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MoJ: new criteria to apply to shell companies from 8 November

MoJ: new criteria to apply to shell companies from 8 November

The Ministry of Justice (MoJ) has finally laid out how it will stop the large medical reporting organisations (MROs) registering ‘shell’ companies on MedCo, a practice it said “undermined the government’s policy principles of independence and fair competition”.

The MoJ said the revised qualifying criteria for MROs included a definition of an MRO which would preclude organisations set up purely as a shell “to gather instructions and forward them on to a related organisation”.

From 8 November, existing shell companies will be judged against the revised criteria and removed from the system if they do not meet them. The criteria apply with immediate effect to new MROs registering on MedCo and those applying for reclassification as a high-volume national MRO (ie, tier 1). For all other MROs, the criteria will be implemented on 25 January 2017.

We reported recently that a host of major tier 1 MROs had created dozens more shell companies, although they argue that the purpose was to meet client demand rather than farm more work.

The definition requires the MRO to be independent (ie stand-alone companies with their own management and in separate premises from any other MRO), properly staffed and resourced, and “directly and solely responsible for all work associated with receiving instructions from the MedCo portal and instructing a medical expert to provide an initial medical report”.

Where MROs have a common third-party owner, they will not be removed from the system so long as they are fully functioning entities in their own right, with a principal function of providing medical reporting services.

The MoJ said the aim was to enable MedCo “to ensure that MROs registered on the system, or applying to register, do not undermine the system’s random allocation model”.

MROs which were removed from the system would be able to fulfil existing instructions, it added.

MedCo will be publishing supporting guidance for MROs to assist with the interpretation of the revised criteria.

Nigel Teasdale, vice-president of the Forum of Insurance Lawyers (FOIL) and its representative on the MedCo board, said: “The introduction of MedCo is an on-going process and it is important that abuses which undermine the system are tackled as they arise. FOIL sees the changes to the qualifying criteria and the declaration of financial links as significant steps in MedCo’s development: hopefully this will enable MedCo to focus its resources on improving the quality of the medical reports themselves.

“It is clear that MedCo is changing behaviours and it is important that the regime continues to develop. FOIL welcomed the MOJ’s commitment earlier this year to keep the framework under review and, in particular, hopes in due course to see formal regulation of MROs as part of the regime.”

Meanwhile, a survey on personal injury (PI) commissioned by the Solicitors Regulation Authority (SRA) – see full story on Legal Futures here – found that just 24% of (mainly claimant) respondents believed that MedCo achieved independence between MROs and firms, while 59% said relationships between solicitor firms, insurers and MROs had not improved as a result of the system.

Even more (68%) thought that the quality of reports had not improved as a result of MedCo (only 4% said they had).

The in-depth interviews conducted as part of the research corroborated the survey’s findings, but the report said “many of those critical of the portal did not disagree with the rationale behind its introduction, but rather criticised the ‘rushed implementation’ and resultant ‘loopholes’ and the regrettable ‘complication of a previously simple system’”.

The poorer quality medical reports were largely attributed to the standardisation process, increased use of drop-down lists and reduced fees for medical experts.

Both claimant and defendant solicitors commonly mentioned that the mechanisms used to circumvent portal objectives included shell companies and bilateral agreements between MROs and solicitors.

“Some interviewees also thought that large practices were able get around the MedCo system due to the scale of their operation: big firms, dealing with thousands of cases a year, could have arrangements with groups of MROs, ensuring that one would always appear on the list of agencies produced by MedCo.

“However, it was also possible for small firms to manipulate the system by filtering search results by location. Recently however, it was said that MedCo had increased efforts to prevent PI firms’ manipulation of the MedCo portal and attempts to circumvent the random allocation of MROs.

“Additionally, solicitors thought to be manipulating the system’s search function to increase the probability of known experts appearing are, it is said, being monitored.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Scale of costs “dwarf the great majority” of claims

The Court of Appeal has ruled that the effect of a Calderbank offer is not the same as a part 36 offer, in a battle over a massive £19m in costs from an intellectual property dispute.

Mr Justice David Richards said the scale of the costs involved in the case “dwarf the great majority of civil claims, including most claims in the High Court”.

He said the jurisdiction of the courts to make costs orders following a Calderbank offer – an offer made without prejudice save as to costs – derived from CPR part 44.

“I accept that the broad terms in which the discretion conferred by part 44 is expressed comes at the price of some uncertainty and some scope for argument as to costs,” the judge said.

“It is in the nature of a discretionary remedy dependent on the particular circumstances of the case that there is more uncertainty than exists than where there is a rigid rule.

“But courts are well accustomed to dealing with those cases where it is arguable that the just result is not simply that the unsuccessful party pays the costs of the successful party in full.”

He concluded that it would be “contrary to the express terms of part 44” to read across into it a “rigid approach” drawn by analogy with part 36.

The court heard in Coward v Phaestos and others [2014] EWCA Civ 1256 that the relationship between Dr Martin Coward, a mathematician and computer programmer, and his wife and business partner, Elena Ambrosiadou, broke down in 2009.

They had married in 1983, and started a quantitative trading business together in 1992. The judge described this as a “highly successful enterprise”, which was carried on through a number of firms he labelled collectively as IKOS.

He said that following the end of the relationship, Dr Coward, who had written the original software and made a significant contribution to its development, resigned and set up his own competing business.

“Each side alleged that the other was using software in which it owned the copyright,” David Richards J said. “Litigation ensued in a number of countries”.

Counsel for Dr Coward claimed that, since IKOS had failed to accept a Calderbank offer made in July 2012, it should pay his costs since that date.

Counsel for IKOS argued that the businesses did not have to show that they obtained “significantly more” at trial than the Calderbank offer. Relying on CPR 36.14 (1A), IKOS argued that “any advance on the terms of the offer” was enough to entitle it to costs.

Mr Justice David Richards ruled that the effect of a Calderbank offer was not to be assessed by analogy with the terms of CPR rule 36.14(1A), which defined a “more advantageous” judgment as one that was “better in money terms by any amount” than the relevant offer.

However, he agreed with the trial judge, Mrs Justice Asplin, that three aspects of the final order represented “substantial improvements” on the Calderbank offer.

Dismissing Dr Coward’s appeal, he said Asplin J’s exercise of the discretion vested in her by the rules “cannot in my judgment be faulted.”

David Richards J added that even allowing for “technical, factual and legal issues of some complexity”, the costs at stake seemed “very large” for a three-week trial.

He said that IKOS, which claimed more than twice the costs claimed by Dr Coward, would have to prove at assessment that they were “both reasonable and proportionate”.

Lord Justice Ryder and Lord Justice Moore-Bick agreed.

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We are currently looking for a senior costs draftsman/costs lawyer for our Aylesbury office to assist with our increasing workload.  The successful candidate must be able to use CostsMaster or be willing to learn.  If you are interested in applying for this position please send us your details and CV via the Contact form on our Careers web page.

About Harmans:

Harmans is a highly renowned firm of Costs Lawyers and Costs Draftsmen providing a specialist legal costs service tailored to our clients’ needs.  With 40 years experience our Costs Lawyers and Costs Draftsmen are instructed by some of the country’s leading law firms and have been involved in many high profile cases.  Our Partners are all Costs Lawyers and members of the ACL with a track record for dealing with some of the largest claims for legal costs proceedings in the UK.  Whether in the Supreme  Court or the Magistrates’ Court, we battle to get the best results for our clients.  It’s why they keep coming back to us and it’s how we protect our reputation as one of the UK’s most respected legal costs specialists.

