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VW: private hearing over lead solicitor role

Two law firms are in the High Court this week, battling it out to be named the lead solicitors in the group action being taken over the Volkswagen emissions scandal, Litigation Futures can reveal.

The face-off comes ahead of a hearing next month on whether to grant a group litigation order (GLO) in the case.

London firm Harcus Sinclair brought the claim against Chesterfield-based Your Lawyers, and the pair were scheduled to be facing off in a private hearing before a deputy High Court judge for the last of three days today.

Neither firm commented on the dispute when contacted by Litigation Futures, but we have seen an order emanating from another private hearing held last month, in which Mr E Johnson QC, himself a deputy High Court judge, ordered an expedited trial.

While the firms may have hoped that their disagreement would have stayed between them, the judge said his order should be copied to all the other firms of solicitors representing both the claimants and defendants in the case.

A hearing in January first considered Harcus’s application whether to grant a GLO. The dedicated Your Lawyers website for VW claims records that at the hearing, “[we] informed the court that we were very well placed to take on the role of lead solicitors, and to take a leading role in the conduct of this litigation.

“We expected a little encounter with Harcus Sinclair, the firm that made the application and another couple of law firms but on the day of the hearing, there was a consensus that the application should not proceed. The High Court agreed and the application was adjourned until October 2017.”

Harcus Sinclair has enjoyed a high profile over its pursuit of the case, working with national giant Slater & Gordon to represent tens of thousands of car owners in the group. Some 1.2m cars built by VW, Audi, SEAT and Skoda – all part of the VW Group – are affected.

We reported at the start of the year that Harcus Sinclair was operating under a damages-based agreement and has secured third-party funding from Therium Capital Management.

The key allegation is that the affected cars should not have been certified as fit for sale because they produced higher levels of harmful emissions than the rules allowed. It is also alleged that the affected vehicles only passed official emissions tests because their engines were fitted with a ‘defeat device’ which reduces the emissions under test conditions.

Harcus Sinclair said it would make a claim for exemplary damages if it could show that VW deliberately fitted the defeat device to increase its profits.

Your Lawyers specialises in consumer action claims and group litigation, and says on its website that it too has thousands of clients under ‘no win, no fee’ agreements.




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Costs management order: judge gives parties time to reflect

A judge has warned parties to a Technology and Construction Court case that they need to find ways to save costs if the budgeting process is not going to make the litigation uneconomic to fight.

Mr Justice Akenhead took the proactive step in a £170,000 claim over damage that the claimant alleges occurred following the use of an adhesive.

In Finesse Group Ltd v Bryson Products (A Firm) [2013] EWHC 3273 (TCC), the judge faced a range of issues in the first case management conference, including costs, that led him to observe that “since the issue of these proceedings in the Tunbridge Wells County Court and its later transfer here, this case has not proceeded effectively or well”.

The claimant and two named defendants have filed costs budgets of some £206,000, £198,000 and £207,000 respectively, and if and when a third defendant is joined in, “it is at least possible that its costs budget will be similar”, the judge noted.

Akenhead J continued: “Because the parties are coming back for a review case management conference in February 2014, I deferred making a decision on costs management orders. However, I did point out to counsel that the expenditure of some £610,000 or, with [the possible third defendant], £800,000 of costs on a claim for under £170,000 at least looks extremely disproportionate.

“One can legitimately envisage, only by way of example, a hypothetical scenario of [the claimant] losing and being ordered to pay the three other parties’ costs, which even after assessment might (subject to the costs management regime) cost them some £500,000-£600,000 plus their own costs; many right-thinking people might consider that to be wholly unacceptable.”

As a result, the judge “invited” the solicitors to give “very serious consideration substantially to reducing the costs budgets to reflect these sorts of considerations and to seek sensible and imaginative solutions, such as the sharing of certain types of expert, to achieve this”.

