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Budget failure: sanction need not be nil assessment

Budget failure: sanction need not be nil assessment

A claimant’s failure to update his budget in advance of an unplanned preliminary hearing has led a High Court judge to rule that “every assumption” would be made against him in assessing the costs.

Mr Justice Warby said ordering no costs would be disproportionate, and was in any case not a sanction prescribed by CPR 3.18 (relating to assessing costs where a costs management order has been made) or the practice direction.

Simpson v MGN Ltd & Anor [2015] EWHC 126 (QB) concerned the costs of a preliminary hearing on meaning and an application to strike out a plea of justification in a libel claim brought by Premier League footballer Danny Simpson against the Daily Mirror.

The claimant’s original budget had included a contingency for such a hearing – which the defendant contested – but Master Yoxall declined to direct a preliminary issue and so neither approved nor disapproved the figure. However, the defendant’s contingency was agreed.

The claimant then sought an order for the preliminary hearing and served an amended budget on the defendant, which failed to respond until two working days before the hearing; the claimant had not filed the amended budget with the court in the meantime.

The hearing was largely a success for the claimant but the defendant argued that his approved costs budget did not make provision for the hearing and there was no good reason to depart from it, meaning no costs should be allowed. The claimant described this as “rank opportunism”, especially given the late reply to the claimant solicitor’s letter on the amended budget.

Warby J said the application of rule 3.18(b) – not departing from a budget unless there is good reason to do so – was not straightforward here, given that the claimant had put forward a budget for this phase of the litigation which was not agreed, approved or disapproved, while the defendant’s budget had been agreed.

“I am inclined to think that the wording of CPR 3.18 was not aimed at such a situation, but rather at ensuring that once the court has reached a decision on what it is reasonable for a party to spend on a given phase that conclusion should be final in the absence of some good reason. However, that was not a point addressed in argument and I reach no conclusion on it.

“Assuming that I am wrong in this, it seems to me that on the facts of this case there is good reason to depart from the budget approved by Master Yoxall for this phase of the litigation, by allowing recovery of some costs by the claimant.”

Among the factors the judge took into account were that the claimant’s proposed budget for this phase had been known from before the overall budget was set, the revised budget that was sent through, and the defendant’s delayed response to it – “that is not a co-operative approach”, he said.

Further, “the claimant’s failure to comply has had only a modest impact on the efficient dispatch of this litigation, and no appreciable impact on the efficient conduct of litigation overall. It was never likely to have any substantial impact on either.”

Making every assumption against the claimant in assessing the hearing’s costs was a “just and proportionate” sanction that “in more general terms provides a sufficient incentive to parties to comply”.

The defendant also complained that while the claimant had filed its costs schedule for the hearing with the court, it had not been served on the defendant.

Again Warby J noted that this failure to comply with paragraph 9.5 of practice direction 44 did not prescribe a sanction of no costs being recovered.

However, he said the failure led to unnecessary delay in costs in resolving the assessment and he made a deduction from the costs claimed to reflect this.

Overall the claim for £24,096 was slashed to £10,500 (both including VAT), with the major reduction coming from only allowing the costs of one counsel when two had been instructed, which Warby J said was not necessary.

Jon Lord, a Council member of the Association of Costs Lawyers, commented: “This ruling shows how some of the kinks in the budgeting process still need to be smoothed out; otherwise they risk just introducing an unnecessary layer of costs into litigation.

“In keeping with the football theme of the case, the only goal scored was an own goal by Mr Simpson in failing to serve his team sheets (budget and statement of costs) on the opposition before the game. The penalty for that was sensibly proportionate in the form of the additional cost caused by his failure.”




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Ramsey: stricter and more consistent application of the rules

The judiciary is undertaking a review of those recommendations made by Lord Justice Jackson that have not yet been implemented, it has emerged.

In an interview with this website to mark his appointment as honorary president of the Association of Costs Lawyers, Mr Justice Ramsey – the judge in charge of implementation – said this may lead to some “tidying up” of the CPR or even legislation to introduce further changes.

He highlighted issues such as aligning the bill of costs with the budgeting form Precedent H, and introducing pre-issue costs management as among those under consideration by a working party which he is chairing.

Ramsey J said that generally “the reforms are being accepted and dealt with as one would have wanted”. The importance of costs budgeting and the need for compliance has particularly come to the fore, and “parties are now fully engaged in preparing and discussing their costs budgets”, he said.

A key element of the reforms is that judges are less tolerant of delay and failures to comply with orders, and Ramsey J said it was clear there was “stricter and more consistent application of the rules than we had before”.

Lawyers have pointed out mistakes and inconsistencies in the revised CPR and the judge said this is always going to happen in a complex set of rules like these. Sorting them out is “the business of the rule committee”, he pointed out.

Ramsey J said his role with the ACL was to help its members come to terms with the changes in the same way that he is assisting others in the litigation world. “They are adjusting their business models to decide where their skills can be best used,” he said.

Costs budgeting is seen as a major growth area for costs lawyers. “Certainly with the Jackson reforms and costs budgeting, one has to look at the costs of running cases from the beginning,” he said.




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Mortimer: surprisingly commercial decision

Legal expenses insurers have welcomed this week’s Court of Appeal ruling about the rates they have to pay non-panel firms.

On Wednesday the Court of Appeal said before-the-event (BTE) providers have to pay an “appropriate” rate to ensure policyholders have a meaningful freedom of choice of solicitor.

The case involved ULR Additions, but it has emerged that three other leading BTE providers – ARAG, Arc Legal Assistance and DAS – intervened in the case.

Robert Kay, chief executive of ULR Additions, said: “We are, naturally, delighted with the outcome, which has totally justified our decision to appeal the first-instance judgment of Burton J.

“It must be right than an insured has the freedom of choice in appointing his or her own lawyer, but equally that the insurers are entitled to rely on the terms of their contract of insurance to provide the best access to justice by utilising pre-determined economic rates. Otherwise, how can insurers accurately price their premiums?

“We were always convinced that common sense would prevail, and thanks to our excellent legal team we believe we have secured an important legal precedent on behalf of not just ourselves but the whole insurance industry.” ULR was represented by Nick Bacon QC of 4 New Square and Dr Mark Friston of Kings Chambers, instructed by Horwich Cohen Coghlan.

Kathryn Mortimer, head of legal at DAS, told Legal Futures that the court had reached a “surprisingly commercial” decision. She explained: “These judges actually understand insurance. When you are trying to underwrite and reserve for the losses you are indemnifying, you have to have some sort of control over what you spend.”

Tony Buss, managing director of ARAG, also welcomed the ruling, saying that insurers dealt with non-panel firm requests by negotiation, recognising that different circumstances demand different types of lawyer. He said ARAG has a panel of firms at different grades depending on the demands of the case.

 




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Keen: Claimants currently over-compensated by discount rate

The government will look to remove “avoidable obstacles” stopping the greater use of periodical payment orders (PPOs), Ministry of Justice spokesman Lord Keen said yesterday.

He also reassured claimant lawyers that the government “is fully committed to the 100% compensation principle”.

In a speech on reform to the Association of Personal Injury Lawyers annual conference in Birmingham, Lord Keen talked about the discount rate, saying the evidence the MoJ has gathered “demonstrates that the current approach to setting the rate does not reflect the actual investment behaviour of claimants, and this is resulting in systemic over-compensation”.

He continued: “Research by the Government Actuary indicates that on average (after deductions for investment management and taxation) awards will currently produce about 120 to 125% of the required compensation.

“Such over-compensation means that the NHS in particular is overpaying on claims for clinical negligence, putting increasing pressure on the public purse. Every pound that is being spent on over-compensation could be spent on frontline NHS services.”

