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Rowles-Davies: quadrupled funding facility

Recession-related litigation is growing, new figures have shown, with the number of contract claims in the High Court soaring by nearly half in 2011.

In all 982 contract claims were issued in the Chancery Division 2011, compared to 683 the year before, a rise of 44%, with breach of contract and debt the main causes of action, according to the Ministry of Justice’s recently published annual court statistics.

There were similar trends in other courts – breach of contract claims in the Queen’s Bench Division also rose 44% to 969, while breach of contract/agreement/debt claims in the Commercial Court rocketed 49% to 722.

The sharp rise compared with a more gentle 6% increase in Chancery Division cases overall (to 35,238). This hid significant variations, however, including a 19% jump in intellectual property litigation (to 667 claims) and a 10% rise in Bankruptcy Court applications (to 12,121), as well as a 17% drop in professional negligence cases (to 184), the majority of which were against solicitors.

There was overall a 16% fall in proceedings issued in the Queen’s Bench Division (to 13,928). Of those started in the QBD of the Royal Courts of Justice, a quarter related to debt and around one in five related to breach of contract.

Nick Rowles-Davies of leading third-party litigation funder Vannin Capital said the trends showed how recession-related litigation, such as debt and breach of contract, is playing an increasingly significant role in the courts.

“Our own experience – from the ever-growing number of approaches for funding we receive – matches the trends identified by these statistics. The kinds of disputes the courts are seeing are often caused by the difficult situations people find themselves in during a recession; this is compounded by the fact that, by definition, they struggle to get the money together to take their case to court.

“That, of course, is where we come in and the demand we are seeing is in part why we recently quadrupled our funding facility to £100m for the coming year. This is litigation funding providing access to justice for people who might very well not be able to afford it otherwise.”

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For the second year running Laird Assessors are the headline sponsor for the annual charity golf day run by Claims Magazine.  The Golf & Spa day takes place on the 10th July this year at the Forest Pines Hotel & Golf Resort.  Last year we raised over £1000 for Claire House and we’ll be attempting to beat that this year.  Claire House, the chosen charity,  is a children’s hospice on the Wirral that provide respite and end-of-life care for children and young adults with life-limiting medical conditions.  It’s a charity that we work closely with a lot and we are pleased to be able to support such a positive charity again.

There are 18 teams taking part in the day with a shotgun start at 1pm after breakfast.  For those that aren’t that keen on Golf, there is an option to go and have some relaxing spa treatments in the resort itself.  The day will finish with a prize-giving dinner and charity raffle.

For more information on Laird and any of their services, including their translation/interpretation service, please contact Pippa on

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Anthony Graham, head of information systems at Thomson Snell & Passmore

Full service law firm, Thomson Snell & Passmore, is implementing the Law Society Endorsed Proclaim Case Management Software solution from Eclipse Legal Systems.

Rated by Guinness World Records as the UK’s oldest law firm, Thomson Snell & Passmore can trace its history back to 1570, signifying a unique promise of longevity and continuity. Providing a full range of services to private clients and business organisations, the firm offers a friendly and supportive service from its team of astute solicitors.

The firm will be implementing a ready-to-go Personal Injury Case Management system, serving to improve transparency and efficiency, whilst providing fee earners with a consistent approach to matter management.

Additionally, Eclipse’s integration with the MoJ’s Claims Portals will ensure the process of submitting claims is much quicker, allowing fee earners to manage all submissions entirely through the Proclaim desktop.

Further to this, Thomson Snell & Passmore will take advantage of Proclaim’s integration with the incumbent Envision legal accounting solution, providing the firm with a ‘one view’ approach to financial management and enabling further analysis of overall productivity and efficiency throughout the Personal Injury and Clinical Negligence departments.

Anthony Graham, head of information systems at Thomson Snell & Passmore comments:

“As an extremely well-established practice, we aim to continually develop our services, not only to meet the needs of the dynamic legal sector, but also to meet the needs of our clients.

“After conducting research into the market, we found Proclaim to be a fantastic solution, ensuring total flexibility and therefore enabling us to offer the most efficient and flexible service to our clients – something that is key to our longevity within the legal profession.”

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Ambulance chasing: NHSLA released figures in support of costs cap call

Law firms named in a Sunday Telegraph ‘ambulance chaser’ exposé based on costs data supplied by the NHS Litigation Authority (NHSLA) have hit back, arguing that if there was less negligence, there would be fewer claims, and that the behaviour of the authority itself is in part responsible.

Sunday’s story claimed “compensation lawyers” were in some cases “claiming costs and fees worth up to 10 times more than the damages awarded to the patients that they represent” and said the authority had called for a cap on the level of claimant lawyers’ costs.

Leeds-headquartered, 13-office national firm Simpson Millar was accused of “attempting to charge the health service up to £1,400 an hour in costs”, with total costs in one case of more than £100,000, yet “eventually accepted an offer of £30,000”.

The story quoted the NHSLA chief executive, Catherine Dixon as saying that many solicitors were ‘front-loading’ costs and incurring “a lot of cost on a case before we see it, even when the damages are very low. We’ve also seen an increasing number of poorly put together claims.”

The story calculated that patients received £438m in damages, but their solicitors were paid £196m in costs, compared to NHS lawyers who received £46m. Ms Dixon told the paper that the NHS would save £69m a year if claimant lawyers’ costs were capped at “the same level as the cost of the health service’s lawyers, plus an extra 20%”.

Simpson Millar partner and head of medical negligence, Neil Fearn, said he had investigated the £1,400-an-hour figure among the 25 people in his department “but no-one has confirmed that they have put in a bill at this level”. He couldn’t absolutely rule it out, but if true it was a “one off”, he said.

“We would not put in a bill in our normal practice at that level and accept only 30% of what we presented. That hourly rate is not one that I recognise and certainly that rate of recovery is absolutely not one that I recognise.”

Mr Fearn said the firm would “normally expect to recover somewhere in the region of 70-75%”. He added: “We go to great lengths to ensure that we don’t over-egg the case, that we are doing the work necessary to get the result for the client in very difficult circumstances”.

He complained that “what seems to be missing is that behind these claims are injured people, injured at the hands of the doctors and nurses employed by the NHS and defended by the NHSLA.”

The Sunday Telegraph acknowledged the NHSLA provided it with “a list of the law firms whose claims for costs have been significantly reduced following negotiations or court action”. Litigation Futures obtained a copy of the list, which covered 10 firms’ cases settled between 1 January 2010 and 31 January 2014, including the number of cases handled, costs claimed, costs settled, and a “costs saved” calculation as a percentage.

Simpson Millar did not appear on the list. An NHSLA spokeswoman confirmed that while the list was “aggregated”, the information quoted about the firm’s alleged hourly rate “was in relation to a single claim”.

The firm appearing third on the aggregated list, Express Solicitors in Manchester, was accused in the article of having claimed “£1.4m in costs for 30 cases since 2010. The costs have been reduced to £779,063 after negotiations”. On the list, the “costs saved” were represented by the NHSLA as 47.11%.

James Maxey, managing partner of Express Solicitors, said in a response submitted yesterday to the Sunday Telegraph’s letters page that he had “spent too much time with the families and victims of clinical negligence” to take ambulance chasing jokes “in good humour” any longer.

He described Ms Dixon’s claims about front-loading costs as “preposterous”. If “more admissions were forthcoming in the early days of a claim”, costs would be reduced. He accused the NHSLA of being “worse than most insurance companies at replying to requests for information for even the simplest of disclosure”.

