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Wallis: ATE insurance market has to remain responsive

New research has highlighted how ineffective qualified one-way costs-shifting (QOCS) has been in suppressing the need for after-the-event (ATE) insurance, with 90% of firms still advising every client of its availability.

The poll of over 500 managing partners found that one in six firms arrange an ATE policy for every client, though the majority (61%) operate a business model where ATE is arranged only if the client specifically requests it or if the firm considers it to be necessary based on the firm’s own assessment of the case. Some 5% never arrange an ATE policy.

The survey, conducted by Liverpool-based O’Connors – which specialises in acting for other law firms – revealed that just over one in ten recommended a policy only when there has been a material increase in the client’s exposure to an adverse costs order, such as the receipt of a part 36 offer or new witness evidence coming to light, arguably leaving clients at risk of not being able to get cover at all or only at a significant premium.

Of the clients who decline their law firm’s recommendation to take out ATE, 53% tell their law firm they are prepared to take the risk and 31% that they feel the premium is too high. O’Connors said this premium resistance is “perhaps reflective of the 41% of managing partners who said that in their opinion ATE insurance premiums now being charged in the market do not fairly reflect the client’s risk exposures, compared to 24% who said they do”.

Law firms ranked premium pricing and extent of cover most highly in their choice of ATE insurance provider, with ATE expertise, ease of doing business and insurer security close behind. Most firms (95%) accessed ATE policies direct from an insurer with only 12% ever using an insurance broker. Just over a third (35%) of firms use just one insurer, with the majority (59%) having two and 6% three or more.

Less than a quarter (23%) of respondents said their law firm’s client proposition is to provide clients with a contractual indemnity for their adverse costs risk; 65% said they never do this. Providing such a contractual indemnity can have an impact on a firm’s balance sheet and ultimately its financial stability, O’Connors said.

The charging model of personal injury law firms was quite diverse. The largest proportion of respondents (47%) charged a percentage of damages plus ATE premiums and disbursements; 27% charged a percentage of damages including ATE premiums and disbursement, and the rest a number of different charging structures to suit each client.

O’Connors partner Nigel Wallis said: “These results show the diversity of business models in the market and the lengths to which law firms go to ensure that they act in their client’s best interests.

“In order to survive, the ATE insurance market has to remain responsive to the needs of firms and their clients and things are likely to remain very fluid as the full impact of the reforms starts to bite.

“From our own experience of advising many law firms, we see an increasing number of management teams seizing new market opportunities and developing innovative business models that are client centred and, one hopes, financially successful.”

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CJC: key role in civil justice system

CJC: key role in civil justice system

The Civil Justice Council (CJC) has been given a clean bill of health following a triennial review carried out by the Judicial Office.

A report issued yesterday – some 20 months after the review was announced – said that all those who contributed “agreed strongly” that there was a continuing need for the CJC.

“It was noted that its functions are particularly needed at the current time, when there is such a significant amount of change and reform within the CJS [civil justice system]. Litigants in person putting pressure on the system were one example given and the need for the CJS to be more accessible.”

If the CJC were to be abolished, the review said, it would only have to be reconstituted in one form or another.

It did, however, recommend that the CJC draw up a plan to improve the diversity of its membership, and that it should consider a “more formal and consistent assessment” of members.

The CJC is an arm’s length public body and the review rejected the possibility of moving it or its functions into the Ministry of Justice. “For the council to effectively fulfil its role, it is necessary for it to be independent of government,” the report said. “The council acts as a ‘critical friend’ to the MoJ, giving honest and transparent advice and feedback on government policy which would be compromised if it were to be moved into the MoJ.”

However, there were suggestions made to the review that the two could work together more closely, in particular with relevant CJC members becoming involved in drafting legislation.

The idea of merging the CJC with the Civil Procedure Rule Committee was also firmly knocked back. “In all likelihood it would increase bureaucracy, be a disincentive for council members to give their time and expertise freely, and would attract the opposition or at least strong scepticism of the senior judiciary.”

The report pointed out that the CJC and rule committee called for “very different expertise”, with the former focusing on policy development and scrutiny of the CJS in practice, and the latter being a technical rule-making body.

“By way of example, on a major reform process such as the Jackson costs reforms, the CJC looked at the pre-legislative technical implementation of the measures, and the rule committee drafted and agreed consequent rules and practice directions to give procedural effect to the policy and legislation. One was not qualified to effectively carry out the other.”

The review also rejected a merger with the Family Justice Council, saying that given their very different agendas, natures and workloads, the effectiveness of both would be diluted. Further, there was no prospect of “real administrative or substantive benefits” from doing so.

The review also covered the Family Justice Council and gave it a similar endorsement.

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Bellamy: BTE penetration is falling

Government hopes that before-the-event (BTE) legal expenses insurance will take up the slack left by legal aid cuts and the end of recoverability – and that its cost will fall – are wide of the mark, a leading insurer has warned.

Phil Bellamy, group underwriting, ATE and special risks manager at DAS, told Litigation Futures that a wide range of factors are having a negative impact on the BTE market.

“The rapid growth in comparison websites has led to a reduction in BTE penetration via the traditional add-on route as cash-strapped consumers uncheck the legal expenses option in order to save £20 to £30 off their motor and household premiums,” he explained. “Eight years ago, BTE penetration was in excess of 50%; today it has reduced to about a third, with no signs of this trend stopping anytime soon.”

Pointing out that the net premium retained by BTE underwriters is often just a few pounds – “and very occasionally zero” – Mr Bellamy said this was only possible because of a number of critical factors, including: a relatively low claims frequency across the book; additional income from referral fees; strictly controlled costs through the effective use of economies of scale and panel solicitors; and carefully controlled exposures.

He said: “Tinkering with any of these factors, such as the upcoming ban on referral fees, or the [government’s] proposed publicity of BTE insurance, will ultimately lead to a negative effect on claims costs, and thereafter result in an increase in the net premium required by underwriters, and not the reduction in cost the government predicts.”

He suggested that it will take many years for consumers to realise that they could lose a portion of their damages in cases brought after April 2013, and only then will they consider the potential benefit of a £25-a-year BTE policy.

Mr Bellamy also questioned how solicitors will deal with their professional obligations when they discover a potential new client has a BTE policy offering a nil deduction from damages, while their firm’s new business model involves a 15%-25% deduction.

“How does SRA mandatory principle 4 – ‘You must act in the best interests of each client’ – fit in the new world?” he asked. “Is it based solely on a claimants expected retained damages? Or do other factors come into play, such as location, expertise or speed of settlement? And which trumps the others?”

The insurer said he has asked the Solicitors Regulation Authority for guidance on this, but has yet to hear back.


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Kightley: firms need to “flex” the fixed-fee regime

“Litigate, don’t procrastinate” was the message yesterday to claimant solicitors as one way to ameliorate the financial loss they will suffer from the new portal and fast-track fixed fees.

Speaking at the Association of Personal Injury Lawyers (APIL) annual conference at Celtic Manor, Stuart Kightley of north London firm Osbornes, said that taking the maximum success fee from all claimants’ damages would not be enough to make up for the impact of the new fees.

Instead firms need to “flex” the fixed-fee regime by being more ready to issue proceedings in cases that fall out of the road traffic accident, employer’s liability and public liability (RTA/EL/PL) portal schemes. “Don’t mess around – just issue,” he said.

He modelled how this would work, and more generally the impact of the new fees, by taking a basket of 300 successful cases at average damages levels – 100 in each category – where the current fee levels (using the figures produced by Professor Paul Fenn) were put up against the new fixed fees with a success fee charged to the client to the maximum level.

Mr Kightley – APIL’s new secretary – then assumed that half of the RTA cases would settle inside the portal, 35% would settle outside the portal and 15% would conclude after proceedings have been issued.

On this basis RTA cases currently generate average costs of £1,750 per case. Under the new fees, it falls by 16% to £1,470 per case. However, by issuing more readily – with 25% of cases concluding after issue – average costs would be £1,720, a fall of just 2% on the present level.

In EL – assuming 80% settling pre-issue – he put averge current revenue at £3,550 per case. Modelling 24% of cases settling within the new portal, and 56% pre-issue, fees would fall 16% to £2,960 per case. But issuing in 30% of cases, rather than 20%, would take it to £3,230, a more modest fall of 9%.