This was why the Civil Liability Bill – which has its second reading in the House of Lords next Tuesday – would look to set the rate by reference to expected rates of return on a low-risk portfolio of investments, rather than very low risk as now.

Lord Keen continued that the government considered that PPOs were “in principle a better form of taking compensation for future loss than a lump sum payment, and supports their use”.

He said: “That said, it is also right that claimants should be able to choose a lump sum if they wish.

“To assist claimants in reaching decisions on how to receive their compensation we intend to provide or endorse guidance on standard practice to ensure that claimants are properly informed as to the implications of choosing between a lump sum and a PPO.

“We will also investigate whether there are any ways in which the present law and practice regarding PPOs could be improved to ensure that any avoidable obstacles to their use are removed.”




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The introduction of LASPO has dealt a savage blow to personal injury firms up and down the country and has brought a great deal of confusion and concern. Firms who instruct medico-legal agencies and still receive commission are now more likely than not acting in breach of LASPO.

However, firms can find ways of commercially benefitting from providing medical agency services whilst still complying with LASPO. Indeed firms can actually increase their earnings from medical agency services if they have the right set up.

InJur provides an in-house medical agency solution which does just that. It complies with LASPO and enables firms to satisfy the requirements of the SRA Handbook. At the same time, it allows them to generate significant extra income from their medical reporting requirements.

InJur has linked up with Legal Compliance Services, a team of former SRA compliance experts, to create a unique service which combines the setting up of the firm’s own in-house agency and a bespoke compliance and risk management review at an affordable price.

Sharon Lister, Managing Director of inJur, said “Many PI firms exist today simply because of the extra income they generate using inJur. Teaming up with Legal Compliance Services means that these firms now have instant access to specialised SRA and LASPO expertise enabling them to operate with confidence.”

Richard Robinson, Managing Director of Legal Compliance Services, said: “Legal Compliance Services assists firms in finding ways of ensuring their business models are compliant with LASPO and the SRA Handbook. We are delighted to link up with inJur to offer a valuable service to firms who have been suffering financially from the recent changes.”

To learn more, contact

inJur                                                                                           Legal Compliance Services

0161 870 2461                                                                         01788 561 661

team@injur.co.uk                                                                info@legalcomplianceservices.co.uk

www.injur.co.uk                                                                   www.legalcomplianceservices.co.uk




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laura-clapton-consilia

Laura Clapton mediator and partner at Consilia Legal

Law Society Endorsed legal software provider, Eclipse Legal Systems, has announced the creation of an innovative addition to its portfolio of case and matter management workflows.

The new Proclaim Mediation Case Management system has been designed to eliminate time-consuming document production and simplify the complicated rates and structures associated with this particular area of legal services. Although initially being used for family-orientated processes, the Proclaim Mediation solution is entirely customisable to suit workplace, commercial and public dispute procedures.

In addition to the inherent Proclaim functionality – such as data storage, document creation, time recording, etc – the solution has also been tailored to seamlessly guide fee earners through all mediation case stages. This includes the facility to detail MAIMs appointments, any subsequent joint meetings, and financial or childcare agreements, as well as capabilities for automated letter production and full diary and task management.

Furthermore, Proclaim’s provision for Legal Aid work means all time is automatically recorded – available for users to effortlessly upload to the LAA – eliminating duplicate data entry and allowing for the submission of bills directly through the Proclaim desktop.

Laura Clapton, mediator and partner at Eclipse client, Consilia Legal, comments on the legal software:

“We simply could not carry out mediation work to this standard without using Proclaim – mediation is extremely admin intensive and requires excellent organisation – the system provides a core service delivery backbone, and is the perfect PA!”




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RTA: portal claims running at 70,000 per month in 2014

The number of cases staying in the electronic portal for employers’ and public liability (EL/PL) claims is increasing, but there are also signs of claimant lawyers making deliberate errors in an effort to remove them and benefit from higher fixed recoverable costs, a leading defendant law firm has suggested.

It comes with the number of EL/PL claims submitted via the portal rising to 60,000 since it was set up last July.

The latest figures from the portal shows that by the end of April, 20,924 EL and 34,737 PL claims had been made. EL disease claims have crept up more slowly, to 7,421.

An analysis of the figures by City firm Kennedys said that the retention figures are improving month on month. “This is hopefully because claims handlers are becoming more familiar with the process and their ability to assess merits within 30 (EL) and 40 (PL) working days,” it said.

Nonetheless, 50% of EL claims have left the portal process, along with 41% of PL and 35% of EL disease claims.

While some of this may be because of claims being submitted for injuries sustained before 31 July 2013, Kennedys said: “We are… seeing certain behaviours emerge which suggest a deliberate attempt to remove claims from the portal and no doubt seek to enjoy enhanced fixed recoverable costs. This includes, for example, submission of CNFs [claim notification forms] without completion of mandatory fields, such as national insurance details.”

It said overall, the experience of compensators towards the EL/PL portal was “positive” and some were already reporting a saving on costs, and even referring to “the perception that the industry has a better reputation from being able to compensate genuine claimants more quickly”.

Elaborating on the causes of exit from the portal, it said key reasons given were incomplete CNFs and duplicate claims. It said more PL claims than EL claims cited a failure to acknowledge the CNF on time as a reason to use the exit function, which was not surprising, since tracing the insurer was more difficult in PL claims.

Meanwhile, with around 70,000 new claims now entering the RTA portal each month, Kennedys said there had been “a notable increase from the end of last year and implies that if there were any initial ‘teething problems’ with the revised portal, these have been overcome”.




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Supreme Court: key is whether it was proper to vary an order

The Supreme Court last week upheld the right of judges to change their minds, even if an order is sealed by the court before a revision is made.

In unanimously reversing a majority verdict by the Court of Appeal which said a judge should not have changed her decision on who was responsible for child abuse in care proceedings, the Supreme Court said the overriding factor is dealing with the case justly.

Giving the reasons in L and B (Children) [2013] UKSC 8, Lady Hale, who sat with Lords Neuberger, Kerr, Wilson and Sumption, said that contrary to previous practice, the decision “is not reserved for exceptional circumstances and would in every case depend on its particular facts.”

She continued: “It would be relevant whether any party has acted upon the decision to his detriment especially in a case where it was expected that they may do so before the order is formally drawn up”. In this case the parties had not irretrievably changed their position as a result of the initial judgment.

The case arose in care proceedings involving two children after one of them was hospitalised with serious injuries. The judge found the father was the perpetrator in a short oral judgment. But two months later, before the order was sealed, she gave a written ‘perfected’ judgment that concluded she was unable to determine whether the mother or the father was responsible.

The mother appealed and was successful. The father brought an appeal to the Supreme Court with the support of the local authority, the children’s guardian, and their maternal grandparents.

Lady Hale said: “No judge should be required to decide the future placement of a child upon what he or she believes to be a false basis. The judge had heard very full submissions on the evidence and it was not necessary to invite further submissions before changing her findings in this particular case.”

However, even if the initial order had been sealed by the time the judge changed her mind the Supreme Court’s decision would still have been on the basis of “whether it was proper to vary an order, rather than whether that order had been sealed”.




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Wallis: increased recognition of role of mediation in difficult PI claims

A host of well-known names in the world of personal injury have joined the board of specialist mediation provider Trust Mediation.

The expansion follows the retirement of founding chairman and former Court of Appeal judge Sir Henry Brooke as a director. He has now been appointed as the company’s honorary president.

Trust Mediation founder Tim Wallis, the one-time defendant lawyer who is now also independent chairman of RTA Portal Co, has become the new chairman.

Trust Mediation is a not-for-profit service offering fixed-price mediations. The mediators on its panel charge a commercial fee for mediation but the directors provide their services as directors on a voluntary basis. Since launching five years ago, it has a settlement rate of nearly 90%.