He continued that “delays impact upon the progress of the case, and can lead to further costs being incurred if it becomes necessary to issue proceedings”, adding: “Arguments on costs always follow but if the NHS simply complied with the rules, costs would be considerably lower and cases would reach conclusion more swiftly.”


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Grayling: turning the tide on the compensation culture

The small claims limit for personal injury cases will not be going up to £5,000, the Ministry of Justice (MoJ) announced today.

Instead it has unveiled a raft of other measures aimed at cutting the cost of motoring, including the creation of independent medical panels to detect fraudulent whiplash claims.

The government said the changes were “part of its plan to help hardworking people”, but it will be seen in legal circles as a major relief to hardworking claimant lawyers. The decision was predicted by this website just last week.

The MoJ has decided not to take forward the small claims limit increase in light of concerns raised during the whiplash consultation, particularly around giving other reforms time to settle down. However, it will be keeping the limit under review and has not ruled out a change in future.

In a statement to Parliament today, justice secretary Chris Grayling said there are “good arguments” for increasing the limit “to raise incentives to challenge fraudulent or exaggerated insurance claims”.

However, he had listened to the views of the transport select committee and others that “now may not be the right time” to raise the limit “because of the risks that it may deter access to justice for the genuinely injured and encourage the growth of those disreputable claims firms which so damage the industry”.

He continued: “At this stage, we have decided to defer any increase to the small claims threshold until we can determine the impact of our wider reforms on motor insurance premiums and better safeguard against the risks identified above. We believe that this is the right thing to do for all interests.”

The MoJ has also revealed that the number of claims management companies registered to handle personal injury work has continued to fall – from a peak of 2,553 in December 2011 to 1,902 in March 2013, before implementation of the referral fee ban, and 1,485 last month.

The MoJ said it will now “work quickly with experts” to implement the independent medical panels next year. This will include developing a scheme for accrediting medical experts who can assess whiplash injuries, enhancing the medical reporting process, improving information for medical assessments and carrying out spot checks to ensure quality.

The government claimed that figures from the AA show its LASPO reforms and “action on rogue claims firms” have already led to a 12% fall in average motor insurance premiums over the past year, equivalent to £80.

Mr Grayling said: “We are turning the tide on the compensation culture and helping hardworking people by tackling high insurance premiums and other motoring costs.

“It’s not right that people who cheat the insurance system get away with it while forcing up the price for everyone else – so we are now going after whiplash fraudsters and will keep on driving premiums down.”

Other changes to benefit motorists are a freeze on the statutory maximum price of the MOT test for a car (£54.85) until 2015, and trialling new comparison road signs which will show prices at different service stations along a route, making it easier for drivers to get the cheapest deal and encouraging competition on prices. The fees charged for the driving test will also be reviewed to identify any opportunity to save money for the 1.5m car drivers who take their test every year.

See blog here.

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Prophet Costs

A website dedicated to budgeting is a first in the industry

We’re delighted to announce the launch of our new Prophet Costs website.

After completing many hundreds of successful legal costs budgets via our Prophet Costs programme, we thought it was finally time to dedicate a site reflecting on everything to do with budgets.

The site focuses on three main areas:

  • MRN award winning collaborative solution to budgets and what we can do to help you and your firm maximise the potential of your case
  • All the latest developments on budgets
  • Your questions and responses on all budget related matters

Having won wide acclaim from within the litigation sector for dealing with some of the most complex budgets we feel we are uniquely placed to reflect on the reality on the ground and the decisions coming out of the courts in England & Wales.

Commenting on the site, Director Elliot Mocton said, “The launching of a website dedicated to budgeting is a first in the industry and comes in direct response to solicitors wishing to be kept informed of all the developments in this area.”

For more information on Prophet Costs, please contact either Michael Joseph, Abbey Bukhari or visit our website


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Kamran Akram, principal at Asons Solicitors

Eclipse Legal Systems, the sole Law Society Endorsed legal software provider, has announced an increase in take up of its SecureDocs document delivery and acceptance tool.

SecureDocs was the legal sector’s first seamlessly integrated secure delivery tool, developed by Eclipse as an optional feature within its Proclaim Case Management solution. Fully embedded within Proclaim, SecureDocs utilises an email messaging function to allow the intended recipient to securely view documents, via an online portal. Additionally, recipients can action documents using an innovative digital signature feature.

Since its inception, SecureDocs has greatly increased in popularity among Eclipse clients and is in use across a wide range of sectors, evidenced by the recent statistics revealing thousands of documents are sent and accepted each day.

Eclipse attributes this rapid increase to its clients’ awareness in the importance of sending and receiving confidential information, particularly in light of recent hacking threats.

Furthermore, the tool is enabling a much quicker turnaround in terms of client capture. Documents which have previously taken weeks to be delivered, signed and returned are now taking just 20 minutes, resulting in speedier case progression and improved client service.

Eclipse client and one of the north-west’s largest firms, Asons, implemented SecureDocs to enhance client service and drive efficiency throughout all departments. The firm heavily utilises the document delivery tool for requesting and transmitting confidential and personal client information.

Kamran Akram, principal at Asons, comments:

“SecureDocs has been invaluable to our firm, not only in terms of efficiency – we now operate 100% digitally – but also in eliminating the risk of sending emails to the wrong recipient. As a law firm, the work we do is of a sensitive and personal nature so the extra reassurance that SecureDocs brings ensures total security – for us and our clients.

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Brindle: stark warning

A circuit judge has ruled that a personal injury claimant who exaggerated the extent of his ongoing symptons should be denied the protection of qualified one-way costs shifting (QOCS) on the grounds that the claim was “fundamentally dishonest”.

It is thought to be the first ruling on the issue, which has excited a great deal of comment among practitioners as to how the courts would define the exception.

John Foy QC and Simon Brindle, personal injury specialists based at 9 Gough Square, acted for the defendant, instructed by BLM. Mr Brindle said the case should be seen as a “stark warning that the judiciary will be willing to make a finding that a claim is fundamentally dishonest, even if there is an element of honesty to it”.

Under the CPR, a claimant can lose the protection of QOCS if the claim is found on the balance of probabilities to be “fundamentally dishonest” or the claim is struck out.

Ruling in Gosling v Screwfix and Anr (unreported, 29 March 2014) at Cambridge County Court, HHJ Moloney QC ordered the claimant to pay the defendant’s costs of the action on an indemnity basis.

Mr Brindle went on: “Substantial exaggeration, even if ‘only’ of around 50% of the claim, can result in a finding of fundamental dishonesty being made, and expose the claimant to enforcement of any costs order made against them to the full amount.

“Such costs orders could include not only any made as a result of the exaggeration of the claim, but of the whole claim.”

Mr Brindle said the judge made the finding, not because he was satisfied that the claim in its entirety was dishonest, but because the claimant demonstrated dishonesty in relation to quantum.

“The judge was satisfied that the claimant had suffered injury in an accident and, in doing so, did not accept submissions that the claimant had been dishonest about the accident circumstances.

“However, the claimant had significantly exaggerated the extent of his ongoing symptoms – as demonstrated by covert surveillance of him, commissioned by the defendant’s insurer. The effect of the discovery of this deceit effectively was to reduce the value of his claim by half.

“The judge held that, in significantly exaggerating the extent of on-going symptoms, the claimant’s conduct was dishonest, and designed both to deceive and give a false impression.

“The judge also held that dishonesty, crucial to around half the value of a claim, was, ‘on any view’ sufficient to be characterised as fundamental. As a result, he was satisfied, on the balance of probabilities that the claim was fundamentally dishonest.”

Mr Brindle warned that applications for findings of fundamental dishonesty may become a “regular occurrence” in the future.