The figures were worst in PL. Average current fees – based on 75% settling pre-issue – are £4,330 per case. Under the new regime, with 19% settling in the portal and 56% pre-issue, it sinks to £3,140. Issuing in 35% of cases, rather than 25%, improves things a bit to £3,410, still a 22% fall.

Put all together, the 300 cases in the basket currently generate £963,000. Even with the maximum success fee, the effect of fixed fees will reduce that revenue by 21% to £757,000, Mr Kightley said.

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Court of Appeal: CFA “made” under the regulations

Appeal judges have ruled that solicitors cannot recover their costs where conditional fee agreements (CFAs) fail to comply with the cancellation of contracts regulations, with a potential impact on a significant number of cases.

The court dismissed an appeal by Susan Cox against a decision that her CFA was unenforceable on the grounds that it had been entered into during a visit to her home and no notice had been given of her right to cancel.

Lords Justices Longmore, Underhill and Sharp ruled that the CFA had been “made” for the purposes of the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008.

The Court of Appeal’s full judgment in Cox v Woodlands Manor Care Home (2015) is yet to be published.

According a report on Lawtel, a solicitor visited Ms Cox at home because her injuries made that more convenient. The claim was settled for £100,000 and costs were awarded on the standard basis.

The care home argued that Ms Cox was not liable to pay her solicitors since the CFA was unenforceable under the 2008 regulations – the CFA was a contract for the supply of services, Ms Cox was a consumer and the solicitor a trader. It was admitted that no notice of her right to cancel had been served.

A costs judge held that the CFA had not been “made” when it was signed because there was no intention to create legal relations until the position with the claimant’s legal expenses insurer had been confirmed. But Judge Denyer QC allowed an appeal against this, holding that the fact the CFA might have ceased to operate if the insurer agreed that the solicitors could act, did not prevent it being legally effective when signed.

Upholding this ruling, the Court of Appeal said that even if the obligations were not immediate, the agreement was made when signed.

That was correct as a matter of law and also consistent with the policy behind the regulations, which was to protect consumers in their homes from pressure that operated at the moment of decision.

Paul Wainwright, head of technical costs at BLM, which acted for the care home, said the result of the ruling was that the claimant’s bill of costs was assessed at nil and BLM was awarded its costs throughout the process, including the appeals.

He said the ruling confirmed that the 2008 regulations applied to cases funded by CFAs and that solicitors satisfied the description of ‘trader’ and their clients ‘consumers’ under the regulations.

“As such, the decision will apply to all CFAs entered into between solicitors and their client’s between 1 October 2008 and 13 June 2014 [when a new version of the regulations came in].

“It is possible that a significant number of contracts made in the home do not comply with the 2008 regulations. This would include CFAs, as in this case, and credit hire agreements.

“If defendants correctly identify a failure to comply with the regulations, this decision demonstrates that such failure will be fatal to the recovery of the claimant’s costs.”

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Full-service law firm, Gorvins, has implemented the Proclaim Practice Management Software solution from Eclipse Legal Systems.

The South Manchester-based practice employs 100 staff and provides a full range of legal services for its clients which include blue chip organisations, SMEs, entrepreneurs, public sector and regulatory bodies, and private individuals.  As part of the firm’s growth plans, and its strategy to focus on providing the very best in client and customer service, Gorvins embarked on a rigorous selection process to replace its incumbent, dated Practice Management System.

Gorvins has rolled out the full Proclaim Practice Management solution across the entire firm.  Now all staff, including solicitors, secretaries and support, have instant desktop access to Proclaim Matter and Case Management tools, providing a consistent environment for all file progression – from process-driven work to complex multi-path matters.

As part of the integrated solution, Gorvins now uses Proclaim’s matter inception and CRM features to enhance management of all new enquiries and matters.  Gorvins plans to roll out the FileView Interactive and SecureDocs online self-service solutions next, to enhance client communications and electronic document viewing / signing.

A full client and financial migration from the previous Gorvins system has been carried out by Eclipse, having converted all relevant data to Proclaim.

Lorraine Lockie, Managing Partner at Gorvins, comments:

“We selected Proclaim based upon both the system’s standout features, and Eclipse’s qualities as a supplier.  Proclaim provides a one-stop solution for us, seamlessly integrating our key requirements which include financial management, workflow, CRM, compliance and document management.  The system stood ahead of its peers in providing this holistic approach, and in also boasting the flexibility to ensure it develops with our practice.

“As a firm we are looking to grow, not only in terms of scale but also the breadth and depth of our service offerings.  The ethos at Eclipse is very similar to ours at Gorvins – approachability, professionalism and a strong focus on making sure the client is happy.  We look forward with confidence to the future with Proclaim as our platform for growth.”


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Eclipse200Eclipse Legal Systems is further increasing its new start-up client portfolio, by implementing its Law Society Endorsed Proclaim Practice Management Software solution at Prism Family Law, a Newcastle-based firm.

Founded by Andrew Wraith, the sole trader practice will specialise in all aspects of Family Law, offering clients a friendly and personalised service through what can often be traumatic circumstances. The ambitious new start-up plans to expand in the future, and aims to establish an impeccable reputation throughout northeast England.

In order to begin practicing from its inception, Prism Family Law will implement Eclipse’s ready-to-go Proclaim Family Practice Management system. Thanks to Proclaim’s high level of automation, case opening procedures will be significantly reduced as all relevant documentation will be generated at the click of a button, saving Andrew time to be productive elsewhere. Additionally, Proclaim will transfer details into the electronic Consolidated Matter Report (CMR) – catering for multiple cost rates – and producing the summary CMR at the end of the relevant accounting period.

To further drive efficiencies, the integrated practice accounting and financial management toolset will streamline client billing and provide a detailed analysis of the start-up’s operations.

Andrew Wraith, director of Prism Family Law, comments:

“As a new start-up – and in particular a boutique firm – I know the importance of implementing the correct legal software in order to reduce expenditure and streamline processes. Having thoroughly researched the market, it’s clear that Eclipse’s Proclaim Practice Management system will eliminate a number of time-consuming aspects, enabling me to provide the highest quality of personal service, and concentrate on establishing Prism Family Law’s reputation.”

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Email: failure to comply with CPR

A High Court master has allowed a party’s bid to withdraw a part 36 offer ahead of the new discount rate coming into force on Monday, even though they used a defective method to deliver it.

In Thompson v Reeve & Ors, the claimant – who suffered a road traffic crash and then negligent treatment of her injuries – valued her case at £347,000 and last August made a part 36 offer of £340,000.

On 28 February 2017, her solicitors emailed the defendants to withdraw it and Master Yoxall said it was “no secret” that this was because of the announcement of the new discount rate the day before, as a result of which the claim would be worth about £602,500.

On 2 March, the defendants tried to accept the part 36 offer, again because of the new discount rate.

CPR 6.20 only permits service by email where the receiving party has indicated in writing that it is willing to accept service by email, which was not the case here. The claimant submitted that rule 3.10 – which gives the court a general power to rectify matters where there has been an error of procedure – could be used to validate service.

Master Yoxall said the case law showed that rule 3.10 has a “wide effect” and could be applied in this case.

He said: “I accept that it has no application in certain circumstances, eg rule 7.6(3) which specifically describes the only circumstances in which the time for service of the claim form can be extended. Likewise I accept that rule 3.10 cannot be invoked to extend a statutory time limit or to avoid service of a document required by statute.

“In the present case, the claimant gave notice in writing of the withdrawal. It is not disputed that the notice was actually received. The notice provides the defendants with all the information necessary… It is the method of service which is defective. In my judgement, rule 3.10 can be invoked to cure the defect.”

While accepting that part 36 was a self-contained code, the master said it was “not completely freestanding”.

The final question was whether to exercise the discretion to make an order under rule 3.10. Saying it would be just to do so, Master Yoxall concluded: “In my view, it would not be consistent with the overriding objective that a technical breach of the rules should impede the proper assessment of damages in this case.”

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Financial product mis-selling claims are increasingly prevalent but require specialist knowledge both to bring and defend. There are also now regulatory pressures on firms and banks to avoid litigation and involving the regulator in litigation.

By attending this new half-day course you will improve your understanding of how to structure, pursue and defend claims for financial product mis-selling – focussing on swaps and other derivatives, investment portfolios and unregulated collectives.

This practical course is directed at new entrants to this field of litigation and those in need of brushing-up their skill set. It will cover the nuts and bolts in relation to effective presentation of claims and the best tactics to employ to get the best results.