Otherwise, he warned, the court may well otherwise be faced with a “stark” choice of assessing and fixing the maximum proportionate budget for each of the parties.

“If it has to do that, then the shortfalls between the current costs budgets and those maximum allowances could well be so substantial that commercially it may be unrealistic for the parties to fight the case.”




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Motor insurance prices continued their recent downwards trend during the first quarter of 2014, according to one of the key surveys being watched to judge the impact of the civil justice reforms.

According to the Confused.com Motor Insurance Price Index in association with Towers Watson, the 7.5% reduction over the first three months of 2013 means that comprehensive prices have fallen by around 19% in the last year, from £736 to £596. The last time that the average premium stood below £600 was at the end of 2009.

Car insurance: 19% fall in premiums over last year

Comprehensive policyholders in Manchester and Merseyside received the largest annual average price cuts in the country, amounting to 23% or a price saving of nearly £250. “These areas have previously been associated with particularly high third-party claims costs and so would be expected to see greater benefit from LASPO and related reforms,” the survey said.

Stephen Jones, UK head of P&C pricing at Towers Watson, said: “This quarter’s price reductions are sizeable, even allowing for the fact that motor insurers may wish to be tactically competitive around this time of year due to growing new vehicle registrations and the pattern of market renewal dates.

“Further contributing factors could include optimism surrounding potential reforms in the medical assessment of whiplash and action which may be taken on third-party repair and hire costs.

“Another factor to consider is that some insurers declared increased reserve releases when announcing their year-end results, perhaps indicating growing confidence in their understanding of the claims cost impact of recent legislative changes including LASPO.”

The survey showed that telematics policies – involving a device fitted to cars that tells insurers how well the policyholder is driving – are an increasingly significant feature of the cheapest prices.




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In response to a record £28m fine for Lloyds Bank, FCA director Tracey McDermott said last month: “Customers have a right to expect better from our leading financial institutions and we expect firms to put customers first”.

Many businesses and individuals have found that they have been mis-sold products by the banks, and unfortunately obtaining compensation has been far from straightforward. Cases of financial mis-selling have been widely covered in the news in the last year especially, and it is more important than ever that you remain up to date.

MBL’s one day conference offers you the opportunity to catch up with the latest strategies on how to pursue a mis-selling claim effectively. This conference will appeal to all those litigators who need to reinforce their knowledge in relation to such issues as mortgage mis-selling, IRHPs and how to approach settlement.

Join a panel of expert speakers on 30 January in London and explore topics such as: understanding the documents and products; the implications of the latest cases; calculating your (recoverable) loss;  mortgage mis-selling; alternative avenues such as the FOS, the FSCS and the Redress Scheme.

For the full conference agenda and details of how to book please click here.




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Rowles-Davies: ALF membership a good signal

The ability to demonstrate that funds are readily available and strong personal relationships are the most important factors for solicitors when choosing a third-party litigation funder, a poll by funder Vannin Capital has found.

The snapshot survey of commercial litigators also found unrealistic terms and general inflexibility the hardest aspects of dealing with funders and the reason some are put off seeking funding at all.

But around half predicted that the Jackson reforms – and particularly the end of recoverability for success fees and after-the-event insurance premiums – will make litigation funding more attractive, with those who have yet to use it more likely to think so than those with experience of funding. More than eight in ten solicitors are likely to consider using funding in the next 12 months.

Of those who had used funding in the past two years, general commercial litigation (39%), professional negligence (28%), breach of contract (17%) and arbitration (11%) were the main areas. The results showed the contrasting standards in the market, with more than half (56%) complaining that the process of obtaining funding took too long, but 28% saying the speed of decision-making was excellent.

Respondents cited the need to know the funds were there and strong personal relationships as the most important factors when choosing a funder (29% each), followed by the ability to provide an answer at speed (18%). The main difficulties encountered when using funding were unrealistic terms/difficult negotiation (cited by 67%) and the inflexibility of the funder to respond to changes in the case (47%).