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Medical experts: Hit by instructing parties going into administration

Expert witnesses in personal injury work are not willing to work with litigants in person if the government’s plans to increase the small claims limit for personal injury (PI) cases are passed into law, new research has revealed.

It also found that 38% of experts operating in PI said they have been affected by a law firm or other instructing party going into administration.

The annual Bond Solon survey – which received 801 responses – said 76% of medical experts would not accept instructions from a litigant in person, compared to 46% of non-medical experts.

If the small claims limit goes up to £5,000 for road traffic cases and £2,000 for employer’s and public liability claims, it is expected that far more cases will be pursued by litigants in person.

Indeed, Lord Chancellor David Lidington said last month that whiplash cases were “not cases where it ought normally to be necessary to have legal representation”.

The survey said: “Expert witnesses are more and more reluctant to accept cases from litigants in person partly due to poor instructions from litigants in person and low fees…

“The small claims track regularly sees claims by litigants in person where the case might need to be supported by an expert’s report.”

Bond Solon said the number of PI expert affected by instructing parties going into administration reflected the “challenging time” for the legal market.

The survey said: “Competition between law firms is high. Law firm mergers are now commonplace placing great pressure on smaller firms with some of them going into administration. Clients are also demanding greater value for less money.

“In addition to this, alternative business structures have impacted the legal market allowing non-lawyers to own and invest in law firms. ‘Law tech’ start-ups using technology to streamline routine aspects of legal work are also threatening the business models of established law firms.

“Finally, cuts to legal aid and other funding changes have led lawyers to squeeze their fees.

“These pressures are not likely to reduce. More law firms, currently struggling with debts and unbilled work, may go into administration, so before accepting work, experts should conduct some due diligence.”

Other results included over a third of experts who could work in legal aid cases saying they would refuse to do so, while 69% said they would not continue working in legal aid cases if expert witness fees were further reduced.

Nearly half (46%) of the experts surveyed said they have come across an expert that they consider to be a ‘hired gun’, despite the expert’s express duty to the court rather than its instructing party.

Some 30% said that in the past year they have been asked or felt pressurised to change their report by an instructing party, in a way that damages their impartiality.

“Solicitors need to understand the role of experts and should not consider them as an adversarial tool,” the survey said. “Judges need also to keep a careful eye out for bias.”

Half of experts said they have felt stressed due to their activity as an expert witness.

“Since the Jackson reforms to the Civil Procedure Rules in April 2013, experts have had to comply with court timetables and tighter deadlines for reports. Changes in costs budgeting, proportionality and funding have also put a strain on expert witness work.

“The respondents have mentioned the difficulty of balancing expert witness work with other work/family commitments as the main reason for experiencing stress. Another key reason is respecting the short deadlines.”

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Maxey: pre-decided outcome

Two Manchester personal injury firms are seeking support for a legal challenge to the Ministry of Justice’s proposal that will stop solicitors from owning the medical agencies through which they commission reports in whiplash cases.

Express Solicitors and Jefferies Solicitors are contacting other claimant PI lawyers to see if there is interest in pooling resources to instruct counsel with a view to contesting the plan set out in a letter from justice minister Lord Faulks earlier this month.

They argue that the move would be an unreasonable restraint of trade. James Maxey, managing partner of Express Solicitors, said: “Solicitors are not precluded from owning non-solicitor businesses and why should they be in these circumstances?”

The Ministry of Justice letter said it was “committed to ensuring that there should not be a financial link between the party commissioning the medical report and any intermediary organisation through which the report is provided (or indeed with the medical examiner), other than for payment of the examination/report”.

It is therefore proposing, as a preliminary measure, to prohibit either party having a financial interest in an intermediary through which a medical report is obtained.

Mr Maxey said: “I’m an owner of Express Solicitors and also an owner of Ontime Group, which provides outsourcing services for claimant PI firms, including cost lawyers, investigations and a medical agency. Unsurprisingly, the medical agency does the vast majority of my firm’s work, as well as working for other, quality claimant PI practices.

“We want to connect to other professionals, who are partners/owners in a legal practice and also involved in the ownership of a medico-legal agency or using some form of white-labelling for medical reports, who will see these new proposals as a significant issue.

“This appears to be another pre-decided outcome on behalf of the Ministry of Justice… Is it me or have the government decided that claimant personal injury lawyers are criminals?”

Mr Maxey argued that independence issues were already addressed by solicitors’ code of conduct and the Civil Procedure Rules in this regard. “The last people trying to undermine the experts’ independence are in fact the claimant’s solicitors,” he said.

The aim is to arrange a meeting of interested solicitors and then, if there is support, to instruct counsel. To contact Mr Maxey, e-mail him via his colleague, Emma Bates:

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Linetime200Freeths LLP has contracted with Linetime to implement their Liberate litigation software. The system will support the firms growing Commercial Recoveries team.

Freeths LLP have 700 staff operating from 11 cities, offering a wide range of services for businesses and individuals.

Graeme Danby, head of creditor services at Freeths, said: “We already had a system in place handling the core of our day to day case loads. As part of our plans to grow the business unit, we undertook a review of our supporting technology. After researching the leading providers we selected Linetime’s Liberate system. It will assist in the provision of a streamlined, efficient and consistent service for our clients.”

The team will benefit from greater systems support and clients will have online access via the Liberate web portal to real time case information.

Freeths Recoveries team acts for Invoice Finance Providers, Insolvency Practitioners, Local Authorities and Finance Companies.

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Hallinan: opportunity should not be wasted

The Medical Protection Society (MPS) has called on the government to be more “bold” with its proposals to introduced fixed costs for clinical negligence cases by including cases worth up to £250,000 – 10 times the proposed limit.

The Department of Health’s consultation on the new regime for cases worth up to £25,000 – a figure considerably lower than had originally been floated – closes next week, and the MPS said that while it supports the proposals in principle, they do not go far enough.

The government envisages saving around £45m a year by 2020/21, but the MPS – which supports 300,000 doctors, dentists and other healthcare professionals – said it could achieve more at a time when the NHS budget is under huge financial pressure.

Emma Hallinan, the MPS’s director of claims, said: “We fully support the introduction of mandatory fixed recoverable costs for claims of clinical negligence.

“In lower-value claims, it is not unusual to see lawyers’ costs exceed the compensation awarded to claimants. As an example, in a recent case involving a delayed diagnosis which settled for £4,000, legal costs of £35,263 were sought. This is simply not right.

“We do, however, question the £25,000 threshold proposed by government. While we understand the argument for not capping legal costs for the most expensive and complex claims, we believe it is appropriate and viable to include claims up to £250,000.

“Disproportionate legal fees are still a significant issue for claims up to this value – setting the threshold at £25,000 would help, but the financial benefits to the NHS and the taxpayer would be greater if the threshold were set at a higher level.”

Ms Hallinan said the NHS paid out £1.5bn in clinical negligence costs in 2015/16, with legal costs accounting for 34% of that bill. The fixed costs scheme presented “an opportunity to create a more proportionate, fairer system while generating savings to the NHS which can be used to deliver front line care. It is an opportunity that should not be wasted”.

She concluded: “We urge government to be bold when making its decision on the threshold. Difficult decisions about spending in the NHS are made every day, and how we approach the spending of NHS funds on lawyer fees must be one of them.”

MPS also stressed that fixed fees would need to be one of a number of legal reforms to control the cost of claims, but told Litigation Futures that it was keeping its other proposals under wraps for the time being.

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LASPO: no litigation services provided before 1 April

A law firm which was instructed in the run-up to LASPO coming into force failed to take any substantive steps in the case before 1 April 2013 and as a result their conditional fee agreement fell foul of the Act’s transitional provisions and was unenforceable, a district judge has ruled.