The new directors are leading multi-party action specialist Paul Balen, a consultant at Nottingham-based Freeth Cartwright; barrister Andrea Barnes, one of the founder mediators of the Court Based Mediation Scheme; Lea Brocklebank, a partner at DAC Beachcroft Claims Limited and like Mr Wallis a past president of the Forum of Insurance Lawyers; Brian Dawson, senior partner at Chester-based Walker Smith & Way and a member of the Association of Personal Injury Lawyers’ national executive; and Philip Hesketh, a well-known solicitor turned mediator.

Like existing directors Judith Kelbie and Frances McCarthy, they are all accredited mediators.

Speaking on behalf of the new directors, Mr Balen said: “We have all been involved with Trust Mediation for some time and have contributed to the impressive settlement statistics. We look forward to playing our role in seeing Trust Mediation playing a more prominent role in the sector as we move into the Jackson era which we see as likely to give mediation a new impetus.”

Mr Wallis said there is an increased recognition of the role that mediation has to play in difficult personal injury claims. He said:  “Most personal injury claims settle, sooner or later, and most settle by established routine. What we have found over the last five years, however, is that some difficult cases – or ordinary cases with difficult people – do not settle easily and for those mediation can provide practitioners with a really effective tool to reach the client’s objective and quickly.”

He also pointed to Lord Justice Jackson’s report, which said it is wrong to assume that personal injury cases cannot be resolved through mediation, so long as the mediators are experienced personal injury practitioners.




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Landman: lessons from Wales

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

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

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

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

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

Improved legal process for UK asbestos claims

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

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

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

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

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

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

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

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

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

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

A lesson from Wales …

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

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

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

It’s overdue – but it’s happening.

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

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

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




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Clinical negligence: call for calm

Clinical negligence: call for calm

Costs budgeting is starting to work in clinical negligence and government plans to introduce fixed fees in ‘lower-value’ cases worth up to £250,000 are moving too far and too fast, a Queen’s Bench Master has warned.

Master Cook said claims of more than £50,000 could not be classified as lower value and before extending fixed costs beyond that figure, “the current costs regime should be reviewed and its effects should be subject to proper scrutiny and research”.

He added: “The inevitable conclusion to be drawn is that there is now a very strong momentum perhaps an irresistible momentum towards the introduction of fixed costs in civil claims. But in my view change should not be driven on the basis of out of date statistics and the short-term financial interest of the NHS.”

His speech to a seminar at 7 Bedford Row in London came almost exactly a year after another lecture at the chambers in which he had expressed concern about the burden of budgeting in clinical negligence cases.

With a backlog building up, last year costs budgeting was temporarily disapplied for clinical negligence, and Master Cook said that following the appointment of one extra full-time master and four deputy masters, it will resume from the end of this month, with waiting times for first case management hearings “reduced to a few months”.

He continued: “The experience of the clinical negligence masters is that there are now signs that parties are adapting to the costs management process. We are seeing a significant increase in the number of cases where budgets are agreed or where a number of the phases are agreed.

“By requiring the parties to focus on the total budget per phase and requiring cash offers to be made where agreement cannot be reached the arguments are more focused. This leads to shorter hearings and in return enables more efficient use of court resources.”

However, there were also “some unwelcome signs”, such as an increase in the number of litigants in person. “I do not pretend that this increase in the number of litigants in person involves substantial numbers but it is something we have not really encountered before and to my mind it raises questions about whether these claimants are able to access effective legal advice.”

He said masters were also seeing a rise in the number of non-specialist firms attempting to move into the clinical negligence field, adding to the costs of the process.

Master Cook questioned the NHS Litigation Authority’s (NHSLA) apparent belief that fixed costs could save it more than a quarter of the costs it pays out to claimant solicitors.

“I don’t intend to submit these claims to detailed scrutiny. There is a respectable case to be made that the NHSLA has presented the statistics in a less than neutral fashion,” he said, referring the audience to Andrew Ritchie QC’s article last year on the NHSLA’s annual report.

“What I can say is that the figures used to support the NHS’s argument that claimant’s costs are disproportionate in lower-value claims are derived from the pre-costs management regime. Also left out of account as drivers of costs is the conduct of the NHSLA and hospital trusts.”

Master Cook noted that the Department of Health consultation on fixed costs, which was initially due last autumn, has still not been published, even though the planned implementation date of 1 October 2016 remains unaltered.

“It must also worthy of note that case for fixed fees was presented to the [Civil Procedure] Rule Committee by Mr Masterson of the commercial division of the Department of Health.

“I would suggest that such a state of affairs is profoundly worrying and does nothing to instill confidence in the proposals. What I find particularly concerning is how the NHSLA’s concern over disproportionate costs in ‘lower value claims’, that is claims valued up to £25,000, has morphed into a proposal to fix costs in cases up to £250,000.”

The process of running a clinical negligence cases “has a cost which means that establishing a low-value claim will always proportionally higher than a more substantial claim. I would certainly be slow to describe a claim worth £50,000 to £100,000 a low-value claim”.

This applied also to Lord Justice Jackson’s recent call for the widespread adoption of fixed costs, although he agreed with Sir Rupert that introducing fixed costs for clinical negligence on their own would lead to unhelpful “Balkanisation”.

He concluded: “My own view for what it is worth is that if this change is to come about: it must apply to all civil litigation; it must be gradual; we must start by extending the low-value part 45 scheme to all claims including the fast-track; there should be gradual extensions of fixed costs from £25,000 to £50,000 to say £150,000 and such extensions should be made in the light of experience; suitable uplifts must be agreed for difficult and complex claims such as clinical negligence, possibly in conjunction with some form accreditation scheme; alternatively, there must be some flexibility in rates (judicially controlled for difficult and complex cases); and there must be a robust and predicable mechanism to update rates paid to lawyers linked to actual costs in the real world…

“Unless fees are set at a level which make it economically viable to take on such claims, people will be denied representation…

“The past five years have seen an unprecedented period of change in the way in which civil claims are funded there has been much change in the legal market, there have been mergers and spectacular failures.

“In my opinion a period of calm is called for before more radical change. We do not have a system of justice that is worthy of the name unless people can get effective redress.”

An NHS Litigation Authority spokesman said: “We would agree entirely with Master Cook with respect to his comments on the entry of non-specialists into the clinical negligence market and the difficulties this creates in the resolution of claims.

“It is important that injured patients obtain access to justice at reasonable cost and that excessive costs are challenged appropriately in order to preserve NHS resources for patient care. This is why we have drawn attention to clear evidence of disproportionate costs being claimed, particularly on lower-value cases.”

Julie Say, a partner and head of clinical negligence at London law firm Hodge Jones & Allen, said: “It is heartening that the judiciary is contributing to the analysis of the current proposals for fixed fees in clinical negligence claims. Master Cook is echoing concerns about the flawed basis of the proposals together with ignoring cost management already carried out by the courts.”




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Mercedes: car hire costs under scrutiny

An increasing number of reports are emerging of hardline decisions by district judges over non-compliance with the CPR or breach of orders and directions.

Ozbay & Ozbay v Jack Richards Haulage Limited saw a strike-out that the successful defendant barrister said would not have occurred pre-Jackson, while Ibbertson v Black Horse Limited indicated that applicants will have to show that the wider interests of justice will be served by being granted relief from sanctions.

Ozbay involved a modest personal injury claim augmented by some £220,000 of hire charges arising from two years in a Mercedes hire car.

In a briefing, the defendant barrister, Brian McCluggage of Manchester chambers 9 St John Street, instructed by Berrymans Lace Mawer, said that “notably, the strike-out arose out of breach of disclosure obligations but before any ‘unless order’ had been made. The judge expressly made his decision on the change of litigation culture envisaged by the Jackson reforms”.