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Aspire Law – a partnership between Aspire, a national spinal injury charity, and Moore Blatch, a personal injury law firm – is implementing Eclipse’s Proclaim Case Management Software solution.

Aspire recently became the first organisation of its type to own a stake in an alternative business structure (ABS) law firm.  The new venture will be dedicated to providing a specialist service to people with spinal cord injuries, creating a Social Enterprise Model which places clients’ needs and requirements at the centre of work, delivering a highly personalised service. The service could in time expand to include advisory elements around housing, education, care and rehabilitation.

Aspire Law will make no deduction of fees from the compensation awarded to clients and – as a joint partner – the charity will receive 50% of profits to reinvest into projects, like the Aspire Housing Programme which provides accessible accommodation to spinal cord injured people discharged from hospital who would otherwise have nowhere suitable to live.

The new ABS is implementing Proclaim across the business, providing a desktop solution for fee earners dealing with a broad range of claims.  Proclaim provides scope for the firm to expand its offerings into other areas, providing the ability to service the complete needs of its client base.

Chris Byron, managing director of Aspire Law, comments:

“We are extremely proud to be able to introduce an alternative way of delivering legal services to people with spinal cord injuries, which combines the legal expertise of our team with strong charitable values.  The decision to implement Proclaim was commercially right for us as a business; having seen how the system enhanced processes at another Moore Blatch business, Moore Blatch Resolve, we were confident that Proclaim would be able to deliver in line with the aims of Aspire Law.”

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Spamalot: granting relief avoided windfall for defendant

A High Court judge has granted relief from sanctions where a successful party failed to serve a notice of its funding arrangements on form N251.

Though the judgment was drafted before the Court of Appeal handed down Mitchell last week, Mr Justice Norris said he took account of the decision and did not need to revise his draft ruling, “which I consider proceeds upon correct principles”.

The costs ruling in Forstater & Anor v Python (Monty) Pictures & Anor [2013] EWHC 3759 (Ch) – which followed a high-profile claim for royalties arising from the play Spamalot – heard that when the second claimant was joined to the first claimant’s conditional fee agreement (CFA), it failed to complete and serve form N251.

This meant that, under CPR 44.3B, upon winning it was unable to recover any part of its success fee unless the court ordered otherwise.

The defendants were later made aware of the CFA through correspondence.

Norris J said the failure to serve the N251 was “simple oversight” and that there was “no good explanation” for it.

While not suggesting it had suffered any prejudice, the defendant said this made no difference, relying on the observations of Mr Justice Floyd in Supperstone v Hurst [2008] EWHC 735, who said that relief should not be granted lightly and that if a party does not have a good explanation, “relief from sanctions will usually be refused”.

He continued: “It is vitally important to the administration of justice that the rules of procedure are observed.”

Norris J said that while he agreed with this “statement of principle”, it was not the statement of a rule.

He drew a distinction between a failure, through human error, to comply with a rule of general application – as in this case – and “a conscious failure to comply with a specific order made in the action itself”.

The judge said that when the defendant had been informed of the CFA, “the policy embodied in CPR 44.3B had… been fulfilled (albeit not in a technically correct way) and the substance of the rule was then complied with. The conveying of the requisite information in letter instead of on form N251 had no discernable impact on the conduct of the action.”

Norris J was also clearly influenced by the fact that to refuse relief would leave the second claimant liable to pay the success fee and possibly lead to litigation with its solicitor, while granting relief would deprive the defendant “of what may properly be regarded as a windfall (in that it received the relevant information on the wrong piece of paper)”.

As a result, he granted relief from the date when the letter was sent.

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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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Laird Assessors are pleased to announce that they have teamed up with The SOLICITORS Group to offer you 20% discount off the cost of a 6 hour Personal Injury Conference as a valued customer of Laird Assessors.

the SOLICITORS group are leading providers of high quality, affordable CPD training for the legal profession. Their courses are constantly reviewed to ensure that they cover all of the latest changes and developments in the law. For further details of conferences running click here to visit the website.  The dates and locations we are running this offer on are:

Please note, you will be invoiced the full amount by the SOLICITORS group and you should claim your 20% discount direct from us.  Discount applies to conferences to the following LAW2014 events; Birmingham (27th Feb), London (20th March), Peterborough (2nd April), Gateshead (30th April).

We really hope this offer will be of value to you and your teams.  For more information, please contact Pippa Saunders on 0151 342 0670.

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Niemczewski: scope for improvement

The draft pre-action protocol for the RTA portal extension to cover employers’ and public liability (EL/PL) claims is a significant step towards a streamlined personal injury process but is in danger of becoming too complex to be workable according, it was claimed yesterday.

Artur Niemczewski, CEO of leading liability adjuster Garwyn, said there is “scope for improvement” upon the current draft, which was published last week. “We also await details of the proposed fixed costs tariffs, which will be key to the success of the new protocol.”

Peter Wilson, regional and technical director of Garwyn, added: “Clearly, considerable time has been spent reviewing responses to the initial consultation to formulate the draft protocol… we welcome the recognition that EL and PL claims have distinct challenges and the acceptance that certain types of injury claim are inherently unsuitable for the process. We also welcome the emphasis placed on ensuring that the claim notification has adequate detail.

“However, the protocol has elements that are too Draconian, for example the strict 24-hour acknowledgement deadline, which is likely to compel insurers to impose unprecedentedly stringent notification conditions, and offering defendants no facility to address questions to the claimant’s medical expert.

“The rules are also unduly complex in some respects, and we are concerned that defendants will face a minefield of deadlines which will trap the unwary and places too much reliance on process rather than expertise”.

Mr Niemczewski continued: “Every organisation with any involvement in EL and PL claims will be affected by what will be a profound shift in the process. The stated aim of the protocol is to accelerate outcomes and reduce costs. Those who invest in preparation should benefit, as they take advantage of the fixed costs that are the ‘carrot’ of the reforms. However, those who lack the resources or get lost in the complexities risk their insurance costs escalating, particularly if claim volumes rise to test defences.”


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Boiler disrepair: firm lost fees claim

Boiler disrepair: firm lost fees claim

A High Court judge has refused to grant relief from sanctions to a law firm which “deliberately decided not to comply” with a practice direction and unless order in an appeal against a finding of negligence.

Essex firm Davis Solicitors had already lost a claim for unpaid fees and been ordered to pay former clients over £21,000. The firm’s appeal was struck out on the grounds that it failed to lodge an appeal bundle.

Ruling on an appeal rejecting an initial application for relief from sanctions, Mr Justice Supperstone said the position of sole principal Nancy Ballard, who represented the firm in court, was that she “considered it unnecessary to file an appeal bundle”, while accepting that she was in breach of the relevant practice direction.

The judge said that “the reason she made no attempt to correct the breach or even to serve an appeal bundle” was because “she did not think that filing an appeal bundle would assist”.

Supperstone J went on: “She thought, she says, that what was important was to make an application for relief from sanctions as promptly as possible. She stated that she thought it was only necessary to have an appeal bundle once permission has been granted.

“She did not appear to appreciate the need for applications for permission to appeal to be presented in accordance with the rules so as to ensure the effective management of the appeal process at the permission stage.”

The High Court heard in Davis Solicitors v Raja and another [2015] EWHC 519 (QB) that the firm had acted for Fida Raja and Hande Riaz “with regard to the disrepair of a boiler”.