There are said to be many cases of a similar nature in the courts involving clients who were signed up in the rush before 1 April 2013.

According to a briefing by defendant firm DWF, in Choudhury (suing by his Litigation Friend) v Markerstudy Limited, the infant claimant was the passenger in a rear-end shunt on 12 March 2013 and his litigation friend accepted an offer of £1,150, which was approved at a hearing in January 2015.

The defendant requested a detailed assessment after not accepting the outcome of a provisional assessment.

The claimant sought to rely on a collective conditional fee agreement (CCFA) entered into between his law firm and the claimant’s insurer on 19 December 2011 and contended that the CCFA provided a valid pre-LASPO retainer which bound the litigation friend from a date prior to 1 April 2013. The claimant submitted that legal work had commenced before 1 April 2013.

The CCFA provided for a 12.5% success fee in the event that the case settled and a 100% success fee if the case was won after a trial.

The defendant did not dispute that if the litigation friend was bound by the terms of the CCFA prior to 1 April 2013 and advocacy or litigation services had been provided prior to that date that there would be a valid retainer in place.

The claimant maintained that his insurer had instructed the solicitors under the terms of his insurance policy that provided before-the-event insurance. However, the claim was actually brought by the claimant’s litigation friend, who was not insured under the policy.

The litigation friend did not become bound by the terms of the CCFA until she signed and returned the terms of business on 1 April 2013.

The defendant argued that the litigation friend had therefore actually entered into a post-LASPO, CFA and as such, the CFA was unenforceable as it did not provide for a 25% maximum limit of the success fee recoverable.

It also argued that the CCFA would be unenforceable in any event pursuant to the transitional provisions that required any success fee to be capped at 25% unless “advocacy or litigation services” were provided to the litigation friend before 1 April.

The bill of costs recorded just one undated routine telephone call to the claimant prior to 1 April 2013 and a routine letter about what would be involved in the claim. The defendant argued that the conversation probably related to funding matters and did not entail any advocacy or litigation services.

The claimant submitted that the pre-1 April telephone call and correspondence were items of work that fell within the definition of legal services pursuant to section 199 of the Court and Legal Services Act 1990.

District Judge Wildsmith, sitting in York, found that no litigation services were provided to the litigation friend or the claimant prior to 1 April. The telephone call was linked to the letter that outlined the nature of the funding arrangement, he said.

As the agreement was signed on 1 April 2013, it fell foul of LASPO and was unenforceable as between lawyer and client, and so no costs were payable due to the indemnity principle. So he assessed the claimant’s bill at nil and ordered costs of £3,000 in favour of the defendant.

Will Mackenzie, senior managing costs advisor at DWF, who represented the defendant, said: “Pre 1 April 2013, solicitors and counsel were all in a rush to enter into CFAs and CCFAs to ensure that a success fee was recoverable.

“According to the judgment of District Judge Wildsmith, unless substantive work was done to progress the claim, claimants and counsel are likely to be found to have fallen foul of the relevant regulations and lose entitlement to recover their entire claim for costs.”

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US: hybrid contingency arrangements common

The draft Damages-Based Agreement (DBA) Regulations 2013 have “surprising implications” because they appear to preclude partial or hybrid DBAs, one of the City’s top litigation firms has argued.

Herbert Smith Freehills said its interpretation of the regulations, which were laid before Parliament earlier this week, is that if a lawyer acts under a DBA, this must be on a full ‘no win, no fee’ basis.

They would not be able to agree an arrangement where, for example, the lawyer receives a reduced hourly rate as the case proceeds which is payable win or lose, plus a contingency fee in the event of success.

In a briefing issued yesterday, the firm said: “This goes against last summer’s recommendations from the [Civil Justice Council’s] DBA working party, which concluded that there was no reason to prevent parties instructing their lawyers under partial DBAs, analogous to ‘no win, lower fee’ arrangements that are permitted where a lawyer is instructed under a conditional fee agreement.”

It said these sorts of hybrid arrangements are used by commercial claimants in US litigation. Such claimants will not normally agree a ‘traditional’ contingency fee, where the lawyer gets 30% or 40% of any recovery but no fee if the claim is unsuccessful, but may agree a modified fee arrangement, with for example a discounted hourly rate combined with a smaller contingency fee or uplift in the event of success.

“We had expected that the introduction of contingency fees for civil litigation would allow greater flexibility for firms wishing to meet the demands of commercial clients for more creative billing solutions. It appears, however, that the regulations will leave little room for flexibility,” Herbert Smith said.

“In fact, as drafted, the only payment a solicitor acting under a DBA would be permitted to receive if the claim failed would be non-counsel disbursements, which means that the solicitor would be on the hook for counsel’s fees where counsel was not acting under a DBA and those fees were incurred by the solicitor as a disbursement. This seems unlikely to have been the intention of those drafting the regulations.”

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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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Watthey: importance of such rulings cannot be overestimated

The Mitchell ruling is not to be used as a tactical weapon, the High Court has warned litigators in a case where its opprobrium was reserved for the conduct of the party on the other side of the default.

The judgment of Mr Justice Leggatt – in which he sought to distinguish the facts from those in Mitchell – is likely to be welcomed across the litigation world.

He said the defendants seemed to have viewed their opposition to a stay being lifted in the case as “a potentially free ride whereby, if successful, they would obtain a fortuitous dismissal of the claim without a trial and, if unsuccessful, would still have their costs paid by the claimants as the defaulting party”. It is, the judge emphasised, “important to discourage that approach”.

Summit Navigation v Generali Romania [2014] EWHC 398 (Comm) concerns a claim on a policy of marine insurance. Under a consent order, the claimants had to provide additional security for costs by 4pm on 5 December 2013, failing which the action would be stayed.

In the event, security was made available on the morning of 6 December, whereupon the defendants’ solicitors refused to accept it, on the basis that the action was now stayed. They refused to consent to the lifting of the stay, and the timetable was derailed: nothing was done in the claim for over two months.

While he said that a stay was a sanction, Leggatt J said not all sanctions are equal for the purposes of CPR 3.9: “There is, in my view, a significant difference between an order which specifies the consequence that proceedings are to be stayed if security for costs is not provided by a specified date and an order that, unless security is provided by a specified date, the claim will be struck out.”

The stay was intended to be “non-permanent”, he said, and rule 3.9 is “quite capable of accommodating more than one approach to applications for relief from sanctions taking account of the nature of the sanction and the nature of the relief sought”.

He distinguished the case from Mitchell: “In giving guidance as to how the amended CPR 3.9 should be applied, the Court of Appeal in Mitchell was not concerned with the ‘rather special form of order’ that is an order for security of costs, nor with the granting of relief from a sanction which was not intended to be permanent.”

Under the terms of the new rule 3.9 therefore, neither the need for litigation to be conducted efficiently and a proportionate cost, nor to enforce compliance, provided a good reason to refuse to lift the stay, said Leggatt J.

If he was wrong and Mitchell did apply, he continued, he would still grant relief. The non-compliance was ‘trivial’ – although the judge preferred to say it was not material (“since the whole thrust of the new approach is to inculcate a culture of compliance with rules and orders and to dispel an attitude which trivialises even ‘minor’ breaches”) – and the claimants’ insurance broker was responsible for the non-compliance.

And even had he not come to these conclusions, Leggatt J said he would still have considered it just to grant relief.

