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Lord Brennan: confident of good future results

Third-party litigation funder Juridica last week posted strong results for 2013, with dividends worth $25.7m (£15.6m) paid out to shareholders and a healthy forecast for the next 18 months.

Audited results showed cash proceeds during the year ending 31 December 2013 were $37.2m from four investments: one final settlement and three partial settlements, which the company said have “further recovery potential”. Other investments have “all continued to progress”, it reported

The company’s outlook was positive, with its portfolio of antitrust and competition, patent and commercial cases in the pipeline all claimed to have the potential to deliver next year and the year after.

Juridica’s chairman, Lord Daniel Brennan QC, said the forecast was based on a “review of presently scheduled trial dates, expected final decisions following trial, and possible settlements in multiple cases that are in an advanced stage of development”.

During 2014 the company believed four cases could generate “significant cash”. Two were part of its antitrust and competition portfolio, one of them with liability won through all appeals and only damages due to be decided by a jury. Claimed damages are over $1bn. A third case, part of its commercial portfolio, has claimed damages of over $500m and the fourth has already provided Juridica with about $69m and has “aspects of its damages claim on appeal”.

Juridica said it expected to make several investments “in medium to large patent portfolios during 2014”. It has relationships with more than 170 law firms to help feed its pipeline of work, including 35 of the top 100 global practices. “We currently have a pipeline of attractive investment opportunities that are proceeding through our due diligence process.”

During 2013, the company made supplemental investments worth just under $3m in four existing cases. Also, it invested $2m for a 7.8% stake in ipCreate, an American intellectual property creation, acquisition and development company.

In its six years to date, the company’s portfolio has generated gross cash proceeds of approximately $125m and paid out dividends of about $64m to shareholders. Ten investments have completed, of which just one generated a cash loss.

Commenting on the results, Lord Brennan said: “Our investments have continued to mature during the year… We have already provided cash returns to shareholders in the form of dividends that equal approximately 62% of our net funding. With the continued maturation of our existing portfolio and with our pipeline of potential investments, we anticipate significant returns from the investment portfolio over the next 12 to 18 months and beyond. The Board therefore looks to the future with confidence.”

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inCase200Just over 12 months ago inCase hit the legal sector with its revolutionary mobile app, specifically tailored for law firms specialising in personal injury. Offering an effective communication tool for firms, early adopters began to see the advantage of their own mobile app as speed of securing instructions; enhanced client satisfaction and reducing overheads began to take hold.

Today, inCase has already been radically enhanced to offer a signature feature. Allowing firms to send documents and forms securely to a client’s mobile phone or tablet within seconds using PUSH technology and notifications, clients are alerted to take immediate action.

incase your overviewContinuing to reinvest knowledge and experience built up over the last year and previous 2 years from its original conception by founder and PI solicitor, Sucheet Amin, inCase has already released a model specific for the conveyancing market and it has plans to open into other sectors in the coming 12 months.

inCase mobile appFounder and managing director, Sucheet Amin said “it is such an achievement to be shortlisted in this category of Associated Industries. Whilst being among some long established and well respected businesses, inCase has demonstrated again that it is worthy of this recognition.”


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Jackson: within 10 years costs management will be accepted as an entirely normal discipline

Jackson: within 10 years costs management will be accepted as an entirely normal discipline

The Master of the Rolls, Lord Dyson, yesterday expressed misgivings over a recommendation from Lord Justice Jackson that the court should not seek to manage costs “if it lacks resources to do so without causing significant delay and disruption to that or other cases”.

However, both emphasised their strong support for the principle of costs management, with Jackson LJ predicting that within 10 years it will be accepted as an entirely normal discipline “and people will wonder what the fuss was all about”.

The pair were speaking at the annual Harbour Litigation Funding lecture at Gray’s Inn, with the architect of the 2013 costs reforms making his first major speech on how they have progressed since they were implemented.

Though his lecture was focused on costs management, Jackson LJ observed that many of the criticisms of his reforms have not been borne out.

On costs management, he said the most important lesson of the last two years was that “when done properly”, it works well. He added: “Although some practitioners and judges regard the process as tiresome, it delivers a valuable service to court users and is worth the cost.”

But he acknowledged that problems have arisen, notably delays in listing case and costs management conferences (CCMCs). The issue was particularly acute with clinical negligence cases in London, where the waiting time for a first case management conference has reached nine months.

Noting that he had originally recommended that adopting costs management be a matter of judicial discretion, Jackson LJ proposed repealing amendments to CPR 3.15 and Practice Direction 3E that introduced an assumption in favour of costs management.

“In place of those provisions, PD 3E might set out criteria to guide courts in deciding whether or not to make a costs management order. The formulation of the criteria must be a matter for the Coulson committee [the sub-committee of the Civil Procedure Rule Committee, chaired by Mr Justice Coulson, looking at costs management reform].

“But I would suggest that in formulating criteria the committee should bear in mind the following principles: (i) In most contested part 7 cases and in most cases of the type identified in PD 3E paragraph 2, costs management by a competent judge or master promotes financial certainty and reduces the costs expended on the litigation to proportionate levels. (ii) However, the court should not manage costs in any case if it lacks the resources to do so without causing significant delay and disruption to that or other cases.”

Jackson LJ said some judges feared this would become an excuse for others to ‘opt out’ and lead to forum shopping.

“I do not share these fears. I believe that once criteria are laid down all judges will conscientiously follow them. It is important that there be a uniform approach across all civil courts. There will be an obligation on all judges with leadership roles actively to monitor how ‘their’ judges are exercising the discretion to costs manage.

“If different practices emerge, this should be drawn to the attention of the Deputy Head of Civil Justice, so that he can give appropriate guidance.”

Specifically in relation to reducing the clinical negligence backlog in London and possibly other locations, Jackson LJ called for a “one-off release” from costs management for all cases which already have CCMCs listed for between October 2015 and January 2016. They should instead be “called in for old-style case management conferences at the first opportunity”.

However, in a short address after the lecture, Lord Dyson said that while the proposals to deal with delay are “worthy of the most careful consideration” and he was sure that judges would do their best “conscientiously” to apply such new rules, “I fear that the ‘lack of resources’ card will be played in many cases and that there is a real danger that costs management will become the exception and not the rule in clinical negligence cases”.

Speaking to Litigation Futures after the event, Lord Dyson clarified that this concern applied to “very intensive cases” in general, and not just clinical negligence, and added that he did not share Jackson LJ’s “optimism” about how judges would use such a discretion.

Lord Dyson told attendees that he was otherwise positive about Jackson LJ’s ideas, which he said would be of “great use and interest” to the Coulson committee. The other recommendations included:

  • Making the full-day refresher course on costs management compulsory for all civil judges;
  • Introducing a standard form of costs management order;
  • Amending the rules so that budgets should be lodged 14 days before the CCMC;
  • Until the new form bill of costs is developed, in those cases where detailed assessment proceedings are commenced, the receiving party should lodge a summary of its bill in a format which matches Precedent H;
  • Precedent H needs to be improved, in particular the provisions in respect of assumptions and contingencies, but there should be one sweeping revision – possibly when the new bill of costs is introduced – rather than piecemeal changes over a period of time;
  • A single hearing for both case and costs management should be the norm;
  • Reflecting judicial unhappiness about the recent court fee increases, the court should disregard court fees when considering whether a party’s costs are proportionate;
  • The court should have a residual power to revise agreed budgets where they are obviously excessive or the assumed case management directions upon which budgets were based have changed; and
  • In relation to costs incurred before the CCMS,
    • Precedent H should have separate total columns for incurred and budgeted costs;
    • In the general run of cases, where incurred costs are a small part of the whole, the court should only budget future costs, leaving incurred costs for detailed assessment if not agreed; and
    • In any case where the court has or procures sufficient information for the purpose, it should have the power (a) to comment on the incurred costs; (b) summarily to assess the incurred costs; or (c) to set a global budget figure for any phase, including both incurred and future costs.

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Clinical negligence case: pre and post 1 April 2013 costs

It is “convenient and necessary” for lawyers’ bills to be split into two parts to distinguish between work carried out before and after 1 April 2013 in any case involving proportionality, the Senior Costs Judge has ruled.

Master Gordon-Saker said this was because the old and new, post-Jackson proportionality tests were different.

Ruling on a fatal medical negligence claim, the Master also said it was “both necessary and convenient”, where a costs management order had been made, for bills to be drawn up “in parts which reflect the phases”.

He went on: “Although multi-part bills tend to obscure the overall picture, it seems to me that (unless a sensible alternative can be devised) in a case in which a budget has been approved or agreed and the costs are to be assessed on the standard basis, it will be both necessary and convenient to draw the bill in parts which correspond with the phases of the budget.