Ms Ballard later sued her clients over an unpaid invoice for £2,970 plus interest and costs. The defendants counterclaimed for consequential losses and negligence.

Giving judgment in favour of the defendants, Deputy District Judge Parker said it was “difficult to conceive of a worse case in relation to poor service”, the work carried out by Ms Ballard was “shoddy” and “above all” she had been negligent.

Ms Ballard appealed. Her appeal was struck out by Judge Wulwik on the grounds of failure to lodge an appeal bundle, in accordance with CPR PD 52B.6 and an unless order.

She applied for relief from sanctions, but her appeal was dismissed by Judge Mitchell at Central London County Court. Ms Ballard appealed to the High Court.

She argued that failure to file the appeal bundle was not a “significant breach” of PD 52B because all relevant documents had been served on the defendants and she had complied in “every other respect”.

Rejecting this argument Mr Justice Supperstone said that not only did Ms Ballard fail to comply with the practice direction, she ignored the unless order.

Supperstone J concluded: “The fact is that Ms Ballard had deliberately decided not to comply with the practice direction and the unless order because she considered that what she had done in terms of filing and serving documents for the appeal was sufficient.”

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Ellman: strong views on all sides

The government will wait until the transport select committee finishes its investigation into whiplash – and until the impact of the LASPO reforms begins to show – before announcing the outcome of its consultation on reform, justice minister Helen Grant announced this morning.

The consultation, which closed on 8 March, committed the government to review the submissions received and publish a response in spring 2013.

The committee announced its inquiry into whiplash – including an examination of the government’s consultation proposals – on 15 March.

In a statement laid before Parliament today, Ms Grant said: “The government believes that, prior to taking any final decisions on whiplash reform, it should give due consideration to the views of the transport committee.

“The government also believes that the impact of its recent civil reform programme on the price of motor insurance premiums needs to be assessed. Consumers should be rewarded with the lower litigation costs being reflected in lower insurance premiums.

“For these reasons the government has decided to defer publication of its formal response to the consultation until after the committee has reported.”

The select committee will next week start taking oral evidence as part of its investigation. After receiving 54 written submissions, the committee’s hearing will begin with a focus on the medical questions around whiplash.

The Chartered Society of Physiotherapy will be giving evidence, as will the head of the bioengineering research group and Nottingham University, a lecturer in anatomy and behaviour at Nottingham’s school of veterinary medicine and science.

MPs will also hear from Thatcham Research – the motor insurance repair research centre – the Institute and Faculty of Actuaries, and the Lloyd’s Market Association, which has made some radical suggestions for reform.

Monday’s session will conclude with MPs probing Dr Simon Margolis, chief executive of leading medical reporting agency Premex Services, and Dr Andre Brittain-Dissont of Dr Brittain-Dissont Medico-Legal Reporting.

There will be a further oral evidence session on 17 June, although the witnesses for it have not yet been named.

Louise Ellman MP, chair of the transport committee, said: “There are strong views on all sides of the debate on whiplash claims.  We will hear oral evidence from different groups on the government’s proposals for reducing the number and cost of whiplash claims. We will discuss with witnesses the impact these proposals might have on reducing motor insurance premiums and on access to justice for injured people.”

Speaking at an Association of British Insurers conference in March when she announced the inquiry, Ms Ellman said her instinct was that “a lot of whiplash claims” are fraudulent” – encouraged by cold calling – but that there are “genuine claims in there too” which must not be lost in the rush to tackle fraud.

The committee sought written evidence under five main headings:

  • Whether the government is correct in describing Great Britain as the “whiplash capital of the world”;
  • Whether it is correct to say that the costs of whiplash claims add £90 to the average premium and, if so, what proportion of this additional cost is due to “exaggerated, misrepresented or fabricated” claims;
  • Whether the proposals put forward by the government, in relation to medical evidence of whiplash and incentives to challenge fraudulent or exaggerated claims, are likely to reduce motor insurance premiums and, if so, to what extent;
  • The likely impact of the proposals on access to justice for claimants who are genuinely injured; and
  • Whether there are other steps which the government should be taking to reduce the cost of motor insurane.

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Colin Griffin

Griffin: claims “plummeted” after hike in court fees

Kings Chambers has launched a new arbitration service, with its own website, in what is believed to be the first move of its kind.

Kings Arbitration Service (KAS) offers clients a range of fixed fees, starting at £3,000 for a paper arbitration of a dispute worth less than £1m.

Colin Griffin, chief clerk at Kings Chambers, said KAS, launched yesterday, was unique in covering “the whole of litigation” rather than particular sectors.

Mr Griffin said court cases had “plummeted” since issue fees hit £10,000 for claims worth £200,000 or more.

“This is cheaper, quicker and more efficient,” he said. “Many people will still want to go to court, but it’s an alternative.”

Mr Griffin said that at a time of “spiralling costs”, clients were increasingly looking at more cost effective ways to resolve their disputes, and there were “strong rumours” that court fees would double in the “foreseeable future”.

He went on: “There are also fees to be paid to the Court Service each time an application is made and again when the case is set down for trial.

“The culture adopted by the courts has the effect of increasing costs at every juncture. Requiring mediation to be undertaken even if the parties consider there is little point to avoid being penalised in costs is a perfect example.

“We feel we’re approaching the process of litigation in an entirely new way. We want to see litigants accessing justice in a cost-managed and efficient way allowing them to pursue claims without the hindrance of large potential costs or lengthy compliance procedures.

“A reduction in costs, bureaucracy and other factors is clearly in the interests of both claimants and defendants.”

Arbitrators in the scheme included former Court of Appeal judge Sir Maurice Kay, former senior circuit judge His Honour David Gilliland QC, and QCs Paul Chaisty, Lesley Anderson and David Casement.

The fixed-fee system organises arbitrators into bands, with a top fee of £8,500 for a two-day arbitration with a ‘category A’ arbitrator. Kings, which is based in Manchester, Leeds and Birmingham, will host arbitrations in chambers or at a venue chosen by the parties.

Mr Griffin added that if the new service took off, other arbitrators would be invited to join.

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Warby J: too much work “is no excuse”

A High Court judge has granted relief from sanctions, after a law firm blamed pressure of work for late service of evidence in a Russian libel case.

Despite the absence of a good reason for the breach, Mr Justice Warby said: “Compliance is not an end in itself. A more nuanced approach is required.”

Warby J said an important point clarified by the ruling in Denton was that “a serious default for which there was no good reason would not always lead to the refusal of relief from sanctions”.

The court heard that the claimant’s solicitors, West End firm Hamlins, had served evidence on the defendants three to four hours after the deadline in a Russian libel dispute in which the claimant was accused of fabricating evidence, conspiracy to murder, and bribery and corruption.

Warby J described as “straightforward, but unimpressive” the reasons put forward by the claimant’s counsel for the breach.

“In short, a combination of late finalisation, mistakenly prioritising the filing of papers with the court over service on the defendant, and oversight due to other work.”

Warby J said counsel for the claimant was right to accept that “it is no excuse that the solicitors had too much work on” and “no good reason” was provided for the breach.

However, he said the claimant should be granted relief from sanctions on the grounds, as the court observed in Denton, that there were “degrees of seriousness”.

Delivering judgment in Sloutsker v Romanova [2015] EWHC 545 (QB), the judge described the breach as “far from being at the extreme end of the scale” and said it was not deliberate.