For more information on course dates and prices, or to make a booking, please email quoting ‘Litigation Futures’.

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Supreme Court

Lord Sumption: costs ‘could exceed entire assets of estate’

A trustee in bankruptcy considering an appeal to the Supreme Court can go ahead without taking on the risk of having to pay the costs of previous proceedings in the lower courts, five justices have unanimously ruled.

Giving the leading judgment, with which the four other justices agreed, Lord Sumption said that if the trustee lost, and his liability extended to the costs of the proceedings below, it would exceed the entire assets of the estate.

The court heard that the issue arose from a professional negligence action against BPE Solicitors, which resulted in the Court of Appeal awarding a former commercial client a nominal amount of £2 in damages, but making him liable for the firm’s costs of almost £470,000.

A few months after the Court of Appeal’s ruling in 2013, the claimant, Richard Gabriel, was made bankrupt on his own petition and a trustee in bankruptcy was appointed.

Delivering judgment in BPE Solicitors and another v Gabriel [2015] UKSC 39, Lord Sumption said the trustee accepted that if he lost at the Supreme Court, he would be personally liable for BPE’s costs, but not the costs of the proceedings below.

If he decided not to appeal, Lord Sumption said Mr Gabriel’s creditors would recover only between 3p and 5p in the pound, but if he won that figure was expected to rise to between 23p and 25p.

If he lost at the Supreme Court and his liability extended to the costs of the proceedings below, Lord Sumption said Mr Gabriel would be “personally exposed for the balance subject to any indemnity which he is able to obtain from the creditors”, and it was “far from clear” whether any indemnity would be forthcoming.

Lord Sumption said the only authority that dealt directly with the question was the 1882 case of Borneman v Wilson, in which the Court of Appeal extended the personal liability of the trustee to cover costs incurred by the other side before his adoption of the proceedings.

However, Lord Sumption said the Victorian ruling was “no longer good law”, because, at the time when it was decided, costs could only be awarded against a party in the proceedings.

He said the modern jurisdiction to make an order for costs against a non-party was conferred by Section 51(3) of the Senior Courts Act 1981.

Lord Sumption said there could no longer be an “absolute rule” that trustees should be required to pay the other side’s costs, including those relating to a time when the issue was conducted by the bankrupt. Instead courts had a discretion.

“The mere fact that the trustee has adopted the appeal could not possibly justify this court in ordering the trustee to pay the costs which the Court of Appeal has ordered to be paid by Mr Gabriel.

“The trustee is entitled to adopt the appeal to this court without adopting the distinct proceedings below. Indeed, the adoption of proceedings below would be contrary to principle.”

The Supreme Court declared that if the trustee appealed to it, he would not be held personally liable for any costs up to and including the Court of Appeal’s order.

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HarmansHarmans Partner and Costs Lawyer Gary Knight discusses the implications of Lord Justice Jackson’s Review of Civil Litigation Costs on how solicitors recover costs on behalf of their clients.

“To improve is to change; to be perfect is to change often”. Winston Churchill

The Legal Profession has faced a period of almost continuous change since the introduction of the Civil Procedure Rules in 1999, and never more so than following the publication of Lord Justice Jackson’s Review of Civil Litigation Costs (The Jackson Report) presented in 2010.

There are many challenges to be faced, but the following may have the greatest impact on how solicitors recover costs on behalf of the client.

  • Budgets
  • Fixed costs
  • New format bill of costs


Case management powers under CPR Part 3 enabled the court to consider any available budgets of the parties, and to take into account the costs involved in each procedural step (CPR 3.17). In assessing costs on the standard basis where a costs management order has been made, the court was not to depart from the receiving party’s last approved or agreed budget unless satisfied that there is good reason to do so (CPR 3.18).

The case of Valerie Elsie May Merrix v Heart of England NHS Foundation Trust (2016) considered the relationship between costs budgeting and costs assessment and determined the extent to which the costs budgeting regime under Part 3 of the Civil Procedure Rules (“CPR”) fettered the costs judge’s powers and discretion at a detailed assessment.

The Court at first instance considered that ‘cost budgeting was not intended to replace detailed assessment’ as found against the receiving party.

The Claimant’s appeal heard by Mrs Justice Carr DBE [2017] EWHC 346 9QB found that the provisions of CPR 3. 18(a) and (b) had “shifted the burden to the paying party to show good reason at detailed assessment or summary assessment why the budget should not be departed from” given that the consideration of a costs budget at a costs management hearing was not only to establish an individual fund, but to give the parties an indication as to what was reasonable and proportionate to spend prosecuting or defending their claim. Therefore, what was reasonable and proportionate at a detailed assessment, unless the paying party could show good reason as to why it was not the case, should be in accordance with any costs budget set?

Costs Judge, Master Whalan had considered a similar issue when assessing costs in Harrison v University Hospitals Coventry & Warwickshire NHS Trust and held that there could be no departure from the incurred costs figures in the budget without good reason.

Fixed costs

In January 2016 Lord Justice Jackson caused a stir by suggesting fixed costs should be applied to all costs in claims valued up to £250,000.

His comments were perhaps borne out of frustration given the criticism aimed at the costs budgeting process and fortunately he has distanced himself from the figure.

Figures between £25,000 and £125,000 have been mooted but at the moment there are no clear recommendations, however the general view is that some form of fixed costs will be introduced.

New Format Bill

It may surprise some to discover Practice Direction 51L made under rules 47.6 and 51.2. provides for a pilot scheme (“New Bill of Costs Pilot Scheme”) to operate from 1 October 2015 to 30 September 2017.

Initial uptake has been underwhelming, however the new format will become compulsory from October 2017.

In his review of Civil Costs Jackson LJ suggested any new bill should include:

(i) a transparent explanation about what work was done in the various time periods and why.

(ii) a user-friendly synopsis of the work done, how long it took and why.

The new bill should also be:

(iii) inexpensive to prepare.

To achieve the above it will be necessary to have a compatibility between time recording systems and a revised bill format.

The idea that a bill of costs can be generated automatically and transmitted electronically is an attractive proposition however, a reliable electronic bill produced using J-codes directly from a case management system would be dependent on faultless data and high levels of quality control.

In a speech given in April 2016, LJ Jackson suggested “decoupling” J-Codes from the new format bill of costs. This has led to the introduction of the new practice direction.

Under the new pilot scheme the parties are permitted to use the new format bill of costs but will not be forced to use J-Codes.

Three major changes to be faced by the legal profession though one might say that fixed costs will make redundant the need for budgeting though if  budgets remain and are to be treated as “carved in stone” what need is there for a new format bill of costs?

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Carr: procedural co-ordination essential

An approved or agreed budget will bind the parties at detailed assessment unless there is good reason not to, the High Court has ruled in a decision that is almost certain to go to the Court of Appeal.

Overturning the ruling of District Judge Lumb in the much-talked about case of Merrix v Heart of England NHS Foundation Trust [2017] EWHC 346 (QB), Mrs Justice Carr said this would achieve the purpose of cutting down the number of detailed assessments.

Also, she said, “real emphasis needs to be placed on the importance of certainty on costs in the context of access to justice”.

She observed that “one can be confident that this decision on first appeal will not end the debate”, describing the issue as one which “would appear to be ripe for early consideration by the Court of Appeal”.

Carr J said she had learned that in May the Court of Appeal would be hearing an appeal against a similar decision by SCCO Master Whalan in the unreported case of Harrison v Coventry NHS Trust. “It may be that any appeal from this decision could be listed alongside that matter, if that were thought appropriate.”

She continued: “Whatever the future holds, however, it is important that a growing body of judgments on the same issue does not emerge in piecemeal manner. It is essential that there is procedural co-ordination.

“The same solicitors and/or counsel are involved in many of these matters in what is a relatively small world. I am told that many stays of detailed assessments are already in place, pending the outcome of this appeal. The parties may accept my judgment as binding for their purposes.

“Alternatively, it may be that further stays need to be imposed, to prevent unnecessary court and judicial time and expense being devoted to a debate which the Court of Appeal is very shortly going to consider.”

Carr J said the key to the issue was CPR 3.18: “The words are clear. The court will not – the words are mandatory – depart from the budget, absent good reason. On a detailed assessment on a standard basis, the costs judge is bound by the agreed or approved costs budget, unless there is good reason to depart from it.