“Within each part it will also be necessary to distinguish between the costs incurred before and after the budget was agreed or approved. This could be done without further sub-division by use of italics, bold, superscript or some other formatting device.

“The new format of bill, which is shortly to be the subject of a pilot in the Senior Courts Costs Office, should avoid these difficulties.

“Where a bill has already been drawn without being divided into phases, one possible course to avoid re-drawing the bill would be to serve schedules setting out the individual items of costs claimed in relation to each phase. I understand that a number of courts have directed this.”

Master Gordon-Saker was ruling in BP v Cardiff & Vale University Local Health Board [2015] EWHC B13 (Costs), involving a woman who died in 2010 from an infection linked to a severe brain injury which was sustained during a quadruple heart bypass operation.

The law firm Hugh James acted for her, and following her death, for her son, MP, suing as the administrator of her estate. Proceedings were issued in June 2013, seeking total damages of over £440,000.

Master Gordon-Saker said the claim was settled at a round-table meeting shortly before trial in January 2015, for £205,000. The settlement was approved by the court and the damages divided between four of the woman’s children.

The master said it was “difficult to identify” the work done before 1 April 2013, but assumed that the total base costs claimed were £45,000. He said this did not appear disproportionate, given that it was a “complex clinical negligence case in which both liability and causation were disputed throughout”.

For the period after 1 April 2013, the master allowed total base costs of £138,203. He said this bore a “reasonable relationship” to the sums in issue – a claim for £440,000, which settled at £205,000.

Master Gordon-Saker ruled that the claimant was entitled to his costs.

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Grieve: cost-effective approach

The growth in international litigation involving the government has prompted the Attorney General to begin recruitment for a new public international law panel.

The panel, made up of junior counsel able to take on advisory work and litigation in domestic and international courts, will be modelled on the London civil panel, and divided into A, B and C categories, which relate to the barrister’s seniority.

Current London rates are £120 per hour for the A panel, £100 for the B panel and £80 for the C panel if the barrister is over five year’s call; otherwise it is £60.

Attorney General Dominic Grieve QC MP said: “As the volume of international civil cases grows, now is the right time to make sure we can calls on barristers who are sufficiently experienced and expert in the field.

“With new panel members we can achieve this in a cost-effective way ensuring the government can call on an excellent a pool of counsel which will get the best value for taxpayers’ money.”

The law officers already maintain four panels of junior counsel to undertake civil and EU advocacy work for all government departments, with the assistance of the Treasury Solicitor’s department. Between them there have around 430 members.

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Augusta Ventures LLP

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Augusta is a niche financier that focuses on commercial litigation. It is FCA and JFSC regulated, as well as conforming to UK Consumer Credit Regulations.

Augusta offers its Trinity finance product through accredited law firms. Trinity is ideally suited for small and medium commercial claims, and to date, over 200 firms have accessed the Augusta Trinity platform.

For law firms and their clients, Augusta’s Trinity provides transparency, fast turn around and certainty. The application process is web based, claims have been approved for finance in less than 2 weeks, and Augusta’s funds are deployed in full at the outset.

Key Features:
Small and medium claims financed. Fast turnaround of cases. Transparent online application. Full deployment of financing on approval.

Cost of Funding:
Return of finance and approximately 20% of the net return.

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Employers and the taxpayer may not be seeing the savings they were promised in relation to employment claims following the introduction of fees, according to legal expenses insurer ARAG. Despite an initial fall in the volume of Tribunal applications since fees were introduced last July, the complexity of cases and therefore duration and costs are eroding anticipated cost savings.

“Whilst many tenuous, malicious or spurious claims are deterred by up-front fees”, comments ARAG Head of Underwriting & Marketing David Haynes, “the remainder are being up-scaled to ensure awards will cover costs. The latest tribunal statistics show a 40% increase in complaints per application from an average of 1.8 to 2.5 (during 2013). This is the unintended result of introducing fees that can run to several thousand pounds for something like an unfair dismissal case that goes all the way to an appeal hearing”.

As a result employers are facing complex and aggravated complaints which expose them to inescapable legal fees and potentially unlimited compensation awards that have the potential to damage their business.

The fee system itself does not give individuals new rights to bring more complex cases as such, but has the potential to incentivise fee- paying individuals to raise grievances that would not formerly have been included to inflate their ET claim as one set of fees applies irrespective of the number of complaints raised.

“There are definite signs of a more aggressive approach by individuals wishing to strengthen their chance of recovering fees by adding additional grounds for complaint” adds Mr Haynes. “If the new system simply leads to an increase in the complexity of claims, it will certainly not fulfil its stated aim of reducing costs and, in fact, may considerably raise the total cost to both taxpayer and employer”.

Major trades unions are also pushing towards paying Tribunal fees as an incentive to expand their memberships. This would potentially add to the volume of claims, especially from women that the TUC believes have suffered most.

“Recent reports highlight very extended and complex cases concerning whistle-blowing sexual harassment, and equal pay show how time consuming and damaging these kinds of cases can be to business. Resulting bad publicity has added to the problems for the organisations concerned”, adds Mr Haynes. “Those employers benefiting from our innovative commercial legal protection policies would be cushioned against such awards, legal costs as well as any tribunal fees awarded against them. With a successful defence, all their costs would be indemnified and a stressful situation averted”.

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Craig Budsworth

Budsworth: “the agency is almost irrelevant”

The government’s proposed 10% cut in fixed fees for doctors’ medical reports on whiplash cases does not go far enough, the Association of British Insurers has said.

In its response to the Ministry of Justice consultation on medical reports and whiplash claims, the ABI called for current fee of £200 for a GP report, agreed by the Association of Medical Reporting Organisations, to be cut by £30 to £170.

The ABI said the proposed figure of £180 would only be appropriate if it included the cost of the new accreditation process for medical experts, which is still to be agreed and implemented.

A fee of £170, under the current process, would “remove most of the referral fee element and still leave a sufficient profit element”.

The ABI said it strongly supported a ban on law firms obtaining reports from agencies which they own or have a financial interest in, currently the subject of a possible judicial review.

The association also called for a cap of 20% on the proportion of medical reports which law firms could obtain from any one agency. It suggested that, in order to achieve true independence, medical experts could be allocated “via an extension to the functionality of the claims portal”.

Craig Budsworth, chairman of the Motor Accident Solicitors Society (MASS), said: “It is very difficult to deal with the question of price at the moment, because the accreditation of medical experts is still to be understood and costed.

“If the price is reduced now, the issue will have to be looked at again when the accreditation process is finalised.”

Mr Budsworth described as a “red herring” plans by the Ministry of Justice to prevent law firms owning medical reporting agencies.

“The agency is almost irrelevant; it’s about the expert and ensuring that the expert is independent. If I directly instruct the same doctor time and time again, how would that be caught by the ownership point?”

Mr Budsworth said a better way of tackling the problem might be for doctors to declare where their work as experts is coming from, just as solicitors declare the sources of their work to the Solicitors Regulation Authority.

In its response to the consultation, the Association of Personal Injury Lawyers said it would be opposed to a cut in fees for doctors’ reports if this resulted in them being less thorough and detailed.

“The question of the fee is really a matter for the medics,” said Brian Dawson, APIL executive committee member and senior partner of Walker Smith Way.

“Our concern is that we want a thorough examination and a detailed report which offers an informed diagnosis. You shouldn’t put cost before quality. It will save money for everyone if there is a decent report, which deals with the issues.”

On the question of whether reporting agencies should be owned by law firms, Mr Dawson said the independence of experts was not necessarily the same thing as the independence of the agency.

“We can understand the potential problem of experts depending on one source of work, but we can also see the benefits of economies of scale and the problems in defining ownership. The best way of dealing with it is through a robust accreditation process.”




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Longmore LJ: Law firm made “little attempt” to assess merits of cases

Indemnity insurers must cover the cost of disbursement loans taken out by clients if law firms default, the Court of Appeal has ruled.

Overturning a High Court ruling, Lord Justice Longmore said: “Disbursements should not be incurred in litigation which is unlikely to succeed.

“A solicitor, who negligently advises his client that a claim is likely to succeed and causes a client to incur disbursements which should not have been incurred, will be liable to the client for disbursements needlessly incurred.

“It should make no difference, from the point of view of a professional indemnity insurer, that the disbursement has been incurred before such advice is given or without such advice having been given at all.”

The court heard in Impact Funding Solutions v Barrington Support Services [2015] EWCA Civ 31 that Impact funded disbursements for industrial deafness claims.

