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Thornton: new rules are a disaster for the environment

The High Court has fast-tracked a judicial review brought by three charities challenging the new costs regime for cases involving the environment.

Mr Justice Dove also capped the liabilities of legal environmental pressure group ClientEarth, Friends of the Earth and the RSPB at a total of £10,000.

Under the environmental costs protection regime introduced in 2013, costs for unsuccessful claimants were capped at £5,000 for individuals and £10,000 for organisations. Defendants’ liability for claimants’ costs were similarly capped, at £35,000.

Under the new rules introduced on 28 February, judges are allowed to vary the cost cap in a case. The charities launched a judicial review, arguing that this weakened financial protection for claimants, who faced unspecified costs.

ClientEarth has claimed the new rules would make it “virtually impossible” to bring an environmental case in the public interest.

The group said the government had 21 days in the fast track, instead of the usual 35, to file its defence, and after the 11 May deadline, the charities would have seven days to reply before a hearing date is set. The hearing itself is expected by the group to take place in around six months.

James Thornton, chief executive of the ClientEarth, said: “People must be able to go to court to defend their environment. The government’s new rules cynically undermine this right.

“By fast-tracking our case and protecting us from debilitating legal costs, the judge has clearly signalled the importance of our challenge to the government.

“These new rules are a disaster for the environment. Faced with the risk of almost unlimited costs, who would put their finances, maybe even their house, on the line?

“People and charities need financial certainty before they bring a case to protect people and the planet. After Brexit, this will become even more important, because the EU won’t be able to hold our government to account.”

In its report on the reforms, the House of Lords statutory instruments committee, concluded earlier this year: “The requirement of article 9 of the Aarhus Convention is that, in relation to environmental matters, contracting parties ‘shall provide adequate and effective remedies, including injunctive relief as appropriate, and be fair, equitable, timely and not prohibitively expensive’.

“The MoJ has not provided a convincing case for changing from the previous standardised system of cost capping, which was well understood, to this more complex system which appears to have significant potential to increase both the costs for public administration and the uncapped litigation costs of the claimant.”




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Miners: £3m paid out last year

Compensation payouts to miners suffering from noise-induced hearing loss (NIHL) are rising sharply, government figures have shown.

Responding to a freedom of information request, the Department of Energy & Climate Change – which is responsible for the liabilities of the former nationalised coal industry – said that in 2013/14 it paid out just over £3m in respect of 1,393 claims.

This compares with £2.2m paid out on 953 claims in 2012/13, and £827,065 on 366 claims the year before that.

The first four months of the 2014/15 financial year had seen £961,005 paid out on 435 claims.

The figures show the average payout to be around the £2,200 mark.

The number of claims paid is considerably less than the number received – 3,147 of the 11,230 received in the three and a bit years reported – but the department does not say whether the remaining claims have been rejected or are still being processed.

Though the number of paid claims increased by 46% between 2012/13 and 2013/14, the number of claims received fell 12% between those two years.

NIHL claims are becoming the new personal injury battleground. The Association of British Insurers last month argued that industrial deafness claims are “fast becoming the new cash cow for claimant lawyers” and their fees need to be curbed.

Bridget Collier, head of industrial disease at Fentons and a member of the Association of Personal Injury Lawyers’ executive committee, wrote on the association’s blog last week that “in the last three years more information about the right to claim for hearing loss has become widely available”.

She said: “I myself am driven mad listening to the radio advertisements and on social media that tell me what the symptoms are and that there might be a claim. But all this amounts to education. Without it, you might just carry on thinking that deafness is something that’s crept up and you cannot do anything about it. But on learning that it might be someone’s fault and not an unfortunate consequence of age, of course it’s fair to make enquiries.”

She said audiogram tests and an examination by an ear, nose and throat consultant can work out what is caused by excessive noise and what is caused by age or health issues. “With a test procedure with such specific results, a fraudster is obvious in several ways. We can surely rely upon on the evidence.”

As a result, Ms Collier said “the insurers’ accusations make us wonder if they are simply trying to avoid paying out by shaming people out of claiming”.




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Stark: judges want to hear from those with recognised level of qualification

The number of people choosing to train as a costs lawyer has almost doubled during 2011 as the impact of several major forces – including the Jackson reforms and the  350-001 exam Legal Services Act – are felt in the costs sector, the Association of Costs Lawyers (ACL) has reported.

It received 112 applications to take its training programme this year, compared to 65 in 2010.

Study leads ultimately to qualification as a costs lawyer, an authorised person under the Legal Services Act with independent rights of audience and to conduct litigation.

ACL chairman Iain Stark said one major factor was the growing  vcp-510 exam insistence of the courts that only those with rights of audience can appear in costs hearings – law costs draftsmen, who are not members of the ACL, have to rely on an out-of-date legal fiction that they are temporary employees of their instructing solicitor and so can ‘borrow’ their rights of audience.

Mr Stark said: “Following the recent costs management pilot in Birmingham and the current nationwide pilot in Mercantile Courts and Technology and Construction Courts across England and Wales arising out of the Jackson reforms, the profile and importance of costs has never been higher

. As such, judges increasingly want to hear from those with the relevant experience and recognised level of qualification.

“All litigators will have to get to grips with costs budgeting as part of these reforms and we are seeing more firms – including some of the largest in the City – deciding to bring costs expertise in-house so they can manage costs from the start.”

The increased status of costs professionals coupled with the continued downturn in the legal jobs market has changed people’s attitude towards a career in costs, Mr Stark continued.

“The unprecedented rise in student numbers demonstrates that people are starting to realise that there are other routes to a successful and rewarding legal career. Under the Legal Services Act, costs lawyers undertake reserved legal activities and enjoy the same benefits and status of many other legal professionals – including partnership in legal disciplinary practices.”

He said the costs lawyer route to qualification also supports the social mobility agenda in the legal profession, as students need only a minimum of four GCSEs to begin the training – those who have completed law degrees or postgraduate legal education can gain exemptions from parts of the programme.

The ACL said the term ‘costs draftsman’ now denotes an unregulated and unqualified person operating in costs and those who instruct costs draftsmen have no recourse to either the Legal Ombudsman or the Costs Lawyer Standards Board, the profession’s regulator.

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Moulder J: The rationale “does not extend to a non-party”.

An attempt to claim litigation privilege by global mining and commodities giant Glencore, in a case where it was not the party to proceedings, has been rejected by the High Court.

Mrs Justice Moulder said there was no authority for the proposition that “a person controlling litigation can assert litigation privilege against a party which it is controlling and who is the party to the proceedings”.

Moulder J said she accepted the claimant’s argument that it was “an established principle that litigation privilege can only arise in favour of a person who is a party to the litigation in question”.

She went on: “This rationale does not extend to a non-party. Accordingly, I find that any right to assert litigation privilege arising out of the Peruvian proceedings is that of the claimants as a party to those proceedings and it is not open to the defendants to assert such privilege against them.”

The High Court heard in Minera Las Bambas SA and another v Glencore Queensland and others [2018] EWHC 286 (Comm) that in 2014 the claimants purchased the defendants Xstrata Peru, which at that time indirectly owned the Las Bambas mining project.

After the sale purchase agreement (SPA) closed, the Peruvian tax authorities began an investigation, leading to a tax assessment under which the first claimant’s liability was increased.

Minera Las Bambas responded by launching proceedings against the tax authority in the Peruvian Tax Court. Under the SPA, Glencore took control over one of the two aspects of the Peruvian proceedings, though “the defendants have only ever acted in the name of the first claimant”.

Moulder J said the English proceedings centred on interpretation of the SPA and subsequent deed of indemnity, and whether the defendants were obliged to indemnify the claimants in respect of the VAT liabilities that were the subject of the Peruvian proceedings.

The claimants, seeking an order for inspection of 25 documents, applied to the High Court under CPR 31.19(5) for a determination as to whether the defendants were entitled to rely on litigation privilege.

Standard disclosure took place in April 2017, and last month City law firm Linklaters, acting for Glencore, confirmed that there were “only 25 documents in relation to which the defendants were seeking to assert litigation privilege”.

She said that even if it was “open to the defendants as a matter of principle to assert litigation privilege where it controls litigation of a party”, they had not established that the privilege could be maintained where the control was “not over a party to these proceedings and in relation to documents created for use in these proceedings but in relation to documents created in relation to other proceedings to which the defendants are not a party”.