“No distinction is made between the situation where it is claimed that budgeted figures are or are not to be exceeded. It is not possible to square the words of CPR 3.18 with the suggestion that the assessing costs judge may nevertheless depart from the budget without good reason and carry out a line-by-line assessment, merely using the budget as a guide or factor to be taken into account in the subsequent detailed assessment exercise.

“The obvious intention of CPR 3.18 was to reduce the scope of and need for detailed assessment. The respondent’s approach would defeat that object. This straightforward conclusion reflects the fact that costs budgeting involves the determination of reasonableness and proportionality.”

The judge said this approach was consistent with the obiter comments of the Court of Appeal last year in SARPD Oil. “Read as a whole, it is clear that the Court of Appeal’s position was that, once a budget was agreed or approved, then part 3.18(b) applied.”

The fact that hourly rates are not fixed at the costs budgeting stage was no obstacle either, Carr J said. “As the notes to CPR 3.18 in the White Book reflect, the fact that hourly rates at the detailed assessment stage may be different to those used for the budget may be a good reason for allowing less, or more, than some of the phase totals in the budget.”

The judge emphasised that costs budgeting does not replace detailed assessment – the question was how the assessment should be conducted.

“Further and on any analysis, there remains room for detailed assessment outside the budget – for example in relation to pre-incurred costs not the subject of the costs budget; costs of interim applications which were reasonably not included in a budget; where costs are being assessed on an indemnity basis; where the costs judge finds there to be a good reason for departing from the costs budget.”

Carr J said her conclusion reflected what was “the clear intention of costs management” – to reduce the cost of the detailed assessment.

DJ Lumb had expressed concern that her approach would lead to longer and more expensive cost management hearings instead.

Carr J said: “With proper and realistic co-operation and engagement between the parties, that should not be the case. The costs budgeting exercise already takes up significant amounts of court time and the parties’ time in preparation. There is already a very substantial investment.

“Further, the costs budgeting exercise is not intended to be a detailed assessment, and the parties and the court should not approach it as such. It is a broad, phase-based assessment which will, albeit performed on a principled and carefully timetabled basis, inevitably be rough and ready in places.

“The clear intention behind and effect of the cost budgeting regime is that it is nevertheless to result in a budget from which the court will not depart on detailed assessment on a standard basis, unless there is good reason to do so.”

The “shortcomings and inevitable inaccuracies” in the cost budgeting process did not help the respondent, she continued.

“Where costs claimed are less than the budgeted figure, then the inaccuracies will be irrelevant, since the receiving party will only recover the lower figure (because there would be good reason to depart by reason of the indemnity principle). Equally, where costs claimed were higher, the receiving party would have to show good reason for departure from the budget.”

John Foy QC and Daniel Frieze, instructed by Irwin Mitchell, acted for the claimant/appellant, and Ben Williams QC, instructed by Acumension, for the defendant/respondent.

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Etherton: MR sat on appeal

Etherton: MR sat on appeal

Solicitors who served witness statements two months late cannot call any witnesses at trial after the Court of Appeal upheld the first instance judge’s decision to refuse relief from sanctions.

The ruling has the potential “to increase claims against solicitors and has wider implications for insurers dealing with claims and litigation in the courts more generally”, according to Alex Denslow, the partner at CMS Cameron McKenna who represented the successful respondents in the so-far unreported case of Clearway Drainage Systems v Miles Smith.

The failure to comply with the order resulted in three pre-trial reviews, rather than the single one planned.

According to CMS, this was an unusual case in that the solicitors had “unaccountably not applied for relief much earlier when informed by the other side of the missed deadline and they did not react promptly after the judge’s advice to do so at the first pre-trial review”.

It continued: “Practitioners should take note that it was not the initial failure by the solicitors to serve its client’s witness statements in time that was the critical failing but rather the solicitors’ failure to take action promptly as soon as they became aware of the position.

“The Court of Appeal made very clear that a solicitor’s existing heavy workload would not excuse a lack of promptness. Practitioners need to be mindful that missed deadlines remain a fertile ground for negligence claims.”

The appellant in Clearway argued that the first instance judge had given overriding priority to the factors listed in CPR 3.9(1) and that she should have given more weight both to the fact that the trial could have gone ahead on the original date despite the late submission of witness evidence and to the reality that refusal of relief would in effect mean the end of the case, which, according to the appellant would be an unjust outcome where the claimant itself was blameless.

The Court of Appeal, which included the Master of the Rolls, Sir Terence Etherton, confirmed that Denton remains good law in stating that whereas the two factors listed at CPR 3.9(1)(a) and (b) “may not be of paramount importance… they are of particular importance and should be given particular weight at the third stage when all the circumstances of the case are considered”.

The court concluded that the judge had undertaken a “conscientious and impeccable” analysis of the three stages of the Denton test and that she had been fully entitled to give importance to the appellant’s solicitors’ lack of promptness in applying for relief. A case management decision by the first instance judge would have to be wholly wrong before it would be overturned, the court said.

It also stressed that there would be no return to the practice of some years ago where costs orders were generally considered sufficient penalty for lax compliance with court directions – indeed, consistency in taking a rigorous approach was imperative.

Mr Denslow suggested that the decision meant the lower courts would be less likely to grant relief, which should concern solicitors’ indemnity insurers.

“Where the delay or failure to comply with the court order was, or was arguably, the fault of the solicitor conducting the litigation, they may be exposed to a claim by their client.”

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Our latest seminar is quickly getting booked up, if you haven’t already reserved your space then do it now!

The seminar will focus on costs in a post-Jackson landscape.  We will be holding two sessions: 9.15am-10.30am (please note: this sessions is nearly full) and 10.45am-midday.  Each session carries 1 CPD point.

Our seminar is free and open to all but is limited to 30 attendees per session.  As places are limited and going fast they will be allocated on a first come first served basis, email for latest availability.

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Tipp-Ex: document altered

Tipp-Ex: document altered

A solicitor who misled a court by using Tipp-Ex to alter a statement of truth has been fined £7,000 by the Solicitors Disciplinary Tribunal (SDT).

The SDT found that Roger Paul Jackson’s actions were “spontaneous”, but had contributed to his clients’ personal injury claim being struck out.

The tribunal heard that Mr Jackson was reported to the Solicitors Regulation Authority (SRA) by Weightmans, the defendant lawyers in the case, in November 2014.

“Weightmans reported that the respondent had altered a statement of truth from an earlier particulars of claim in order to mislead the court into believing that the claimants had verified the amended particulars of claim as served on the defendant.”

Mr Jackson, who was a salaried partner at Manchester-based BPS Law at the time, was born in 1958 and qualified in 1983. He initially represented three claimants in the case – the driver of a car involved in a collision and his passengers. The solicitor prepared a statement of claim, including a statement of truth signed by the claimants, in September 2012.

The tribunal heard that Mr Jackson was later instructed to act only for the passengers and amended the particulars of claim, also changing the date of birth of one of the passengers. He issued proceedings in October 2013.

“On receipt of the proceedings, Weightmans noted that the statement of truth on the amended particulars of claim was still dated 28 September 2012 and appeared to be the same statement of truth which was previously signed by three claimants.

“The page had been manually altered to remove the name of the driver and his proposed status as ‘first claimant’ by the use of Tipp-Ex. The document has also been altered to show the two passengers as ‘first claimant’ and ‘second claimant’ by handwriting on the statement of truth.”

Weightmans applied to have the claim struck out, an application which was granted in May 2014, in part because the particulars of claim had not been verified by a valid statement of truth.

Mr Jackson argued before the SDT that CPR 17.1(1) allowed a party to amend his statement of case at any time before it is been served on every other party.

His secondary position was that even in cases where the permission of the court was required, it was only required to be re-verified where the substance of the statement of case was changing, which was not what happened here. The solicitor submitted that the district judge had erred in law.

Finding against him, the SDT said that part 17 was only applicable to claims that had been issued and addressed the issue of amendments in those circumstances.

It said: “Even if the respondent had discussed the content of the revised particulars of claim with his clients, for which there was no compelling evidence, the proper procedure was to either get them to sign a new statement of truth and particulars of claim, which he had attempted to do, or sign it himself with a statement confirming that he was authorised to do so.

“The tribunal noted that the respondent had been approaching a limitation deadline and it was in that context that he had decided on the course of action that he took, namely altering the existing statement of truth without any justification for doing so.”

Though this finding meant it was not necessary to assess whether or not the change of claim was substantial, the tribunal said removing one of the claimants was a “small but material” change.