Longmore LJ said that if claimants lost cases and their disbursements might be covered by legal expenses or after-the-event insurance, but if those insurers avoided liability, Impact would seek to recover their loans from the solicitors.

He said the solicitors in the case were Barrington Support Services, now in liquidation but successfully sued by Impact for over £580,000. Impact then brought proceedings against Barrington’s indemnity insurers, AIG Europe, under the Third Parties (Rights Against Insurers) Act 1930.

Longmore LJ said AIG accepted that Barrington’s liability to pay the loans fell “in principle” within the cover provided under the minimum terms and conditions.

However, AIG argued, and the High Court agreed, that it could rely on an “exclusions” clause on the grounds that Barrington had breached its contract with Impact by not paying it back.

Longmore LJ said Barrington made “little attempt to assess the merits of the claims which it proposed to conduct on behalf of its clients”, breaching not only its duty to its clients but its disbursement funding agreement with Impact.

However, the judge said that to assess the rival arguments, a judge had to “stand back from the detail” and ask what the “essential purpose” of the exclusion clause was.

In this case, he said the “essential purpose” of the clause was to prevent insurers being responsible for liabilities which affected solicitors personally, such as office photocopiers, leases or mortgages.

He concluded that obligations arising out of loans made to cover disbursements in the case of intended litigation were “essentially part and parcel” of the obligations of a solicitor in respect of professional duties to the client.

Lord Justice Longmore allowed Impact’s appeal. Lord Justice Patten and Lady Justice Gloster agreed.

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Hearing claims: doubled in a year

There has been a “staggering” rise in the number of deafness cases, with lawyers “exploiting” the lack of certainty around the condition, a specialist insurer for the construction industry claimed yesterday.

Electrical Contractors’ Insurance Company (ECIC) said the number of deafness claims it is managing more than doubled between 2012 and 2013, and it expects a further increase by the end of 2014.

ECIC provides insurance for tradespeople in the main from within the electrical contracting, roofing, plumbing, lift maintenance and heating and ventilation sectors.

ECIC said that while control of noise levels is a particular issue in the construction sector, it believes “along with other insurers, that the rise in deafness claims can partly be attributed to an increased focus by the legal profession on pursuing these types of claims”.

The Association of British Insurers recently warned that industrial deafness had become a new “cash cow” for the legal profession.

Ian Hollingworth, claims manager at ECIC said: “The rise in deafness claims is staggering and a real concern. While there will be genuine claims we do have a concern that a good proportion will be speculative and potentially exaggerated.

“The best protection for employers is to ensure they follow the HSE’s guidelines to the letter. This will not only limit the risk of exposure but offer some protection against liability claims and the solicitors now focusing on this type of claim.”

Under guidelines set out by the Health and Safety Executive, if any work is undertaken in an environment where the noise is consistently over 80 decibels, for example from electric drills or belt sanders, action needs to be taken to limit the risk of hearing damage and litigation. Employers must provide information about the impact of noise, and protection for the employee to use.

Mr Hollingworth added: “The real challenge is in proving damage to hearing has occurred and, indeed that this has been caused by work given reports over the past few years warning of a rise in hearing loss in young people due to the use of MP3 players. This lack of certainty is something that is no doubt being exploited by the legal profession.”

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Are you comparing apples with apples on the ATE front?

Posted by Fallon Turner of Litigation Futures sponsor TheJudge

During the latter part of February 2013 and throughout the whole of March, we at TheJudge, together with all of the litigation funders and insurers with which we work, saw an exceptionally large surge of applications for after-the-event (ATE) insurance and third-party litigation funding.

As a result, literally thousands of policies were written in the last few weeks of recoverability, with many ATE insurers having teams in place until midnight on Sunday 31 March to process last-minute applications and policy acceptances. Not only did we have brokers working over the weekends throughout March to cater for the additional workload, but we also invited litigation insurance underwriters into our offices to speed up the decision-making process.

All in all, it was an extremely successful, although extremely hectic, March and I think it’s safe to say we’ll never again see such a huge volume of cases in such a short period of time.

As our director James Delaney explained recently, the quality of cases which we saw during March was a lot higher than expected. However, this could be down to the fact that the lawyers had not had the luxury of trying to settle the case ahead of applying for cover or indeed using ATE quotes as leverage to try and initiate a settlement.

In other words, the ATE insurance market suffered less adverse selection during February and March 2013 than in a ‘normal’ month. The implications of this way of thinking for the future depends on how litigators now respond to the post-Jackson ATE insurance market.

It’s important to remember that leaving all litigation insurance applications until all settlement attempts have failed will inevitably increase the price of premiums, meaning clients lose more of their damages. Routinely using funding products such as ATE insurance and litigation funding will keep the cost more palatable to clients, meaning more benefit from retaining increased proportions of damages.

Whilst most ATE insurers remain committed to the litigation insurance market, there is no doubt that the landscape will change. With ATE insurance premiums no longer being recoverable from the losing party, clients will be liable to pay their own litigation insurance premium either at the outset or from the damages and/or costs recovered at the conclusion of the dispute. As a result, it’s becoming increasing important to really understand a client’s expectations and abilities in relation to premium payment.

Historically, the trial stage premiums for commercial cases have fallen somewhere between 40% and 60% of the sum insured, with discounts applying in the event of an early settlement. While many industry experts agree that premiums should come down, as the emphasis really is on price, underwriters – similar to litigation funders – will of course take a much keener interest in the ratio of cover required to the anticipated damages to ensure that the case is proportionate and can stomach an ATE insurance premium.

This will certainly bring about a real shift in the way ATE underwriters consider and price applications for litigation insurance but specific information on the new products is either not yet forthcoming for many insurers, or (perhaps understandably) presented in a confusing way meaning it is very tricky for lawyers to be able to compare apples with apples, when advising clients on the funding options available.

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Malla: onus is on claimants

The sharp divide in opinion over the future of the discount rate came to the fore this week, with the argument that it should be set by reference to what claimants are actually going to do with their money countered by the claim that this would constitute an attack on the principle that injured people should receive 100% of their compensation.

The issues were aired at a debate hosted in London by insurance law firm Kennedys and chaired by Mr Justice Turner.

Simeon Maskrey QC, head of 7 Bedford Row, and David Westcott QC of Outer Temple Chambers were asked to take the roles of opposing counsel, with the caveat from both that they were not reflecting their own views.

The current government consultation questions the legal basis for setting the discount rate, derived from the 1998 House of Lords ruling in Wells v Wells. The Lords said that claimants were not in the position of ordinary, prudent investors and so calculated the return to be expected on the investment of damages by reference to low-risk index-linked government stocks (ILGS).

Speaking for a reduction in the rate, Mr Maskrey said there was “no justification” for classing claimants as a special case. While using ILGS sought to minimise any ‘market risk’ – that the yield will not keep pace with inflation or not be honoured – he argued that the approach failed to take into account ‘uncertainty’ risk (that the yield will not provide an adequate return for what the claimant wants or needs because costs are increasing at a greater rate).

There was also the ‘shortfall’ risk where claimants compromise certain heads of loss to achieve a settlement, leaving a hole which they need to fill through investment.

As a result claimants do not, in reality, invest solely in ILGS – even the Court of Protection does not, Mr Maskrey noted – and instead have a mixed portfolio aimed at securing a higher return to fill the gap created by these three risks.

He asked why the House of Lords ignored “what claimants are actually going to do in favour of what they won’t do”. In virtually all other circumstances, he observed, “the law asks a claimant what they are going to do and then gives them the damages to do it”.

On the other side, Mr Westcott said that to suggest claimants have an appetite for risk, or ought to be required to take risk, mistakes the relationship between investment and risk in their situation.

“Ordinary investors counternance – or even embrace – risk because they choose to invest their money,” he said. “Claimants are required to invest their damages through no choice of their own… There is no reason why claimants should be the only category of investors required to take a risk for the benefit of someone else [by reducing the amount of money defendants are required to pay].”

Saying the “law has always been clear that what the successful claimant will actually do with the money awarded is irrelevant”, Mr Westcott insisted that even if a claimant does invest in higher-risk equities, any return is not over-compensation but – like for any successful investor – a return for taking that risk.

Mr Westcott said the ruling in Wells and in later cases showed that judges regarded the use of a very low-risk option like ILGS as a “critical component” in the application of the 100% compensation principle. “To take the use of ILGS, without establishing that a better tool for the assesment of loss exists, is to attack the 100% principle itself.” Given that the yields from ILGS have sunk to zero since the financial crisis, the discount rate too should fall, he added.

Both barristers agreed, however, that there was a debate to be had about whether to maintain the 100% compensation principle.