“The fact that the claimants missed the deadline for putting up security for costs by a day did not in itself have any impact on the efficient conduct of these proceedings, nor on the wider public interest of ensuring that litigants can obtain justice efficiently and proportionately.” To rule otherwise would have rendered compliance an end in itself, which the Master of the Rolls in his March 2013 lecture, as approved by the Court of Appeal in Mitchell, had warned against.

Indeed, “unlike the claimants’ default itself, the defendants’ response to it has had a very serious impact on the litigation. The whole timetable for the proceedings has been derailed, significant costs have been incurred and court time has been wasted to the detriment of other court users.

“In other words, the reliance placed on Mitchell in this case has had the very consequences which the new approach enunciated by the Court of Appeal in Mitchell is intended to avoid.”

The defendants had acted unreasonably in refusing to agree to lift the stay, he said, and “disregarded the duty of the parties and their representatives to co-operate with each other in the conduct of proceedings, and the need for litigation to be conducted efficiently and at proportionate cost. It stood Mitchell on its head”.

Leggatt J said he was putting his ruling in writing in the hope of discouraging other litigants from makings similar arguments. He further penalised the defendants by making them pay the claimants’ costs.

James Watthey, the barrister at Hardwicke Chambers instructed by Hughes & Dorman to act for the claimants, said: “Today’s judgment is likely to be met with relief amongst solicitors and copied by other High Court judges who are keen to distinguish Mitchell from the circumstances of other cases before them, on the basis that the sanction in question is of a different and less harsh nature.

“If litigants think that they can hitch a ‘free ride’, as the judge put it, on the on the back of their opponent narrowly missing a deadline, they are wrong…

“What constitutes a ‘just result’ remains a key question for the court to determine. The courts have not turned from dispensers of justice into machines, mechanically insisting on compliance as ‘as an end in itself’ – this is certainly good news for litigators.

“The importance of these High Court judgments cannot be overestimated. Daily, at the coal face of litigation in the county court, the junior judiciary is refusing applications for relief in circumstances where the result produces a clear injustice between the parties, despite the lack of any real countervailing imperative.”

Cubism Law and Jason Evans-Tovey of Crown Office Chambers are acting for the defendants.

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How the Ministry of Justice’s background calculations on new fee levels may have looked, but probably didn’t

Posted by Neil Rose, Editor, Litigation Futures

Chris Grayling’s decision just before Christmas to rethink the implementation date for the RTA portal extensions was an unexpected present for claimant lawyers and a victory for the Association of Personal Injury Lawyers (APIL) and Motor Accident Solicitors Society (MASS), which had begun the judicial review process over the failure to conduct the full review that had been promised before such a move was taken.

The timing of the climbdown, so soon after the Lord Chancellor announced his controversial plans to curtail the number of judicial reviews, was particularly unfortunate for the government.

Anyway, the good news was tempered by the statement that the rethink did not affect the consultation on the proposed new fee levels for portal claims and fast-track cases that fall out of the claims process. The consultation closes today and the tenor and content of the response issued by the Access to Justice Action Group (AJAG) will no doubt be echoed by other claimant lawyers and groups, not least the obvious (to everyone else) failure to take into account the impact raising the small claims limit would have.

But there is one aspect of the consultation that continues to make my blood boil (and I don’t normally get worked up about these things). Irrespective of the rights and wrongs of the proposals, and of what side of the fence you sit, the Ministry of Justice’s (MoJ) failure to explain how it actually came to the figures it put forward is so patently outrageous that surely Mr Grayling would have to abolish judicial review altogether to save it from another challenge.

It defies belief that figures put together after the entire claim process was analysed down to five-minute segments of work could be thrown away and replaced with fee levels that, for all we know, were plucked from the air. Or from the Association of British Insurers’ Christmas wish-list.

The common assumption is an official at the MoJ simply subtracted what they reckoned is an average referral payment of £700 from the current £1,200, and hey presto you have a new portal fee. One hopes it was more sophisticated than this – referral fees weren’t built into the original calculation, while some allowance should be made for marketing costs – but absent any explanation from the MoJ, one cannot help but suspect it wasn’t.

North-west law firm Forster Dean has been trying to get to the bottom of this. It submitted a Freedom of Information Act request to the MoJ on 26 November seeking the release of relevant documents showing how the figures were reached. On 20 December the MoJ responded by saying that it had some of the information sought, but that it might be exempt as it relates to the formulation of government policy.

It said: “In line with the terms of this exemption in the Freedom of Information Act, we have to consider whether it would be in the public interest for us to provide you with the information requested. However, we have not yet reached a decision on the balance of the public interest in this case.”

As a result, it has used powers under the Act to extend the time for making this decision to 22 January, some 18 days after the consultation closes. Not a great deal of use, one might suggest. As Forster Dean chief executive Greg Shields puts it: “I don’t understand why the MoJ simply would not put this information in the public domain to promote a mature consultation on the way forward.” The firm has also gone back and asked how what is essentially an arithmetical exercise counts as the formulation of government policy.

We do not expect the government to act capriciously but that is what it appears to be doing. As it is, the MoJ is hardly covering itself with glory given that, with less than three months to go, practitioners still don’t know the shape of the regimes for damages-based agreements and qualified one-way costs-shifting, to take two significant examples, nor when any change to the small claims limit will be implemented. The detail of the referral fee ban will not be settled until less than a month before it comes into force (indirectly the government’s fault given the time it has given for its introduction).

One fears a repeat of what happened with the critical Fenn report on the first year’s operation of the portal, publication of which was held back by the MoJ until after it had made the decision to extend the regime.

If the implication is that fees will go down on 1 April irrespective of when extension happens, then there is no more time to waste. The MoJ, if it is to retain any credibility, must publish now, and give time for stakeholders to examine and comment on its methods, before announcing its final decision. In line with how the figures were no doubt calculated, it’s not rocket science.


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RTAs: MoJ aware of Portal Co's concerns

The government is determined to introduce the expanded RTA claims portal in April 2013, the Ministry of Justice (MoJ) has stressed, despite the company behind the system saying it cannot be done in that time.

As well as announcing plans earlier this week to consult on raising the small claims limit for personal injury (PI) and introduce independent medical evaluations of whiplash injuries, the MoJ highlighted the extension of the RTA portal to claims worth £25,000, and to employers’ and public liability cases, as a key part of its plans to reduce the cost of motor insurance.

However, we reported in March that Portal Co – which oversees the technical infrastructure of the RTA portal – has told the MoJ that it would take 11 months to amend the portal to encompass RTA claims worth up to £25,000, and two years and seven months to build and test a new system for EL and PL.

Further, it said this work could only begin once the Civil Procedure Rule Committee has set the rules and we believe the committee has been asked to complete this work by December.

An MoJ spokeswoman told Legal Futures: “We are aware of the Portal Co concerns and continue to work with them and other key stakeholders on both the vertical and horizontal extensions, with a view to implementation of a revised protocol by April 2013.”

She also confirmed that an independent evaluation of the RTA portal – which was promised in the Solving disputes in the county court consultation response in February as a precursor to any extension – will be published in the summer.

The spokeswoman rejected the suggestion that the proposal to increase the small claims limit for PI cases from £1,000 to £5,000 was a U-turn.

While acknowledging that the Solving disputes consultation response stated that there will be no change to the PI threshold, she pointed out that, as explained in the original consultation paper, this was because the consultation did not actually look at this question – its focus was on whether to raise the standard small claims threshold of £5,000.

She continued: “The threshold for personal injury claims hasn't been looked at since 2007, when it was decided the time wasn't right to raise the limit. There is now political and industry will to revisit this question and following discussions at the Prime Minister’s recent summit, we believe it is right to consult on an option which could help address the rising cost of personal injury claims. The insurance industry has also promised to pass on any savings to consumers.”