He reported that the judge held it was unnecessary for the defendant to establish any specific prejudice by failing to meet the disclosure deadline. “He held that the interests of other litigants who were having their hearings delayed by this case, the claimants’ apparent disregard of the timetable and the increased emphasis on observation of court orders and directions in the revised overriding objective and CPR part 3.9 [relief from sanctions] were critical factors in the exercise of his discretion,” Mr McCluggage said.

“He decided that it was inappropriate for the court to tolerate this standard of litigation, especially when the actual disclosure required was commonplace in terms of financial documentation and the like.”

Permission to appeal was granted as the judge felt that guidance on sanctions for non-compliance was required.

Mr McCluggage said: “The case is of interest because this decision was based on a scenario where a strike-out would have been most unlikely pre-April 2013, but where the facts lay right on the margin where the Jackson reforms might make a difference.”

The Ibbotson case, as reported by City firm CMS Cameron McKenna (which was not involved in the matter), concerned an application for relief from sanctions over a failure to serve notice of funding in form N251.

The claimants had sought to recover £26,900 in additional liabilities in a claim for £8,000, and said they had served the N251 three weeks late. But trainee Katie Dyson said there was no record that either Black Horse or the court had received it, leading the court to conclude, on the balance of probabilities, that the notice had not, in fact, been served.

The court found that the prejudice to Black Horse was substantial because the after-the-event (ATE) premium was “extremely large” and the lack of notice denied Black Horse the opportunity to raise questions about the ATE and factor its potential liability into its litigation strategy. Thus the court denied the claimants relief.

Ms Dyson said: “The unwillingness of the court to indulge the claimants may, at first glance, seem to jar with several recent High Court decisions in which petitioning parties have been granted relief. However, an examination of these recent judgments demonstrates a consistency in the way that the spirit of Lord Justice Jackson’s reforms has been applied by the judiciary.

“In the case of Raayan al Iraq Co Ltd v Trans Victory Marine Inc, relief was granted to the applicant so as to avoid a disproportionate consequence to a small, unintended act of human error. Similarly, in Kesabo v African Barrick Gold plc, relief from sanction was necessary to prevent delay and disadvantage to the parties.

“In these cases, unlike in the present case, neither party was substantially prejudiced by the applicant’s breach of procedure. It may thus be concluded that for an application for relief from sanction to be successful, it is imperative that the applicant demonstrates that the wider interests of justice will be served.”




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McCann: only 60% of the costs orders have followed a court finding

McCann: only 60% of the costs orders have followed a court finding

Court rulings of fundamental dishonesty, leading to the loss of protection of qualified one-way costs shifting, are not as rare as some suggest, insurance firm Horwich Farrelly has claimed, saying that it has secured more than 60 enforceable costs orders on fraudulent low-speed impact (LSI) claims alone since mid-2014.

Collectively there were worth more than £350,000 to insurers, with the largest award being £26,600.

Fraud partner Ronan McCann said the judiciary were initially slow to adopt the provision, but since last summer there has been a notable shift. The concept has now been expanded on through section 57 of the Criminal Justice & Courts Act 2015, which requires the court to throw out a claim found to be fundamentally dishonest.

Mr McCann said: “We are currently securing, on average, one fundamental dishonesty finding a week on suspect LSI cases. Some of these decisions have involved highlighting to the judiciary that claimants who would normally be considered as beyond reproach, such as teachers, have been fundamentally dishonest.”

He said that while 60% of the costs orders have followed a court finding of fundamental dishonesty the firm has also proven that cases do not need to be taken through to trial to secure a costs order. “We are also achieving great success with obtaining enforceable costs orders where the claimant discontinues proceedings in order to avoid a trial or the where a case is struck out,” Mr McCann said.

He added: “It’s an important achievement because it sends a very strong message to claimants tempted to make fraudulent claims – even if it’s ‘just’ inflating the amount claimed – that they could end up significantly out of pocket.”




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Cameron: kill off the health and safety culture for good

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Court of Appeal: claimants’ liability for disbursements was real

The Court of Appeal has backed the “somewhat novel” credit agreement that saw Welsh firm Hugh James fund clients’ disbursements to the tune of £787,500 and then recover interest on them at 4% above base.

The firm represented a number of successful lead claimants in the Phurnacite Workers Group Litigation against the Secretary of State for Energy and Climate Change and Coal Products Ltd.

The high-profile group action was brought by former employees and their families of a phurnacite plant in South Wales, successfully claiming exposure to harmful dust and fumes caused mesothelioma.

But in order to progress the case through the courts, Hugh James agreed a credit arrangement with the claimants to fund the disbursements that in the High Court Mrs Justice Swift described as “at least in the personal injury sphere… somewhat novel”.

Interest was set at 4% above base rate and payable out of damages if the claims were successful. If the individual claim was unsuccessful, the credit agreements were covered by after-the-event insurance.

Swift J rejected the government’s argument that the disbursements were not recoverable, and said the interest rate was not “excessive or unreasonable”.

On appeal by the government, it was argued that as the claimants would not have to repay the interest unless recovered from the defendants, their claim was effectively a subrogated claim by Hugh James and their liability to pay interest was notional rather than real.

This should have led the judge to assess the rate of interest by reference to the solicitors’ circumstances rather than those of the claimants – and as Hugh James should be equated to a first-class borrower, the rate should be 1% above base.

Giving the unanimous judgment of the Court of Appeal, Lady Justice Sharp dismissed the appeal. She said: “These were personal injury actions brought by claimants of modest means for their own benefit. They needed to fund their claims and they borrowed to finance their disbursements at what was conceded to be a reasonable interest rate for private individuals in their circumstances, certainly in comparison to what would have been charged in the open market.

“Under clause 5 of the agreement, payment of the interest was contingent on the claim being successful and damages actually being received… this does not mean that the arrangements were ‘unreal’ or ‘notional’… The claimants won their claims and recovered damages.

“In the events which had happened, the liability had crystallised. Their interest liability was therefore no longer contingent. It was entirely real. Having succeeded, they were liable to pay for the funding advanced to them and the interest charged upon it.”

Speaking after the High Court ruling, Gareth Morgan, lead partner on the case for Hugh James, said: “This is a precedent for a personal injury case. What it means is that if a claimant enters into a funding arrangement and incurs interest on disbursements, then in appropriate circumstances, that is a cost which can be charged against the defendant in the event of a successful claim.

“This switches the burden of funding disbursements from claimant to defendant.”




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KainKnight

Stuart Waters appointed in first stage of expansion of Johnson & Johnson Exeter office

Kain Knight, one of the UK’s largest professional firms of costs lawyers, has appointed Stuart Waters from its London Wall office as manager in charge of the Exeter office.

The Exeter office was acquired as a result of Kain Knight’s acquisition of Johnson & Johnson, also based in St Austell, in November 2014. The acquisition is the latest phase of Kain Knight’s well-publicised business expansion strategy which commenced in April 2013.

Stuart has worked in the legal profession for his entire career, starting as a barristers’ clerk in London and subsequently joining a law firm as a fee earner and eventual head of the Criminal Department. He has worked in the legal costs industry for the past 16 years, joining Kain Knight in July 2014.

Commenting on the appointment, Peter Petyt, CEO of Kain Knight, said:

“We are delighted to appoint Stuart to this position as the first stage in our expansion of the Johnson & Johnson Exeter Office. He and his family are relocating to Exeter, which shows great commitment to the cause, and we are very confident that his enthusiasm and expertise are ideal for growing the office further.

Since our acquisition of Johnson & Johnson we have received a great deal of interest in our services from clients in Exeter and from the surrounding region and we already arranging in-house and external seminars on current issues in the legal costs market.