Almost three-quarters (72%) of solicitors were required to sign up to a conditional fee agreement, most commonly on a ‘no win, some fee’ basis that saw them paid between 25% and 50% of their usual fee come what may. After-the-event insurance was taken out in 56% of cases.

‘More favourable terms’ was, perhaps unsurprisingly, the one factor that would make solicitors increase their use of funding, or make those who have not used it to date embrace the concept. The existence of the Association of Litigation Funders’ code of conduct was widely welcomed – although many recognised that it was too early to judge the impact of the code. Solicitors were split on whether there needed to be statutory regulation of funding.

“The litigation funding market is split between those that have funds and those that claim to have but don’t,” said Vannin Capital consultant Nick Rowles-Davies. “By making some solicitors wary of the whole market, the latter group is holding back its development just at the time when, due to the Jackson reforms, funding is more important than ever.

“It is no surprise that such companies are inflexible and not good at communication given that even if they can eventually secure money from another source, they are constrained in what they can do with it.

“A good funder will be able to show they have the money ready to go, will make rapid decisions, and will develop a genuine partnership with the solicitor and their client. Membership of the Association of Litigation Funders, with its capital adequacy requirements, acts as a good indicator that you are dealing with a proper funder.”




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Parker: CJC member

Two of the ‘big beasts’ of the injury world are to lead the new Civil Justice Council (CJC) working group set up to consider fixed recoverable costs (FRC) in clinical negligence claims with a value of £25,000 or less, it has emerged.

Leading defendant insurance lawyer Andrew Parker has been named chair, with David Marshall vice-chair.

Mr Parker is head of strategic litigation at DAC Beachcroft, with a wide-ranging agenda across injury claims. He is also a former president of the Forum of Insurance Lawyers and a current solicitor member of the CJC, which is why he is the chair.

Mr Marshall, managing partner at south London firm Anthony Gold, is a clinical negligence lawyer and former Association of Personal Injury Lawyers president. He currently chairs the Law Society’s civil justice committee.

The CJC said further membership of the group would be announced in due course.

The terms of reference are:

  • To consider and recommend an improved process for clinical negligence claims, where the claim has a value of £25,000 or less;
  • To draw up (i) a structure for FRC for such cases to attach to the new process, (ii) figures for FRC in the proposed structure, and (iii) figures for the cost of expert reports;
  • To have regard to how any improved process or scheme of FRC might affect issues of patient safety, including the way in which case outcomes are reported back to healthcare providers for learning purposes;
  • To consider how expert reports should be commissioned and funded, including the feasibility of single joint experts for at least some claims, as part of the improved process;
  • To report with recommendations by the end of September 2018.

The working party was set up following last week’s long-awaited publication of the Department of Health’s report on its consultation on introducing FRC.




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Bills: solicitors given chance to revise claims

Bills: solicitors given chance to revise claims

The High Court was wrong to strike out a claim over unpaid fees brought by a firm of solicitors on the basis of alleged exaggeration and inaccurate sums, without hearing any witnesses, the Court of Appeal has ruled.

Lord Justice Vos said it was “most unsatisfactory” that Kevin Prosser QC – sitting as a deputy judge of the Chancery Division – had decided that a solicitor was lying and that other witnesses were untruthful without their being cross-examined.

“Of course, it can very occasionally be appropriate to conclude that there has been fraud without oral evidence being heard, but in this case the judge relied on forensic deduction in a case where oral evidence at least might [his emphasis] have put a different complexion on the allegations made,” he said.

Alpha Rocks Solicitors v Alade [2015] EWCA Civ 685 concerned bills in two separate matters, one for £131,514 and the other for £43,732.

Mr Prosser acknowledged that the step he was taking was draconian, but held that the abuses which he had identified both involved a serious misuse of the court’s procedure, rendered further proceedings thoroughly unsatisfactory, and created a serious risk that a fair trial of the claims would be impossible.