“Apart from necessitating the application for relief – the costs of which will inevitably be borne by the claimant – the breach has not had any or any serious effects on the efficient progress or the cost of this litigation, or any other litigation.”

Concluding on the relief from sanctions point, Mr Justice Warby said the claimant should be relieved from sanctions for serving evidence “some four working hours late”.

The allegations complained of in the case concerned Alexei Kozlov, a former business associate of the claimant, Vladimir Sloutsker. The defendant, Olga Romanova, is a journalist and Mr Kozlov’s wife. She made the allegations in a blog post, many of which were republished on a variety of Russian websites.

Warby J estimated that the online articles “reached as many as 60,000 readers in this jurisdiction”, while a radio programme was probably heard by several thousand more.

He concluded that the claim involved a “real and substantial tort” in this jurisdiction, and England was “clearly the appropriate place in which to try the claim”.

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ATE award: (from left) host Patrick Kielty, Paul Hurley (ARAG), Keith Bushnell (CEO of HCML, the award sponsor) and Dr Harry Brünjes (judging panel chair)

ARAG was named insurance provider of the year at last week’s Eclipse Proclaim Personal Injury Awards.

The company – which also won in 2009 – beat off competition from 80e, Elite Insurance and Financial & Legal for the award, with the judges saying: “This insurer has also worked hard to save costs through streamlined policy applications, and played an active role in helping to minimise the risk to claimants with the changes contained in the LASPO Act.”

Entrants to the category had to demonstrate product development, innovation, client satisfaction and added value, and success in negotiation.

ARAG managing director Tony Buss said: “We were successful against strong opposition and have firmly established ourselves as a leader in this field. The team at ARAG should be incredibly proud and despite some challenges ahead we will continue to strive for excellence for ourselves and our customers, maintaining an innovative and customer-focused approach.”

Paul Hurley, business development and marketing director, added: “We endeavour to encapsulate all of the elements required for this award everyday and are proud that this has been recognised by the judges, all industry experts. It is a humbling experience but one that toasts the success that six years of hard work can bring.”

Meanwhile, David Greenwood from Jordans Solicitors was named claimant personal injury lawyer of the year, with the judges saying “his dedication to achieving justice and fighting child abuse is second to none”.

His defendant counterpart was David Wynn from Keoghs, whose citation said: “Our winner has brought a unique perspective and approach to claims involving a tragic and painful disease, which looks for a collaborative approach between victim's solicitors and insurers. A recognised authority in his area, he is highly respected on both sides of the litigation fence whose work has yielded exceptional results.”

Claimant personal injury team of year was the allegation of fraud team at Nesbit Law Group, while the defendant award went to the catastrophic and neurotrauma team at AXA Commercial Insurance, which “works closely with claimant organisations to create a more open and principled approach to claims resolution”.

Barrister of the year was Bill Braithwaite QC of Exchange Chambers and chambers of the year Civitas Law.

Leading claimant lawyer John Spencer was given an outstanding achievement award. The citation said: “The judges praised him for being ‘very brave’ when providing evidence to the transport [select] committee last year during its probe into the rising cost of motor insurance, where he disputed some of the arguments raised to explain car insurance premium rises and called for a clear avenue to independent legal advice for accident victims.

“He has had a major, positive impact across many areas of the sector. He campaigns every minute of every day to help those unfortunate enough to have suffered an accident. In the words of the judges, ‘his whole life is devoted to access to justice’.”

Other winners included Eddie Ryan, former head of Co-operative Legal Services, who received a lifetime achievement award; first4lawyers (claims management company of the year), Premex Services (medical agency of the year), and Fletchers Solicitors (outstanding case of the year). The awards were organised by Barker Brooks.

All the award winners

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inCase200Long-standing north-west firm, Ralli Solicitors have chosen inCase to help them develop their own mobile app for their personal injury clients.

The firm has embarked on a number of long term projects to systemise and improve efficiency within the personal injury practice in the wake of the reforms.

Having recently implemented a new case management system, it was time to turn attention to enhancing communications between the firm and its clients. Amongst the number of benefits, with inCase integrating directly into their IT systems, it was the clear leader in its field.

Martin Coyne, Managing Director said, “inCase provides a one stop App for our clients, which contains all of their case data. They will have to do no more searching emails for documents – it’s all there inside the App, which is more efficient for them, and more economic for Ralli. Just perfect and easy!”

Sucheet Amin, managing director and founder of inCase said, “Martin is a seasoned and well-respected solicitor and businessman. As someone who has ‘seen it all’ I’m delighted that he and his team have chosen us as his partners in developing their own app.

“Our ability to use the technology and experiences that we have built up over the last 3 years puts us in a position to meet Ralli’s expectations which include brand management and client service.”

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Malla: Lord Chancellor will be attracted to the mixed portfolio option

There is a case to cut the discount rate to 0% – and a case to keep it at 2.5% depending on the kind of investments it is based on, a debate on the current government consultation heard last week.

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

The rate has been 2.5% since 2001, set largely by reference to yields from index-linked government gilts (ILGs). This is on the basis that claimants would seek low-risk investments. But the yield from ILGs has fallen in recent years and there is pressure from claimant representative to cut the rate; the impact would be to increase the cost to defendants. The government also asks whether the rate should instead be set by reference to a ‘mixed portfolio’ of investments.

Speaking a debate organised by City defendant law firm Kennedys, Dr John Pollock, actuary and founder of Pollock & Galbraith, told the audience in London that the government should stick to ILGs, arguing that only they guarantee a return relative to the retail prices index (RPI). “If a claimant invests in a suitable portfolio of ILGs at a yield equal to the discount rate at which his compensation has been calculated, he will be fully compensated without risk.

“Even ILGs do not provide full compensation if the losses of expenses grow faster than the RPI. All other investments, even if offering the prospect of higher returns, cannot guarantee full compensation.”

Dr Pollock said that given the decline in yield in ILGs in recent years, the rate should now by 0%.

However, Doug Hall, head of forensic services at Smith & Williamson, a firm of both accountants and wealth managers, explained how his firm has advised clients on a mixed portfolio where the net return in a balanced index over both an eight- and a four-year period would justify the rate remaining the same.

“You can effectively manage risk over the long term [with a mixed portfolio],” he said, “but you can’t eliminate it.” Mr Hall added that tax is a big issue for claimants, and shows how one size does not fit all – there should be multiple discount rates. Keeping the rate where it is now is “the least worst option”, Mr Hall suggested.

But pressed by top legal commentator and event chairman Joshua Rozenberg as to what they thought the outcome is likely to be, Mr Hall said he saw “a lot of momentum to make a reduction. If it came down by 1-1.5%, it will be a good result for the defendant community”. Dr Pollock said he could not see how the rate would not fall to between 0% and 1%.

Mr Hall added that the second consultation due on the rate – which will examine the legal basis for setting it – could yet play an important role in the final figure the government chooses.

Kennedys partner Christopher Malla said: “If there is any reduction in the discount rate, it will increase a claimant's damages. The larger the future loss, the greater the increase in damages will be… Bearing in mind the potential impact a reduction to the discount rate will have on the NHS, other government departments and local authorities, I anticipate the Lord Chancellor will be attracted to the mixed portfolio option.”

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Sue Nash, Omnia Legal Software and Litigation Costs Services

The landmark Mitchell judgment had not only costs lawyers but also the wider legal market in a frenzy as the implications of the stringent ruling were turned over and analysed in great detail.