A third motor insurance summit is understood to be scheduled for the autumn.

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Porter: clients increasingly demand choice

Well-known after-the-event insurance broker Universal Legal Protection (ULP) is to ramp up its third-party litigation funding offering after recruiting the former UK head of sales and marketing at Burford Capital.

Tim Porter joins ULP as business development director, responsible for developing all existing and future product lines in response to the increased demand for litigation insurance and funding.

Richard Myrtle, ULP’s managing director, explained that because litigation funding is currently an unregulated activity, most insurance brokers feel unable – or are not allowed – to provide any sort of service in this area.

He said ULP will be careful neither to give advice nor make recommendations, but the aim is to remove the legwork from the client or solicitor by sourcing all of the options for them to consider.

He added: “Tim’s appointment demonstrates our confidence in and commitment to the litigation insurance and funding markets. We continue to deliver new products in response to the ever-changing economics of litigation and we continue to work with law firms, funders and their respective clients to create risk transfer solutions to reflect risk appetite, tolerance and budget.

“Like us, Tim is passionate about giving clients choice and he understands that to consistently grow your business you need to put your clients’ needs before your own.”

Mr Porter said: “I’m delighted to be joining ULP. The role of the broker is essential in an ever-changing marketplace where clients will increasingly demand choice. There is plenty of litigation risk capital available in the UK, and competition will force funders to consider a broader portfolio of investments.”

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Agreement: Switch not a tactical step

Claimants did not act unreasonably in switching funding from a damages-based agreement (DBA) to a conditional fee agreement (CFA) shortly before trial, even though the defendants are now facing a much larger bill, a costs judge has ruled.

Master James ruled that the defendants had not raised a “genuine issue” over the reasonableness of the decision.

In Dial Partners LLP & Anor v Eastern Airways International Ltd & Ors [2018] EWHC B1 (Costs), under the DBA signed in March 2015, the claimants’ solicitors, specialist City litigators Candey, were to receive 50% of the proceeds of the claim. In November 2016, less than two weeks before the date listed for trial, this was replaced by a CFA.

The claim settled on the eve of trial for £625,000 inclusive of VAT and interest, but excluding costs. The defendants’ liability under the DBA would have been a maximum of £250,000 plus disbursements other than counsel’s fees. Under the CFA, however, the claimants were seeking costs of £523,000.

The defendants were notified of the DBA but not the switch to the CFA. A defendants’ £300,000 part 36 offer was open at the time of the switch.

Master James said: “The claimants’ case is that this change from DBA to CFA was not a mere tactical step to take advantage of a near-certain settlement; as far as they were concerned, the matter might well have fought on to trial and the outcome thereof could not be predicted merely because a defendants’ part 36 offer had been made; I have to say that based upon the facts and figures above referred-to, I accept that submission.

“The claimants did not receive an offer of £300,000, craftily change their retainer and then accept that offer a day later; they received an offer of £300,000, changed their retainer but fought or at least negotiated on for almost two more weeks, until the eve of trial when they settled over the weekend for more than double what the defendants had on the table at the time that the retainer was changed.”

In Surrey v Barnet and Chase Farm Hospital and others [2016] EWHC 1598, Mr Justice Foskett ruled that a paying party has to raise a “genuine issue” before any investigation into the reason for a change in funding would be undertaken.

Master James found that the defendants had not raised a “genuine issue” as far as reasonableness was concerned.

She said: “It is not that the claimants would wish to ‘punish’ the defendants by incurring an extra costs burden just in order to pass it on to them, but why should the claimants not take the opportunity to ensure that their solicitors were paid (and that the defendants were liable to pay) something much closer to what the case actually cost to run?…

“In fact, if the case had settled at above a certain figure (Candey put it at £950,000) they would actually be worse off than had they stayed with the DBA.”

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Medical reports: international plan for Doctors Chambers

Doctors Chambers, which describes itself as the “UK’s largest independently owned providers of independent medical evidence”, is looking for an external investor.

Dr Bippon Vinayak, the group chairman and chief executive, told Legal Futures that the company was looking for a partner “with experience of executing overseas expansion”.

Dr Vinayak went on: “Over the last couple of years, we have been approached by various parties interested in applying our model overseas but the time wasn’t right for us.

“We feel the business is now ready to embark on that journey, having developed its state of the art technology to make the whole process and interaction as seamless as possible.

“We have great ambitions for the business and feel a partner with experience in executing overseas expansion will be ideal for us. I, together with all my senior team, fully intend to drive that process.”

He added that he was not looking for an investor to buy the entire Doctors Chambers group, which he owns with his wife, but a stake in the group, which also comprises: rehabilitation provider Bodycare Clinics; DC Life, which provides medical screening for high net-worth individuals; document signing business Document Plus; and software company Smart Online.

Dr Vinayak, a consultant surgeon, said Cavendish Corporate Finance had been appointed to lead the search. In the year to 31 March 2013, the last period for which there are filed accounts, the company’s sales rose by 17% to £13m. Press reports have valued the group at £100m.

Meanwhile, Dr Vinayak said Doctors Chambers remained committed to being “the best operator” in the domestic market and the Civil Procedure Rules were developing in a way which would support this.

Based in Windsor and Newcastle, Doctors Chambers was established in 1994. It has one of the largest panels of medical experts and provides over 80,000 medical reports a year.

The company is a founder member of the Association of Medical Reporting Organisations.

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Pascall: Case highlights risks for funders

Posted by Matthew Pascall, senior underwriting manager at Litigation Futures Associate Temple Legal Protection

In September 2014 a UKIP MEP, Jane Collins, gave a speech at UKIP’s annual conference slandering three Labour MPs. The following month, a letter of claim on their behalf was sent to Ms Collins. It contained an offer of settlement under which Ms Collins would pay each £10,000 in damages, which they would then pay to charity.

UKIP’s National Executive Committee (NEC) discussed the letter of claim that month and referred Ms Collins to solicitors, RMPI, with whom UKIP had close ties. No settlement having been agreed, in November 2014 the three MPs issued claims against Ms Collins. Temple Legal Protection insured the MPs’ claims.

In December 2014 UKIP initially decided to allocate £10,000 to Ms Collins to help her defend the claim. Ultimately, RMPI billed £36,000 for its work defending the claim between October 2014 and June 2015. UKIP paid almost all of this.

In January 2015, counsel instructed by RMPI advised Ms Collins that she had a weak case and ought to settle. On 2 February, UKIP’s NEC decided to try and settle the claim on the best terms possible and that the party would fund any settlement.

However, by early March 2015 UKIP had decided that the case should not be settled until after the upcoming general election due in May because they did not want to appear to be conceding defeat during the campaign.

In the event, this decision and its consequences for the progress of the case and the costs caused by the inevitable delay, were to prove decisive when the court came to consider whether or not UKIP should pay any of the costs incurred by the claimants.

In March 2015, counsel again advised UKIP in pessimistic terms about Ms Collins’ chances of defeating the MPs’ claims and advised that Ms Collins should try and settle on the best available terms. UKIP was still determined to defend the claim until after the general election in May. At a hearing held in April 2015, the court decided that the words complained of were defamatory.

The election took place on 7 May 2015, after which UKIP wanted to settle the case as quickly as possible. That led to an offer of amends alongside a without prejudice offer of damages of £15,000 for each MP. By making the open offer of amends, Ms Collins was, on the face of things, conceding liability but leaving open the question of damages.

It is clear that Ms Collins felt somewhat let-down by the party. On 23 June 2015, Ms Collins told RMPI that she intended to defend the claim and represent herself. UKIP and the solicitor’s role in the case came to an end at that point. Over the following 20 months Ms Collins sought, unsuccessfully, to withdraw her offer of amends and defend the claim.