“The district judge had found that the respondent’s explanations lacked credibility and were disingenuous. The tribunal agreed with that assessment having heard the respondent give evidence…

“The tribunal was satisfied beyond reasonable doubt that by issuing proceedings using the altered documentation, the respondent had failed to uphold the rule of law and the proper administration of justice. In misleading the court and the defendant’s solicitors, the respondent had failed to adhere to a strict ethical code and had therefore lacked integrity.”

In mitigation, Mr Jackson accepted that “in an ideal world” the amended particulars of claim would have been signed by both clients. But he said this was an isolated incident and there had been no other similar examples.

Further, the district judge had not reported the respondent to the SRA and he argued that the decision to strike out the claim was draconian, given that it was based on a technicality.

On sanction, the tribunal recognised that Mr Jackson’s actions were “spontaneous and he had not acted in breach of the position of trust”.

However, the impact of the reputation of the profession was serious “as the integrity of documents is of fundamental importance to the trust the public places in the profession”.

The SDT continued: “The matters were aggravated by the fact that this was a deliberate and calculated act and he knew or ought to have known that he was in material breach of his obligations… Matters were mitigated by the fact that this was a single episode.”

He was fined £7,000 and ordered to pay costs of £7,000.

The SDT said that Mr Jackson was “currently doing some locum work”, having left BPS in June 2014.

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Probate: rich pickings in contested cases

There are rich pickings for lawyers in several areas of litigation that could help offset losses for personal injury specialists following the Jackson reforms, experienced litigators have reported.

Speaking at last week’s Law Society litigation conference in London under the banner Litigators: survive and thrive, experts in cross-border cases, collective actions, patents, contentious probate and insolvency were upbeat about the potential for growth in their areas.

Stephen Mason, senior partner of Leeds-based travel law specialists Travlaw, said fear of being badly affected by the Jackson reforms was making people ask themselves: “What do I do – go off and open a sandwich shop, or are there things I can use my litigation skills for to develop my practice?”

Cross-border work was increasing with the trend for companies and individuals to work and train across international boundaries. “If you are not used to it, it can seem a bit daunting. But there’s not that much to it and it’s not that scary,” he stressed.

Giles Anderson, a senior associate at Clifford Chance, said the recession has created openings in insolvency work. “There is a lot of work you can do and it is not that difficult… any litigator can do it.” He added that adjustments within companies have produced opportunities to assist transactional lawyers. “There’s an awful lot of restructuring coming down the line,” he predicted.

Peter Ellis, a partner at regional firm Browne Jacobson, said it was “a very, very good time to be taking an interest in intellectual property as a potential area of work to get into”. The average cost of a patent case is estimated to be between £650,000 and £1.5m. “If you get your gearing right, it is still an area of work where clients are prepared to pay for the protection of the value of their intellectual property,” he said.

The Patents County Court is tolerant of practitioners who are finding their way on matters of law, although it expects a high degree of proficiency in procedure, he said. Building a practice around access to the court could mean “you will find an awful lot of people out there that want to use your services”.

Alison Meek, a litigator in contentious probate at central London firm Harcus Sinclair, said a number of factors had contributed to growth. They included an ageing population, meaning higher dementia rates and issues arising around capacity, increasing property prices, and fractured families. “As a probate lawyer it is of course rich pickings and it’s going to continue to be,” she said.

David Greene, a partner at Lincoln’s Inn firm Edwin Coe, said there was a steady growth in group litigation and collective actions accompanying the rise of consumer and environmental rights. People’s ability to form associations of victims using Internet communication provided a “ready body of potential claimants”, he said.

Another driver for collective actions, Mr Green argued, is cost efficiency. The high cost of litigation means consumers cannot afford to bring claims alone, especially where they have small losses individually. “There is nothing particularly special about collective actions work – it’s not rocket science, it is just about [putting] these groups together and to litigate on their behalf,” he said.


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Haynes: LEI market is not working effectively for non-panel firms

Posted by David Haynes, head of underwriting and marketing at Litigation Futures sponsor ARAG

A survey carried out by the Employment Lawyers Association (ELA) in conjunction with the Law Society, Association of Personal Injury Lawyers and Motor Accident Solicitors Society has confirmed that non-panel firms suffer detriment when legal expenses insurers exercise their right to appoint panel firms to deal with claims.

This right is available to insurers until it becomes necessary to issue proceedings, and where (for example, when defending employment claims) the insurer is exposed to paying civil compensation, unless there is a conflict of interest. The survey was completed by nearly 700 people, 48% of whom were employment lawyers.

It is of obvious concern to members of the ELA that 90% of respondents had experienced problems when conducting claims under LEI;

Only 14% of respondents said that it was viable for a solicitor to issue proceedings and run a tribunal case at an hourly rate of £100 plus VAT, which according to the survey is the rate commonly paid under LEI policies. This reduced to 8% for associates, 7% for senior associates and to only 4% for partners.

Some 52% of respondents stated that they had (frequently or always) lost instructions from a prospective client in favour of a panel firm, while 42% of respondents said that the LEI policy terms frequently or always limited the rate payable to non-panel solicitors.

There is no evidence from this survey that ELA’s concerns translate into consumer detriment and the survey found that actual complaints to the Financial Ombudsman Service (FOS) were rare, with firms being deterred from complaining because of alleged delays by the ombudsman in resolving complaints.

FOS data for the period April to December 2013 shows that 507 legal expenses insurance complaints were received, of which 40% were upheld in favour of the customer – around 270 complaints if we annualise the figures. Of these complaints we do not know how many are connected with freedom of choice but we suspect very few (if any), as in most cases disputes arise because of a disagreement over the operation of policy cover.

Our own position is that we adopt a flexible approach in negotiating suitable terms with non-panel firms where policyholders wish to exercise their right to choose their own solicitor; but the use of panel firms works well for our policyholders. In the main policyholders are happy to use the services of panel firms as they realise that the service standards that we demand of panel firms are beneficial and claimants remain fully protected from paying legal costs.

Policyholders can opt to pay the difference where a non-panel firm will not accept instructions at rates that we deem to be proportionate and reasonable given the nature of the claim.

We are confident (without conducting a survey!) that our panel firms would not report problems in conducting claims under our policies and the success rate of panel firms is significantly higher than non-panel firms.

Waiving our right to control the appointment of non-panel firms has a bearing on the fortunes of policyholders who make a claim. Moreover, a lack of capacity to control costs would also result in significant increases to legal expenses premiums across the board at a time when there is government support for legal expenses insurance for individuals and businesses as an affordable means by which to access justice.

What this survey makes clear is that the LEI market is not working effectively for non-panel firms because it does not deliver the rewards they seek. This is very different from a market that does not work effectively for consumers. We would question how the ELA has been able to come to the conclusion that the LEI market is not working well for consumers by conducting a survey which was not targeted at consumers but at its own members.

The ELA’s position seems somewhat delicate as it has exposed itself to debate about the true motive in conducting such a survey. Surely a survey which purports to be in the interest of consumers would not focus on the ELA’s own members?

The ELA is to publish the second part of the survey soon, which will include more detailed evidence of the problems experienced (by their members?) when conducting cases under LEI policies.

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Bacon: acted for successful party

Bacon: acted for successful party

A defendant whose conduct forced the claimant to seek third-party funding to take its case to arbitration has to pay the £2m owed to the funder following the claim’s success, the High Court has ruled.

HHJ Waksman QC, sitting as a High Court judge, said litigation funding costs fell within the arbitrator’s general costs discretion, which was not to be confined by what may or may not be allowed in a court governed by the CPR.

We reported the outline of Essar Oilfield Services Ltd v Norscot Rig Management Pvt Ltd last month, but the full ruling ([2016] EWHC 2361 (Comm)) has now been released (it can be downloaded from the website of 4 New Square here).

Norscot was the successful claimant in an ICC arbitration – the arbitrator was former Court of Appeal judge Sir Philip Otton – and was awarded around $12m, of which $4m was the costs order.

The case concerned Essar’s repudiatory breach of an operations management agreement. Sir Philip was highly critical of Essar’s conduct both during the currency of the agreement and also for most of the arbitration period. He said Essar had set out to cripple Norscot financially in not making payments under the contract and then exerted commercial pressure throughout the arbitral process.

It was a “David and Goliath battle”, he said, and Essar made a “blatant attempt to drive Norscot ‘from the judgment seat’”. Nonetheless, Norscot pursued its claims “with courage and determination” and Sir Philip accepted that it was forced to seek third-party funding.