He found the deliberate exaggeration in the first bill to be 115 hours of work on trial bundles because the opposing party had prepared them. The judge rejected the evidence from one of the firm’s partners that it had prepared parallel bundles.

In relation to the second bill, the judge found that it was drawn up knowing it to be inaccurate in a number of respects as to the work done and the fee-earners in respect of whom charges were made, relying on the evidence adduced by the solicitors themselves from their costs consultant.

Overturning the decision, Lord Justice Vos, giving the lead ruling with which Lords Justice Fulford and Moore-Bick agreed, said: “It is perfectly apparent from a reading of the judgment itself that the judge forgot his own repeated warnings to himself about not conducting a mini-trial and about the draconian nature of what he was contemplating doing.

“He did conduct an inappropriate mini fraud trial without hearing any witnesses. He decided that a solicitor was lying and that other witnesses were untruthful without their being cross-examined. In my judgment, that was a most unsatisfactory state of affairs…

“Moreover, whilst the judge said that the abuses he had identified were a serious misuse of the court’s procedure, he did not consider whether it was proportionate to strike out the entirety of the claims… on the basis of alleged exaggerated and inaccurate claims amounting to no more than a relatively small percentage of them.”

Vos LJ acknowledged that the case against the solicitors on the preparation of the bundles “may look and have looked very bleak”, but said it was “not appropriate” to find that the bill was fraudulently exaggerated without cross-examination.

“Moreover, I cannot really see why the now admitted inaccuracies in the [other] bill cannot properly and fairly be dealt with on a detailed assessment.”

Vos LJ said Mr Prosser should have realised “that striking out was too blunt an instrument to deal with the heavily conflicting evidential accounts of the parties”.

He concluded: “Even bearing in mind the need for litigation to be conducted efficiently and at proportionate cost, I do not think that it was clear at the stage the proceedings had reached that the solicitors had forfeited their right to have an adjudication of their claims to the [fees] and a detailed assessment of their bills.”

He ruled that the solicitors should, in the light of the strike out arguments, be given an opportunity to reduce their bills if they wanted to and then the case should go back to a Chancery judge for directions.




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Barclay: discount rate mechanism has grown outdated

The new government has made clear that significant reform of the discount rate remains firmly on the agenda after the election.

In a speech this week to the Association of British Insurers, City minister Steve Barclay said the change in the rate earlier this year “concerns me, and I know it will concern many of colleagues in Parliament”.

Mr Barclay, also economic secretary to the Treasury, continued: “We are currently considering the responses to the consultation we’ve received… We want to make sure that the way the rate is set is put on the firmest possible footing in future, so that we have a better and fairer system for claimants and defendants.

“In doing so, we will keep true to the 100% principle: that a claimant is paid no less than they should be, and no more.

“In short, we have been consulting on moving away from a mechanism that has grown outdated and, with negative returns on interest-linked gilts, lost its connection with the way people invest in the real world.”

It is still not known if the Ministry of Justice will look to use the Civil Liability Bill – ostensibly about reform to small injury claims – as the vehicle for any legislative change required after the discount rate consultation.

Meanwhile, a recent High Court ruling shows that a negative discount rate can have negative consequences for claimants, according to Andrew Parker, head of strategic litigation at defendant firm DAC Beachcroft.

He said that in JR v Sheffield Teaching Hospitals last month, Mr Justice Davis held that the correct award for the cost of purchasing alternative accommodation suitable for the claimant’s needs was nil.

In an article about the case, in which DAC Beachcroft acted for the defendant, Mr Parker explained: “JR’s current accommodation was not suitable; the parties agreed that a new property should be purchased and adapted.

“If JR were awarded the full capital cost, he would be left with an asset that would appreciate in value and be realised by his estate on death, generating a windfall and over-compensating him.