Mrs Justice Moulder gave judgement in favour of the claimants.

 




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Jackson: problems of costs budgeting have greatly diminished

Lord Justice Jackson has chosen cost capping, rather than fixed costs, as the way forward for a voluntary pilot he hopes to introduce in the Mercantile Court, as the judge continues to investigate the possible extension of fixed recoverable costs.

He said the pilot, for commercial cases worth up to £250,000, would follow the model used in the Intellectual Property Enterprise Court (IPEC). Jackson LJ said there would be a cap, “rather than a fixed sum”, on recoverable costs for each stage of the case and an overall cap on the total.

In a webinar for the New Law Journal, Jackson LJ said the pilot which he was promoting would run at the Mercantile Court in London and Manchester.

“If claimants wish to issue in this fixed or capped cost list, they can choose to do. If defendants object, the case will come out.

“The regime will restrict recoverable costs and contain an expedited procedure to reduce the burden of work on the lawyers for each party.”

Jackson LJ said the pilot would be limited to cases worth up to £250,000. “If a case is above that, even if both parties want to go into the pilot, they won’t be able to.

“I hope we will get a sense of how much the market wants this and useful feedback about how the pilot rules are working.”

Costs rules at the IPEC set out a maximum amount of costs which the court will award for each stage of a claim. Subject to limited exceptions, the court will not order a party to pay total costs of more than £50,000 on the final determination of a claim in relation to liability and no more than £25,000 on an inquiry as to damages or account of profits.

Jackson LJ emphasised that his pilot depended on approval from the Civil Procedure Rule Committee.

The judge said he was “extremely pleased” that the problems of costs budgeting had “greatly diminished”.

“Some practitioners and judges say that because it is working well, that will reduce the need for fixed costs. That is the argument being put to me.”

However, Jackson LJ said costs budgeting did not deal with the problem of costs already incurred or “historic” costs. “That is not an argument against costs management, but something does need to be done about incurred costs in these cases.”

He said he would consider this issue in the run-up to publication of his final report in July, along with the question of whether costs management could be “modified in some way” and the extent to which it reduced the need for fixed costs.

“I still believe that in appropriate cases we need fixed costs. Certainly there must be some fixed costs outside and above the fast track, but I will look very carefully at which cases are suited to fixed costs and which are not.”

Jackson LJ added that while with business cases there was for “some variant of fixed costs or capped costs” going a “reasonable way” up the scale in terms of size, personal injury and medical negligence had to be looked at “through a different lens”.

He first mentioned the idea of a voluntary pilot in a speech early last month.




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High Court: disinheritance claim needs hearing

A litigant in person’s contentious probate claim, part of which was dismissed by a High Court master as “no more than tittle tattle”, needs a proper hearing, a judge has decided.

Andrew Sutcliffe QC, sitting as a High Court judge, said Master Price should not have treated the defendants’ application as being for summary judgment when it was for a strike-out.

Mr Sutcliffe said that the master did not “expressly consider the fairness” to the claimant of doing this and dispensing with the procedural requirements involved.

“It seems that what the Master did was to apply a test on the basis of an application not before him in circumstances where he had neither explicitly exercised his discretion to treat the application before him as including an application for summary judgment nor explained to the claimant the consequences of the course he proposed to take.

“The fact that the claimant was a litigant in person cannot be ignored. She was in my view entitled to have proper notice of the fact that the defendants were applying for summary judgment.”

The court heard in St Clair v King and another [2018] EWHC 682 (Ch) that Anna St Clair was a step-daughter of Jean Lech, who died in 2012. After Ms St Clair’s father died in 2008, Ms Lech disinherited both Ms St Clair and her daughter, replacing them as beneficiaries by her nephew and carer.

Ms St Clair disputed the validity of the will disinheriting her on a variety of grounds, including undue influence, testamentary incapacity, want of knowledge and approval, and fraud.

Ms St Clair, who was not represented before Master Price but was represented by a direct access barrister before the High Court, argued that the master should not have struck out her claims on the basis that they had no real prospect of success but instead should have adjourned the hearing to give her an opportunity to obtain legal advice.

Her counsel also complained that it was unfair for the claimant to be handed a 15-page skeleton argument by the defendant’s barrister “as she went into court”, adding to the unfairness of asking a litigant in person to deal with the application at such short notice”.

Mr Sutcliffe said it was “crucial” to the outcome of the appeal that the master proceeded on the basis on an application for summary judgment under Rule 24.2, when an application to strike out under Rule 3.4 was before him.

Instead of concluding that the particulars of claim disclosed no reasonable grounds for bringing them, the master applied the “summary judgment test”, that they did not have any realistic prospect of success.

Mr Sutcliffe said it was “obvious” that the claimant was not given the 14 days’ notice of a summary judgment she was entitled to and he was not persuaded that she had a “proper appreciation” of the fact she was facing one.

The judge accepted counsel for the claimant’s submission that to proceed on the basis that the defendants had made a summary judgment application amounted to a “serious procedural irregularity”, and that there should be a rehearing of the case, rather than a review.

Mr Sutcliffe disagreed that Ms St Clair’s claims of undue influence could be regarded as “fanciful” and lacking any prospect of success “without hearing the evidence to be called at trial”. He made a similar finding regarding the claimant’s want of knowledge and approval, and lack of testamentary capacity claims.

The judge allowed the claimant to amend her pleadings to include an argument based on mutual wills and breach of promise, but refused to allow a fraud claim to be included.

Mr Sutcliffe allowed Ms St Clair’s appeal and said he would hear from the parties on the question of costs.

He said that in light of this decision and because her claims of undue influence, want of knowledge and approval, and lack of testamentary capacity were permitted to proceed, it was not “appropriate” for the award of costs on the indemnity basis to stand”.




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All commercial lawyers need to identify the commercial concerns of the client. Exclusion and limitation clauses are used to deal with those losses that are most significant to any business. These clauses are probably the hardest negotiated and the most fought over in any litigation; because they allocate risk. These clauses, above all others are those that require clear and unambiguous wording.

MBL’s one-hour webinar will give you practical guidance on drafting and interpretation of exclusion/limitation clauses for use in commercial contracts.

It is aimed at every lawyer that drafts or interprets commercial contracts and will outline some of the recent case law on incorporation, interpretation and statutory control through UCTA “unreasonableness”. Exclusion and limitation clauses are fundamental to commercial contracting because they deal with the allocation of risk. While the recent decisions inevitably turn on the specific facts of each case there are, nevertheless, several key lessons that can be identified and applied when using these clauses.

 

For more information on webinar content and costs please email lucy@mblseminars.com quoting Litigation Futures. Alternatively give us a ring on 0161 793 0984.

 




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Richard Percy, Chief Actuary, DAS UK Group

Leading legal expenses insurer, DAS UK, has appointed Richard Percy as Chief Actuary, with effect from 10 February 2014.  Richard will lead the actuarial department which specialises in all types of legal expenses insurance in the UK, Canada and Norway.

Prior to joining DAS, Richard was Head of Commercial & Corporate Partnership Pricing with Lloyds Banking Group General Insurance.  Prior to this Richard worked as an actuary for Lloyd’s of London.

Dr. Thomas Jannakos, chief financial officer, DAS UK Group; “Richard’s expertise will be critical in ensuring that our current and future plans are underpinned by a market leading actuarial approach that is financially robust and, just as importantly, enables us to develop further opportunities for our broker community and commercial clients.”

 




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Havenhand: major cultural change for the district judges

The questions raised by the Mitchell ruling, such as the effect on a part 36 offer of a budget being disallowed, are already emerging as the impact of the Court of Appeal’s decision is felt.

Barrister Barry Havenhand of Clerksroom has supplied Litigation Futures with details of one case where the failure to file a budget in sufficient time saw the defendant’s budget restricted to its court fees, as in Mitchell.

On 2 December he was representing the claimant at a telephone case management conference (CMC) in a county court case which had already been allocated to the multi-track. It was the first CMC, meaning the parties needed to file their Precedent H costs budgets.

The claimant’s budget was filed on 22 November, but the defendant did not file theirs until 29 November.