The third-party funder, Woodsford Litigation Funding, advanced £647,000, which was repayable either at 300% of the sum advanced from the damages recovered, or 35% of the damages, whichever was the greater. As a result, Norscot sought from Essar the £1.94m due to Woodsford.

Sir Philip held that he had the discretion to make such an order, because they were “other costs” for the purposes of section 59(1)(c) of the Arbitration Act 1996. This defines the costs of the arbitration as including the “legal or other costs of the parties”.

Essar challenged this. HHJ Waksman rejected Essar’s contention that Sir Philip had exceeded his powers in making the order, and went on to find that “as a matter of language, context and logic, it seems to me that ‘other costs’ can include the costs of obtaining litigation funding”.

He continued: “The expression should not be confined by some legal straightjacket imposed by reason of what a court might or might not be permitted to order.”

The judge described this case as a “telling example of the good sense of reading ‘other costs’ in this way”.

He explained: “This was a case, perhaps unusual, where the arbitrator ruled in detailed and robust terms that Essar drove Norscot into this expensive litigation because of its own reprehensible conduct going far beyond technical breaches of contract, in order to vindicate its rights.

“Further, as the tribunal found, Norscot had no option, but to obtain this funding from this third-party funder. As a matter of justice, it would seem very odd and certainly unfortunate if the arbitrator was not entitled under section 59(1)(c) to include the costs of obtaining third-party funding as part of ‘other costs’ where they were so directly and immediately caused by the losing party.”

Laura Beagrie, a professional support lawyer at Surrey firm Stevens & Bolton, said: “It is notable that the only requirement for the recovery of the third-party funding costs (an ICC arbitration with an English seat) is one of reasonableness (article 31(1) of the ICC Rules).

“This arbitrator thought it was reasonable based on the fact that the Essar had behaved in an reprehensible manner which had forced Norscot to take out third party funding, but other ICC arbitrators in other disputes could in theory find that recovery is reasonable without making any adverse findings against the unsuccessful party.

“This decision should enhance the attractiveness of England as an arbitral seat for those who wish to take out third-party funding. Those involved in the arbitration and third-party funding industries will no doubt want to review the chances of recovery of third-party funding costs in other seats and under other arbitral rules.

“It does make you wonder whether recovery of third-party funding costs really is impossible in English litigation. The Civil Procedure Rules don’t specifically disallow it, has it ever been argued and what might the chances of success be?”

Nick Bacon QC of 4 New Square and Chirag Karia QC of Quadrant Chambers (instructed by Davies Johnson) acted for Norscot, while Andrew Hogan of Ropewalk Chambers in Nottingham (instructed by Squire Patton Boggs) represented Essar.

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Hurndall: relationships restored

The London Borough of Havering has saved an estimated £240,000 of costs and significantly reduced the time required to resolve three recent disputes, according to arbitrators, the Centre for Justice.

Centre for Justice uses lawyer assessors to investigate and then adjudicate on the case if a settlement is not possible, and claims that the public sector is losing up to 10% of its revenues annually in handling complaints and disputes through the courts.

The three cases, which were all resolved to the satisfaction of all parties, within two months of the Centre for Justice being appointed, represent the wide spectrum of the borough’s legal issues and involved sums ranging from £20,000 to more than £4m.

One case involved the claim to a new tenancy by a local business with a counterclaim for arrears of rent and breach of covenant by the borough. The case was successfully concluded with the business now fully operational with a new tenancy from the borough.

The second case involved a dispute over a contract for the provision of social care services to council adult social care clients, with the supplier, council and clients all as parties. This case was settled amicably, the contract renewed and the clients remain in situ.

The third concerned an alleged error in the council’s registry offices, which was claimed to have resulted in the postponement of a marriage and the costs of postponement.

Alex Cumming of the London Borough of Havering’s legal department said: “The Centre for Justice was cost effective and met all our objectives. I would be very happy to recommend the process and we will be using it again.”

Anthony Hurndall, director of the Centre for Justice, said: “Our form of arbitration does not rely on an adversarial approach to arrive at a result. Our trained arbitrators deal directly with the parties and usually achieve an amicable settlement without the need for a formal award.

“It is evidence of the integrity of the service that, with each of the London Borough of Havering cases, relationships have been restored and the parties continue to do business together.”

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Rowley: taking away cost uncertainty

Irwin Mitchell has teamed up with Allianz Legal Protection to launch ‘Support4Dispute’, a bespoke funding solution to support insolvency practitioners (IPs) manage the costs and risks of litigation.

Under the terms of the conditional fee agreement that forms part of the package, Irwin Mitchell’s legal costs and success fee is only payable by IPs once a cash recovery is made from the opponent.

The after-the-event (ATE) insurance provided by Allianz is a staged premium facility linked to the amount of damages recovered, and capped to enable IPs to retain a greater share of any recovery made. In addition, the premium is deferred until the case is settled, and only payable on successful cases.

John Vickery, restructuring and insolvency partner in Irwin Mitchell’s Manchester office, said: “This product has been developed specifically for the IP sector and addresses all of the financial issues relating to why they may be reluctant to pursue litigation claims.

“Quite simply, the Support4Dispute service that we provide takes the gamble out of insolvency litigation and enables IPs to launch legal actions far more easily following an insolvency, without having the risk of having to pay their own legal fees or a hefty ATE insurance premium where no actual recovery is made or the opponent’s legal fees if the litigation is unsuccessful.”

Steve Rowley, business development manager at Allianz Legal Protection, said: “We worked with Irwin Mitchell over several months to jointly develop a product specifically aimed at addressing the risks and issues faced by insolvency practitioners.

“Using our combined knowledge and expertise we have created a solution that meets the needs of insolvency practitioners, and takes away the cost uncertainty faced when bringing legal action against creditors.”

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Houses of Parliament

Lord Faulks denied that the government is abolishing judicial review

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

“There is nothing novel about the principle of expecting providers to work at risk and receive remuneration only where it is established that their case is meritorious,” Lord Faulks said.

“A similar system has existed for some time in immigration and asylum Upper Tribunal appeals, where remuneration for a permission application is not paid where the application for permission is refused.”

The justice minister was speaking in response to a ‘motion of regret’ tabled by crossbencher and practicing barrister Lord Pannick at the passing of legal aid regulations which came into force on 22 April.

The change means that legal aid will only be payable where the court gives permission for judicial review proceedings to go ahead, subject to the Legal Aid Agency’s discretion.

MPs and peers on the Joint Committee on Human Rights (JCHR) attacked government plans to change the rules last month, saying they “lacked supporting evidence”.

Lord Faulks told peers that the government had modified the criteria that the agency would consider and “making it clear that these would be non-exhaustive factors that the Legal Aid Agency would take into account, in particular when considering all the circumstances of the case.

“That is important, as it will enable the agency to take into account the full range of circumstances in which a judicial review case may conclude prior to a permission decision.

“No two cases will be identical and the agency will necessarily need to look at the facts of each individual case in addition to the factors set out in the regulation.

“This provides the agency with greater flexibility to ensure that work on meritorious cases continues to be paid, which I hope all noble Lords will support. However, the corollary of this approach is that it would simply be impractical for guidance to be issued that attempts to cover all possible circumstances.”

The justice minister said that the government would respond in detail to the JCHR report and “most of the questions posed will be answered”.

Lord Faulks added that the rule change “did not abolish judicial review”, but limited, in very specific circumstances, the recoverability of legal aid.

However, Lord Pannick told peers earlier: “The legal aid regulations we are debating tonight are one example of many where the changes which this Lord Chancellor is imposing are far more damaging than any disease which they purport to treat.

“The problem is that, if lawyers know that they have no right to be paid in such cases, even at the low – scandalously low – rates currently thought acceptable by the Lord Chancellor, the inevitable result will be that clients with a strong claim will find it much more difficult to find competent representation.”


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shares going up

Burford: Big rises in profits and share price

Litigation funder Burford Capital has said that another big rise in profits shows that its model of investing in a “large portfolio of widely diversified and well-diligenced” cases works.

Burford reported that income from its litigation funding business for the first six months of this year was up 64% on this time last year to over £19m, driving a 56% increase in the group’s operating profits to nearly £18m.

In its half year report to shareholders, the group said the results “demonstrated its ability to invest capital wisely and profitably” in the legal sector.