Now Omnia Legal Software, the costs budgeting software created by leading costs lawyer Sue Nash, has been updated to include ‘Mitchell-compliant’ costs budgeting for its users.

As we all know, Mr Mitchell’s solicitors failed to comply with the new costs budgeting rules – they failed to get their proposed budget filed and served in time.

The latest version of Omnia Legal Software features an updated dashboard that alerts users not only when their budget limit is approaching, but also when their court or litigation deadlines are approaching.

Sue Nash, who created Omnia Legal Software and is also founder of costs law firm Litigation Costs Services, says:

“The Court of Appeal sent out a clear message that lawyers need to become much more efficient and comply with the relevant rules. Omnia Legal Software helps solicitors to avoid falling foul of the rules as Mr Mitchell’s solicitors did.”

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Costs: LiP could recover legal advice

Costs: LiP could recover legal advice

Courts can make a costs management order in relation to litigant in person (LiP) costs, and LiPs can recover costs where they obtain assistance from lawyers short of them having conduct of the case, the chief Chancery master has ruled.

The claimant in Campbell v Campbell [2016] EWHC 2237 (Ch) had solicitors when the costs management hearing was ordered, but by the time it happened had become a LiP. His QC has continued to represent him on a direct access basis.

The claimant’s costs budget dated 5 August 2016 provided for future expenditure up to the end of trial of slightly in excess of £315,000, having already incurred costs of £547,621. Both sides asked the court to make a costs management order in respect of the claimant’s costs.

Master Marsh said the court’s jurisdiction to costs manage a LiP was not entirely clear, but after he examined various provisions of the CPR – which generally did not indicate that different provisions applied to LiPs – he concluded that he had the power.

Though CPR 3.13 was one provision which did, by expressly exempting LiPs from the requirement to file and serve a budget, “the editors of the White Book 2016 suggest that in spite of this exemption, it is open to a litigant in person to file and exchange a budget if they wish”, he said.

The claimant also sought a declaration that the cost of solicitors from whom he intended to seek advice, but not instruct to have conduct of the case, would be recoverable, along with the fees of junior counsel the solicitors would instruct. It was not disputed that the direct access QC’s fees would be recoverable.

Master Marsh said there was no reason to construe CPR 46.5(3) narrowly so as to prevent a LiP recovering the cost of assistance in the course of their conducting the claim.

“The direct access scheme, whether it is used for advocacy or other assistance, provides a litigant in person with expertise which may be essential to be able to progress a claim in an orderly manner and is likely to be of assistance to the court for that reason. Similarly, it is clearly contemplated that a litigant in person may pay for and recover the cost of ‘legal services’ relating to the conduct of the proceedings.

“In a complex claim, the litigant in person may wish, for example, to obtain assistance with disclosure or the drafting of witness statements. This is part of the unbundling of legal services contemplated by Lord Woolf.”

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Slade J: Master Rowley “erred in principle”

The High Court has demanded that further cuts be made to costs of over £1.6m claimed by Eversheds, overruling a costs judge.

Mrs Justice Slade said the amount claimed by Eversheds from litigation client Mark Harrison was 4.8 times higher than the firm’s first estimate and about 2.9 times more than a second.

Slade J said that while an estimate was not the same as a quote, Master Rowley had “exceeded the broad measure of his discretion” in considering a reasonable upper limit on profit costs to be twice as high as the second estimate.

“In my judgment the award by Master Rowley of an increase of more than £300,000 in profit costs above those anticipated in the second estimate required explanation and justification.

“Master Rowley erred in principle in relying on the level of the increase in the profit costs of his opponent’s solicitors when nothing was known about the assumptions, advice and information on which it was based.”

Slade J said the master had also erred in the way he calculated the costs of Mr Harrison’s opponent, Lord Laidlaw, which failed to take into account that the first allocation questionnaire figure was net of VAT and the second final figure included VAT.

“The increase was therefore wrongly inflated. Master Rowley based part of his assessment of the figure it was reasonable for the claimant to pay on a mistake.”

The court heard in Harrison v Eversheds [2017] EWHC 2594 (QB) that Mr Harrison was invoiced for just over £1.6m net of VAT for representing him in a property dispute with Lord Laidlaw. The total was made up of over £863,000 in profit costs and over £739,000 in disbursements.

Slade J said the first estimate given by Eversheds in October 2012, including billed profit costs, came to £333,000. By February 2013, an allocation questionnaire provided by Eversheds showed that this figure had increased to £548,000.

In October 2013, Mr Harrison was provided with an estimate showing that profit costs had risen to £692,000 net of VAT. In a Precedent H produced in January 2014, the total for profit costs and disbursements had increased to over £1.6m. The case was settled in March 2014 on a confidential basis.

In a decision in November 2016, Master Rowley ordered that the defendant’s profit costs be limited to £650,000 plus VAT but did not limit disbursements.

Slade J said counsel for Eversheds and Mr Harrison agreed on the legal principles to be applied in the case.

“The overarching question is the sum which it is reasonable for the client to pay. A solicitor is not restricted to an estimate. An estimate of costs is not a quotation.

“A client is not required to establish an estoppel before reliance on an estimate is to be taken into account in assessing costs. In determining what is reasonable for the client to pay the costs judge is to have regard to the estimate. An estimate of costs is not a quotation.”

A quotation was an offer which is accepted, the judge emphasised. “An estimate is what it says. It gives an idea, which from a professional firm can be taken as reasonably and carefully made taking into account all relevant considerations, of what the future costs of work on a case is likely to be.

“A solicitor cannot be held to be restricted to recovering the exact sum set out in an estimate. However, a client is entitled to place some reliance on the estimate. The nature, degree and reasonableness of that reliance will no doubt be one factor in the view taken on an assessment under section 70 of the Solicitors Act 1974 of how much more than the estimate it is reasonable for the client to pay.”

Slade J said of the final total of over £739,000 for disbursements, counsel’s fees amounted to £476,500, experts to £167,600, and accountants to £65,000.

She said that Master Rowley erred in “relying upon the fact that the claimant did not include counsel’s fees in the CFA as a reason for not making an overarching reduction in counsel’s fees” and the fact these fees were outside the CFA “did not absolve the master from considering whether it was reasonable” for Mr Harrison to pay £476,000.

Slade J concluded that Mr Harrison’s first ground of appeal, that Master Rowley “erred in taking the second estimate as the starting point for what costs could be recovered” should be dismissed.

However, she upheld the second ground, that the Master erred in holding that (subject to the impact of the CFA) it was reasonable for the defendant to recover profit costs which were up to double the amount stated in the second estimate.

Slade J upheld the third ground, that Master Rowley should have limited the recovery of disbursements, in respect of counsel’s fees only. Detailed assessment of the defendant’s profit costs and counsel’s fees was remitted to Master Rowley for determination.

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Burnett: no proper basis for advancing a recusal argument

Arguments over “apparent bias” in judges should be based on the view of a “fair-minded and informed observer” and not the feelings of clients, Lord Justice Burnett has said.

Burnett LJ, who takes over as Lord Chief Justice in October, told the Court of Appeal: “The party who seeks to bounce a judge from a case may be fair-minded and informed but may very well lack objectivity.

“There are others (I emphasise not this case) who cynically seek to manipulate the composition of the court for perceived advantage.

“It was striking that Mr Berkley QC frequently referred to the feelings of his client when developing submissions on apparent bias rather than focussing on the fair-minded and informed observer. One respects those feelings but they do not advance the argument.”