Damages were assessed in February 2017. The judge awarded each of the MPs £54,000. Ms Collins was also ordered to pay the MPs’ costs with an interim payment on account of £120,000. She failed to pay the costs.

The claimant then proceeded to issue an application for a third-party costs order against UKIP. Temple Legal Protection agreed to insure the application.

In a detailed and comprehensive judgment given in February this year, Mr Justice Warby explained his decision to order UKIP to pay the claimants’ costs between early March 2015, when the party had taken a politically motivated decision to delay settlement of the claim until after the election, up to the point in June when Ms Collins began to represent herself.

He also ordered UKIP to pay the claimants’ costs of the final assessment hearing and the subsequent enforcement costs because it was the decision to delay the case that meant no settlement was achieved at the time when that was most likely.

But for that decision, there would probably have been no need for a final assessment hearing or for the costs incurred by the claimants in enforcing the judgment given at that hearing.

A number of points emerged from the judgment:

The ultimate question in any given case is: Would it be unjust to order the third-party to pay costs;

  • When considering whether or not to order a third-party to pay costs, the court has a wide discretion. A narrow approach based on a detailed analysis of earlier decisions is not helpful;
  • Failing to warn a third party that it might become liable to pay costs if its involvement in the case continues, is a factor but not a determinative factor to take into account;
  • Whilst simply funding a case does not, of itself, make the funder liable to pay costs, if the funder exercises substantial control over the litigation and/ or could be seen as the “real” client, it is more likely that it will be ordered to pay costs. In this case, UKIP’s initial funding was with a view to simply helping Ms Collins defend the claim. A decision it took out of conscience given the context in which her speech was made. The court decided this was “pure funding” which, without more, did not make the funder liable to pay costs;
  • If the litigation is, in real terms, for the benefit of the funder, the funder may be liable;
  • Where the funder’s actions cause costs to be incurred, they are likely to be liable to pay. In this case, that conduct was UKIP’s decision to delay the case until after the general election.

Those who wish to fund litigation or perhaps drift into a position where they do so, need to be aware of the risks highlighted by this case. It is important to note the distinction drawn between those who are pure funders and those who go on to take a decisive and controlling role in the litigation.

In the latter case, if a decision to fund is taken, the funder needs to be aware of the adverse costs risks involved.

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Attu: helping to minimise the impact of crises

Legal expenses insurer ARAG has teamed up with a public relations firm specialising in crisis communications to offer interested customer groups media relations support as part of their policies.

Responding to a number of enquiries from customers for immediate assistance in dealing with the intrusion and disruption of press at the time of an insured event, ARAG has become the first legal expenses insurance provider to launch this service.

Helping to protect businesses or individuals who may be susceptible to a crisis that could damage their reputation, the service from Chelgate provides a rapid and discreet response for practical and professional support that will manage the risk of poor communications and may be capable of limiting adverse publicity.

Whether dealing with a single press enquiry or a gathering media circus, the crisis communication service can be accessed 24 hours a day, 365 days a year. Chelgate can be asked to provide advice, take over media relations responsibilities, and undertake a range of activities to assist the insured ranging from preparing statements, messaging and information in print, video and voice formats, to representing the insured when facing the media or intervening to assure privacy.

Available to individuals and businesses, the crisis communication service will be built into ARAG LEI insurance packages as they renew. It is particularly suitable for potentially vulnerable customers, for example care homes, day nurseries, foster carers and high net-worth individuals, where they lack the resources and experience to cope with unexpected and unwanted attention.

Working with Chelgate and the intermediary, ARAG will tailor the service to each customer based on their specific risks ensuring that it meets their demands and needs.

ARAG product development manager Lesley Attu said: “We begin with the premise that even the best-managed organisations can face acute issues, whether of their own or others’ making.

“The risk to reputation comes not because the situation arose in the first place. It comes from the behaviour and communications witnessed in a crisis situation, and it is here that Chelgate’s expertise and very broad experience will be available to policyholders in order to help them minimise the impact of such crises. We see this as a recognisably valuable add-on to legal advice.”


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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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Houses of Parliament

Government had not acted in “thorough or even-handed” way

The High Court’s decision to block the abolition of recoverability for mesothelioma claims has denied victims the 10% uplift in damages they would otherwise have received, justice minister Lord Faulks has said.

Responding to a highly critical report on mesothelioma claims published today by the justice select committee, the minister said that, as a result of the court’s decision, cases would be handled on a “pre-LASPO” basis and the claimants would “of course not receive” the uplift.

Shailesh Vara, colleague of Lord Faulks, announced earlier this week that the government would carry out a second review of mesothelioma claims “in due course” before abolishing the recoverability of success fees and insurance premiums.

The justice committee said the government, “perhaps as a consequence of being forced into the concession” of initially excluding mesothelioma claims from Sections 44 and 46 of LASPO, did not prepare the ground for the review required under Section 48 of the Act in a “thorough and even-handed way”.

Referring to what has been described as a “secret deal” between the government and insurers, the select committee said: “The existence of an undisclosed ‘agreement’ between the government and the insurance industry is not conducive to the creation of trust among victims’ representatives, claimant lawyers and others that an opposing viewpoint will be heard.

“The haste with which the government embarked on a review and consultation, and the way in which it presented them, left those who favoured retention of the LASPO exemption for mesothelioma potentially disadvantaged in terms of marshalling a persuasive case.”

The select committee recommended that a further consultation, to which the government has now agreed, should “be framed unambiguously and centrally on the question of whether the LASPO provisions should be brought into effect for mesothelioma”.

It said the consultation should be “informed by an updated cost-benefit analysis” and “should not be undertaken until sufficient time has elapsed for the effects of the LASPO changes in non-mesothelioma cases to be assessed”.

The committee added: “All who are involved in formulating policy on mesothelioma claims, and in handling them within the legal process, are acutely aware of the profoundly distressing circumstances in which mesothelioma sufferers find themselves, in most cases as a result of the negligence of a past employer or employers.

“That shared awareness plainly does not translate into practical consensus on the best mechanisms to apply to ensure that claims are dealt with swiftly and fairly. Indeed, we cannot recall any subject into which we have inquired on which there has been such a pronounced binary division of opinion and approach.”

Mr Justice Davis ruled in October that the government could not go ahead with abolishing recoverability of success fees and insurance premiums in mesothelioma cases because it had failed to carry out a proper review of the impact on victims.

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Attu: more enthusiasm from insurance industry

Posted by Lesley Attu, product development manager at Litigation Futures Associate ARAG

Liz Truss sent the insurance industry into a tailspin a little over six months ago, when she announced a change to the rate from 2.5% to -0.75%. Share prices dropped, premiums were hiked and the insurers’ PR machines went into somewhat unseemly overdrive, demanding that the ‘crazy’ decision to ensure that people with catastrophic injuries should be adequately compensated, be urgently reviewed.

It may not have come about quite as quickly as some would have liked, but the Ministry of Justice’s (MoJ) proposals for a new mechanism to set the discount rate seem, published last week, designed to strike a compromise.

If Lord Chancellor David Liddington’s prediction that the new system would currently generate a rate between 0% and 1%, then it could fall very close to the mid-point between the -0.75% that so outraged the Association of British Insurers and the 2.5% that it lobbied and fought so hard and for so long to preserve.

The MoJ says it will maintain the 100% compensation rule so that claimants should receive full compensation for the loss caused by the wrongful injury, and not any more, nor any less. It has accepted that the existing legislation governing how the rate is set is unrealistic and could result in awards that significantly overcompensate claimants.