“The correct approach to avoid over-compensation was provided by the Court of Appeal in Roberts v Johnstone, which awarded a sum equivalent to the loss of income that would be achieved if the capital used to purchase the property were invested in risk-free investments. In Wells v Wells in 1998, the House of Lords endorsed the use of the discount rate as the appropriate rate.

“The claimant in JR argued that a positive rate had to be used and suggested 2.5% (equalling more than the capital cost of the property), but the judge rejected that.

“He accepted that the logic of the discount rate being set at -0.75% was that the claimant could not obtain a real return above inflation from risk-free investment of his award, therefore the appropriate award for the loss of income from capital was nil.”

The claimant has been granted permission to appeal. He also commented that he had no evidence before him to consider any other approach. “Legal teams in other cases are no doubt considering whether to seek permission for such evidence,” Mr Parker said.

“However, the logic of Roberts v Johnstone still fits with the full compensation principle and should be upheld. Ultimately, legislation may be the only answer for those who seek a different approach.”

Mr Parker noted that responses from claimant bodies to the Ministry of Justice’s recent consultation supported a negative rate, but in JR the claimant argued that for other purposes the rate has to be positive.

“This is just one of the logic gaps surrounding [former Lord Chancellor Liz Truss’s] decision,” he said.

Meanwhile, car insurance premiums are set to rise by up to 29% by January 2018, according to ERS, the UK’s largest specialist motor insurer, with the lower discount rate a “key factor” in this.

It attributed £21 of the extra £60 it forecast standard car drivers would pay for their insurance to the discount rate change – taking the average premium to £360 – and £330 of the £720 extra a taxi driver can expect to pay, taking their premium to over £3,000.

Finally, a survey of 131 claimant personal injury solicitors found they were “resigned” to the discount rate moving back up, with the majority believing it will be adjusted to between 1% and 1.5%. Just 10% expect it to stay where it is now.

Commissioned by Bill Braithwaite QC, the research indicated that just 28% of respondents had settled future loss personal injury claims since the discount rate changed to -0.75%.

Mr Braithwaite said: “Claimant personal injury solicitors are pragmatic. Under pressure from the powerful insurance lobby, they believe the government will roll over and backtrack on its decision earlier this year.

“An adjustment to between 1% and 1.5% would be a compromise, face-saving position for the government to adopt – but it would be a backward step for justice.

“Claimants should not be expected to run investment risks with money which a judge has declared is essential to their future health and well-being – yet this will be the reality of their situation if the government moves the discount rate back up.”

Mr Braithwaite said the low level of settlements was a further cause for concern.

“Are insurers delaying settlement meetings in anticipation of the discount rate moving upwards when the government acts on the second consultation?”

He said that claimant solicitors were achieving successes under the new rate, however, with 80% of claims proceeding under the -0.75% rate.




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AIM: broker advisers investors to buy

AIM: broker advisers investors to buy

AIM-listed third-party litigation funder Juridica – whose share price has fallen by two-thirds over the past year in the light of some adverse rulings – has put itself into run-off, citing a lack of scale.

It will not make any new investments, but will provide more funding for existing investments where it is “reasonably required to realise shareholder value”.

The company “will seek to return capital to shareholders in the most appropriate manner, following the completion of investments”, and has begun a review to reduce its cost and fees while this happens.

It does not intend to dispose of assets ahead of their “reasonably expected maturity”, nor will it result in the liquidation of the company “in the immediate future”.

In a note published today, Juridica’s joint broker, Peel Hunt, said it could take “some years” for the portfolio to mature.

With an interim dividend of 5p per share also announced today, Juridica has so far returned 64p to shareholders over the life of the company, which was admitted to AIM in December 2007.

Lord Brennan QC, chairman of Juridica, said: “Both the board of Juridica and its investment manager acknowledge that scale and diversity are now required in order to invest successfully in this asset class, which is not achievable under the company’s existing structure.”