Near the end of the hearing, which mainly dealt with directions, Mr Havenhand raised the issue of when the budgets were filed and sought an order that the defendant should get no costs, other than court fees.

According to Mr Havenhand, the deputy district judge asked his opponent – a trainee – for her comments; she said her principal had not told her about this, and went on to say that they had not known they needed to file a budget, and had only done so when they received the budget from the claimant.

“As the judge remarked, when duly making the order I sought, that probably scuppered any chance of an appeal,” he reported.

However, in this case, the sting for the defendant was effectively removed, because it had already admitted liability and so was not going to get its costs anyway. “But what part 36 offers?” he asked.

“If they make an early offer which the claimant rejects, goes to trial and fails to beat, does the defendant get costs from the expiry of the offer period, under the part 36 procedure, or does the Mitchell costs order take precedence, meaning the defendant can never get their costs? If so, does that not undermine part 36?”

More broadly Mr Havenhand questioned how district judges will apply Mitchell on a day to day basis.

“District judges are used to doing ‘justice’ by applying a combination of rules and flexible common sense, to achieve the right result in individual cases. The DDJ in my case had no problem in applying a rigid rule, in relation to an unimportant error, despite the potential consequences – but it is a major cultural change for the district judges, and some may be resistant.”




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Holland: cash-hungry investing area with a long-term turnaround

Posted by Zoe Holland, managing director of Litigation Futures sponsor Zebra Legal Consulting

In response to the post 1 April 2013 world, the personal injury sector has seen a surge in the number of law firms looking to clinical negligence as a new area of work.

Since the beginning of the year, enquiries about setting up or expanding clinical negligence departments have seen a tenfold increase. From a survey we carried out via contacts in the market, this trend has also been noted by key industry stakeholders such as banks, medical agencies and insurers.

A specialised area of work

Firms need to understand the specialism required to manage this work, not only in terms of case management, but also in financial management.

Understanding the risk profile of clinical negligence is critical to cash flow and profitability. In the post Jackson era, managing and monitoring this work effectively will be critical to a law firm’s ability to generate cash and profit.

As this work can have a three-year lead in, the firm may not feel the real pain of its lack of expertise until year three or four. By this time WIP and disbursement write- offs can be significant. Having worked on two recent projects in firms where this has been a learning curve, other firms need to think carefully before embarking on setting up clinical negligence departments without fully assessing the resource, funding and staff requirements.

Risk assessment

Assessing risk from the start of a clinical negligence case is critical. This is where new entrants into the market may find that they have a skill gap. Risk assessing comes with experience in litigating these cases, and is not a skill that can easily be transferred.

The temptation of some firms is to consider placing their experienced personal injury solicitors into the role of clinical negligence risk assessor. Unless the assessor has significant experience in this field, or has a medical background, this scenario is set to fail.

Financial risk profiling

Given the nature of clinical negligence litigation, firms may carry caseloads with a very small percentage of admissions. Unlike personal injury work, this can make it difficult to assess ‘safe’ work in progress. It is critical therefore to risk profile the caseload as it progresses. This can involve having an overview or case prospects, case complexity and quantum.

For new firms entering the market, it will be critical for any financial modelling/forecasting, for the firm to understand the key indicators of case value and risk. Further, they will need to have a basic overview of a caseload settlement profile.

Seeing it through

If firms view clinical negligence as a way to generate cash quickly, then they are in for a financial shock.

It is a cash-hungry investing area with a long-term turnaround. They must be prepared to play the ‘waiting game’.




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Government wants single waiver system covering all courts

A reformed court fee waiver system, complete with tough means tests that for the first time reduce eligibility for court and tribunal users with savings, is set to come into force next month.

The new remission system – which is aimed at ensuring access to justice for those on low incomes who would otherwise struggle to pay the fees – will involve both disposable capital and monthly income tests.

Announcing the changes, Ministry of Justice junior minister, Helen Grant, reported that only small concessions had been made to Government plans after a consultation, which had 64 responses.

The changes will be implemented by secondary legislation on 7 October.

The new system – which replaces waiver regimes currently operated by different courts – includes:

  • a single system of fee remission across all of the courts and tribunals;
  • a new disposable capital test to assess eligibility for a remission; and
  • a new single income test requiring a bigger contribution from those who pay part of their fee.

Under the gross monthly income test, for example, if they pass the disposable capital test, contributions to court fees will begin to be made by couples earning more than £1,735 if they have two children, and childless single people who earn more than £1,085.

Minor concessions made by the Government after the consultation, which included responses from the Law Society and the Bar Council, centred on a more generous disposable capital test for the over-60s, and a greater number of capital thresholds for younger people.

The time period in which to apply for retrospective fee remission has also been extended to three months from a proposed two months, following the consultation.

The new remission system will not apply to First Tier immigration and asylum tribunals.

Ms Grant said: “The taxpayer contribution towards fee remissions will be better targeted towards those who need it most. They will also ensure that the system of remissions is fair, easy to use and consistent across courts and tribunals.”

Separately, a new fee of £215 for an oral renewal application in judicial review proceedings, first announced in April, will also come into force next month. If the application is granted at an oral hearing, the fee for a resulting full hearing will be waived.




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The government has pushed back implementation of the Jackson reforms and the referral fee ban to April 2013, it announced yesterday.

Government law officer Lord Wallace of Tankerness made the announcement as the House of Lords began scrutinising part 2 of the Legal Aid, Sentencing and Punishment of Offenders Bill, which contains the provisions.

It had originally been scheduled to take effect in October 2012, but speculation had been growing that the timetable was too tight to have everything in place. The government had already pushed back implementation of part 1, dealing with legal aid reform, to April 2013.

A Ministry of Justice spokesman said: “We are committed to reforming the ‘no win no fee’ system so that legal costs for reasonable compensation claims will be more proportionate, and avoidable claims will be deterred from going to court.

“This will help us to move away from the current unacceptable situation where, for example, the NHS paid £200m to claimants’ lawyers for compensation cases in 2010-11 – around three times more than it paid its own lawyers.

“This will require changes to legal rules and regulations and we want to give sufficient time to get the complex details right. We are also conscious that legal businesses will need sufficient time to plan for the changes, alongside other forthcoming regulatory and funding changes to the industry. We will therefore implement the new measures, subject to parliamentary approval, in April 2013.”

Seamus Smyth, president of London Solicitors Litigation Association, said: “The Jackson consultation process took a long time, and highlighted a great deal of disagreement. Implementing his proposals, even as a whole, would have taken time and would not have been easy but tackling them piecemeal was bound to generate more disagreement and take even longer. It is no surprise that the timetable is being stretched. Let's hope the detail and drafting quality of the outcome justifies the wait.”

During the six and a half hours of debate, the government rejected all the amendments to clauses 43 and 45, which end the recoverability of success fees and after-the-event (ATE) insurance premiums, despite a particularly passionate plea on behalf of asbestos sufferers. Justice minister Lord McNally said: “To succeed, we will have to stand firm against some of these hard cases, I am afraid.”

He also questioned claims that the Dowler family would not have been able to take legal action were it not for the current regime. “I thought at the time, and I still think, that it is almost inconceivable that the Dowlers would not have been able to pursue their case under conditional fee agreements.

“The idea that they would have been powerless in the case that they had is perhaps countered by the fact that the matter was settled out of court – and if reports are to be believed, at a cost of £3 million to the offending company. I am not so sure that the argument that they would have been left powerless stands up in those circumstances.”

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Lord Wallace had earlier told peers that the reforms “can help businesses and other defendants who have to spend too much time and money in dealing with avoidable litigation – actual or threatened”. He added that they will promote competition among solicitors.

He said: “No doubt some firms of solicitors will get a reputation for taking on cases with very modest or no success fees, whereas other firms prepared to take on more risky litigation would have higher success fees.”

However, he acknowledged concerns among peers that some of the main Jackson reforms, particularly qualified one-way costs-shifting (QOCS), would be dealt with by the Civil Procedure Rule Committee with little involvement from Parliament. But he indicated that there would not be a “primary financial threshold” to apply QOCS.

Lord Wallace said: “We will, however, continue to work with stakeholders on the detail of a QOCS regime for personal injury cases. We acknowledge and are grateful for the expert stakeholder contributions that have been received. That work will resume in earnest once the details of this bill are finalised.

