responsible for implementing its business development function. Prior to this he held positions at Client Care Options and spent nine years at Burford Capital, overseeing business development in its southern region. John also spent a number of years at American Express Bank and Rabobank International.

Richard Whale sales manager at DAS LawAssist, said: “John has a strong background in business development and financial services, particularly ATE insurance, making him a valuable addition to the team. His key responsibility is to generate and develop new business opportunities while retaining those important existing relationships. His appointment will ultimately help us grow as a business. We welcome him to the DAS LawAssist team.”

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Signature: Copied from another document

A personal injury lawyer who persuaded other employees to fake client signatures and lied about it in court has been struck off by the Solicitors Disciplinary Tribunal (SDT).

Lesley Dee Layton, based at Lance Mason Solicitors in Blackburn, also “directed the creation” of a claim form containing an accident date “which she knew to be untrue”.

Admitting all the allegations in an agreed outcome with the Solicitors Regulations Authority (SRA) and approved by the tribunal, Ms Layton said in mitigation that she had made “open and frank” admissions, “always co-operated” with the SRA and had a “previously unblemished career history”.

She went on: “I had always sought to uphold the rule of law and I am thoroughly embarrassed that it came to this”.

Ms Layton admitted that she had “caused to be created” two witness statements in which the signature of a client, referred to as GH, had been copied from another document.

She had been acting for GH in a personal injury claim and failed to obtain a signed witness statement from him by the deadline set by the court.

A few days later she “directed” an employee of the firm to copy GH’s signature from a different document onto a version of his witness statement, and emailed it to the solicitors for the defendants, BLM.

When BLM sent a letter saying that GH’s statement of truth “appeared to have been cut from another document and copied onto the statement”, Ms Layton created a second statement, directed another employee to fake GH’s signature, and sent it to the other side.

Responding to a request from BLM to see the original witness statement, Ms Layton “directed another individual” at the firm to “trace over the signatures” copied into her two witness statements with a ballpoint pen “in order to give the impression they were original signatures”.

GH’s claim was struck out in April 2015, but in a later statement for a costs hearing in September that year, Ms Layton claimed she had “acted appropriately and honestly throughout the matter”.

She insisted she had sent to BLM “what she thought were the original statements”, and could not explain the findings of an expert that “the signatures were copies which had been traced over with ballpoint pen”.

In a second matter, Ms Layton acted for KF in connection with a back injury he suffered working on a prison farm, but KF “could not recall the exact date on which the injury was sustained”.

By the time the three-year limitation deadline expired, in September 2015, Ms Layton had obtained a signed copy of the claim form, giving the accident date as “on or about the 24 September 2012”, but not the particulars of claim.

She sent a letter to the court on 29 September 2015, enclosing a claim form consisting of a second page signed and returned by KF in August and a first page which “she had directed the creation of”, and with a date for the accident of 30 September 2012.

Ms Layton admitted acting dishonestly by causing two versions of GH’s witness statement to be created into which signatures were copied, representing the statement as signed by GH and denying any wrongdoing, both to BLM and the court.

She also admitted acting dishonestly in respect of KF, by causing a claim form to be filed referring to an accident date which she did not believe to be correct and “which purported to have been signed by the client when she knew it had not”.

Ms Layton acknowledged that her actions led to the striking out of GH’s claim and had it been discovered by the court, there was a “high likelihood” that KF’s claim would have been struck out.

She agreed to be struck off of the roll and pay costs of £13,920.

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Lee Baty, engineering manager

Laird Experts are delighted to announce that our engineering manager, Lee Baty, has been shortlisted at the IMI Oustanding Achievers Awards 2014.  Lee has been shortlisted for the ‘outstanding management professional’ award and was selected from a very high standard of applicants.

The awards ceremony takes place on 23rd October at the Heritage Motor Centre in Gaydon and will be attended by HRH Prince Michael of Kent. The IMI is the professional association for individuals working in retail motor industry and the authoritative voice of the sector. IMI are also the governing body for Professional Register, IMI Accreditations (ATA) and the best source of automotive careers information, standards and qualifications.

Lee joined Laird in April 2013 and quickly took over as engineering manager.  He manages all our field and desktop engineers and is a real asset to the company.  We are very proud to have him as part of our Laird team.