Trading at 150p a year ago, it began today at 51p, although the announcement has pushed it up to around 56p.

Juridica mainly invests in US cases. Earlier this week, Juridica told investors that a dispute over the theft of a trade secret had achieved a full win on liability, only for the jury to award a low level of damages that would see Juridica receive $2m. This compared with an original investment of $3.5m and the case valuation of $9.4m in the net asset value (NAV) at 30 June 2015. An appeal is being considered.

In June, the partial failure of an antitrust case in the US reduced Juridica’s NAV by $30m, knocking 10% of its share price.

Peel Hunt said: “Going forward we would expect dividends to be paid as and when cases crystallise into cash, subject to size and timing issues. Legal cases are unpredictable and it is difficult to take a portfolio approach when two anti-trust and competition cases account for 35% of fair value.

“To complete the bulk of cases could easily take one or two years in our view. The last two NAV moves included downward revisions to overall fair value, adding to investor uncertainty.”

Advising investors to buy Juridica shares, it put a target price on them of 70p. Soon after, RBS’s pension fund increased its shareholding substantially to nearly 10% of the company.




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RCJ: it’s all happening in court 1 today

Claimant lawyers’ hopes of derailing the government’s plan to cut RTA portal fees from £1,200 to £500 rest in court 1 of the Royal Courts of Justice today.

Defendant insurance lawyers have argued that Wednesday’s portal announcement by the Ministry of Justice was timed to defuse the arguments being put today in the judicial review brought by the Association of Personal Injury Lawyers (APIL) and Motor Accident Solicitors Society (MASS).

The hearing is listed for a day and a decision is expected this afternoon. The judges are Lord Justice Elias and Mr Justice Cranston, the latter of whom was one of Lord Justice Jackson’s assessors.

Tracy Head, a partner at Kennedys, said the timing of the announcement was “clearly a pre-emptive strike by the Ministry of Justice (MoJ)”.

She explained: “The publication of the impact assessment, demonstrating the lack of evidence arising out of the consultation, is designed to strengthen the MoJ’s position in advance of that hearing. The impact assessment is significant in that it signals the MoJ’s view that the new cost arrangements will not limit access to justice but will simply encourage what Chris Grayling refers to as ‘efficient and effective’ law firms.

“It will, therefore, be interesting to see the outcome of the judicial review hearing and whether there will be a further ripple effect of challenges to the now confirmed fixed costs regimes.”

Steve Thomas, director of market affairs at Keoghs, said justice secretary Chris Grayling had responded in part to the judicial review by asserting on Wednesday that a full evaluation of the existing scheme is not required to inform a decision about extending that scheme to £25,000.

“The uncompromising tone of the MoJ’s response indicates that they are intent on delivering these reforms for the summer,” he said.

More generally, Ms Head said that staggering the dates of the extended portal scheme will cause insurers some difficulties in the short term as they will be operating a number of separate regimes.

She added: “It is still disappointing that we do not know what the claim notification form for EL and PL claims looks like to assist with training of claims teams, who are going to need to be prepared to make quick decisions on liability.”

Mr Thomas said that Keoghs was still concerned about the level of costs for cases that fall out of the portal and “the ratcheting effect as those move towards litigation. We question how this will impact claimant lawyer behaviour and this will need to be closely monitored”.

With APIL and MASS not commenting on the MoJ announcement ahead of the judicial review, Nick Hanning, president of the Chartered Institute of Legal Executives, took up the gauntlet to express “profound disappointment” with the MoJ.

“The government has failed to listen to those who have experience and expertise in the area. The referral fee ban simply means that firms will have to pay for alternative forms of marketing and so to reduce fees by reference to a notional referral fee which many firms don’t even pay is completely unjustifiable,” he said.

“It is especially galling when, despite asserting there is difficulty in obtaining reliable evidence, the government has elected to ignore the very detailed evidence which was made available when the fixed recoverable costs were first introduced.”