“However, there are some difficult issues which we are addressing, and which need to be got right for the hundreds of thousands of personal injury cases dealt with each year: what does ‘unreasonable behaviour’ mean? How can we balance certainty for the claimant with the need for the claimant to face at least some litigation risk, the absence of which is a major flaw in the current regime? How can we ensure fairness to all sides, and reduce the scope for satellite litigation?”

He said “there does appear to be broad agreement that it should not be a primarily financial threshold in personal injury cases, although that would not necessarily apply were, at some future date, QOCS to be extended to other categories”.

Lord McNally said later that the government will examine the experience of QOCS in personal injury claims before considering whether it should be extended further. “Different considerations apply in different types of case. Environmental claims, for example, typically involve more than one claimant who can contribute towards the costs. Before-the-event legal expenses insurance may be available in relation to the provision of goods and services.” He also pointed to the introduction of contingency fees as another option.

Lord Wallace argued that the insurance market will “respond positively” to the reforms. “It is easy to say ahead of an event that all sorts of appalling things will happen, but after 1999 the market certainly adjusted to the opportunities with ATE premiums, and it is not surprising that those who wish to maintain the status quo are making substantial representations to that effect.”

The only clarification of substance during the debate was that the 10% uplift in damages awards will also apply to bereavement damages.




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Bacon: document your funding advice

Bacon: document your funding advice

Solicitors will be funding litigation directly in the next few years, a leading silk predicted last week.

Nick Bacon QC said he did not understand why cases from the nineteenth and early twentieth centuries were still driving the law on lawyers sharing in the proceeds of litigation in this way given that there was no practical distinction with conditional fee or damages-based agreements (DBAs).

Speaking at the JLT commercial litigation conference in London last week, the 4 New Square barrister said he had seen some DBAs being used, despite continuing concerns about the rules governing them. One solicitor, he recounted, had “taken a punt” on a case with a DBA and made more from that one matter than he had from a decade of litigation.

Mr Bacon added that he thought the courts would do their best to uphold DBAs if they were challenged so as to encourage their use.

In a speech about retainers, he emphasised the importance of attendance notes and client confirmation of the advice given about costs and fee arrangements – “I’ve seen many cases where there was no attendance note,” he said – and of solicitors understanding the products they recommend to clients.

“I see solicitors signing clients up to products that they didn’t need,” he said, recalling one case where the solicitor recommended after after-the-event insurance to cover the part 36 risk, without realising that it only kicked in once the damages had been exhausted.

Insurance brokers were a “useful middle man” because their evidence in court was hard to counter, Mr Bacon added.




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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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joseph-mulrooney-acsl

Joseph Mulrooney, Director of ACSL Solicitors

Established Liverpool firm, ACSL Solicitors, has selected the Proclaim Practice Management Software solution from Eclipse Legal Systems, the sole Law Society Endorsed legal software provider.

Founded in 2009, ACSL Solicitors specialises in a range of legal areas – including Conveyancing and Dispute Resolution – and the firm’s expansive client base is comprised of both corporate and private clients. ACSL Solicitors prides itself on its ability to provide clients with professional legal advice and a personal service tailored to specific requirements.

After experiencing substantial growth in terms of both staff and clients, ACSL Solicitors required a robust, yet scalable practice management system. Following an in-depth demonstration with Eclipse, the practice has decided to roll out the Proclaim Practice Management Software solution across its Dispute Resolution and Conveyancing departments.

Proclaim will provide the teams with a high level of automation, enabling them to concentrate on value-added activities rather than administration. In particular, the dispute resolution department will benefit from Proclaim’s integration with the MoJ portal, enabling staff to efficiently process volume caseloads without leaving the Proclaim application, and simultaneously eliminating duplicate data entry.

ACSL Solicitors has also purchased Eclipse’s client self-service portal, TouchPoint+, which will enable the team to brand it in line with the firm’s visual identity, as well as offer clients a range of Eclipse’s online communication toolsets, including FileView, an online matter tracking solution and SecureDocs, an online document delivery and acceptance tool.

Joseph Mulrooney, Director of ACSL Solicitors, comments:

“Eclipse was our preferred supplier from the outset for a number of reasons, including its position as the market-leader of legal software, and its range of additional efficiency-enhancing products.

“Utilising Proclaim will enable us to provide a seamless client journey, removing the time-sapping tasks of our teams’ daily workload, and allowing them to focus on adding value, providing an efficient service, and eliminating the stress and hassle for our clients.”




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Bogart: increased activity throughout the business

Burford Capital – the leading third-party funder and after-the-event (ATE) insurer – yesterday unveiled a 25% increase in profits before tax for 2013, after recording significant increases in income on both sides of the business.

The company’s £36m turnover was made up of £23m from funding (up 20%) and £13m from ATE (up 29%). Less operating expenses, profit before tax hit £26m. It has increased dividend payouts by 10%.

Burford is currently invested in 35 matters, with a commitment of £159m, having put in £37m during 2013.

Since its inception in 2009, 25 cases have concluded, generating £88m in gross investment recoveries and £30m net of invested capital – meaning a 52% net return on invested capital.

The company’s annual report said the past year saw “continued acceptance and adoption of litigation finance”.

It continued: “Burford’s annual survey showed sharp increases in lawyers’ views of litigation finance as a useful tool, along with an even more dramatic uptick in the views of corporate CFOs favouring its use. Investors are similarly enthusiastic, with hundreds of millions of dollars in new capital entering the asset class – which is a necessary part of continuing the establishment of litigation finance as a normal, mainstream part of litigation.

“Burford’s returns, high and uncorrelated, have delivered on our initial aspirations and have also served to fuel the overall growth of the market.”

The pre-Jackson ‘bubble’ in the first quarter of 2013 meant Burford wrote ATE with around £180m of exposure, more than the previous two years combined.

While the annual report said it was too soon to make any predictions for the future of ATE, “the significant tail of business written during and before 2013 in this business positions it for several years of sustained profitability while we wait for the market to stabilise”.

Chief executive Christopher Bogart said: “2013 was another year of successful progress for Burford, which saw continued significant growth in our income and profits from both the litigation investment and insurance businesses, and increased activity throughout the business. We are excited to be at the forefront of this rapidly maturing and evolving industry.”




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Contract: who repudiated it?

Contract: who repudiated it?

A specialist motor claims handler is suing an insurance company in a row over a cancelled contract, involving almost 12,000 third-party personal injury claims.

The High Court heard that C&S Associates UK, based in Hampshire, claimed damages from Enterprise Insurance Company for terminating its contract.

In a preliminary hearing, Mr Justice Males said Enterprise argued that it was entitled to terminate, on the grounds of repudiation. C&S argued that the insurer was not entitled to terminate, and its conduct itself amounted to a repudiatory breach, which C&S accepted.

Males J described how C&S sent over 2,000 paper claims files to Enterprise’s law firm, Manchester-based Ozon Solicitors, after the insurer launched a file review.

The judge said that after reviewing around 290 files, the law firm claimed to have identified about £500,000 in “savings”, leading the insurer to decide that Ozon should settle as many claims as possible and that the relationship with the claims handler should be terminated.

After only around 80 files were returned to C&S, Males J said the claims handler “took the view that this rate of return was far too slow and was impeding its ability to manage the files and thereby to protect Enterprise’s interests”.

Delivering judgment in C&S Associates v Enterprise Insurance [2015] EWHC 3757, Mr Justice Males said the two companies were introduced to each other at the end of 2011.

“C&S was told that Enterprise was dissatisfied with its existing motor claims handlers and that it was hoping to grow its business, which would lead to an increase in the volume of claims. It was therefore looking for a new claims handler with the capacity to handle its third party motor claims.”

Males J said a contract was signed, taking effect in July 2012, as a result of which C&S handled 11,995 claims on behalf of Enterprise until the contract was terminated in January 2014.

The judge said the order for trial of the preliminary issues provided that Enterprise was not required to prove allegations of defective performance by C&S.

Despite this, he said both parties gave evidence on the issue, particularly from Michael Smith, a director and founder of C&S, and Andrew Flowers, the chief executive and principal shareholder of Enterprise, “no doubt because it is an issue which gives rise to strong and (as I accept) genuinely held feelings on both sides”.