“One year of good results could be a fortunate accident. Two years could be an extra dose of luck. But 2014 was our third year in a row with income over $50m, a trend that we have continued into 2015.

“It is not, we believe, a coincidence that Burford stock has risen about 40% since the end of 2014.”

Burford said the first half of the year saw its “largest recovery to date” from litigation funding – £39m in gross proceeds on an investment of £16m, leaving a profit of £23m. The report described this as “one of Burford’s many portfolio arrangements”.

The litigation funder went on: “The first half of 2015 was characterised by diversity – by size of client, by geography and by transaction type and structure.

“We closed large transactions to finance some of the world’s most complex litigation, and very small transactions to provide access to justice for struggling English businesses using our special small case product in the UK market.”

Known as ‘Sprint’, Burford launched a funding scheme in February this year for cases valued at between £25,000 and £500,000, marketed and administered by broker TheJudge.

Burford said in the report that it believed more competition would be good for the litigation funding market, with “multiple players” increasing demand by “educating clients and lawyers about the possibilities” of litigation finance.

“We do not, however, endorse the participation of capital providers with opaque structures or uncertain or undisclosed capital sources. Potential users of litigation finance need to do diligence, just as in any other area.”

As an example, Burford cited litigation finance providers “using the value of the claims they are invested in”, rather than the value of their own investments, as a “metric of its own size”.

The funder compared this to an equity manager “touting” the total size of all the companies in which they were invested, rather than their own assets.

Burford added that if it participated “in that game”, it would “dwarf our competitors”, with a claim value for its portfolio of “many billions of dollars”.

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Eclipse Legal Systems

Ian Hartley, Chief Operations Officer, Drummond Miller

Heavyweight Scottish firm, Drummond Miller, has selected the Proclaim Practice Management system from Eclipse Legal Systems, the sole Law Society Endorsed legal software provider.

With offices in 6 locations throughout Scotland, and over 100 staff, Drummond Miller has a long-standing reputation of excellence in various areas of law. The firm recognises the level of importance its clients place on their cases, and is committed to providing a high standard of service – delivering common sense legal advice and practical solutions to all client requirements.

In the 6-figure deal, Drummond Miller will replace its incumbent legal software system with Eclipse’s Proclaim Practice Management Software solution. In order to cater for the variety of work areas within the practice, preconfigured case management modules will be rolled out firm-wide for the conveyancing, private client, medical negligence, family law and probate teams, serving to provide a core centralised productivity suite throughout.

As part of the installation process, Eclipse will also conduct a complete data migration, allowing the integrated Proclaim practice accounting and financial toolset to be implemented, resulting in increased efficiency and an ‘at-a-glance’ view of operational effectiveness.

Ian Hartley, Chief Operations Officer at Drummond Miller, comments:

“We undertook a thorough selection process. I was impressed from the very first time I saw Eclipse’s Proclaim system as it’s much more intuitive than its rivals. This is an investment for the long term for us and it was the fact that it is so easy to use, as well as the future-proofing that made it a natural choice.”

To accommodate the legislative requirements in Scottish law, Eclipse’s experienced in-house consultancy team will work closely with Drummond Miller to ensure that workflows and documents fully cater for all bespoke requirements.

Ian continues:

“The fact that Eclipse has an experienced in-house team with the ability to truly bespoke the system – and in line with Scottish law – goes to show why it’s the market-leader. Once implemented, Proclaim will provide us with a comprehensive solution to improve internal efficiencies and seamlessly enhance client service. This is an integral part of our growth strategy.”

Eclipse’s Sales Director, Chris Buckle, adds:

“As a leading and thoroughly reputable practice, Drummond Miller was quite rightly extremely rigorous in its selection process for a firm-wide solution. The fact that we can provide the practice with what it requires now – and what it aims for moving forward – is a testament to the strength and adaptability of our Proclaim solution and its position in the legal sector market.”

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Eclipse2014 200x200Eclipse Legal Systems, the Law Society’s sole endorsed legal software provider, has announced the implementation of its Proclaim Practice Management Software solution at Essex law firm, ESW Legal.

ESW Legal is an established solicitors practice operating from modern offices in Rayleigh, providing services across London and the South East. The firm’s aim is to meet the needs of its clients in a professional, efficient and cost-effective manner.

ESW Legal prides itself on its approachable and friendly service, striving to treat all clients with respect, skill, sensitivity and discretion.

An out-of-the-box hosted Proclaim Conveyancing Case Management solution is being implemented across the department, serving to improve transparency and provide an enhanced approach to matter management.

Risk will be effectively managed departmentally, with users to benefit from a host of tools to manage and streamline the client journey from instruction through to completion.

Furthermore, the integrated practice management and accounting toolset will form a financial solution to ensure administrative overheads are significantly reduced, boosting overall efficiency and providing a detailed analysis of operations.

ESW Legal has also opted for Proclaim’s integration with the Land Registry’s Business Gateway. Utilising Web Services, Proclaim will provide 2-way integration for data and documentation, providing the firm with the capability to further drive client service efficiencies.

Steve Cracknell, director at ESW Legal, comments:

“In such a competitive market, it’s crucial we continue to stay ahead of the competition in terms of the service we offer. Proclaim’s ability to streamline our processes will be fundamental to our success, ensuring clients benefit from even greater speed and transparency, and ultimately enabling us to exceed the service offered by many of the larger London firms.”

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Burford Capital (“Burford”), the world’s largest provider of investment capital and risk solutions for litigation, today announced the appointment of three key hires to complete the expansion of its staff in the United Kingdom.

“We are tremendously excited to have added three very talented and experienced professionals to our staff in London – Julia Mahoney, who will serve as our Head of Technical; Oliver Gayner, who joins as a Litigation Funding Manager; and Steven Savage, our new Head of Marketing” said Andrew Langhoff, Burford UK’s Chief Executive Officer.  “With these smart new hires, we have put in place the team we require to continue to develop, market and deliver innovative new products – such as our recently introduced Burford Hybrid DBA.”

“Both Julia and Oliver will be keenly focused on our rapidly expanding litigation funding business,” said Ross Clark, Burford’s Chief Investment Officer in the UK.  “Now at nine strong, our UK underwriting team is the largest in the country and has been organised to assess funding applications quickly and efficiently. To have an underwriting staff of this size and calibre really makes us stand out.”

Mahoney, who will lead the underwriting team, was called to the Bar in 1985, practiced as a solicitor from 1989 until 2000, and was part of the management team running Travelers’ Professional Indemnity Claims Department from 2000 until joining Burford.

Gayner began his career as a solicitor at Freshfields Bruckhaus Deringer in 2003, before joining Olswang in 2007. His specialisation is in complex, high-value commercial litigation and arbitration. He was ranked as a ‘Rising Star’ in the 2013 Super Lawyers list.

Savage has extensive experience of financial and legal marketing and has spent time at Practical Law, LexisNexis, AAC Capital Partners, The London Stock Exchange and The Economist.

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Coulson: Ruling published “pour encourager les autres”

The incoming deputy head of civil justice has warned parties not to abuse the courts’ tougher approach to rule compliance.

Mr Justice Coulson – who takes on the role when he is elevated to the Court of Appeal next March – said applications based on “minor procedural glitches” were on the rise, having all but dried up following the 2014 ruling in Denton.

As a result, he said he was publishing his ruling in Freeborn & Anor v Marcal (t/a Dan Marcal Architects) [2017] EWHC 3046 (TCC)pour encourager les autres”.

The decision ended with a clear warning: “It is, of course, extremely important, post-Mitchell and post-Denton, for the parties to civil litigation to ensure that they comply with the CPR. Courts will be far less forgiving of non-compliance than they ever used to be.

“But that tougher approach must not be abused in the way that occurred here. Parties need to consider carefully whether the alleged breach of the rules is, on analysis, any such thing and, even if it is, whether it is proportionate and appropriate to require or oppose an application for relief from sanctions in all the circumstances of the case.”

In the case, the Technology and Construction Court office wrote to the parties on 20 September 2017 to say that to the case management conference (CMC) would be held on 24 November.

The letter expressly required them to file and exchange costs budgets not less than seven days before the CMC; CPR 3.13 provides that “unless the court otherwise orders”, budgets must be filed and exchanged not later than 21 days before the CMC.

The claimants’ solicitors, Healys, served their costs budget on 2 November, the defendant’s (Caytons Law) on 16 November. The former then wrote to say that the budget should have been provided 14 days earlier.