Lord Justice Burnett was ruling in Shaw v Kovac and others [2017] EWCA Civ 1028, a case involving a claim for an award of £50,000 for the unlawful invasion of personal rights and loss of personal autonomy.

Lord Justice Davis, who gave the lead judgment, said the claim was accepted by the claimant to be “novel” in the sense that a right to recover under this head of loss had never been acknowledged.

Davis LJ said that, on the morning of the appeal hearing last month, the claimant’s counsel, Michael Berkeley QC, sent an email saying that his client, Ms Gabriele Shaw, objected to Davis LJ and Burnett LJ hearing the appeal and would ask them to recuse themselves on the grounds of apparent bias.

Burnett J, as he then was, gave the lead judgment in rejecting an application by Ms Shaw for judicial review which came before the Administrative Court in 2013.

Mrs Shaw appealed, and the appeal was heard by Davis LJ, along with Hallett LJ and Floyd LJ. Hallett LJ gave the lead judgment dismissing the appeal.

Davis LJ said Mr Berkeley acknowledged that he could not argue for apparent bias “simply by reason of the fact that Burnett LJ and I had (separately) been involved as judges in decisions adverse to Mrs Shaw in the previous judicial review proceedings”.

Instead Mr Berkeley relied on what Davis LJ described as an “untenable argument” that Burnett J had referred to a schedule put forward by Mrs Shaw as “misleading”.

The barrister went on to make what Davis LJ described as the “extraordinary submission” that Burnett J had concluded that the claimant’s father, William Ewan, had given “informed consent” for the operation that cost him his life.

Davis LJ said the argument “completely distorts” both the judgment of Burnett J and the function of the Administrative Court, which was not to make findings of fact. He said there was a further “fundamental” objection to the claimant’s argument in that there was “no issue” about the lack of informed consent.

As far as Davis LJ was concerned, he said counsel for the claimant attempted to rely on a comment by Hallett LJ in her judgment that Mrs Shaw was “trying to run a totally different argument”, unfortunately “based solely on her speculation and assertion”.

Davis LJ said Mrs Shaw “clearly, and again very understandably, remains very close to this whole case”.

He went on: “But that she personally would not wish to have sitting on this appeal two judges who have previously been involved in decisions adverse to her cannot of itself procure a recusal.

“The law is clear. The test is objective. The outcome cannot be determined by the subjective views or wishes of the objecting party.”

Agreeing with Davis LJ, Burnett LJ said the circumstances in which a judge should recuse himself had been “comprehensively considered” in a series of cases in the Court of Appeal and the House of Lords which emphasised that “questions of apparent bias are to be judged from the point of view of a fair-minded and informed observer”.

“The reality is that the appellant before us wished both Davis LJ and I to recuse ourselves because we had previously found against her on arguments advanced in the judicial review claim.

“Whilst entirely understanding why that should be so, it forms no proper basis for advancing a recusal argument.”

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Law Society award: MRN shortlisted

MRN is delighted to announce that its bespoke Prophet Costs programme, which provides a collaborative costs budgeting solution, has been shortlisted for an Innovation of the Year award by the Law Society at its annual Excellence Awards.

Commenting on the achievement, Elliot Mocton, director of the firm said: “We are delighted by the way our product has been recognised by an independent team of eminent judges. This is testament to the incredible and innovative work by our costs budgeting, IT and marketing teams, for which I’m most grateful.”

The interest in the programme and indeed MRN services since Prophet Costs was launched in early 2013 has been phenomenal and thankfully very rewarding for MRN clients.

If you would like more information, please don’t hesitate to get in touch with either Michael Joseph or Jonathan Bassey, who would be more than happy to provide you with a free, no-obligation demonstration of the Prophet Costs programme.

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Lavender: not too early to look at options for improvement

More than half of barristers conducting civil litigation have seen their income fall since implementation of the Jackson reforms, Bar Council research has found.

Many barristers have also experienced problems with the transition from pre-Jackson conditional fee agreements (CFAs) to new-style CFAs.

The preliminary results of the Bar Council’s survey, undertaken to assess the impact of the first year of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), showed that legal aid barristers have fared even worse, especially family specialists. Some 716 people took part, 90% of whom were barristers.

In all 53% of civil litigators reported that their fee income had gone down since 1 April 2013 (7% said it had risen), with 45% saying case volumes had reduced too.

Across all civil work, 70% of barristers had seen an increase in litigants in person, a figure that rose to 88% in the family courts. Most felt that court delays were also on the rise.

Getting on for half of civil barristers (43%) said they had had trouble with the CFA transitional provisions, with the most common situation seeing the solicitor instructed pre-LASPO and counsel afterwards. The other main pinch-point came when the instructing solicitor wanted to assign a CFA of a counsel signed up under the pre-LASPO arrangements.

Just over a quarter of barristers (27%) reported an increase in general interest in ‘non-traditional’ funding arrangements, such as fixed fees, deferred payment until disposal of property or capital assets, pro bono assessment of risk, third-party funding and damages-based agreements.

The findings also revealed that 61% of all respondents noted an increase in the number of lay clients saying they had difficulty accessing legal advice and representation. Similarly, 60% reported an increase in the number of lay clients requesting free advice and representation.

While the majority of practitioner respondents had no immediate plans to leave the Bar, a significant minority were considering a move to judicial or other positions before 2015. Many respondents indicated that they are actively considering whether they have a long-term future at the Bar, and that the effects of LASPO had caused them to think about the viability of their career at the Bar.

The survey was, however, hedged by the caveats that it is too early to fully understand the impact of LASPO and that the Act “was not implemented in a vacuum”.

Bar Council chairman Nicholas Lavender QC said: “The results will help to guide the formulation of policy and provide some strong messages to government, as we approach the General Election, about how LASPO has affected access to justice, especially on those who are most vulnerable.

“Unsurprisingly, the preliminary results from the survey confirm the concerns we raised with the government some time ago: a significant increase in litigants-in-person, more delays in court, and growing difficulty for individuals in accessing legal advice and representation.”

Mr Lavender said that while it may be too early to understand the full impact of the changes, it is not too early to look at options for improving the current situation.

“These include simplifying court processes to ensure that litigants-in-person are able to fulfill the most basic administrative requirements of the court process, and significantly increasing advertising and promotion of what legal aid services remain available and how they can be accessed.

“There needs to be a comprehensive post-implementation review of LASPO, together with an assessment of the effects of the combination of changes that are occurring in civil and family justice. Such a review would also help to identify the (no doubt, unintended) consequences of policy change and the effects of cost shifting, which may require further attention.

The survey was undertaken with the assistance of Professor Graham Cookson from The University of Surrey. The final report is expected to be published in September.

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Parliament: criticism from Labour, Conservative and DUP MPs

The Ministry of Justice (MoJ) came under fire yesterday from MPs over its plan to end the exemption that allows the continuing recoverability of success fees and after-the-event (ATE) insurance in mesothelioma cases.

However, justice minister Shailesh Vara insisted that there is insufficient justification for mesothelioma cases being treated in a different way from other serious personal injury and fatal claims.

Under section 48 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), recoverability cannot come to an end for mesothelioma cases before the MoJ has carried out a review of the likely effect and published a report.

Last summer the MoJ consulted on changes to the way mesothelioma cases are run, and asked if – as a result of those reforms, the 10% increase in general damages and also the separate Mesothelioma Bill – the exemption should come to an end. In his announcement last month on the outcome of the consultation, Mr Vara said it would do this July.