The judge ruled that C&S was not obliged to send a “further batch of 1,500 claims files” to Ozon, and “even if it was under such an obligation, its refusal to do so was not repudiatory”.

He went on: “The breaches of C&S’s duties alleged by Enterprise are capable, if proved, of amounting to a repudiatory breach of the contract. Whether, if proved, they do so amount is a matter to be determined at trial.

“If Enterprise’s case on repudiation fails at trial, its purported termination of the contract by Ozon’s letter dated 13 January 2014 was itself repudiatory. C&S’s solicitors accepted Ozon’s letter as a repudiation bringing the contract to an end by their letter dated 16 January 2014.”

Males J further ruled that the contract had been varied by an exchange of emails in October 2013 so as to increase the fees payable to C&S and provide that the contract should run for at least two years from October 2013.

The judge ruled that the insurer was entitled to restrict “the number of claims handled by C&S on its behalf to whatever level it saw fit and to refuse to allow C&S to handle any new claims on its behalf”.

However, it was not entitled to withdraw from C&S those claims it “had hitherto been handling”, unless the claims handler had repudiated the contract.

Mr Justice Males warned: “Bearing in mind the wide-ranging nature of the allegations made by Enterprise and the number of claims being handled by C&S, the parties will need to give careful thought to the further conduct of this action in the light of this judgment.

“A cost-effective and proportionate way of resolving the remaining issues will need to be found.”




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Lord Thomas

Lord Thomas: squandering money “would not be forgotten”

The Lord Chief Justice has said the country has a “once in a lifetime” opportunity to build a proper court IT system, and failing to make a success of it would be a “disaster”.

In a strongly-worded speech highly critical of previous court IT failures, Lord Thomas said that if the Courts Service and the judiciary squandered the £300-£400m promised by the Treasury, it would “not be forgotten” and “we would not be given that money again”.

Last month the Treasury approved a ‘one-off package of investment’ for the IT systems of HM Courts and Tribunals Service, which should average up to £75m every year from 2015/16 to 2020/21.

Delivering the annual Society for Computers and the Law lecture at the offices of City firm Clyde & Co last night, Lord Thomas said that one of the “huge problems” facing the IT modernisation programme was the “ludicrous” belief of some people that giving evidence over the internet was not permissible.

He said that although there were some situations where security was an issue, the view taken by decision-makers now was that “we must move to an internet-based system as soon as possible”.

He said that it was essential to anticipate futures changes in IT and Lord Justice Leveson had been given the job of looking at what technology might be available in 2016 and 2017.

He said this would include the use of internet-based video conferencing for pre-trial hearings. The LCJ said he also hoped that in the future trials could be held “without anyone actually coming to court”.

It was essential to be clear about what the new system would actually do, to make sure it changed court processes rather than just technology, and was “easy to use and operate”.

The LCJ warned that the “terrible danger” with lawyers was to claim that they had developed a new system and “all we need is someone to do the boring bits”.

Earlier, he explained in detail how the decision, which he described as “disastrous”, was made to introduce the Woolf reforms before the IT systems were ready.

“There was a complete misunderstanding and mismatch between what those who administered the system thought was necessary and what the judiciary wanted,” Lord Thomas said. “The vision of Lord Woolf ended with the spending cuts of 2003-4.”

Lord Thomas said “not much” had been done in the last 10 years, and highlighted some of the failings that had resulted.

He described the current way in which the court business was carried out as “expensive and inefficient” and said people did not understand why things could not be done online.

“Filing is a task which requires some degree of skill,” he said. “Once papers are misfiled, they are gone forever. At many hearings, including the Court of Appeal, papers are filed on time but do not reach the court in time for the hearing”.

It was “extraordinary”, Lord Thomas said, that outside the Commercial Court the only meaningful form of data collection was manually looking through files.

“Our international competition has moved forward,” he warned. “We simply cannot go on as we are.”

The Lord Chief Justice said there were nine lessons to be learned from the failures of the past:

–         Security of funding ( “I very much hope this lesson has been learnt” );
–         An integrated approach across the civil and criminal justice systems (which had been agreed)

–         Joint governance (so that judges participated in all decisions);
–         A clear idea of what was needed;
–         A rigorous system of procurement;
–         Anticipating technological change;
–         Continuity and a clear path ahead;
–         A process built around IT, not IT built around existing processes; and
–         A need for realism

“If we do not succeed in making a success of this, we will never have this opportunity again,” Lord Thomas concluded. “It would be a disaster for the administration of justice in this country and our ability to compete internationally.”

 




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Richard Steel

Richard Steel, new Business Development Manager for Temple Legal Protection

Temple Legal Protection is pleased to announce the appointment of Richard Steel as Business Development Manager.

With 30 years of corporate business development experience, Richard brings a wealth of expertise and the highest levels of client service to the team.

For the last 10 years he has worked specifically within the legal insurance sector dealing with full lifecycle ATE provision for commercial, personal injury and clinical negligence litigation as well as legal insurance products for Solicitors Professional Indemnity. This experience provides him with a comprehensive understanding of law firms and their unique requirements.

Richard’s focus will be to continue to grow the exposure of the company within a market that demands close partnerships. He will strengthen new client relationships in order to truly understand their needs and develop the portfolio of services Temple Legal Protection provides to meet the demands of a rapidly changing market.

After accepting the post, Richard said:

“Temple Legal Protection is a recognised market leader for ATE and BTE insurance, reflected through the new partnership with Royal & Sun Alliance. Combined with their additional funding products, they offer complete solutions for risk management and finance of litigation.  I’m delighted to be able to use my skills to grow the brand and meet the challenges of the constantly evolving legal sector.”

To find out how we can help to support and develop your practice, please contact Richard on 07739 355123 or email Richard.steel@temple-legal.co.uk




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Neuberger: unusual approach in order to achieve a just result

The president of the Supreme Court has taken the “fairly remarkable” course of forcing two barristers into dropping their claims to success fees in a case which he said again highlighted the “many unsatisfactory aspects” of the pre-Jackson CFA regime.

The barristers – Nicholas Le Poidevin QC and Alexander Learmonth of New Square Chambers – acted for the unsuccessful defendant in last year’s high-profile case where a husband and wife signed each other’s wills, an error caused by their solicitor which the Supreme Court rectified.

As a result, the claimant in Marley v Rawlings and another inherited instead of the defendants/respondents.

In a costs judgment issued today, the Supreme Court ruled that the solicitor’s insurer should pick up the costs of the claimant for the entire litigation and for the respondents up to the Court of Appeal.

Giving the court’s unanimous judgment, Lord Neuberger said this was a “practical short-circuiting” of an order that the estate pays the costs, the estate be reimbursed by the solicitor and the solicitor be reimbursed by the insurer.

However, the position in relation to the respondents’ costs in the Supreme Court was complicated by the fact that their solicitors and two counsel were all instructed on CFAs.

The solicitors were only entitled to recover their disbursements under the terms of their CFA – which the court ruled was the limit of the insurer’s liability – but the counsels’ CFAs appeared to entitle them each to their full fee, including a 100% success fee, if the respondents’ costs were paid out of the estate, which effectively they were being.

Lord Neuberger said that given the respondents had lost, “it can be said with real force that their counsel are lucky to be getting anything. In my opinion, it would be quite inappropriate if any costs order resulted in the unsuccessful respondents’ counsel receiving a success fee”.

The president said he was prepared to include the barristers’ base costs in the order against the insurer, but was concerned that the success fee “may very well be recoverable from the respondents or from the solicitors (and if it could be recovered from the solicitors, it may very well be that they could recover the uplift from the insurer as ‘disbursements’)”.

Lord Neuberger said it would be “quite wrong to permit this” and told the barristers that unless they waived their success fees, the respondents would not be able to recover any costs from the insurer in relation to the Supreme Court appeal.

“This is, I appreciate, a fairly remarkable course to take, but the unusual facts of this case, coupled with the many unsatisfactory aspects of the CFA system under the Access to Justice Act 1999 (as illustrated in our very recent decision in Coventry v Lawrence), appear to me to require and justify an unusual approach in order to achieve a just result.”

Lord Neuberger said that following distribution of the draft judgment, the barristers confirmed that they would disclaim entitlement to any success fees, meaning the insurer would be ordered to pay their base costs.