Kain Knight continues to innovate and will be launching new value-added services early in 2015 which leverage our considerable expertise and experience. These new services complement our traditional offerings and will be well received by clients in the South West and farther afield.”




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DASLawAssist 200Leading legal expenses insurer DAS has partnered with Paragon International Insurance Brokers to provide legal protection for its policy for surgical professionals.

Paragon currently offers the policy to ten insurance indemnity schemes, catering for a number of surgical specialties:

  • The ISIS Indemnity Scheme (incorporating Orthopaedic, Spinal and Neurosurgeons).
  • The ISISIS Group (incorporating Plastic, Ophthalmic, General, ENT, Gynaecological and Urological surgeons).
  • SEMPRIS (Sports and Exercise Medicine Professionals Indemnity Scheme, an appointed representative of Health Partners Europe Limited).

The mandatory cover that DAS supplies within the policy includes General Medical Council disciplinary hearings, contract disputes, personal injury, property protection, tax protection, legal defence and access to the DAS legal advice helpline.

Darren Weekes, UK Broker Sales Manager at DAS UK Group, said: “Providing legal protection for these insurance indemnity schemes helps medical practitioners minimise the risks of claims being made which other indemnity insurance may not cover. We look forward to working closely with Paragon to deliver the high quality product and service their customers expect.”

Ian Redbourn, Head of Healthcare at Paragon International Insurance Brokers, said: “At Paragon we provide medical professionals with the level of insurance cover that allows them to continue to practice medicine in a way that meets the needs of their patients. Partnering with DAS to provide the legal protection within the policy helps to give our customers further peace of mind against a range of legal issues that they may face.”




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ARAG plc, the UK arm of the worldwide legal expenses insurer ARAG Group, has announced record profits for its seventh complete trading year (2013).

Figures confirmed by its Dusseldorf-based parent company show that its Gross Written Premium (GWP) under management increased 9% over 2012 to £46.9m whilst pre-tax and pre-amortisation profits were up significantly to £3.3m. The novel alignment to risk, because of a reinsurance share with the parent company, adds extra stimulus to profitable growth.

The number of individual personal lines policies insured rose to just under 3.5 million (up 15%) and Commercial risks were up 32% with just under 200,000 businesses now insured.

“It has been a challenging trading year once again”, comments ARAG plc Managing Director Tony Buss, “with increasing demands to initiate and respond to new situations that may require regulation or other change. Yet it is also one where product redesign and re-writing has been at the fore, new initiatives have been rolled out, additional benefits have been unveiled that widen the array of legal services available to policyholders and where there has still been time to restructure and expand our office space”.

Earlier this year ARAG acquired a further 60% office space boosting their Clifton, Bristol, Head Office to over 10,000 sq ft before announcing a new wave of recruitment to ensure its award-winning quality and service standards are enhanced as business develops further.

ARAG also retained the best Personal Injury Provider Award in 2013 for it’s After the Event (ATE) service and added the best Before the Event (BTE) Underwriting Service Award provider as voted by industry experts. These accolades were achieved despite distractions relating to the implementation of new legislation which directly affected the business.

With a new suite of commercial products having just been launched and both Home Emergency and HNW products in high demand, there are expectations that the company will retain good margins for consistent profits year on year.

“It’s impossible to look too far ahead as we await the results of post-LASPOA claims” adds Mr Buss. “There have been too few closed cases under the new rules in the past 12 months. After a record breaking year in 2013 we are buoyed up by our consistent ability to deliver strong returns and expect to do so again this year, in 2015 and beyond”.

To comment on the article please go via our blogspot: http://theragnbone.blogspot.co.uk/2014/05/annual-results-2013-record-profits-120.html

 




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ARAGLeading legal expenses and assistance provider ARAG has expanded its after-the-event (ATE) insurance operation with the appointment of a new Account Manager to help service increasing demand among solicitors for the company’s growing range of ATE solutions.

Jonathan Bassey has joined the company as Account Manager for the company’s after-the-event (ATE) business. Jonathan will be working with law firms and ATE intermediaries, particularly in the North and East of England.

“At a time when several ATE providers have left the market in one way or another, ARAG is continuing our path of steady growth.” comments Director and Head of ATE, Paul Hurley. “Jonathan has a wealth of knowledge and experience in the legal market that will assist us as we expand our ATE product range to existing and new customers.”

The company has also appointed another new ATE Underwriter, William Snelling, and Harriet Dean who joined the ATE division’s Case Management Unit, in recent weeks, as well as Claims Auditor Jaskaren Dhaliwal, who will work auditing both ATE and BTE case files.

The appointments continue a period of steady expansion for ARAG, which passed the 100 employee milestone earlier this year.




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Smith: demand for one-stop shop

Burford Capital, the world’s largest litigation funder, has announced three new senior hires in its UK after-the-event (ATE) insurance arm and Litigation Futures sponsor Firstassist Legal Expenses, including a former partner at Nottingham law firm Freeth Cartwright.

Mark Thomson joins from Freeths, where he was a commercial dispute resolution partner, to become a litigation funding manager. He is noted for his expertise in commercial litigation, professional negligence and insurance work.

The new head of operational underwriting is Mike Payne, who has over 20 years’ experience in the London insurance market and has a particularly strong background in the legal sector, having worked as head of business development for a large national law firm for some years.

Louise Smith has joined as product development manager. She trained as a solicitor and worked in private practice as a civil and criminal litigator after qualifying. She has since undertaken roles in both claims management and product development, and has extensive experience across all areas of the legal expenses market.

Firstassist managing director Peter Smith said:  “We are delighted to welcome Mike, Louise and Mark to the team. These are extremely talented individuals who will, doubtless, make a real difference to our business and our clients.

“The UK litigation landscape is changing fast but there is no doubt that the need for greater certainty on costs is here to stay. The demand for a one-stop shop to assist with all aspects of legal expenses insurance and funding is greater than ever and we look forward to helping solicitors and their clients in these exciting and challenging times.”




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Maxey: unfair restraint of trade

The government’s delay in pressing ahead with proposals to stop solicitors from owning the medical agencies through which they commission reports in whiplash cases is a “partial victory”, according to a solicitor who has threatened the Ministry of Justice (MoJ) with legal action over the move.

However, James Maxey, managing partner of Express Solicitors in Manchester, said he would revive his plan to bring a judicial review against the government should the issue return to the agenda.

Announcing the way forward on whiplash reform last month, justice minister Lord Faulks said the MoJ remained “committed” to ensuring independence in the commissioning of medical reports, and intended to take it forward as part of the second tranche of reforms, alongside developing proposals for the accreditation of medical experts. Detailed proposals would be published “in due course”, he said.

When the prospect of a ban was first raised, Mr Maxey, along with Michael Jefferies of Jefferies Solicitors, sought to rally support for a possible judicial review.

Mr Maxey said: “We are arranging through the solicitors we have instructed, JMW, to write to [the MoJ] making it clear that we remain opposed to any future change mirroring the one that was suggested, and echoing the transport select committee’s view that further consultation would as a minimum need to be carried out as a precursor to any further proposals for a change around the topic of independence for medical agencies.

“So at this stage, we cannot of course proceed further to fight a non-decision and we are pleased enough with the current outcome in so far as the independence point goes.”

Mr Maxey said the solicitors involved felt “very strongly” that the proposal would be “a completely unfair restraint of trade” that went against the intentions of the Access to Justice Act and the Legal Services Act in creating alternative business structures.

“We therefore consider that, whilst the government haven’t guaranteed that there won’t be a need for a future fight on this, we have influenced the government. Therefore, so far as we are concerned, we feel that this could be chalked up as a minor victory for claimants.”

James Maxey will be on a panel debating the whiplash reforms at PI Futures on 16 September in Manchester. Click here for details.