Kennedys partner Christopher Malla said: “We see the strong force in the case for setting the discount rate by reference to what claimants actually do with their damages.

“The onus is on claimants wanting a reduction to the discount rate to provide evidence they invest solely in ILGS and not a mixed portfolio and that their compensation runs out because it is insufficient. To date this evidence has not been disclosed and I can only assume it is not available.”

Today, the new president of the Association of Personal Injury Lawyers, Matthew Stockwell, will highlight the future of the discount rate as one of the key issues for his members over the next year.

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Jones: judiciary, practitioners and public may not like the new system

Posted by Steve Jones, partner and costs lawyer at Litigation Futures sponsor Harmans

The Jackson reforms have brought about widespread unease amongst claimant solicitors, concerned understandably as to the continued viability of their existing business models.

These reforms have been imposed upon the legal industry as a consequence of perceived market failure, deemed to be manifested in an absence of price competition as a consequence of the ready availability of conditional fee agreements to act as vehicles for risk-free claims.

The status quo (pre April 2013) was considered undesirable as it was believed to lead to unnecessarily high insurance premiums for motorists, householders, local authorities and others by virtue of the recoverability of success fees. This regime was easy meat for the red tops who delighted in informing their readership that ‘spiv lawyers’ were pursuing dodgy claims and raking in doubled fees (whilst happily accepting advertising revenue from claims farmers).

It is no longer realistic to call for the reinstatement of public funding for personal injury matters but it is worth remembering that this situation has come about as a direct consequence of the abolition of the one strand of legal aid that would have required very little manipulation to pay for itself.

Whilst it is easy to poke fun at sensationalist journalism, the new regime is the work of an extremely intelligent man who consulted many other luminaries whilst conducting his review. The loss of the ability to pass the success fee on to an insurer will no doubt lead to price competition where there previously was none, but the consequences of the altered market for legal services may not endear the new system to the judiciary, to practitioners or ultimately to the public.

It is going to be very hard for ordinary players in the legal industry to persuade a public that has grown used to being bombarded with invitations to pursue claims for free that they should surrender part of their compensation to their solicitor. The advent of the alternative business structure coincides neatly with the new rules on success fees and it seems inevitable that the claims farmers will be either be replaced by or will resurface as claims factories with one qualified solicitor overseeing teams of unqualified staff. It will not be hard to fill such factories as there is no shortage of jobless graduates.

The consequences of such business models are largely undesirable. Once price competition has driven success fees to zero, it is easy to envisage a race to the bottom in terms of cutting overheads. Claimants are likely to be represented by unqualified staff in distant locations. A viable branch of a longstanding profession is likely to be decimated, leading to further boarded-up windows on high streets. Courts are likely to be infuriated by poorly prepared cases.

The plight of claimant lawyers is probably not a cause held dear by many members of the wider public, particularly in times of recession. The success or otherwise of these reforms will ultimately have to be judged in the context of the stated aim of driving down the cost of insurance for the public. I will not be holding his breath for reduced renewal premiums in 2014.

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First signs that Bristol based legal services insurer ARAG is implementing its  expansion plan are evident from the six new recruits joining Head Office in quick succession. Earlier this year the company acquired a further 60% surface area within the Georgian-fronted office complex, then renovated and upgraded the entire space.

“This is all about forward planning” comments ARAG managing director Tony Buss. “Our continuing success in attracting demanding clients with our tailor-made policy offerings means we have a continuing need to anticipate demand levels. This way we ensure we maintain our award winning service levels across all areas of our legal services and insurance businesses. We are therefore opening up new roles across the company”.

With substantial pre-LASPOA* after the event cover being booked in the first quarter of last year it is the ATE Claims Management Unit that sees two new faces with Assistants Stephanie Paul and Freddie  Pickles. Meanwhile, Judith Harper joins as Compliance Advisor after more than 30 years’ insurance industry experience and Michelle Camfield becomes HR, Facilities and Project Assistant putting her law degree and HR experience to good use.

On the before the event side Corrie Gilbert trades five years’ previous experience in a direct insurer’s complaints department for a support role with ARAG’s BTE underwriters. Concluding the line-up is Rachael Wornes, who brings 16 years’  legal expenses insurance experience into play as she takes responsibility for Group marketing activity.

“We are now in our eighth full trading year and looking ahead a similar length of time” adds Mr Buss. “It’s good to know that more high-calibre recruits are joining the team at this crucial point in ARAG’s development”.

* (Legal Aid Sentencing and Punishment of Offenders Act)

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the road of money

Employment tribunals increased recoveries by 10%

The civil courts have missed their 100% costs recovery target for 2014-15, it has emerged.

As a whole, the civil courts recovered 92% of their expenditure in fees during the financial year 2014-15, with the family courts (including the Court of Protection) recovering 87%. The civil, non-family, courts recovered 94%.

The figures, set out in HM Courts & Tribunals Service (HMCTS) annual report and accounts, were an improvement on the previous year, when total civil business collected 82% of its expenditure in fees and family 79%.

Costs recovery in the tribunals runs at much lower levels, with employment leading the way on 17%, followed by asylum and immigration on 11% and other tribunals (including land and gambling) on 9%.

However, employment tribunals raised 10% more than the previous year, where they were bottom of the table, following the introduction of a new fee structure.

When the tribunals are included, costs recovery for the whole of HMCTS for the last financial year was 74%.

HMCTS said in its 2012-13 annual report that it aimed for “full cost recovery for civil and family business” by March 2015.

In this March this year, huge fee rises came into force for civil claims worth more than £10,000, with claimants paying 5% of the value of their claim, up to a cap of £10,000.

The Law Society commenced judicial review proceedings in February, at one point citing the Magna Carta’s ban on the buying and selling of justice. However, after obtaining a counsel’s opinion, the society dropped the action in April.

Commenting on the HMCTS figures on costs recovery, A Ministry of Justice spokesman said: “Taxpayers should not have to subsidise the civil courts, which is why we want to recover all running costs through fees.

“We made a lot of progress last year, with a significant increase in the amount recovered. We expect further progress this year following changes introduced in March.”

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Dyson: CJC chairman

The government has not presented the evidence that the growth in whiplash cases is linked to an increase in fraudulent and/or exaggerated claims, the Civil Justice Council (CJC) has argued.

The advisory body – which is headed by the Master of the Rolls, Lord Dyson – also warned that the government is wrong to believe that raising the small claims limit for personal injury cases will make it easier for insurers to challenge them.

In its response to the whiplash consultation, the CJC said it was concerned that “significant reform is envisaged without the government coming to an evidence-based conclusion that the growth in whiplash claims is linked to an increase in fraudulent and/or exaggerated claims.

“It would therefore support further research being carried out before what might be unnecessary, and potentially costly, reform is embarked upon. There is a sense that there is a danger of the problem being overstated, that only a small minority of claims are exaggerated or fraudulent, and the way to tackle fraud is by a robust approach by defendants to civil actions where there is evidence to support such an allegation or, in appropriate cases, through criminal prosecution.”

The CJC argued that where it is alleged a claims is exaggerated or fraudulent, irrespective of its value, it is unlikely that it will be allocated to the small claims track. “Such allegations, which often involve more than one expert report and cross-examination of multiple witnesses, can only properly be dealt with on the fast- or multi-track.”

It said it was concerned that the government’s belief that raising the small claims limit would make it more economically viable to challenge cases “is based on a misconception”.

The council also thought that £5,000 was too high given the complexity of claims that would catch, and could encourage claimants to exaggerate their claims.

While opposing an increase just for whiplash on the basis of both “principle and practicality” – because there should not be a different approach for the same type of injury depending on how it occurred – the CJC said “it is not clear what, if any, evidence there is which would support a proposal to increase the small claims threshold” for all road traffic-related personal injury claims.

The CJC supported the establishment of independent medical panels so as to remove any doubts about the independence of the doctor providing the report. This should take the form of an accreditation scheme run by the General Medical Council and funded out of the report fees, it recommended.

The CJC also questioned the timing of the proposals “given the volume of civil justice reform taking place at present, and how the climate for claims will be changing”. These seem likely to have an impact on the number of claims being brought but they need to be given time, it said.

“It may be that further changes at this point will not be sensitive to the post-April environment, and would undoubtedly add to the pressures on parties, practitioners and judges adapting to it; and secondly, and crucially, carry out a detailed evidence-based assessment of the effects of those reforms.”

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Judge: biggest claim was “false as regards the majority of fees charged”

The High Court has described a law firm’s claims for unpaid fees as “largely dishonest” and dismissed them as “wholly without merit”.