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RCJ

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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




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AugustaVentures200x200Augusta Ventures, the unique litigation funder targeted at the SME market, has launched a new online calculator which enables lawyers, claimants and introducers to see at a glance the estimated potential outcome of financing their legal fees and disbursements through Augusta.

Users insert the approximate sum of damages, then adjust the scale for the amount of legal fees to run the claim to trial and the amount the claimant can contribute. The calculator then provides an estimate of the returns.

Jeunesse Edwards, Augusta Ventures’ engagement director, said: “Our new claim outcome calculator will enable lawyers and introducers to improve their client relationships and give potential claimants a simple overview as to how litigation finance can work for them.

“At Augusta, we believe that a claim is an asset, and we are prepared to provide finance to realise the value of that asset using the claim as the collateral. In return, provided the claim is successful, we receive our funds back, together with a success fee,” says Jeunesse.

Augusta’s loans are non-recourse so if the claim is not successful, the claimant does not repay the finance. If the claim proceeds but is then unsuccessful, then only 90% of the contribution is insured.

The calculator is available at: http://www.augustaventures.com/dispute-process.




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Whiplash: might a physio exam be the best starting place?

Posted by Helen Elkin of Litigation Futures sponsor Bott & Co

Whiplash – such a simple term and yet one which strikes fear into the hearts of the insurance giants and generates cries of ‘fraud’ from the general public.

So much has been published about fraudulent whiplash claims that the government, swayed by the large insurance companies, seems to have convinced the average person on the street that all whiplash claims are fake; or worse still, that the condition does not even exist at all.

The topic is obviously emotive, what with the ever increasing insurance premiums; however, amongst all this debate the innocent victims of road traffic accidents appear to have been completely forgotten.

As a claimant personal injury solicitor, with experience of also working in defendant RTA insurance fraud and having suffered a whiplash injury myself, I have experienced whiplash claims from every angle. Does whiplash exist? Most certainly. Can physical signs of injury be detected? Not visibly. Do some people invent or exaggerate symptoms? Yes.

It is easy to see how an individual could bring a false claim but should the small minority that make fraudulent claims ruin the chances of those actually suffering from seeking compensation. Furthermore, are the changes proposed by the government really going to tackle the issue? Insurers seem to deal with the issue in one of two ways: settle cheaply or raise spurious fraud ‘concerns’ and increase the costs of investigating such matters.

My experience working for insurers suggests that the issue has been made so high-profile that handlers are seeing fraud at every corner, with many claims being referred to claims validation teams simply because there happened to be three or four people in the vehicle. This obviously has a huge impact on the investigation costs. The flip side is that some insurers try to settle the claims cheaply at a very early stage.

The Ministry of Justice has recently decided against a total ban on such pre-medical offers – but by leaving the door open to such offers, are they not encouraging fraudulent claims as settlement on such a basis means the claimant is not asked to prove their injury?

The government has now cut medical report fees to £180. Given the difficulty in diagnosing whiplash injuries, curtailing the fee is not the answer. Many medical examinations are already limited to 10-15 minute slots, which leave no time for claimants to fully explain the extent of their injuries. It certainly does not give the expert enough time to perform a thorough examination. Restricting costs yet further will pressure experts into quickening the process still more to ensure that they remain cost effective.

From personal experience, whiplash injuries can have a debilitating effect; enduring pain, aching, tightness and countless physiotherapy sessions, sometimes for many years after the original injury. So, how then do we properly assess these injuries? Perhaps the answer is to move away from the traditional medical report in favour of an initial assessment by a physiotherapist.

These are the professionals who treat whiplash injuries day-in, day-out. They know the signs and can feel the knots, spasms and tightness in the muscles which are not visible. A physical exam is also likely to dissuade an individual from pursuing a fraudulent claim and any invented or exaggerated symptoms are more likely to be detected.

Would this improve things? Who knows? This is certainly a debate that is going to keep recurring until the right balance is found between preventing fraudulent claims and allowing access to justice for those injured through no fault of their own.




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Jackson: judges need to be more proactive

Jackson: judges need to be more proactive

Practitioners need to think twice before agreeing standard disclosure and judges to be more proactive to steer them away from it, Lord Justice Jackson said last week.

In the latest of a series of speeches this year reflecting on the progress of his reforms, he urged lawyers to look beyond the profitability that may come from standard disclosure.

In a speech to a Law Society commercial litigation conference, the author of the civil costs reforms said that in large commercial actions and other substantial cases, “too often people are treating standard disclosure as the default option”.

He continued: “Parties frequently agree standard disclosure, seemingly without considering whether other options may be preferable, and the courts accept their agreements. It would be to the public benefit if all involved in the disclosure process gave more attention to the full range of options before simply proposing or agreeing to ‘standard disclosure’.”

He reported that a seminar held earlier this year by the GC 100 group – in which judges, practitioners and court users took part – acknowledged that the tools for controlling disclosure, and therefore cost, contained in CPR 31.5 had been under-used.

Following the seminar, a disclosure working group was created, and Sir Rupert said: “[It] may care to consider whether what is needed is culture change rather than rule change.

“In particular (dare I say it?), perhaps the working group might encourage practitioners to think twice before agreeing standard disclosure (however profitable that may be for the lawyers), and judges to be more proactive, by pressing counsel as to what documents are needed and why, rather than approving any agreed directions for standard disclosure.”

He said judges needed to do more than simply adjudicate upon the parties’ competing submissions: “It is necessary to test the opposing arguments.”

He quoted the experience of one unnamed judge: “When disclosure is an issue during case management, it is not uncommon to find that the parties’ counsel cannot describe the documents which they expect to be relevant, why they might exist or why they will benefit determination of the issues concerned. This is particularly the case for electronic documents, when requests for practical descriptions and examples are usually met with bluster.

“This and the fact that disclosure issues are relatively rare suggests the fault lies with a failure to properly address the issues either internally or with the other side before the hearing. That conclusion is sustained by the fact that I usually find a general discussion of the need for the disclosure sought, about the practicalities of effecting disclosure and inspection and over the resulting cost produces a solution by agreement without the need for a decision.”




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Rolls Building

CLLS: List offers “opportunities to create procedures”

The lower limit for claims heard by specialist judges at the Rolls Building through a new ‘financial list’ should be £10m rather than the £50m proposed, the City of London Law Society (CLLS) has suggested.

In its response to the judiciary’s consultation on the issue, the CLLS said the £10m threshold over which costs budgeting does not automatically apply, might be the “more appropriate limit”.

The litigation committee of the CLLS also called for a review of the Commercial Court’s procedures, to ensure they were suitable for financial cases.

“The creation of a financial list offers an opportunity to create procedures that meet the needs of this particular category of case, rather than to impose on it the general procedures applicable to all litigation, as happens currently.”

The committee agreed that “private equity deals” should fall within the list but called for other transactions not involving private equity to be in included.

The CLLS said it was “the nature of the transactions that private equity undertakes that should lead to their inclusion”, not the fact they were undertaken by private equity providers.

“So, for example, the sale of a business between two corporates should fall within the financial list even though no private equity firm is involved.”

The CLLS called for “mandatory publicity” for all test cases, either on the judiciary’s website or by notifying a user’s committee and for trade bodies to be allowed to bring market test cases, rather than merely being joined to test cases brought by others.

“In practice, it may be that few financial institutions will be prepared to bring test cases for the good of the market as a whole, whether through a dislike of publicity or because the costs will generally be irrecoverable.

“Trade bodies are ideally placed to bring test cases, both because of their market perspective and because they can spread the cost across the industry as a whole.”

The committee said “some scepticism” was expressed as to whether the test case procedure would be prove attractive or practicable, but a pilot scheme should “flush out” whether or not this was the case.

The CLLS made it clear that it supported the creation of the financial list.

“It is important for the English courts to improve, and be seen to improve, the service they provide to international litigants rather than merely to rest on the courts’ historic laurels.

“In particular, litigants expect judges to be familiar with the subject matter of a case. The financial list potentially offers litigants the assurance that cases will be heard by a judge with an understanding of the global financial markets, rather than a judge who happens to be available, and demonstrates the benefits that the English courts can bring to dispute resolution in those markets.”