The consequence, it claims, is that the NHS and other public sector bodies can be adversely affected and insurance premiums are inflated.

The MoJ has also acknowledged that injury victims are likely to be more risk averse than ordinary, prudent investors but that ‘low risk’ rather than ‘very low risk’ investments would represent a fairer benchmark.

Primary legislation is necessary and, once it is passed, the discount rate will be set by the Lord Chancellor, who will take advice from a panel of independent experts. The panel will be chaired by the Government Actuary and will include four other members who will bring experience as an actuary, an investment manager, an economist and a consumer investments expert. HM Treasury will continue to be a statutory consultee for each review, which will take place every three years.

The panel will still be able to set different rates for different types of case, but the principles behind how the rate is set will be set out in the legislation.

So far, the Lord Chancellor’s news has been received more enthusiastically by the insurance industry (and its investors) than those representing injured victims, but only time will tell if the new rate setting mechanism will prove fairer or not.

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Court fees: on the rise

The government has refused to bow to sustained criticism of its plans for steep court fee increases and announced that they are to go ahead – but it has yet to decide on whether it will introduce ‘enhanced’ fees that are above cost price.

Issuing its response to the highly contentious consultation on court fees – which attracted 162 submissions – the Ministry of Justice acknowledged that many did not agree with the proposals, which it estimated will generate an additional £105m in fee income a year.

But minister Shailesh Vara said: “I am satisfied that we must press ahead. No one could seriously argue that it is right for the taxpayer to continue to subsidise those who use the courts, by underwriting, year after year, unplanned deficits in court income. We need to get on top of this problem once and for all.”

Mr Vara indicated that enhanced fees will go ahead, saying that “we will be bringing forward our plans for reform in due course”.

To support its decision – and in the face of criticism of the lack of evidence underpinning the proposals – the government published new research conducted by IPSOS Mori, involving 54 qualitative interviews with a range of civil claimants and family applicants.

This said that “overall, most participants reported that court fees were affordable and did not influence their decision to start court proceedings. Many participants felt they would not have been deterred from starting court proceedings if court fees had been higher”.

However, some civil claimants making specified money claims reported that they would weigh up whether the likely cost of court proceedings would be worthwhile against the value of the claim they were hoping to recover.

Also, the study did not cover those who resolved disputes using alternative means, or who had been deterred from bringing their case to court for any reason.

There have been a handful of amendments to the original proposals. Noting the concerns expressed about the proposed £680 for a judicial review hearing or oral renewal, it will instead charge £350 for an oral renewal, with a further £350 charged if permission is granted and the case proceeds to a hearing. (These figures, like others in the consultation, have been uprated to 2013/14 prices.)

“This will mean that those found to have an arguable case will continue to pay no more than had permission been granted in the first instance, while lowering the cost of an oral renewal application.”

The changes will come into force on 22 April. For the full list of new fees, see from page 41 of the consultation response here.


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Wallis: expertise recognised

Wallis: expertise recognised

The NHS Litigation Authority (NHSLA) has included a specialist costs service among the three providers named on its new mediation panel, which began work today.

The Centre for Effective Dispute Resolution (CEDR), Trust Mediation and Costs Alternative Dispute Resolution (CADR) make up the panel.

The two-year contracts were said to be worth £160,000 on total during the procurement exercise, and follow a successful pilot.

In a statement today, the NHSLA said the tender enabled it “to use its unique buying power on behalf of the NHS to procure the highest quality mediation services for the NHS at the lowest possible cost”.

NHSLA chief executive Helen Vernon said: “Our plans to launch a mediation service have been well received by all those involved in the resolution of incidents resulting in harm…

We have used mediation to good effect throughout our 20-year history, including in high-profile cases and group actions. We will closely monitor the service to ensure we see the positive benefits we believe can result from greater uptake of this non-adversarial approach to dispute resolution.”

Hannah Rawlins, CADR Registrar, said: “We look forward to assisting in the streamlining of legal costs recovery, facilitating efficiency and promoting the swift and fair resolution of claims at every opportunity for all parties involved in the process.”

Tim Wallis, chairman of Trust Mediation, said: “We are delighted our expertise as a leading specialist panel of independent personal injury and clinical negligence mediators has been recognised by the NHSLA in the award of this contract.”

CEDR director Graham Massie added: “The mediation of disputes with the NHS will make a positive difference for all concerned, especially patients and the families of patients, sparing them the expense and stress of going to trial when looking for the resolution of a claim.

“Having worked with the NHS in various ways over the last two decades CEDR is delighted to see the NHSLA now confirming its use of mediation and to be one of the organisations selected by them to help find settlements where there are disputes.”

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America: common-interest protection

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

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

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

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

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

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

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

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


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Warby: no jurisdiction after order was sealed

A High Court judge has refused newspaper columnist Katie Hopkins permission to appeal against his high-profile ruling that she had to pay £24,000 in damages over two libellous tweets, saying she applied too late.

He indicated that he would not have granted permission anyway.

Mr Justice Warby handed down judgment on 10 March in favour of blogger and campaigner Jack Monroe, and then heard argument and made his decisions on costs. These included an order for an interim payment of £107,000 on account of costs. The formal order reflecting these decisions was sealed on 21 March.

In his ruling yesterday, Warby J recorded: “During this process there was no application for permission to appeal. The skeleton argument for Ms Hopkins stated that she was considering her position in relation to an appeal but was not making or seeking an extension of time for doing so.

“It would appear that the question had been considered and a conclusion reached that no application would be made at that time. It was said that any application would be made to the appeal court.”

On 23 March, Ms Hopkins’ solicitors, Kinglsey Napley, told the judge that she intended to appeal and that leading counsel had advised that it would be desirable to seek permission from him, prior to applying to the Court of Appeal.

However, Warby J decided that, as the order had been sealed, he no longer had jurisdiction over the case.

“A reserved judgment is given, and the decision is made, when the judgment is handed down at a hearing in court. On the face of it, the application to the lower court must be made then, or at some later date to which the hearing is then adjourned for that purpose, at the request of the potential appellant or at the instigation of the court.

“If an application is not made at one or other of those times, it can only be made to the appeal court. This is a clear and understandable regime, which places the onus on the party who may wish to appeal to make a decision, or to ask for time to make one.

“The standard practice of circulating reserved judgments [as was done here] should make it easier for a party to decide whether to seek permission, and to identify grounds of appeal which can be argued at the hand down.  It is inherently desirable to avoid afterthoughts, and to avoid the uncertainty for the opposite party that would result if these were permitted.”

Kingsley Napley said the judge could still comment on the proposed grounds of appeal, but having concluded that he had no jurisdiction, the judge declined to do so.

“But I will say this. I would have refused permission, as I do not consider any of the four grounds of appeal to have a real prospect of success or that there is any other compelling reason for an appeal to be heard.

“This was not a case which raised any great issues of legal principle. It turned essentially on its own facts. The points of law that are raised are in my view untenable. The Court of Appeal will not lightly interfere with findings of fact.”

Warby J also refused to stay payment of the £107,000 and the assessment of the costs.

“The point is made that the claimant’s solicitor has declined to give any undertaking or comfort as to repayment of the £107,000, if the court decided that should be done.

“It is Ms Monroe herself who would be liable to repay, and it is said that she is of limited means. I do not consider that the information before the court discloses a sufficient risk of these monies being lost, to justify the imposition of a stay.

“The question of whether to stay assessment can be reconsidered if an application is made to the Court of Appeal, and the single judge takes a different view from mine on the merits of the proposed appeal.”