However, Alpha Rocks Solicitors (ARS), based in south London, hit back, saying the decision of Murray Rosen QC “grossly undermines equity and justice”. It intends to appeal.

Mr Rosen, sitting as a deputy High Court judge, said Alpha Rocks “appeared to demonstrate a high level of ineptitude”.

He went on: “Much of its argument might be described as perverse, naïve or even preposterous.

“But it is important not to conflate or confuse such characteristics with dishonesty and fraud, nor to let the deficiencies in ARS’ records and personnel, and the conduct and presentation of its case, detract or divert from, or obscure or cloud, a measured or objective legal analysis…

“However, after five days of trial… I must conclude that many of its shortcomings in dealing with and for [former client Benjamin] Alade were not the result of negligence or eccentricity, however gross”

Rather, he said, in particular in relation to the law firm’s two biggest claims against Mr Alade, an 89-year-old retired barrister, the bills were “variously false… in the most basic ways”.

These were a claim for £131,500 for fees and disbursements said to have been incurred in defending a county court action in the ‘Rufus’ matter, and a claim for fees and disbursements of over £21,500 for a Land Registry claim in the ‘Catherine’ matter.

Delivering judgment in Alpha Rocks Solicitors v Alade (HC13 D00617), Mr Rosen ruled that the Catherine claim was “false” and the Rufus claim was “false as regards a majority of the fees charged”.

Mr Rosen dismissed a further claim for £15,170 “said to have been agreed” for a freezing order in the Rufus matter since it was based on an “alleged agreement for which there is no proper factual or legal basis”.

He said a fourth claim of £3,500, referred to as the ‘landlord matter’, failed entirely on liability.

The judge concluded that many of the shortcomings of Alpha Rocks in its dealings with Mr Alade could only have resulted from a “dishonest plan to charge for sums to which it knew it was not entitled on the basis claimed, or was at least reckless as to the same”.

He ruled that the law firm’s claims were “largely dishonest” and dismissed them as “wholly without merit”. Mr Rosen gave judgment for Mr Alade’s counterclaim against Alpha Rocks for £65,370 plus interest.

The Court of Appeal ruled this time last year that the High Court had been wrong to strike out the claims made by Alpha Rocks on the grounds of exaggeration and inaccuracy, because the then judge, Kevin Prosser QC, had not sought to hear oral evidence before reaching his conclusion.

In a statement, Alpha Rocks said: “We are extremely disappointed with the judgment delivered by Mr Murray Rosen QC, which does not reflect the standard of service we give our clients or indeed the commitment and passion with which members of staff carry out their functions.

“The decision grossly undermines equity and justice as it suggests that a client can avoid paying for professional fees rendered. More so when the outcome of his instructions to us was successful and that evidence was proffered at court.

“We would point out that was a rare incident involving one out of our many clients and the work as well as the claim against the client was initiated by former partners who have since left the firm.

“An earlier decision was in fact successfully overturned by the Court of Appeal in our favour and we can confirm that we are appealing this current decision.”

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Kain Knight

L to R: John Hocking, North West Law, Iain Stark, Chairman of the ACL and Michael Kain, Chairman of Kain Knight

Founder and Chairman of Kain Knight, market leaders in the legal costs industry, was jointly awarded the Chairman’s Cup by the Association of Costs Lawyers (ACL) at its recent AGM.

Michael was honoured with John Hocking from North West Law for services rendered to the Costs industry. He received the honour after stepping down as Treasurer of the ACL, a post he held since March 2011.  Michael also previously served on the ACL’s management committee from 2008.

Going forward, Michael will focus solely on his role as Kain Knight’s Chairman and senior client adviser.  Michael founded Kain Knight in 1976 and has since built it into the leading firm of costs lawyers. Today, the firm has 21 costs lawyers, 44 draftsmen and 22 administration staff working out of offices in Bishops Stortford, London and Canterbury.

Kain Knight recently appointed Peter Petyt, as its new Chief Executive. Peter, a former Corporate Finance Partner at accountancy firm MHA MacIntyre Hudson in London, is focusing on business development both nationally and internationally.  He is also introducing new services which will complement Kain Knight’s existing skillsets, and examining potential consolidation opportunities in a fragmented marketplace.

Michael Kain, Chairman of Kain Knight, commented:

“I was delighted to be honoured alongside John Hocking by the ACL.  I have greatly enjoyed my time with the Association and am proud of the fact that Costs Lawyers are today firmly recognized as an integral part of the legal profession. Today, the profession is facing some significant changes resulting from Lord Jackson’s recent reforms. Fortunately, Kain Knight is strongly positioned to benefit from these changes because of our size and the experience and professionalism of our staff.”

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Gibson: content with outcome

Gibson: content with outcome

An insolvent firm of solicitors could validly assign conditional fee agreements (CFAs) to another law firm, a circuit judge has ruled in a much-anticipated case that is expected to end up in the Court of Appeal.

Jones v Spire Healthcare deals with the fallout from the collapse of Southport firm Barnetts in January 2014, after which its personal injury book was bought by SGI Legal in Liverpool.

Though SGI has concluded many of the cases without challenge, the defendant here disputed the validity of the assignment, even though the claimant had entered into a specific deed of assignment alongside the general one SGI had with Barnetts’ administrators.

At first instance, District Judge Jenkinson ruled that while the benefit of the retainer inherent in the CFA was validly assigned, the burden was not, which meant SGI could recover the costs incurred by Barnetts, but no subsequent costs it incurred because there was no valid retainer.

Further, whilst the assignment was a novation based upon the original, pre-LASPO terms of the CFA, it was not enforceable because it did not comply with the post-LASPO CFA regulations.

The claimant appealed against the disallowance of the post-assignment costs, and the defendant against the allowance of the pre-assignment costs.

HHJ Graham Wood QC noted: “The court has been made aware that this is an appeal of some significance, because the claim involved is one of several hundred which were pursued under CFAs with the now defunct firm, and in respect of which the point has not previously been taken for those bills already assessed, but which might be taken in respect of future assessments.

“Insofar as SGI Legal LLP paid a significant consideration to acquire the work in progress, referred to under a generic deed of assignment, it stands to lose out substantially if costs cannot be recovered for that work both pre-and post-assignment. There are also other cases awaiting my decision, and it appears that a higher appellate court may become engaged on the grounds that this is a matter of public importance and wider ramification.”

The claimant’s appeal turned on the decision of Mrs Justice Rafferty (as she then was) in Jenkins v Young Brothers Transport Ltd [2006] EWHC 151, which established a narrow exception to the rule that a personal contract could not be assigned, saying it could be where a client was following his solicitor to another firm.

Allowing the appeal, HHJ Wood ruled: “Rafferty J was not seeking to qualify the exception to the general rule against the assignment of the burden of a contract to specific situations where personal trust and confidence could be established, so much as to set a context in which it applied to the facts of the case…

“It was open to the judge to conclude that the personal trust and confidence was a necessary element where the contract was a personal one, as opposed to a compelling context, and without it the assignment would not be valid. She did not go so far as to say that, and in my judgment the ratio of her decision was not so qualified.”

This meant DJ Jenkinson was wrong to proceed on the basis that the court had to establish the same context of trust and confidence, HHJ Wood said.

The court, he continued, could not ignore what was intended here. Rules restricting burden assignment were “clearly devised to protect the non-participating counterparty”, but here the claimant had entered into a separate deed of assignment. “It would be an unduly restrictive and overly legalistic approach to deny the parties the effect of what they intended.”

Further, “if the efficacy of an assignment depended upon a qualitative assessment of the degree of trust and confidence, this would generate considerable uncertainty, leading to potential satellite costs litigation whenever a retainer is challenged on the basis of purported CFA assignment, with the court being required to investigate in every case the nature of the relationship between the client and the solicitor.

“It is axiomatic that case handling these days is conducted at a distance, and it would be very difficult to identify those cases where a particular client had been insistent on the continuity of a specific fee earner. Of course every case depends upon its own particular facts, but in my judgment it would be wrong to qualify this particular exception to the general rule based upon an inextricable link between burden and benefit, by making a finding of trust and confidence a pre-requisite.”

However, HHJ Wood did not allow the defendant’s appeal, ruling that the CFA “allowed the contingent debt, referable to an ascertained amount and an ascertained point at which it would be paid in the future, assuming success, to be classified as a present chose in action capable of assignment”.

Simon Gibson, managing partner of SGI Legal, told Litigation Futures that he was “content with the judge’s interpretation”. Acknowledging that it raised “interesting points of law”, he said the firm would be keeping a “watching brief” for any appeal.