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NHS: 24 panel firms

The NHS Litigation Authority (NHSLA) has launched a fresh tender exercise for legal work worth an estimated £136m a year – nearly £550m over the full term of the contract.

Following the tenders, the NHSLA said that new contracts were likely to be awarded to a maximum of 24 panel firms in May this year.

In the tender document, the NHSLA explained that work would be divided into “three distinct lots” – clinical liabilities, non-clinical liabilities, and regulatory, health and disciplinary law.

It estimated annual expenditure, exclusive of VAT, at around £120m for the first lot, £8m for the second and £8m for the third.

However, the authority warned that expenditure “may vary significantly from year to year” and offered “no guarantee” as to the value of work awarded.

The NHSLA estimated that, as a result of the tenders, contracts or “framework agreements” would be awarded to “roughly” 10 firms for the first lot, four for the second and 10 for the third.

It added that the total number of firms may be less than this, as firms can tender for all three lots and may be awarded more than one contract.

A spokesman for the NHS Litigation Authority said: “Using the unique purchasing power of the NHS Litigation Authority, the tender process will ensure that the NHS receives value for money and allow us to maintain high quality legal services for our members.

“The services required are to meet with an ongoing, and often urgent, need to access law firms with specialist expertise and knowledge to provide advice and support on a wide range of health–related issues.”

The spokesman said the new legal services framework was divided into lots to reflect the fact that “law firms often specialise in particular areas” and “three distinct panels” would be created by the bidding process.

“We are encouraging submissions from all applicable organisations, which may tender for one, two or all three lots. We look forward to receiving tender applications, the quality of which will determine the number of firms representing the NHS Litigation Authority on its panel.”

The NHSLA said in the tender document that it expected to be “by far the preponderant user” of the first two panels, while the third would be used mainly by other organisations, such as the Department of Health, Care Quality Commission or Human Fertilisation and Embryology Authority.

The contracts will run for up to four years. The deadline for receipt of tenders is 3 April, and the new agreements are intended to go live on 28 May 2017.




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Squire: litigants may turn to ombudsmen instead of the courts

Squire: litigants may turn to ombudsmen instead of the courts

By Georgina Squire, head of dispute resolution at Rosling King LLP

As we know, in 2014 the rules changed so that only claims in excess of £100,000 could be issued in the High Court, leading to a lot of cases being transferred to the county courts. We are seeing many claims well in excess of the £100,000 threshold being transferred to the county court.

All county court claims are now processed by a central management system in Salford (the County Court Money Claims Centre (CCMCC)) until the matter is allocated to a hearing centre, which usually occurs after directions questionnaires are filed).

This means advanced planning for litigators:

  • If a claim has to be issued in the CCMCC, ensure there are no limitation issues looming, as it can take several days to have a claim issued;
  • Get documents in order before filing, to reduce further delays; and
  • Allow enough time to meet filing deadlines, i.e. factor in a few days for posting etc.

Court fees

Perhaps one of the most significant developments for litigators is the increase in court fees, effective from 9 March 2015. Claims worth between £10,000 and £200,000 now attract a court fee of 5% of the amount claimed, including interest. For litigants seeking to bring claims worth over £200,000, the issue fee has increased to a staggering £10,000.

Already the impact is being experienced where those with claims that now require a £10,000 issue fee are thinking twice before using the court system assessing alternative avenues, regardless of whether they have a strong claim.

Perhaps with cases like this in mind, the recently departed justice secretary, Chris Grayling, announced his intention to review the effects of the increase in civil court fees. While this may well lead to a welcome extension of the fee remission scheme, it seems unlikely there will be a reduction in court fees. For now, at least, the onus falls on the parties to achieve early pre-action settlements, if they are to avoid having to pay hefty court fees.

Hourly rates

The current guideline hourly rates (GHR), which were under review by Lord Dyson, remain in force for the foreseeable future. Practitioners across the country may have breathed a sigh of relief that the Civil Justice Council’s proposals were rejected (they would have seen a net reduction in fee-income of 5% for all fee earners), but Lord Dyson was keen to emphasise that trends in the legal services market were rendering GHRs less and less relevant.

We have seen this in 2015 in the judiciary’s use of proportionality as a driving principle in assessing costs and the greater adoption of (and familiarity with) cost budgeting in civil cases. The trend, as Lord Dyson sees it, is towards the wider use of fixed costs in litigation, a point being lobbied with ministers, with the view to ensuring this element of the Jackson reforms is implemented.

So, what does all of this mean for litigation practitioners in 2015?

  • Dealing with the county court—plan ahead: (i) be mindful of limitation issues; (ii) get your documents in order to avoid further delays at the CCMCC; and (iii) give yourself a few extra days to meet filing deadlines (to account for posting, etc);
  • Think even more carefully as to which court to issue in. Even claims exceeding £100,000 are being transferred from the High Court to the CCMCC;
  • Unspecified claims now attract an automatic court fee of £10,000. At the outset, litigants must factor in this fee when assessing whether a claim is commercially viable to pursue.
  • In specified claims, practitioners should take care to ensure the level of court fee is calculated including the total amount of the claim plus interest;
  • Consider the funding of fees, including the use of third-party funding arrangements. It remains to be seen whether after-the-event insurers will be prepared to offer insurance to cover disbursements alone;
  • For individual claimants, recourse to an ombudsman may become a more attractive and cheaper alternative to pursuing redress through the courts; and
  • The increased fees will likely increase pressure on disputing parties to enter into meaningful settlement negotiations before proceedings are commenced. We may see greater use of ADR, with mediators’ fees likely to be cheaper than court fees in many cases.



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ARAG 200x200In April 2014 court fees for most civil cases were increased to “near recovery” level meaning that the fees payable almost covered the cost of service provision.

In April 2015 the MoJ commenced its consultation on introducing “enhanced fees” for recovery of money and possession claims. Enhanced fees are set so as to deliver court and tribunal services at a profit to the state.

Hot on the heels of yesterday’s announcement that the Justice Select Committee is to undertake an inquiry into the effects of the introduction and levels of employment tribunal and civil court fees http://www.parliament.uk/business/committees/committees-a-z/commons-select/justice-committee/news-parliament-20151/courts-tribunals-fees-charges-inquiry/, the MoJ has today published its response the consultation on enhanced fees for possession claims and general applications in civil proceedings.

Today’s response document also seeks comment on further proposals for wider increases.

In summary despite 92% of respondents to its consultation being opposed to increasing fees to the levels proposed and just 8% expressing agreement, the Government confirms that proposals

  • to increase fees for possession claims from £280 to £355 and
  • increase fees for applications in civil proceedings from £50 to £100 for uncontested applications and from £155 to £255 for contested applications will go ahead.
    These increases will raise additional revenue of £52m a year.

In relation to divorce proceedings fees will be increased from £410 to £510 raising £12m for the treasury. (Original proposal was to increase fees to £750).

In addition to announcing these increases the Government wishes to consult about further opportunities to increase revenue through the operation of court and tribunal services.

  • Proposals include introducing fees in relation to tribunals which do not at present charge fees – for example the property chamber, tax and regulatory chambers of the Tribunal Service. These will initially be set to achieve around 25% cost recovery.
  • A 10% increase is proposed in relation to a wide range of fees in civil courts. Examples of the type of fees that will be impacted are fees for assessment of costs, judicial review proceedings, Court of Appeal fees, enforcement proceedings and civil cases that are dealt with through the magistrate’s courts.
  • The cap on court fees for money cases is currently £10,000. The Government proposes increasing this cap to £20,000. This proposal will impact claims where the sum in dispute exceeds £200,000.
  • The chink of light is that the cap on court fees for personal injury claims will remain at £10,000 and remission rules will be adjusted to introduce additional bands of disposable income and an increase capital threshold for claimants aged over 61.

 

 




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E-disclosure is likely to be one of the largest and most difficult parts of putting together an estimate under costs management. James Morrey-Jones, an electronic evidence consultant at Kroll Ontrack UK, considers the key issues

Morrey-Jones: you need know the data and how to get to it

Details of the new costs management regime due to be introduced in April 2013, were released at a Law Society seminar on 29 May 2012 in a speech by Mr Justice Ramsey. It includes the new rules and the practice direction on costs.