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Bristol: Every indulgence given to a LiP casts an extra burden on the represented party

A litigant in person (LiP) is not to be given “special treatment” as the rules in the part of the law his case concerns are neither hard to find nor “particularly difficult to understand”, the High Court has ruled.

His Honour Judge Paul Matthews, sitting in Bristol as a High Court judge, said the interests of the represented party and the public also had to be taken into account.

EDF Energy Customers Ltd v Re-Energized Ltd [2018] EWHC 652 (Ch) was an appeal brought by the debtor company, Re-Energized, against a winding-up order.

A director of the company, Luke Watson, appeared for the company and so it was treated as a litigant in person.

After a detailed review of the authorities on LiPs, HHJ Matthews derived four principles:

  • There is a general duty on tribunals to assist litigants, depending on the circumstances, but it is for the tribunal to decide what this duty requires in any particular case and how best to fulfil it, whilst remaining impartial;
  • The fact that a litigant is acting in person is not in itself a reason to disapply procedural rules or orders or directions, or excuse non-compliance with them.
  • The granting of a special indulgence to a litigant in person may be justified where a rule is hard to find or it is difficult to understand, or it is ambiguous; and
  • There may be some leeway given to a litigant in person at the margins when the court is considering relief from sanctions or promptness in applying to set aside an order.

He described Mr Watson as an “articulate and knowledgeable layman”, but bore in mind that he chose not to seek legal advice, including on some letters from the respondent’s solicitors which he misconstrued.

HHJ Matthews said: “What the solicitor said [in the letters] was correct as far as it went. He could have said more (indeed, he could have said rather less), but there was no duty, as Mr Watson accepts, on those solicitors to advise him as the adverse party. In my judgment those emails were not misleading, and do not alter the basic position.”

He said the rules in this part of the law were not hard to find or “particularly difficult” to understand.

“Of course, I accept that a layman without any experience of finding his way round a law book or the statute book will take longer to do so, and may fall into error more easily and more frequently than a trained lawyer. That is, after all, why it takes training to become a lawyer.

“Yet Mr Watson had been able to put together a sensible skeleton argument and a bundle for the injunction hearing, a written argument before the district judge, and also a bundle for this appeal. That was of course his choice, as to how he allocated the company’s available resources.

“But he cannot complain if it does not produce the result he wished for.”

HHJ Matthews said he had also to consider the position of the represented party and the public generally.

“Every indulgence given to a litigant in person casts an extra burden on the represented party and on the court system. This extra burden is usually marginal, but it mounts up over time.

“Yet a represented party too may have limited resources, and may have had to make choices, indeed sometimes sacrifices too, in allocating resources so as to be able to afford representation. Delays and lack of finality may impose unwanted and unwarrantable costs on him or her too. The same is true of the court system…

“So, overall, in my view there should be no special treatment for Mr Watson here because he was a litigant in person at first instance.”




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Ruling: privilege of 44,000 documents at issue

Ruling: privilege of 44,000 documents at issue

The High Court has ordered international law firm Dechert to cease acting for the principal creditor of a Russian businessman because it is also acting for his trustees in bankruptcy and has access to thousands of documents that are covered by legal professional privilege.

Mr Justice Arnold found that the safeguards which had been put in place by Dechert did not provide “adequate protection”.

He said: “They simply do not address the key fact that the solicitors acting for Avonwick [the creditor] have already read a large quantity of Mr Shlosberg’s privileged documents and cannot put that knowledge out of their minds.”

One of the other factors the judge took into account was that in reviewing the documents, Dechert had “proceeded upon an understanding of the law which I have held to be mistaken”.

“I do not suggest that Dechert acted otherwise than in good faith,” he added.

Shlosberg v Avonwick Holdings Ltd & Ors [2016] EWHC 1001 (Ch) was an application by Mikhail Shlosberg, a bankrupt Russian businessman domiciled in England, for an order directing that Dechert should cease acting for both Avonwick and his joint trustees in bankruptcy. The application was made primarily in respect of Dechert’s position as solicitors for Avonwick.

Its basis was Dechert’s possession and review of a large quantity of documents, many of which it was accepted were privileged; however, the respondents – Dechert, Avonwick and the trustees – argued that the benefit of the privilege had passed to the trustees and that there was no real risk of any misuse of confidential information by Dechert.

Avonwick lent Webinvest Ltd $100m, backed by a personal guarantee from Mr Shlosberg, Webinvest’s beneficial owner. This was not repaid and Avonwick eventually launched proceedings for $180m, including interest. This succeeded in 2014. In early 2015, Mr Shlosberg was declared insolvent and Webinvest wound up.

Arnold J said there was “nothing inherently objectionable” about a solicitor acting for both a trustee in bankruptcy or liquidator and a major creditor of the bankrupt or insolvent company, but the respondents had to establish that the benefit of Mr Shlosberg’s privilege had passed to the trustees. On the facts he found this proven with respect to only one of three categories of documents; this still left over 44,000 documents at issue.

The respondents relied on several safeguards put in place to protect Mr Shlosberg’s confidential information. These included the trustees engaging London law firm Moon Beever to advise in relation to conflicts of interest and instructing Dechert that no information should be shared with Avonwick without their express agreement.

However, after listing 11 relevant factors, Arnold J concluded that the safeguards were not sufficient. The factors included that Avonwick was “an adverse party to Mr Shlosberg in hostile litigation”; the documents had been reviewed in detail by Dechert over a substantial period of time; Dechert had not tried to set up any kind of information barrier – “on the contrary, the partner in charge of the litigation for Avonwick has led the review of the documents”; and that Avonwick wanted to make use of the knowledge that Dechert had acquired in the pursuit of its claim against Mr Shlosberg.

The judge said: “Taking all of these factors into consideration, I do not consider that Mr Shlosberg’s rights in respect of the privileged information would be adequately protected by granting an injunction restraining Dechert from using the privileged information unless a strict information barrier were created within Dechert and an entirely new team was assigned to act for Avonwick.

“The disruption and expense which this would cause Avonwick would be little short of the disruption and expense of instructing a different firm of solicitors, however, which is no doubt why the respondents have not proposed it. In those circumstances, I have concluded that an injunction should be granted requiring Dechert to cease acting for Avonwick.”

Dechert has not responded to a request for comment.




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Budget: not to be taken as a licence to conduct litigation in an unnecessarily expensive way

Costs judges should not treat costs as reasonable or proportionate simply because they fall within the scope of the court-approved budget, the Court of Appeal has warned.

Giving permission to appeal in Troy Foods v Manton [2013] EWCA Civ 615, Lord Justice Moore-Bick also suggested that it was wrong for judges to approve elements of budgets simply because they do not seem “grossly disproportionate”.

The case concerned a breach of contract claim that fell under the Mercantile Court costs management pilot last year and the budget approved by HHJ Kaye QC in Leeds.

Moore-Bick LJ said: “The defendant's concern is that, on a detailed assessment, costs judges are likely to treat the approval of a budget, or any relevant part of it, as ipso facto establishing that the costs incurred in respect of the matter generally, or that particular element of it, are reasonable if they fall within the approved budget.

“In Henry v News Group Newspapers [2013] EWCA Civ 19 at paragraph 16, I expressed the view that an approved budget was not to be taken as a licence to conduct litigation in an unnecessarily expensive way.

“It follows that I do not accept that costs judges should or will treat the court's approval of a budget as demonstrating, without further consideration, that the costs incurred by the receiving party are reasonable or proportionate simply because they fall within the scope of the approved budget.”

Nonetheless, he continued that one of the principal aims of costs budgeting is to control the parties’ expenditure, and “that will not be effective if judges do not apply the correct principles”.
Judge Kay had said that, looking at the matter in the round, the costs were not so grossly disproportionate or so out of line with the overriding principle as to cause him to put any greater cap on them or to express any greater concern than he had already voiced in relation to certain elements.