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Hallinan: whole system legal reform needed

The price of clinical negligence claims have reached a “tipping point” and urgent reform is needed to bring them under control, the Medical Protection Society (MPS) has argued as it laid out a nine-point plan that included fixed recoverable legal costs for cases worth up to £250,000.

Launching a campaign called ‘Striking the balance’, the MPS – a not-for-profit organisation supporting 300,000 healthcare professionals worldwide – said there should be reasonable compensation for those harmed due to clinical negligence, but that “this must be balanced against society’s ability to pay”.

It said a full-time GP can now expect to receive two clinical negligence claims over a typical career – nine years ago, it was only one. The picture is similar for dentists.

The reform package was part of a three-pronged approach that also highlighted the need to “improve patient safety and the quality and reliability of care delivery”, and secondly “increase our understanding of the drivers of clinical negligence claims to help inform prevention strategies”.

The MPS said it was worried that “the fear of being sued is affecting the way doctors practise, their health and wellbeing, and how they see their future in the profession”.

An MPS survey found that 88% of healthcare professionals were increasingly fearful of being sued, with 72% saying the fear has caused them stress or anxiety. Three-quarters reported that it resulted in them ordering more tests or making more referrals, while 64% said it has made them consider their future in the profession.

Claims costs were rising even though official reports showed “no material deterioration in the quality and safety of primary care in recent years”, the MPS pointed out.

The government is working on a scheme for fixed costs in cases worth up to £25,000 – having flirted with the idea of £250,000 – while Lord Justice Jackson recently acknowledged the specific difficulty of trying to fix costs for clinical negligence cases worth more than £25,000 except in matters where liability and causation have been agreed.

The MPS argued that if spending on clinical negligence by the NHS continued to increase at the same rate as it has over the last five years, it could be paying out £2.6bn a year by 2022 – “a cost that risks becoming unsustainable for society without reform”.

From the £1.5bn paid out in clinical negligence costs in 2015/16, legal costs accounted for 34%, the MPS said.

Alongside a blueprint to improve the prevention of accidents, its plan for legal reform proposed:

  • A limit on future care costs based on “the realities of providing home-based care” – a tariff would be agreed by an expert working party. This would avoid “the enormous differentials between costings proposed by care experts working for the claimant and the defendant”;
  • The use of national average weekly earnings to calculate damages awarded, instead of a patient’s weekly earnings – to avoid higher earners receiving more from the NHS in compensation than lower earners, for a similar claim.
  • The introduction of an ultimate 10-year limit between the date of an adverse incident and when a claim can be made (with judicial discretion in certain cases);
  • A minimum threshold for cash compensation relating to claims for minor injuries;
  • The court would have to allow a patient to withdraw from a claim less than 28 days before trial;
  • A fixed recoverable costs scheme for clinical negligence claims up to a value of £250,000;
  • Putting limits on claimant expert reports covered by after-the-event insurance, such as on the number of expert reports covered, or on costs;
  • Considering ways to reduce expert fees, such as capping fees or the number of experts that can be instructed; and
  • An increase in the small claims track threshold for clinical negligence claims  up £5,000.

Emma Hallinan, MPS director of claims, said: “We believe whole system legal reform is needed and this sits at the heart of our Striking a Balance campaign – we need a regime which achieves a balance between compensation that is reasonable, but also affordable…

“When considering the financial challenges facing the NHS and the change to the personal injury discount rate – which has increased the cost of compensation for clinical negligence, exacerbating an already challenging situation – there has never been a more pertinent time to tackle the root of the problem.

“Of course controlling the cost of clinical negligence once a claim is made, is just one component of a more sustainable system.

“Our report also explores the causes of adverse incidents, acknowledges the need for continued improvements in patient safety, and looks at the complex drivers of claims – from changing patient expectations, through to greater awareness about how to bring a claim.”

Helen Vernon, chief executive of NHS Resolution (the new name for the NHS Litigation Authority), welcomed the report and “the wide ranging debate the report should prompt on how best to address the rising costs of clinical negligence”.
She continued: “Our five-year strategy, Delivering fair resolution and learning from harm looks closely at the drivers of this cost and sets out our commitment to work with and through others to ensure that we learn from what goes wrong and challenge the existing models for delivering compensation.
“The launch of our strategy marked an extension of NHS Resolution’s role to be more involved in incidents at an earlier stage and we fully support the proposal by the MPS for research into why claims are brought so that we can better meet the needs of patients.
“This is how we will become more effective in preventing situations from escalating into unnecessary court action and in resolving concerns in ways other than by litigation.”

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Todd: sensible starting point

The involvement of solicitors and barristers in crafting witness statements in big-ticket litigation has neutered the current regime and it should be replaced by a system of witness summaries and live evidence-in-chief, a Bar Council working party has recommended.

It also called for an end to pre-action protocols in such cases, saying they only add to the length and expense of litigation.

The working party – chaired by immediate past Bar Council chairman Michael Todd QC – has spent a year discussing possible improvements to litigation in the Rolls Building, covering the Chancery Division, Admiralty and Commercial Courts, and the Technology and Construction Court. Its report comes shortly after a review of Chancery Division practice and procedure was announced.

The recommendations have been sent to the senior judiciary.

The group emphasised the importance of docketing – that is, a single judge overseeing all stages of a case – to ensure consistency and effectiveness of case management decisions, and said case management conferences should take place no later than the close of pleadings. At this point the parties should be required to identify the issues to be decided and the evidence required, thus limiting disclosure and the preparation of evidence.

Pre-action protocols should be abolished as, by formalising the pre-action process, “they add to the length and expense of proceedings, and the emphasis instead should be on detailed pleadings in compliance with the rules”, the working party said.

Arguably its most contentious recommendation was that the rules for witness statements should be abolished and replaced by rules for witness summaries, covering a number of specified areas, and subject to the judge’s discretion to exclude oral evidence or direct witness statements.

It argued that by delivering often worthless statements, “the current regime of witness evidence does not improve the prospects of a fair and just outcome; nor does it save time or costs”.

The report continued: “Regrettably, witness statements are the product of a great deal of work by solicitors and barristers, who, having mastered the documentation disclosed by both sides, then put together an account of the facts of the case that fits (so far as possible) the documents, and serves the purpose of the party on whose behalf the statement is put forward.”

The working party acknowledged that there “may be some truth” in the argument that there is nothing wrong with witness statements as such, but “just with the way in which lawyers misuse the system and the rules to try to gain advantage for their clients”.

Nonetheless, it supported replacing witness statements with short witness summaries “to serve the purposes of advance disclosure, and reinstate examination-in-chief, all with the benefit of detailed case management by the trial judge, calculated to identify and focus on the real issues in the case, limit the scope of the oral evidence and secure appropriate admissions or agreement on facts at an early stage”.

Among other things, a witness summary would state on which factual matters in dispute the witness was able to give personal or first-hand hearsay evidence (and the person calling the witness at trial should not be able to stray beyond these matters without permission), and summarise the effect of the evidence which the witness will give.

The working party added: “We recognise that for some fact heavy cases witness summaries would not be helpful and would most likely not represent a saving of time or cost. Consideration of the most appropriate approach would form an important aspect of the case management at the outset.”

Expert evidence would still be dealt with under separate provisions, “as the main problems in this area tend to be a failure to define the questions to be addressed or the giving of permission for such evidence when it is not needed. The existing rules include provision requiring the permission of the court for expert witnesses to be called to give live evidence, and these can be enforced as appropriate.”

The working party’s other recommendations were a single, electronic case management administration system, and a single procedural guide, across the jurisdictions of the Rolls Building,

Mr Todd said: “We hope that the recommendations which we have put forward for discussion provide a sensible starting point to continue to improve and evolve civil litigation…

“The Bar Council is playing a crucial role in the Ministry of Justice’s UK Legal Services Plan for Growth, which was launched recently. As part of ensuring that London remains one of the world’s most attractive dispute resolution centres, we have to ensure that we keep developing our civil litigation system to ensure it remains relevant to the needs of its consumers.

The working party was made up of the chairs of the Chancery Bar Association (Timothy Fancourt QC), Commercial Bar Association (Stephen Moriarty QC), and the Technology and Construction Bar Association (Chantal-Aimée Doerries QC), as well as commercial barristers Martin Bowdery QC and Geraldine Clark.

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Matthew Kain, managing director of Kain Knight

Eclipse Legal Systems, the UK’s leading legal software provider, today announced the implementation of its Law Society Endorsed Proclaim Case Management Software solution at Kain Knight, the UK’s largest firm of costs lawyers.