In a nutshell, the new costs management process will require parties to file and exchange budgets before the first case management conference for approval by the court. Costs will be actively managed by the court within the boundaries of those approved budgets. At the end of a case the successful party will be able to recover the reasonable costs of the case and when these are assessed the court will take into account the approved budget.

As practitioners consider the application of these new rules, a number of questions arise – what steps must be taken, and when to comply and how to ensure that e-disclosure costs, which are often one of the big-ticket items on the litigation budget, are estimated properly?

What do the new rules require?

You will find them in CPR 3.11 to 3.18, practice direction 3E and the new precedent H for providing costs budgets. They apply generally to all multi-track cases in the county court and Chancery or Queen’s Bench Division, except Admiralty and Commercial Courts, unless the court so orders and to any other proceedings if the court so orders (CPR 3.12(1)). The rules require that all parties except litigants-in-person must exchange costs budgets in precedent H within 28 days, after service of the defence (paragraph 1 of PD 3E).

We know that after budgets have been filed, the court may then manage the costs and make a costs management order (CMO) in terms of which it will control the parties’ budgets in respect of recoverable costs. Irrespective of any CMO, the court will at all times have regard to any budgets available from each party and the costs of each procedural step, when making case management decisions (CPR 3.17(1)).

Underpinning the new regime is an approval process. The judiciary has indicated that the court will not undertake a detailed assessment in advance when approving budgets. Rather the court will consider whether the budgeted costs fall within the range of reasonable and proportionate costs.

What is reasonable and proportionate?

A broad view will be taken of what is reasonable and proportionate, and judges are expected to be flexible when approving budgets. The old approach was to allow costs which were considered to be reasonable and necessary to the litigation. Lord Justice Neuberger has said that necessity does not render costs proportionate and proportionality should prevail over reasonableness. If the total figure is not proportionate, the court should make an appropriate reduction.

The new proportionality test is set out in CPR 44.4(5) and balances the costs incurred against the value or importance of the case and its complexity.

There will no doubt be some uncertainty as practitioners grapple with the application of the new test principles. In the meantime, it is worth remembering that the “leaving no stone unturned” approach is not always the most proportionate route (see Nichia Corp v Argos Ltd [2007] EWCA Civ 741 at [47], Jacobs LJ).

What does this mean in practice?

His Honour Judge Simon Brown QC wrote earlier this year that he looks in budgets for the “biggest Manhattans, normally disclosure and witness statements focusing on, for example, charging rates, lawyer rates and double manning”, and where it is thought reasonable and proportionate, it is possible to direct that disclosure takes place in stages (see Goodale v Ministry of Justice [2009] EWHC B41 (QB)).

Therefore, when it comes to assessing the costs of e-disclosure and what is likely to be proportionate, this will depend on the circumstances of each case and is likely to involve a technical assessment of the electronically stored information available; and depend on:

  • The accessibility of that information;
  • The ease or expense of retrieving it; and
  • The cost of reviewing it.

There are tools and techniques available which might reduce the burden and cost of disclosure and these have a role to play in reaching the goal of proportionality. You can achieve a lot more with technology than without it. Technical expertise from e-disclosure providers and experts is likely to be very helpful when these proportionality assessments are made.

Can I amend?

Yes and parties are required to do so, if significant developments in the litigation warrant a revision.

Budgets should be regularly updated and any revised budget needs to be re-filed. In practice, it may be difficult to estimate disclosure requirements 28 days after filing a defence, so variations to budgets will be required. Until some data has been collected, some sampling done and test searches run, the solicitor may not have much of an idea as to the number of documents likely to be disclosed, influencing the data selected for processing and how it is reviewed.

Of course, one of the consequences of the new rules will be that a lot of early debate about disclosure will be required. Practitioners will need to get a feel for their document universe as soon as possible and early discussion with e-disclosure providers and experts about the case, their disclosure objectives and the data is essential.

The practice direction does say that the parties should discuss their estimates during the estimate-building process and before each case management conference, hearing or pre-trial review. It may have once been customary to leave disclosure to a later stage in the proceedings but now it will be essential to start early so there is time for proper scoping, costing and discussion about the e-disclosure exercise and it will help to follow a systematic approach to ensure the case objectives are being met efficiently.

Overshooting the budget

Although there may be room for negotiation about what is necessary and proportionate, indications are that the courts will not depart from the agreed budgets too readily and undoubtedly case law will develop in this area.

The Senior Costs Judge’s ruling earlier this year in Sylvia Henry v News Group Newspapers Ltd [2012] EWHC 90218 (Costs) sent out the clear message that lawyers need to have a reliable method of monitoring adherence to budgets; if they don’t, they will be vulnerable in the new world of costs management and therefore periodic budget reviews are not only recommended but are good case management.

Designing an approach to e-disclosure and scoping

The key to developing an approach to e-disclosure is to know the data and how to get to it, taking into account all applicable data sources in traditional places as well as the cloud and mobile devices. The electronic documents questionnaire (EDQ) will be a useful aide when scoping the e-disclosure exercise and preparing a budget.

Collaboration between the legal team, the client and the e-disclosure provider is fundamental to scoping success. Some of the initial steps in the process are:

  1. Understanding what the legal team is looking for and the disclosure obligation.
  2. Mapping the data universe and then preserving relevant data and selecting relevant sources.
  3. Considering the need for proportionality and prioritisation and what can be done to achieve them. This may mean that the process is carried out in stages, as the court said in Goodale, “to make the exercise the least expensive and most proportionate exercise possible”.
  4. Deploying technology to target the key data and reduce the time spent reviewing it to make reliable decisions about relevance and privilege.
  5. Working out what can be agreed with the other side to comply with the rules and reduce the disclosure burden without compromising the case strategy.

The future

Many law firms are taking the approach that costs management or budgeting is something they already do or should do anyway for their clients as a universal and healthy discipline, and some already have fairly sophisticated budgeting solutions in place. What is clear is that a budget is not something one can work out on the back of an envelope and hope for the best; budgeting is a professional skill and has serious consequences.

There is time to prepare for the change coming next April by developing budgeting skills and procedures. When the time comes, the ability to gather the information needed for the budget early on and use technology effectively will make all the difference in establishing a realistic budget.





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Tennant: awaiting clarity on final figure

A widespread consensus has emerged that Lord Justice Jackson is backing away from extending fixed recoverable costs to cases worth up to £250,000, Litigation Futures can report – although what level he is now looking at is unknown.

The judge is due to deliver his report by the end of July, and several sources indicate that the message of how difficult it will be to fix costs for higher-value cases has got through.

In his report to last week’s Law Society council meeting, interim chief executive Paul Tennant said: “We anticipate that the final recommendations will move away from the initial suggestion of fixing costs for all claims up to £250,000, although we await clarity on the final figure.

“The report to the Lord Chief Justice and the Master of Rolls must be published by 31 July 2017, although this deadline may be altered in light of the General Election.”

Speaking to Litigation Futures last week, Brett Dixon, new president of the Association of Personal Injury Lawyers (APIL), agreed that this view “seems to be the general consensus”.

Meanwhile, speaking yesterday at a conference in Manchester organised by the Association of Costs Lawyers, well-known costs expert Professor Dominic Regan said it has become clear that Jackson LJ “has abandoned fixed costs up to £250,000 or anywhere near that figure”.

An alternative figure of £125,000 has been suggested but nobody seems to know what the judge might be thinking.

Jackson LJ gave little away during his address to APIL’s annual conference last Friday, although he acknowledged the specific difficulty of trying to fix costs for clinical negligence cases worth more than £25,000 except in matters where liability and causation have been agreed.

He also seemed to accept the argument that costs cannot be fixed if the procedure is not as well.

Litigation Futures also understands that a deal to introduce fixed costs in noise-induced hearing loss cases has been brokered by the Civil Justice Council after more than a year of discussions.

The agreement was reached shortly before Christmas 2016, but for unknown reasons has not yet been approved by the Civil Procedure Rule Committee.


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Are the days of the Arkin cap numbered?

Stephen Innes

The Arkin cap has come to be seen as increasingly unfashionable, and a forthcoming hearing may provide some indication of the prospects of it being consigned to the back of the wardrobe of history. As a reminder, where a claim backed by litigation funding fails, the funder may be susceptible to a non-party costs order in favour of the successful party.

October 5th, 2018