In a Westminster Hall debate secured by Labour MP and former claimant solicitor Andy McDonald, MPs from all sides of the House hit out at the move.

Mr McDonald argued that no case had been made for changing the position. He said: “To have introduced a new regime in April 2013 with the exceptions, and then to consult on whether the exceptions should still apply, alongside a whole host of other matters in relation to mesothelioma claims, in July 2013 was simply ludicrous.

“There were just three months between the introduction of the new regime in April and the July review; that was simply far too soon for any proper assessment to have been made of the likely effects of sections 44 and 46 [banning the recoverability of success fees and ATE respectively] on mesothelioma claims. No one can tell at this stage how much clients will be charged by solicitors under LASPO. The situation is developing as the market adapts.

“The same can be said of the cost of ATE insurance. The government are jumping the gun. They need to pause and commit to a genuine process of review.”

Mr McDonald predicted that without success fees, “some cases that should run will not, as they will be too risky”.

“Removal of the exception will result either in those cases not running, or in mesothelioma victims having to pay out of their compensation. That was clearly not the intention of Parliament, and I urge the government to reconsider.”

He was supported by Conservative Tracey Crouch – who said the MoJ had made a “bad decision” – and Nigel Dodds of the DUP, as well as fellow Labour MP Ian Lavery and shadow justice spokesman Andy Slaughter.

Ms Crouch said: “An individual who contracted mesothelioma because they worked in industry, worked in a dockyard or lagged a ship has to navigate through a minefield of complex case law, and they need specialist legal help. It is not fair that they should be punished by sections 44 and 46 of LASPO when they receive such help.”

The MPs criticised the MoJ for not publishing a report and also for linking the change to the Mesothelioma Bill, which deals with claims by victims who cannot trace their insurer.

Mr Vara said the required report would be published – declaring that “the government are satisfied that it meets our obligations under section 48” – and that the link with the bill was to do with timing and bringing the different reforms in together this summer.

He said: “The government have carefully considered the likely effect of implementing the LASPO reforms on mesothelioma claims, including the evidence put before us by respondents to the consultation. The issues raised, however, were generally similar to those in other very serious personal injury cases to which the reforms already apply.

“There was little explanation of any particular feature of the mesothelioma claims process that would lead to a different or disproportionate effect on claimants’ access to justice, should the reforms apply.

“Ultimately, in our view, there needs to be a specific justification for the continued difference in treatment between mesothelioma cases and other personal injury cases – most particularly, other serious personal injury cases that have their own tragic features involving, as some do, catastrophic injury and the need for substantial care arrangements for the remainder of a claimant’s life, sometimes when the claimant is very young.”

Speaking after the debate, Matthew Stockwell, president of the Association of Personal Injury Lawyers, said: “It’s impossible to rationalise why dying people should have to pay for the inherent risks of pursuing redress, when they certainly never asked to be in a position where they need compensation.

“Mesothelioma claimants know they are going to die, and they know they have to race against the clock when they make a claim. They are simply trying to make their last few months more bearable, and to ensure that their families will have some security when they’re gone. If ever a claimant needed full compensation, it is surely the claimant facing a death sentence just because he turned up for work.”

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Nothing wrong with “broad-brush” assessment of costs

A costs order of £10,000 against a woman described by her barrister as “in dire straits” has been upheld by the Employment Appeal Tribunal (EAT).

Mrs Justice Simler held that nothing in the rules required an employment tribunal to make a “precise estimate of what could be afforded”, and nor in this case did it make one.

“The reality of the claimant’s age and the prospect of her returning to work in the future were matters that the tribunal was plainly entitled to have regard to. They have not been challenged on this appeal.

“They involve a certain amount of speculation about future events about which there can be no certainty, but that is inevitable in an exercise of the kind with which the tribunal was concerned and gives rise to no error of law.

“There was no positive evidence to the effect that the claimant had no realistic prospects of obtaining employment ever again in future or of improving her financial position as a consequence. She is only 39, after all.”

The EAT heard in Chadburn v Doncaster and Bassetlaw Hospital NHS Foundation Trust and another (UKEAT/0259/14/LA) that Mrs Chadburn had unsuccessfully pursued a number of discrimination claims against her former employer.

Mrs Chadburn’s counsel argued that her financial situation was “dire”, and although the tribunal concluded that she was £600 in debt, the true position was £4,800.

However, Simler J said: “The respondents’ costs of the race discrimination aspect of this case amounted to £35,000, and the award, accordingly, amounted to less than a one-third contribution toward those costs.

“I accept that represents a significant liability for the claimant, but the respondents have been required to defend vexatious, false allegations she knew to be untrue, which had the effect of doubling the length of the hearing, significantly expanding the issues and involving witnesses who would otherwise not have needed to be involved in the tribunal proceedings at all.

“There could, in those circumstances, be nothing wrong in principle in the tribunal making a broad-brush assessment of the limit of the award of costs at a level that would give the respondents the benefit of the doubt as to the claimant’s future ability to pay but having recognised that at the current time she was in no position to pay and had significant debts.”

Simler J concluded that the tribunal’s decisions could not “be impugned as in error of law” and dismissed the claimant’s appeal.

Louise Piper, employment lawyer at Howes Percival, commented: “This is a helpful case for employers who are faced with vexatious claims and could act as a deterrent to employees seeking to make false allegations.”

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ARAG200Legal expenses insurer ARAG has launched a comprehensive policy for commercial landlords in response to significant demand from brokers. Commercial Property Owners’ Legal Solutions combines the core elements of Landlords’ Legal Solutions – which protects against legal costs arising from residential letting disputes – with ARAG’s highly regarded Essential Business Legal policy. Additional cover has been included for commercial lease disputes and the letting of holiday accommodation.

The policy allows up to £50,000 for legal costs for disputes arising from commercial and residential property disputes and up to £50,000 for other disputes within the business itself. The newly created cover is for disputes over properties in the UK.

“It was our own business partners who alerted us to the potential for commercial property owners’ cover”, comments ARAG Head of Sales, Andy Talbot. “We then sought to enhance and refine the two existing policies into something that went even further. The new product squarely meets the concerns of commercial landlords in addition to providing a seamless join between familiar business and landlord legal expenses insurances”.

Access to five helplines – legal, tax, counselling, redundancy and crisis communications – and an online document resource, rounds off the new Commercial Property Owners’ Legal Solutions. It is available for rating on an individual scheme basis by the BTE Underwriting Unit via ARAG’s business development executives nationwide.

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Cameron: kill off the health and safety culture for good

The government is to extend the upper limit of the road traffic accident (RTA) portal to £25,000, while similar fixed-fee schemes are to be introduced into  70-410 exam other, as yet unspecified, areas of personal injury, Prime Minister David Cameron has announced.

In a speech on health and safety to small businesses and entrepreneurs in Maidenhead yesterday, Mr Cameron said the moves would tackle the compensation  CompTIA sy0-301 dumps culture and address businesses’ fear of being sued for trivial or excessive claims.

“This coalition has a clear New Year’s resolution: to kill off the health and safety culture for good,” he said.

However, there is little flesh on the announcement, which is the first sign of the government’s response to the Solving disputes in the county court consultation that closed last June.

All that is definite right now is the extension of the RTA portal limit from the current £10,000 and that the model will be used for other areas of personal injury work.