As the longest established independent firm of costs lawyers, Kain Knight boasts a strong track record and an enviable reputation for providing services that span the entire spectrum of costs litigation issues. With an extensive client base, the firm’s expert team provide a meticulous and focused approach to facilitate swift resolution.

Kain Knight will be implementing a ready-to-go Proclaim Case Management Software solution to provide fee earners with a comprehensive desktop application that will automate a number of aspects within the business, resulting in enhanced turnaround times for clients.

Furthermore, Proclaim’s capability to manage electronic file transfer will enable the practice to offer a seamless Proclaim-to-Proclaim file transfer service to its solicitor clients who are also Proclaim users, resulting in reduced settlement times and quicker case progression.

Matthew Kain, managing director at Kain Knight, comments:

“As the UK’s leading costs drafting firm, we require a case management solution that can handle complex costs disputes across a range of practice areas. Proclaim will be critical to our future success thanks to its inherent flexibility, enabling us to scale the system as and when we need to, whilst maintaining tight control of our financials and aiding us in continuing to provide the exceptional client service we are renowned for.”

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Collins: code raising standards in legal market

The third-party litigation funding market received another boost yesterday after a funder raised a new tranche of money to put into cases.

However, the Solicitors Regulation Authority (SRA) has told Legal Futures that solicitors are not under a requirement to choose funders that comply with the new voluntary code of conduct.

Therium Capital Management Limited – part of the listed City of London Group – has closed a third limited liability partnership (LLP), raising £4.3m from high net-worth investors, some of whom are already invested in the business.

It comes only six months after Therium closed its second LLP, which has already returned a sum equal to 51% of the capital invested. The first LLP, which closed in May 2010, has returned 90% of the capital invested. Both LLPs still have a “substantial pipeline of ongoing case investments”, Therium said.

Solicitor Neil Purslow, one of the founders of Therium, said the involvement of existing investors in the new LLP is “a clear endorsement of our business model and our track record to date in litigation funding”.

He continued: “We currently have a strong pipeline of cases for funding and anticipate being able to develop a portfolio of claims for LLP3 very quickly.”

In addition to raising money through LLPs, Therium said it is holding discussions with a number of institutional investors and family offices about managing funds on their behalf.

In recent weeks Investec, Managed Legal Solutions and Caprica have entered the third-party funding market, although Allianz Litigation Funding has exited.

Last week the Civil Justice Council (CJC) published the long-awaited voluntary code of conduct for third-party funders, with Lord Justice Jackson expressing the hope that solicitors would only use funders which have signed up to it. That the SRA should mandate this has been suggested during the gestation of the code.

Richard Collins, the SRA’s director for policy and standards, said: “It's great that the voluntary code exists and that so many want to sign up to it. We welcome any move that leads to the raising of standards in the legal services market, and third-party litigation funders embracing a code of conduct to demonstrate their commitment to operating quality, ethical services certainly fits the bill.

“However, in line with our own drive to persuade the profession to be focused on outcomes, we wouldn't be looking to be as prescriptive as to make it compulsory for solicitors to only use those funders that had signed up to the code. Such a move might not always be in the best interests of the client, which is of course principle 4 in the new Handbook. So making it mandatory for solicitors to use only funders that subscribe to the code of conduct would not be in the spirit of outcomes-focused regulation.”

A CJC spokeswoman said: “The CJC's role was to facilitate agreement on the code of conduct and establishment of the Association of Litigation Funders of England & Wales, in order to ensure compliance with the code by its members. These objectives have been achieved.

“The council has supported these developments because it believes that the code and the Association will promote best practice and greater transparency in the provision of litigation funding services to the benefit of the consumers of these services.

“The code provides a real measure of consumer protection in terms of capital adequacy, clarity on when a funder can terminate a litigation funding agreement and a QC clause to resolve disputes. The council is pleased to note that the SRA has welcomed the code.”

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Houses of Parliament

Lord Lang said access to justice review should not be “unduly restrained”

The government’s plan to introduce a stricter test on judicial review outcomes “risks undermining the rule of law”, the House of Lords constitution committee has warned.

In their report on the Criminal Justice and Courts Bill, which will enter its committee stage in the Lords later this month, the peers said judicial review was central to the rule of law.

The current test gives the courts a discretion to reject judicial review applications where they are satisfied that it was inevitable that the decision involved made no difference to the result.

The new test, set out in clause 64 of the bill, would require courts to reject applications where the outcome would not have been “substantially different”.

Peers said the new test changed “the current test of inevitability to a new test of high likelihood”, raising an issue of “both of principle and practical concern”. They said lowering the threshold risked “unlawful administrative action going unremedied”.

Peers quoted from a statement made by Lord Neuberger, the president of the Supreme Court, in his evidence to the committee.

Lord Neuberger said that although some “hopeless applications” got through, because judicial review was so important, people should accept that “inevitably that there will be some applications that are unmeritorious but nonetheless get pursued and hold things up.

“But provided it does not get out of hand—I have no reason to think that it has got out of hand—it is a small price to pay for a healthy judicial review system.”

The constitution committee added that clause 64 could turn the permission stage of a judicial review hearing into a “full dress rehearsal of the substantive hearing”.

Peers also attacked clauses 67 to 70 of the bill, which would impose tougher costs rules on interveners and restrict the ability of the courts to make protective costs orders (PCOs) in judicial review cases.

The committee said that peers may wish to consider, as the bill progressed through the House of Lords, “whether the restrictions in clauses 67 to 70 impose too great a limit on effective access to justice”.

Lord Lang of Monkton, the committee chairman and a Conservative peer, said: “The Criminal Justice and Courts Bill will clearly have a significant impact on judicial review.

“Judicial review is an important means for citizens to challenge the legality of decisions by the state, so access to the process should not be unduly restrained.”

Justice minister Lord Faulks told the House of Lords earlier this year that ministers “firmly reject” the accusation that changes to the rules for payment of legal aid in judicial review cases would undermine access to justice.

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Hines: Strategy issue for some claimant firms

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

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

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

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

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

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

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

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

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

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

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Eclipse200Established in 1889, Merseyside-based Lees Solicitors is a full-service practice committed to delivering excellent customer service.  The firm employs over 100 staff across its three offices in Birkenhead, Heswall and West Kirby.

In preparation for competitive and legislative changes to the legal markets, Lees Solicitors embarked upon a new business strategy focusing on direct client acquisition – reducing a reliance on third party introducers.  To achieve this new goal, investment in technology was required to ensure operational processes were optimised and service delivery became the prime focus of the practice’s activities.

A Proclaim Practice Management Solution was implemented firm-wide to provide an efficient and consistent approach to multiple practice areas.  Proclaim’s integrated financial platform enabled a complete reporting base and a seamless approach to billing and practice management.

Proclaim impressed with its ability to be accessed from anywhere at any time – a vital requirement for Lees as it would enhance the firm’s flexibility and service proactiveness.

Lees set out its stall to be the go-to law firm in the region for a broad range of legal services.  Critical to this was fast, transparent service delivery.

Using Proclaim’s process management capabilities, Lees has been able to build a complete client journey – from initial inception right through to cross-selling and upselling opportunities at file conclusion.  The management board at Lees has access to real-time information courtesy of Proclaim’s integrated reporting suite – providing both broad and granular data analysis.

In terms of marketing and business development, Proclaim provides a core platform from which to service clients and ensure that loyalty and recommendation levels are at an all-time high.

“Proclaim enables us to optimise our processes and gives us the agility to implement a superb client experience – driving customer loyalty and improving margins”, says Joanna Kingston-Davies, CEO, Lees Solicitors.

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Chris Bogart

Bogart: Cost of commercial litigation in the UK “continuing to rise”

Burford Capital, the world’s largest litigation funder, increased operating profits by 43% to $61m (£41m) in 2014.

Announcing its financial results for the last calendar year, Burford said income for the year increased by 35% to $83m.

The funder said “robust demand” for its capital was reflected in $150m of new investment commitments for 2014 – more than three times the level in 2013.

Burford’s after-the-event insurance business contributed $19m to the profit figure, while income grew 16% despite a previous expectation that it would fall. The acquisition purchase price was recovered “long ago”.

Chris Bogart, chief executive of Burford Capital, said the majority of the firm’s investments were in America, but a “significant minority” were in the UK and Europe.

According to the AIM-listed company’s report to shareholders, average investment size, excluding UK matters and new initiatives, is currently $8m. This compares to $4m when the company started in 2009.

However, Mr Bogart said only 37% of Burford’s portfolio involved single cases, rather than multi-case portfolios and complex actions.

“There remains a strong tendency, especially in the UK market to regard litigation funding as the funding of a single case only,” Mr Bogart said. “The release of these numbers is a clarion call for London to catch up.”