Moore-Bick LJ said: “It seems therefore that the judge proceeded on the basis that he would approve any figure for a particular element of the claim, provided it was not so unreasonable as to render it obviously excessive or, as he put it, ‘grossly disproportionate’.
“Although the court will not readily interfere with the judge's decision in a matter of this kind, which essentially involves an exercise of judgment, I think it is arguable that in this case the judge did not apply the correct principles and, as a result, approved an over-generous budget in respect of some elements of costs.”

The judge said he gave permission so that the Court of Appeal could establish the correct principles upon which costs budgeting is to be carried out and also possibly the proper approach to be taken by costs judges on detailed assessment where there is a budget.

However, it is understood that the case has now settled, but the comments indicate that the court recognises the early need for guidance.




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In January 2017, Litigation Costs Services, one of the country’s most experienced group action costs firms, will join forces with Elite Law Solicitors, the country’s first Lexcel accredited costs practice.

Sue Nash – Costs Lawyer, MD of Litigation Costs Services (LCS) and former ACL chair – will join Elite as Senior Consultant.

LCS was founded in 2002 by Sue and former ACLD founding member Terry Wisdom and practises from offices in High Wycombe.  Whilst it offers the full range of costs services, it is particularly well known for its specialism in group action costs and has worked on over 50 such actions over the last 15 years.

LCS’ clients will transfer to Elite and will benefit from an increased team and the extensive range of services offered by Elite as well as receiving continuity from Sue and the LCS team.

Elite – born out of HM Law Costs Draftsmen – this year became the first costs firm to gain Lexcel accreditation and is rapidly building upon its existing following and reputation http://www.elitelawsolicitors.co.uk/

Elite’s Managing Partner, costs specialist and Solicitor James Scozzi, says that “We are delighted to welcome Sue as a key member of our practice.  As one of the country’s most prominent costs lawyers – and a recognised group action specialist – she will add another dimension to our already respected team.  Sue will also play a part in offering costs and budgeting advice and training to our clients”.

For her part Sue is delighted with her new role:  “I have known – and previously worked with – both Steve Howey and John Mistri for some 20 years and have also worked closely with James in the past on a number of projects.  Elite share my commitment to client service and to expanding the role of costs expertise to the benefit of their Solicitor and lay clients.  They are well placed to meet the challenges that are coming for all litigators and I am excited by the opportunity of working with them for many years to come”.

Despite the imminent changes through the expansion of the PI small claims limit and the extension of fixed recoverable costs, Sue remains optimistic about the future for costs practices. “Whilst those firms practising predominantly in costing what the judiciary refer to as ‘low value claims’ will undoubtedly face disruption and the loss of traditional costs drafting work, those individuals and firms who look ‘outside the box’ will find that their skills and experience lend themselves to future areas of work which will become increasingly valuable to solicitor and lay clients alike; legal project management, pricing, WiP valuation, costs ADR and costs auditing are just a few of the areas that spring to mind.

Furthermore, costs budgeting will remain for higher value cases, solicitors will continue to need assistance with the new format bill of costs (particularly in the early years) and in the meantime there will be a long ‘tail’ of traditional bill costs drafting and negotiations work.”

Omnia Legal Software http://omniasoftware.co.uk/ will remain a separate entity and continue to trade from its offices in High Wycombe with Sue remaining as MD.  With a new format ‘electronic’ bill of costs due to become compulsory from October 2017 the role of technology in costs practise is set to become the norm: https://www.litigationfutures.com/associate-news/costs-it-is-proving-its-value-2  




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Medical reports: new qualifying criteria

Medical reports: new qualifying criteria

Some 134 ‘shell’ companies were yesterday removed from MedCo in the wake of the new rules announced last month by the Ministry of Justice.

Under the revised qualifying criteria for medical reporting organisations (MROs) unveiled last month, the definition of an MRO now precludes organisations set up purely as a shell “to gather instructions and forward them on to a related organisation”.

Many of the high-volume national MROs (ie, tier 1) set up tier 2 shell companies to increase their chances of appearing in the random selection of MROs put to claimants and their solicitors.

They argued that this was to allow solicitors to choose MROs with which they have existing relationships, rather than being forced to work with companies they do not have a relationship with.

However, in an announcement yesterday, MedCo emphasised that MROs which have been suspended from the system – but have already been instructed to produce a medical report – would be able to fulfil the instruction and have an ongoing obligation to upload their case data to the system.

Yesterday’s changes also introduced a new search offer that increases the chances of a tier 1 MRO being selected. The results will now throw up a choice of two tier 1 and 10 tier 2 MROs, replacing the previous choice of one tier 1 and six tier 2 companies. No changes have been made to the number of direct medical experts presented.

The MedCo statement said: “The revised qualifying criteria enable MedCo to ensure that MROs registered on the system, or applying to register, do not undermine the system’s random allocation model. MedCo applies the revised qualifying criteria to determine that MROs are properly constituted businesses with satisfactory systems and sufficient resources in place to operate to the minimum required standards.”




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Napier: contingency fee working party to report by end of July

Implementation of the Jackson reforms is set to dominate the work of the Civil Justice Council (CJC) in the coming year, its newly published 2012/13 business plan has shown.

Top of the agenda at the moment is the advice being given to the Ministry of Justice (MoJ) on the operation of qualified one-way costs-shifting, with an announcement from the MoJ – along with publication of the report of the CJC working party, chaired by Berrymans Lace Mawer partner Alistair Kinley – due either this week or next, Litigation Futures understands.

The contingency fees working party chaired by Michael Napier, which is looking at issues of principle and practice to underpin the introduction of damages-based agreements, is due to report by the end of July.

The CJC’s other two Jackson-related pieces of work are a review, chaired by HHJ Graham Jones, of the raft of pre-action protocols, with a view to making recommendations for reform that promote consistency of approach in the protocols; and work on publishing an ADR Handbook, the aim of which is “to ensure better and more consistent ADR services and to improve client application of the value and nature of ADR services”.

The CJC’s other work includes a review, chaired by District Judge Margaret Langley, of whether senior Fellows of the Chartered Institute of Legal Executives should be entitled to claim automatically the same hourly rates as solicitors with comparable post-qualification experience. This will then go to the Master of the Rolls, who is also awaiting a report from the MoJ’s advisory committee on civil costs about whether the guideline hourly rates need changing.

The other projects on the CJC’s agenda are: a review of the protocol on expert evidence; its working party on access to justice for self-represented litigants (the new name for litigants in person) pursuing those recommendations from its report on the issue which do not require legislative change; and a study of the present state of ADR education at university level and in vocational training courses.




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Craig Budsworth

Budsworth: Concerns the accreditation scheme developed “too swiftly”

The Motor Accidents Solicitors Society (MASS) has questioned the independence of the government’s proposed portal for medical evidence in whiplash cases, to be funded and built by the Association of British Insurers (ABI).

Craig Budsworth, chairman of MASS, said he would be asking the Ministry of Justice (MoJ) what alternative funding options were considered for the portal, currently labelled ‘MedCo’, and what the arguments were behind the choice of the ABI.

“Given our existing concerns that the balance of reforms has already tilted too far in favour of defendants, we will understandably have questions about how the scheme’s independence will be assured when its structure and operation lies in the hands of one side of the legal debate,” Mr Budsworth said.

Mr Budsworth said he was also concerned by the MoJ’s planned accreditation scheme for medical experts in whiplash cases, due be introduced once the portal is up and running.

“We continue to be worried that the accreditation scheme has been developed too swiftly and without fully understanding the structure, rules and impact of the new scheme,” he said.