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McNally: not acceptable to say that CFA reform is good for everyone else, not the government

The House of Lords yesterday inflicted two defeats on the government over part 2 of the Legal Aid, Sentencing and Punishment of Offenders Bill, but the main elements of the Jackson reforms remained intact.

Peers voted to exclude asbestos claims and then all industrial disease cases from the end of recoverability. However, a vote to put the 10% damages uplift and qualified one-way costs-shifting (QOCS) on the face of the bill failed.

The compromise on Jackson put forward by the Law Society, Association of Personal Injury Lawyer and Motor Accident Solicitors Society did not go to a division.

In the one other vote on the fourth day of the bill’s report stage, peers supported an amendment laid by former Paralympian Dame Tanni Grey-Thompson that imposes a duty on the Lord Chancellor to secure that a person eligible to legal aid advice is able to access it “in a range of forms at the outset, including securing the provision of initial face-to-face advice”.

The aim was to remove the provisions for both a mandatory telephone gateway and the delivery of legally aided services exclusively by telephone.

In all the government has so far suffered nine defeats in the Lords on the bill.

Despite justice minister Lord McNally arguing against any exceptions to the end of recoverability, peers voted 189 to 158 to exclude asbestos-related cases, as proposed by crossbencher Lord Alton, and 168 to 163 to exclude all industrial disease claims, proposed by Labour justice spokesman Lord Bach.

Lord Alton said: “How it can ever be just to raid the compensation that someone has been awarded because they have proven their case in court – to take up to 25% of what they have been awarded to help them through the last days of their life. How can it ever be a matter of justice to do that?”

Lord McNally said: “I am not aware of anything associated with those cases which makes them particularly expensive to bring. I have not heard anything since which persuades me that there is anything particular about the nature of those cases – the cases, not the disease – which makesthem any harder to bring in legal terms than any other case.”

Though he rejected carve-outs for various other areas of litigation, the minister did offer a glimmer of hope over international human rights cases, saying he was happy to “re-engage” with interested parties before the third reading of the bill.

Lord McNally finally laid to rest the long-running question of whether insolvency related cases should be exempted from the end of recoverability given that it is an area where the government sometimes benefits from conditional fee agreements (CFAs). However, he told the House: “I do not believe it is acceptable to say that CFA reform is good for everyone else, but is not good for the government.”

Lord McNally said that the judiciary believed the 10% uplift should be done by the courts, while putting QOCS in the legislation, rather than leaving it to the rule committee, would make it far less flexible.

He also updated the thinking on the financial test for QOCS. “We agree that, for personal injury cases, there should not be an initial financial means test,” he said. “We are in discussion about whether there should be a financial contribution, although we recognise the arguments that there should not be. The Civil Justice Council, chaired by the Master of the Rolls, is helping the department on the way forward.”

Lord McNally was unable to confirm that controversial amendment 135A, which some thought meant that the end of recoverability would have retrospective effect, would not do that, but said he would confirm the matter shortly. The primary goal is to bring collective CFAs in line with the reforms.

Lord Thomas did not press to a vote his amendment to introduce statutory regulation of third-party litigation funding. Lord McNally said: “At the moment we are looking at how voluntary regulation is working in the area. However, my right honourable friend the Lord Chancellor is very aware of the situation and is keeping it under review.

“We do not think that statutory regulation through this bill is either the right place or the right time but we welcome the fact that my noble friend has put this issue on the political radar. Both lawyers and legislators will have to follow the matter closely to see whether we will need to return to it at some future date.”

The government also said there was no need for statutory regulation of third-party ‘contact’ by insurance companies as it is covered by Financial Services Authority rules.

At the end of the debate, Lord McNally refused to allow any exceptions to the ban on referral fees in personal injury cases, such as for trade unions and charities. “Trade unions will of course still be able to refer cases, without payment, to those best able to pursue them,” he said. “Nothing in the clauses prevents lawyers providing services free of charge to registered charities.”

However, he did accept the thrust of two amendments laid by Lord Hunt of Wirral seeking to tighten up the ban and will bring back amendments at third reading to address the issues raised. One would prevent the payment of a referral fee for some non-injury element of an injury claim, and the other would ensure there is not a way round the ban by routing payment to someone other than the person making the referral.

Labour amendments on making the payment of referral fees a criminal offence and halving the fees payable under the RTA portal will be addressed on the next day of report next week.

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