Despite his opposite number warning that he would seek costs if forced to apply to the court, the claimant’s solicitor said there had been a “gross delay” in the service of the defendant’s costs budget and maintained that the defendant should be treated as having filed a budget comprising only the applicable court fees.

As a result, the defendant’s solicitor made a formal application for relief from sanctions, but Coulson J ruled that this was not necessary.

“Rule 3.13(1) is clear, that the 21-day period applies, ‘unless the court otherwise orders’. I consider that the letter from the court office of 20 September 2017 amounted to the court ‘ordering otherwise’.

“It stipulated when the costs budget should be provided. The defendant was quite entitled to conclude that the court had ‘ordered otherwise’ than rule 3.13, and to rely on the content of the letter.

“It is immaterial that, on further consideration, it might have occurred to the defendant’s solicitor that the letter may have contained an error, and was referring to the old rule 3.13, which stipulated seven, not 21, days.

“A busy litigation solicitor is entitled simply to rely on the date specified in writing by the court office, rather than embarking on an investigation into whether or not the letter contained an error.”

Coulson J continued that, if he was wrong, he was in “no doubt” that relief should be granted.

The breach was not serious and significant – “no hearing has been lost and no delay to the costs budget process has in fact occurred” – the letter from the court was “the best possible reason for the delay”, and it was “plainly” just and reasonable to grant relief.

“There was no deliberate breach. There was at worst an inadvertent breach because there was reliance on a letter from the court office which, on this assumption, contained an error. In addition, the delays have caused no prejudice to the claimants, whereas there would be considerable prejudice to the defendant if he was not able to rely on his costs budget.”

He ordered the claimants to pay the defendant’s costs of and occasioned by the “unnecessary application”, which he summarily assessed at £1,300.

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J-Day: take your ATE out before 1 April

The Jackson reforms will leave law firms at risk of professional negligence claims, a leading after-the-event (ATE) insurer has warned.

Russell Smart, COO of Elite Insurance, a Litigation Futures sponsor, said any conditional fee agreement (CFA) entered into prior to 1 April where ATE insurance has not been purchased could potentially leave clients facing bankruptcy or law firms exposed to negligence claims.

The new rules prohibit the recovery of ATE premiums for policies purchased on or after 1 April regardless of when the client entered into a retainer with their solicitor, he pointed out.

Mr Smart said: “There are thousands of CFA cases where ATE insurance has not been purchased either because the case is not insurable until investigations are complete, or because BTE enquiries are on-going.

“Despite many of these CFAs being entered into some weeks and possibly months ago, this will mean the client will not benefit from recoverable ATE premiums – but neither will they be afforded the protection offered by qualified one-way costs shifting, nor the 10% increase in general damages.”

Such clients will now have to pursue their cases uninsured or face disproportionately high ATE premiums which will have to be paid for from their damages, he argued.

“The rule merely emphasises the lack of thought put into these reforms and highlights the government’s incompetence. ATE insurers tried to engage with Lord Justice Jackson and the Ministry of Justice over the last three years but without success and therefore it does not come as a surprise that they have not thought through the ramifications.

“The rules should be amended to allow for recoverable ATE premiums based on the date the CFA was entered into. However, given the government’s haste, this is unlikely.”

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Robson: little academic research into what makes an effective advocate

Nottingham Law School is to launch the first LLB with Advocacy next year as it creates the UK’s first centre devoted to academic study of advocacy.

Nottingham was the first university in the UK to award an LLM in Advocacy Skills and the LLB “will give students a unique chance to experience how the theory of law works in the courtroom and perfect their analytical and presentational skills”.

Led by senior lecturer and barrister Jeremy Robson, the Centre for Advocacy will examine what makes for effective advocacy and how lawyers can be trained to ensure that they present their cases accurately, ethically and persuasively.

Mr Robson said: “It is the duty of the advocate to ensure that their client’s interests are protected robustly. Despite the importance of this role there has been very little academic research conducted into what makes an effective advocate.

“Drawing on the expertise of many of the experienced advocates who teach at Nottingham Law School, and working in conjunction with our colleagues in the School of Psychology and School of Forensic Science we aim to change that.”

Mr Robson was called to the Bar in 1999 and practised in the Midlands until joining Nottingham in 2008.

Since that time he has taught and designed a number of different advocacy programmes, including leading the LLM in advocacy skills, a bespoke programme commissioned by the Attorney General of Malaysia.

He said: “The legal system is currently in a state of significant change and one of the consequences of this is that more and more bodies are able to offer advocacy services. It is vital for the preservation of the rule of law that the standard of advocacy is maintained.

“It is also a skill which, if students can demonstrate they can do well, opens up a whole host of opportunities in the jobs market.

“If they are good advocates, it means they can analyse a complicated set of facts, identify what is relevant and present an argument in a way which is engaging and persuasive. We will be exploring ways of ensuring that all our graduates possess these skills.”

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Edward Pepperall QC: Home Office should have accepted offer

The High Court has made it clear that the additional 10% uplift on damages the courts can award for beating a part 36 offer means an uplift on damages plus basic interest.

Edward Pepperall QC, sitting as a deputy High Court, also said that the court’s focus under part 36 must be “upon the conduct of the litigation”, and not on “whether the claimant had led a blameless life up until the moment when a tort was committed against him”.

The High Court was considering the case of Abdulrahman Mohammed, a Somalian who Mr Pepperall described in the substantive judgment as a “prolific and violent offender”.

Mr Mohammed was awarded £78,500 plus interest for unjust imprisonment for a total period of 445 days. Mr Mohammed’s solicitors, Leigh Day, had earlier made the Home Office a part 36 offer of £70,000.

Considering first the enhanced interest he should award under rule 36.17(4)(a), Mr Pepperall said: “While judges are required to take into account ‘all of the circumstances’, it does not follow that each circumstance prayed in aid will necessarily be relevant to the exercise of the court’s discretion under part 36.

“As I explained in my main judgment, the fact that Mr Mohammed is a criminal who had been lawfully imprisoned on a number of occasions did not mean that he was not entitled to compensation for false imprisonment, but it did moderate the award.”

Delivering judgment in Mohammed v the Home Office [2017] EWHC 3051(QB), Mr Pepperall said that among the relevant matters in calculating enhanced interest were the Home Office’s own submissions on quantum, which valued the case “very much in the region of the part 36 offer”.

Mr Pepperall said Leigh Day’s offer of £70,000 should “always have been recognised as a reasonable offer that put the Home Office at risk under part 36 in the event that liability was established”.

Another factor was the time between offer and judgment, with over seven months elapsing between the deadline for accepting the offer and the trial.

Mr Pepperall said that despite Mr Mohammed’s criminal background, “through the skill of his legal team”, he prosecuted the claim reasonably. In contrast, the Home Office “should have recognised the weakness of its defence significantly earlier than 4.03pm on the afternoon before trial”.

Mr Pepperall said: “The judgment handed down by Hayden J on 3 March 2016 clearly demonstrated the difficulties with the Home Office’s case and should have led to an earlier concession of liability.

“Specifically, the Home Office should have re-evaluated this case on receipt of the part 36 offer. Had it done so, it should, in my judgment, have recognised that the offer should be accepted.

“That said, it is plainly more desirable that a party should undertake a last-minute reassessment and make a late concession of liability than that it should persist in a bad defence.”

The judge awarded enhanced interest on his damages award of £78,500 plus basic interest, at the rate of 6% over base from the date of the part 36 offer on March 23 2017 until judgment.

Turning to the 10% uplift, Mr Pepperall said the parties were in dispute over whether it should be applied to the gross award of damages for beating the part 36 offer or the net award.

He said a third possible approach to interest under rule 36.17(4)(d) was to apply the uplift to damages plus all the interest awarded, including enhanced interest under rule 36.17(4)(a).

However, Mr Pepperall said that his judgement, the proper construction was clear.

“In calculating the additional amount, the court should take into account the gross award that would have been made but for part 36. That is the sum that the court was about to award when taken to the part 36 offer.”

This included basic interest, whether awarded pursuant to contract or the court’s discretionary power, but excluded any enhanced interest awarded under rule 36.17(4)(a).

Mr Pepperall accordingly awarded an uplift of 10% on his damages award plus agreed interest under the Senior Courts Act 1981 at a rate of 2% p.a from service of proceedings to judgment.

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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!”


The increasing appetite for third-party funding in Europe

Ross Nicholls

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

April 10th, 2018