“Rules are being drafted without the full knowledge of how the whole process will look. It was MASS’s understanding that the scheme would be funded by the experts themselves through their accreditation fee, but this has yet to be clarified.”

However, Mr Budsworth welcomed the introduction of compulsory checking of previous claims histories by claimant lawyers, based on data supplied by insurance companies.

He said MASS had campaigned for compulsory data-sharing since 2012, which “should have a discernible positive impact on discouraging potential fraudsters from attempting to bring forward unmeritorious claims”.

David Johnson, president of the Forum of Insurance Lawyers (FOIL), said the forum was “in principle” in favour of further reform of the expert instruction process for whiplash cases to achieve “proper independence of the experts involved and ensuring proper standards of reporting through accreditation”.

He said FOIL recognised that “fundamental changes to the system will need to be carefully thought out, so as to effectively achieve those aims and to minimise the risk of adverse, unintended consequences”.  

Andrew Pemberton, director of Argent Rehabilitation, part of the Parabis Group, said: “The inability to have service-level agreements with providers of choice will potentially drag down the quality of service and prevent claimant representatives from delivering to the same standards they do today.

“An example of this is at Argent we are able to pre-populate a medical expert’s report with data gathered by a telephone triage. This prevents duplication and increases the time available to the expert at the assessment.

“Without these kinds of links the patient experience will suffer and the time taken by GPs, and therefore costs, will increase.”

 




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Parliament: second reading of bill today

Opt-out collective actions for breaches of competition law moved a step closer to reality last week after the Consumer Rights Bill began its passage through Parliament.

The bill has its second reading in the House of Commons today, and opt-out actions are likely to prove controversial, with the CBI claiming that they will introduce US-style class actions to the UK.

However, the Department for Business, Innovation and Skills (BIS) said last week that research by the Office of Fair Trading (OFT) showed that businesses view the current approach to private actions as the least effective aspect of the UK’s competition regime because they are so complex to bring.

The bill puts forward a three-prong approach to tackling the problem. First, it proposes reform of the Competition Appeal Tribunal (CAT), including allowing the CAT to hear stand-alone cases – where the alleged breach of competition law is not already the subject of an infringement decision by the European Commission or OFT – grant injunctions, and introduce a cost-capped fast-track regime aimed at SMEs.

This fast-track regime will have an emphasis on injunctive relief, and there will be a presumption that an SME case will be suitable for the fast-track.

The second element is to promote ADR to ensure that the courts are the option of last resort

This will see the introduction of a new opt-out collective settlement regime in the CAT and a new role for the Competition and Markets Authority (CMA) in certifying voluntary redress schemes.

Under the collective settlement regime, any representative consumer group or trade association, together with a business which has broken competition law, could jointly approach the CAT to agree on a level of damages without having to take a case through the court process. Any settlement would then be binding on eligible consumers, unless they opted-out of the settlement.

Under the certifying redress scheme, the CMA could approve a consumer compensation scheme put forward by a business which had broken competition law. Consumers could then come forward and claim their compensation.

Finally there is the “limited” opt-out collective actions regime to sit alongside the existing opt-in regime. Under the latter, only Which? can take forward a collective action on behalf of a group of consumers.

The provisions in the bill will allow any representative consumer group or trade association to bring an action, and eligible consumers or businesses would automatically be included unless they actively opt out.

Safeguards to prevent the emergence of US-style litigation, BIS said, include certification by the CAT of whether the case should be opt-in or opt-out; no treble damages and no contingency fees.




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Supreme Court: Unanimous ruling

An insurance company that settled personal injury claims directly with the clients of a law firm has to pay the solicitors the costs they would have earned, the Supreme Court ruled today.

Though it upheld the outcome of the Court of Appeal hearing, the court disagreed with the route taken to get there.

Lord Briggs, giving the unanimous ruling of the Supreme Court, said “we were told that this practice by Haven had been repeated on a sufficiently large scale for the determination of the dispute to have financial consequences running to many millions of pounds”.

At first instance, His Honour Judge Jarman QC in Wrexham rejected Cheshire firm Gavin Edmondson Solicitors’ objections to the actions of Haven Insurance in settling six low-value road traffic claims so as to avoid paying legal fees.

However, the Court of Appeal ruled that while Edmondson had no right to recover fees from its clients under the terms of its client-care letter – which the court found trumped the conditional fee agreement (CFA) that said it could – it had an interest which equity could protect and which was “deserving of protection”.

This meant Haven had to pay the RTA protocol fees that would have been due.

Lord Briggs disagreed with the Court of Appeal’s finding on the client-care letter.

He said the letter “did not destroy the basic liability of the client for Edmondson’s charges expressly declared in the CFA and Law Society’s standard terms”; rather “it merely limited the recourse from which Edmondson could satisfy that liability to the amount of its recoveries from the defendant”.

Further, the letter was “plainly intended” to be read in accordance with, “rather than in opposition to”, the CFA and Law Society’s terms.

“Those two documents are… shot through with clear assertions of the client’s responsibility for the firm’s charges in the event of a win in the litigation…

“The result of the above analysis is that there did exist, in each of the six cases, a sufficient contractual entitlement of Edmondson against its claimant clients to form the basis of a claim to an equitable lien over the agreed settlement debts payable by Haven on behalf of its insured drivers.”

The next questions to establish the lien were whether the settlement debts owed their creation, to a significant extent, to Edmondson’s services provided to the claimants under the CFAs – which it was agreed they did – and whether Haven had notice or knowledge of Edmondson’s interest in the settlement debts.

Here, Lord Briggs did agree with the Court of Appeal. He said: “Once a defendant or his insurer is notified that a claimant in an RTA case has retained solicitors under a CFA, and that the solicitors are proceeding under the RTA Protocol, they have the requisite notice and knowledge to make a subsequent payment of settlement monies direct to the claimant unconscionable, as an interference with the solicitor’s interest in the fruits of the litigation.”

As a result, he ruled that the CFAs made between Edmondson and its clients contained a sufficient contractual entitlement to charges to support the equitable lien on traditional grounds.

Though not strictly necessary, Lord Briggs went on to consider the Court of Appeal’s reformulation of the equitable lien, and found it wanting.

The Court of Appeal rested its conclusion on two alternative grounds, both of which assumed that Edmondson’s clients had no contractual responsibility of any kind for its charges.

The first was that Edmondson had its own entitlement to recover its charges from Haven under the RTA protocol. The second was that the clients had such an entitlement, and Edmondson had a right to sue Haven for its enforcement using the client’s name for that purpose.

“There are in my judgment insuperable obstacles in the way of each of those alternatives,” said Lord Briggs. “They stem mainly from the voluntary nature of the RTA protocol.”

Even assuming that Haven’s conduct breached paragraph 7.37 of the RTA protocol, “it creates no legal or equitable rights of any kind, if the client has no responsibility to the solicitor sufficient to support the solicitor’s lien. There is no legal entitlement of the solicitor direct against the insurer which the lien can support by way of security”.

It was, he said, “simply wrong” to find “a general principle that equity will protect solicitors from any unconscionable interference with their expectations in relation to recovery of their charges”.

Lord Briggs continued: “Furthermore the careful balance of competing interests enshrined in the RTA protocol assumes that a solicitor’s expectation of recovery of his charges from the defendant’s insurer is underpinned by the equitable lien, based as it is upon a sufficient responsibility of the client for those charges.

“Were there no such responsibility, it is hard to see how the payment of charges to the solicitor, rather than to the client, would be justified.

“Furthermore, part of the balance struck by the RTA protocol is its voluntary nature. Its voluntary use stems from a perception by all stakeholders that its use is better for them than having every modest case go to court.

“If the court were to step in to grant coercive remedies to those affected by its misuse by others, that balance would in all probability be undermined.”