Mr Bogart said his concern about commercial litigation in the UK was the cost, which was “high and continuing to rise”.

He went on: “Court fees are a symptom of that, though they still represent only a small percentage of the costs involved in bringing an action. It is becoming increasingly difficult to justify litigating in the UK.”

Mr Bogart predicted that foreign jurisdictions and arbitration would benefit as a result.

Burford said it completed a successful issue of retail bonds on the London Stock Exchange last year, raising £90m of capital for litigation finance.

Mr Bogart added: “I am very excited by the uptake of capital from the legal profession and looking forward to this continuing in 2015.”

Burford announced its acquisition of business intelligence firm Focus Intelligence in January. Last month it launched a funding option for claimants with cases valued between £25,000 and £500,000, aimed particularly at disbursements. Known as ‘Sprint’, it is marketed and administered exclusively by broker TheJudge.

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Spencer: dubious principles laid down by Alcock

Posted by John Spencer, director of Litigation Futures sponsor Spencers Solicitors

The intensity of the recent football match between Tottenham Hotspur and Chelsea was palpable even to those listening to it on the radio, let alone the fans present at White Hart Lane. This was a classic London derby, a game of pulsating action and plenty of bite.

Everyone who saw the two sides compete for a hard-fought 1-1 draw would agree that this was football at its most visceral and unforgettable.

After the game, I reflected on football’s ability to leave a mark. What happens on the pitch becomes etched in our collective memory, imprinted forever in our consciousness. No doubt the game’s inherent theatre, its speed and its competitiveness are reasons for this.

Hillsborough case law on psychiatric injury

But, as the 25th anniversary of the Hillsborough disaster looms at the end of the current season, it is important to recall that sporting events can leave a mark for different reasons. And, when it comes to Hillsborough, it is a regret to note that the law on psychiatric injury is both unsatisfactory and borne of what we now know to be erroneous assumptions about what happened at Sheffield Wednesday’s historic ground on 15 April 1989.

At Hillsborough that day, 96 fans died in a terrible crush early on in an FA Cup semi-final between Liverpool and Nottingham Forest. The crush resulted in injuries to a further 766 people. Those involved ranged from children to the elderly. The tragic incident is Britain’s worst-ever stadium-related disaster.

Appalling misinformation appeared in the public domain just hours after the disaster. It grew worse and worse, as the police sought to blame fans for what happened rather than take any responsibility themselves. The Sun newspaper infamously poured oil on troubled waters with a front-page splash that only its then-editor, Kelvin MacKenzie, believed in. MacKenzie’s story, headlined ‘The Truth’, was a vicious libel on Liverpool fans, and rightly led to The Sun being all but boycotted in Liverpool.

The real truth

But the old saying is that the truth will out – and soon enough it did. The Taylor report, published in 1990, found that the main reason for the disaster was a failure of police control. Lord Taylor’s inquiry also led to Liverpool’s fans receiving their first official exoneration – and to the police being roundly criticised for lying and evasiveness.

Later, in September 2012, came the findings of the Hillsborough Independent Panel. This categorically found that no Liverpool fans were responsible for the deaths, and said that attempts had been made by the authorities to conceal what happened, including the alteration by police of 116 statements relating to the disaster.

Against all this, a number of fans and their families rightly sought redress for their sufferings because of Hillsborough. Indeed, the disaster went on to spawn what remains, to this day, the leading authority in domestic case law on psychiatric injury. That case is Alcock v Chief Constable of South Yorkshire Police [1992] 1 AC 310.

Here, Alcock and several other claimants were ‘secondary victims’: they were not primarily affected, in the sense that they were injured or in danger of injury, but they suffered harm because of what they witnessed.

Rewind to what I said at the beginning of this piece. Football is an intense, visceral spectacle, conducted as mass participation theatre. How awful must it have been for those who saw their loved ones at risk, injured or even killed in the Hillsborough disaster?

Alcock needs unstitching

It seems obvious that the effect of what they saw would have been profound and damaging. But the Alcock case, which went all the way to the House of Lords’ Judicial Committee, imposed a series of “control mechanisms” to fetter a victim’s ability to bring a claim. If these are not met, there is no duty of care, and therefore no possibility of a claim for negligence.

Chief among them is the requirement that a claimant must perceive a “shocking event” with his or her own senses, either as an eye-witness or happening upon its immediate aftermath. This means that if a father saw his son crushed via television footage, or if he arrived some 30 minutes after the incident, he would not be able to bring a claim.

Lord Steyn of Mostyn has described the law on recovery for psychiatric harm as “a patchwork quilt of distinctions which are difficult to justify”. In another judgment (Frost v Chief Constable of South Yorkshire Police [1999] 2 AC 455), Lord Hoffman said that “the search for principle was called off [in Alcock]”.

The “control mechanisms” were “more or less arbitrary conditions which a plaintiff had to satisfy and which were intended to keep liability within what was regarded as acceptable bounds”. Into the bargain, they are more or less impossible to understand by the ordinary man.

The ‘ordinary man’ – and woman – are the people who were at Hillsborough nearly 25 years ago, they were at White Hart Lane on Saturday and they attend football matches up and down the country week in, week out. The House of Lords has stated that it can go no further than the principles articulated in Alcock, dubious as they are. Only Parliament can legislate for change.

Against what we now know to be the truth of Hillsborough, it is high time that we revisit Alcock. It seems more than possible that its principles were informed by the extraordinary level of misinformation dominating the media and political agendas at the time. It is time for this particular patchwork quilt to be unstitched and put back together in a way that offers real justice for victims of psychiatric injury.

John Spencer is director of Spencers Solicitors, who are specialists in personal injury compensation claims. He is a former chairman of the Motor Accident Solicitors Society (MASS) and a Law Society personal injury panel member.

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Trucks: compensation of £6,000 per vehicle sought

Third-party litigation funder Therium Capital Management is backing a £4bn opt-in collection action being brought by the Road Haulage Association (RHA) against truck manufacturers found guilty of illegal price fixing.

The RHA said it has also secured “the largest tranche of after-the-event insurance that’s ever been underwritten”, although it has not revealed the size or provider.

Last July, the European Commission fined MAN, Volvo Group (which includes Volvo Trucks and Renault Truck), Mercedes-Benz parent company Daimler, Iveco and DAF nearly €3bn (£2.6bn) for price fixing and other cartel activities between 1997 and 2011.

The RHA action before the Competition Appeal Tribunal will seek compensation for haulage and logistics companies that were bought or leased vehicles at inflated prices.

The association said “early indications” were that compensation could be in the region of £6,000 per truck and that 650,000 new trucks were sold during the 14-year period – this would be £3.9bn in total.

Therium will be paid either three times (or less, if the case settles early) of what it has cost to bring the claim, or a percentage of the money that the group wins, if that is more than the first option plus the return to the funder of the funder’s outlay.

Potential claimants have been told: “The percentage starts at 30% and reduces to 5% at higher overall compensation levels. There is also a third reduction in the funder’s fee if the case settles early.

“Based on conservative estimates of the level of damages and the number of trucks that will form part of the RHA’s claim, you should receive between 91% and 95% of any award or settlement. If the case settles early, you would receive an even higher portion of your award or settlement. To some extent, the RHA’s ability to deliver returns at this level will depend on the ultimate size of the claimant group.”

RHA chief executive Richard Burnett said: “UK truck owners affected by the truck cartel have potentially paid too much for their lorries over a 14-year period and we’re determined to get a fair deal for them.

“This is a chance to get their compensation with no risk to their business or finances.”

Specialist transport law firm Backhouse Jones is running the case, along with Exchange Chambers and Brick Court Chambers.

The first stage will be to ask the tribunal to authorise the RHA to act as industry representative and to set out the basis on which operators can opt into the claim. The first hearing is expected to be later this year.

Although the RHA is bringing the action, non-RHA members are able to join.

We reported earlier this month that the first opt-out collective action had been withdrawn due to insufficient damages.

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Dismore: flawed approach to fees

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

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

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

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

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

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

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

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

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

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

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

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

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



The misleading claims behind the campaign to lower the discount rate

Matthew Best Temple Legal Protection

A coalition of organisations which represent the NHS and health professionals has made strong claims in a letter to justice secretary David Gauke that the legal costs of clinical negligence claims are crippling the NHS. Similar comments were made by the National Audit Office (NAO) in September last year and yet the case doesn’t hold water. The letter was signed by the NHS Confederation, Academy of Medical Royal Colleges, British Medical Association, Family Doctors Association, Medical Protection Society, Medical Defence Union and the Medical and Dental Defence Union of Scotland.

February 9th, 2018