Litigation Futures understands that this is very likely to include both employer’s and public liability, but more work is still needed before deciding whether industrial disease and clinical negligence cases will be caught too.

It is unknown at the moment whether the new regimes will be for cases worth up to £10,000 or £25,000. Extending the portal to £25,000 also brings the Jackson reforms into play as the judge wanted to see fixed fees across the fast-track.

The detail will be revealed when the consultation response is finally published. Ori

ginally slated for October, the Ministry of Justice said yesterday that it will be made public “soon”. Minister Jonathan Djanogly told Parliament last month that it was postponed “due to ongoing discussions within government”.

Other reforms to health and safety more broadly include changing the law on strict liability for civil claims so that businesses are no longer automatically at fault if something goes wrong, rationalisation of the law in the area, while from 6 April businesses will no longer have to report accidents in the workplace unless an employee is off work for seven days or more.

David Bott, president of the Association of Personal Injury Lawyers, said: “We have grave concerns that the government is pushing through too many swathing changes to the system at once without proper consideration as to the implications for injured people.

“The danger is that workers could be exposed to an unnecessary risk of injury and then be left with a civil justice system which cuts them off from their right to full and fair redress.”

He added that “it is far too early” to consider extending the portal “as it still has teething problems and remains far from being the finished article”.

Andrew Dismore, who co-ordinates the Access to Justice Action Group (AJAG), said it would oppose the changes as its own research showed that 48% of people suffering accidents at work do not make a claim even when they know someone else is to blame. “Cutting ‘red tape’ will only endanger workers,” he argued.

Mr Dismore predicted that people with claims under £25,000 will struggle to find a solicitor under a fixed-fee scheme.

“It is suggested the fixed fee for running an employer’s liability case or public liability case could be as low as £400. This very low fee makes running these types of cases completely unviable. There is an irreducible minimum of work which must be done which must be reflected in the fee,” he said.

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Linetime200Manchester based personal injury solicitors CFG Law (part of the client first group) have invested in Liberate from Linetime. The firm will be rolling out a combined accounts and case management system across their whole practice.

As part of the implementation the firm will extend its client-centered approach focusing on putting clients’ needs first.

The new system will allow their 60+ strong team to streamline internal processes whilst providing improved communication channels and service to clients.

Managing director, Alastair Fernie commented, “This is an exciting time for CFG Law as we are investing in new systems as part of our ongoing commitment to deliver an exceptional service to clients.

“Our excellent team of injury solicitors are dedicated to putting clients first and a more efficient system will allow us to respond to their needs much more quickly.”

With over 25 years’ experience, CFG Law have also recently invested in new premises and rebranded signifying their absolute focus on putting their clients’ needs at the heart of everything they do.

Phil Snee, development director at Linetime, commented, “We are delighted to welcome CFG Law on board to join our growing community of personal injury solicitors and look forward to a lasting and mutually beneficial relationship”.


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New system for medical reports “a complete shambles”

There are 175 medical reporting organisations (MROs) – including 14 ‘tier 1’ providers – registered with MedCo, the government’s system for selecting experts in whiplash cases, it was revealed yesterday.

It had been speculated that there were between 15 and 19 tier 1 MROs, while the overall count is considerably larger than most will have expected.

Speaking at the PI Futures conference in Manchester, Martin Heskins, a director of MedCo, also admitted that it gets “complaints about everything”.

As revealed on Litigation Futures recently, the 14 big MROs have been audited by MedCo, and there “may be some enforcement action” necessary, he said. Auditing of the other MROs has not started.

He also revealed that MedCo has 457 independent medical experts and 1,673 authorised users. There have so far been 199,000 searches resulting in the selection of an MRO, and 19,000 in the direct selection of a medical expert.

Dr Bippon Vinayak, chair and chief executive of Doctors Chambers, said he had “no idea” that there were so many medical reporting companies operating through MedCo.

“This time last year we probably had no more than 20-30 companies which were active to any extent.”

Some of the MROs will be the multiple tier 2 ‘shell’ agencies set up by some of the tier 1s, including Doctors Chambers, however.

Mr Heskins said: “We know that there are problems with the system. There are problems with any new system. One of them was the speed with which it had to be introduced.

“We get complaints about the results. We get complaints about everything. Had there been a pilot, and there wasn’t, we could have adapted it. There are very few problems with system we can change without input from the Ministry of Justice.”

Alongside law firms trying to ‘game’ MedCo, there were also poor behaviours by users, such as a firm of solicitors which insisted on being present at a medical examination, and a medical expert conducting examinations by Skype.

Mr Heskins said MedCo had reported another firm to the Solicitors Regulation Authority, but he cast doubt on the interest of the regulator in personal injury issues. “They are moving away from specifics and leaving things up to the members. I don’t think they are taking this seriously.”

Mr Vinayak said a “vacuum of information” had created fear and he strongly criticised MedCo, arguing that it was unfit for purpose, unnecessary, an “over-reaction and over-engineered.”

However, he said MedCo “had the opportunity to get things right”, but, if it did not, the Ministry of Justice might impose a centralised system of direct management of experts.

Michael Jefferies, managing director of Jefferies Solicitors and a founder of Lawyers Medical Agency, described MedCo as a “complete shambles” that “kills competition” in the market. “I don’t think the signs are good”, he added.

Dr David Pearce, director of Qualitas Medical Services and the Association of Direct Medical Experts, attacked the failure of both the MoJ and MedCo to tackle the shell MROs. “I can’t understand this,” he said. “It has led to a situation where we have over 170 MROs, including around 60 shell companies.”

In a separate development, MedCo launches its system for accrediting medical experts today.

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America: common-interest protection

A US Federal Court has ruled decisively in favour of litigation funders being able to see privileged material and so-called ‘attorney work product’ without those materials being disclosable to opposing parties.

Work product is the US term for materials created in the preparation of a case. In the unnamed case, which involved funding from AIM-listed Burford Capital, the court held: “It is quite evident that the subpoenas seek the production of documents that were prepared by counsel for [the claimant] in anticipation of and during litigation and are protected by the work product doctrine.

“Litigation strategy, matters concerning merits of claims and defences and damages would be revealed if the documents were produced. The matters directly involve the mental impressions of counsel and are protected from disclosure as work-product. Moreover, the production of the items subpoenaed would intrude upon attorney-client privilege under the ‘common-interest’ doctrine. The ‘common-interest’ doctrine protects communications between parties with a shared common interest in litigation strategy…

“Here, Burford and [claimant] now have a common interest in the successful outcome of the litigation which otherwise [claimant] may not have been able to pursue without the financial assistance of Burford.”

Chistopher Bogart, Burford’s chief executive, said: “This ruling is significant in ensuring that litigants can seek funding to even the litigation playing field without fear of exploitation by their opponents.”

Meanwhile, in Australia, funder International Litigation Partners has survived a challenge to the legality of its agreement after the High Court (the country’s highest court) ruled that the funder was providing its client with a credit facility rather than a financial service as defined by legislation, and so did not need an Australian financial services licence.

Had it been the latter, the client would have been able to rescind the contract because the funder did not hold a licence and walk away without having to pay an $A8m (£5.1m) early termination fee.

The decision comes on the heels of changes to Australian corporate law that seek to ensure that litigation funding is not treated as a managed investment scheme and therefore subject to detailed regulation.



The increasing appetite for third-party funding in Europe

Ross Nicholls

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

April 10th, 2018