Mr Hanning said the real losers would be clients: “The knock-on effect of these recommendations is that while some legal practices may be willing to take on cases, it will only be on the basis they are handled by very junior staff, who will have little or no training. Innocent victims of RTAs risk finding themselves either unrepresented or poorly represented and unable to access the expert legal advice they deserve and need.”

Law Society chief executive Des Hudson said: “It is disappointing to see that the views of those who disagree with the Association of British Insurers and the government are declared partial and biased by the Ministry of Justice. These changes will make it more difficult for those injured through the negligence of others to receive compensation.

“Will motor insurance premiums reduce or, more likely, will the profits of insurance companies increase?”




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Budgeting: Precedent R disregarded

A defendant who offered very low sums in their budget discussion report in the hope that the court may compromise in the middle of the polarised figures put forward by the two sides is guilty of “an abuse of the cost budgeting process”, a High Court judge has ruled.

Warning that budgeting is not “a game”, Mr Justice Coulson said he wanted his ruling published on Bailii “because of the critical need to ensure that the Precedent R process is carefully and properly adhered to”.

In Findcharm Ltd v Churchill Group Ltd [2017] EWHC 1108 (TCC), he said the introduction of Precedent R, which requires each party to comment on the cost budget of the other, has led to a “great saving” of judicial time, “because it has obliged the parties to adopt a realistic attitude to the budget of the other side, and has assisted in the identification of the real disputes between the parties on costs”.

But he continued: “However, even now, some parties seem to treat cost budgeting as a form of game, in which they can seek to exploit the cost budgeting rules in the hope of obtaining a tactical advantage over the other side.

“In extreme cases, this can lead one side to offer very low figures in their Precedent R, in the hope that the court may be tempted to calculate its own amount, somewhere between the wildly different sets of figures put forward by the parties. Unhappily, this case is, in my view, an example of that approach.”

The case involves an £820,000 claim by Findcharm, which operates a restaurant within the Churchill Hotel in London, over a four-month closure that followed a gas explosion.

Coulson J recorded: “In contrast to Findcharm’s detailed pleaded claim, Churchill’s defence could not be more basic. It is a combination of bare denials and non-admissions of the kind that the Civil Procedure Rules was designed to sweep away.

“It is, bluntly, an insurer’s defence straight out of the 1970s. For example, despite the fact that the explosion happened in its hotel, Churchill does not even formally admit the cause of that explosion.”

Findcharm’s budget was £245,000; through its Precedent R, Churchill offered less than £90,000.

The judge said: “In my view, Churchill’s Precedent R is of no utility. It is completely unrealistic. It is designed to put as low a figure as possible on every stage of the process, without justification, in the hope that the court’s subsequent assessment will also be low. In my view, therefore, it is an abuse of the cost budgeting process.”

Among the examples of “the lack of reality” in Churchill’s Precedent R were its offer of £5,300 for Findcharm to prepare three witness statements and consider Churchill’s two; Findcharm’s estimate was £40,235.

“[Churchill’s figure] is simply incredible in a case where, not only does the background and circumstances of the explosion need to be explained, but also where a large claim for loss of profits will need to be underpinned by detailed factual evidence.”

As a result, the judge said he was “obliged” to disregard Churchill’s Precedent R, and considered Findcharm’s budget to be both proportionate and reasonable.

Churchill’s own budget was just under £80,000. “Even on Churchill’s own case, it seems erroneous on its face,” Coulson J said.

“For example, it allows nothing at all for fire experts, even though at the CMC Churchill were arguing that causation was in issue and an expert was necessary. It also purports to estimate a sum of less than £7,000 for the preparation of a High Court trial. It is, therefore, on any view, an unrealistically low budget.”

However, Findcharm had, “not unreasonably”, agreed the Churchill’s budget and so Coulson J approved it.




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Pulford: deal strengthens our group structure and abilities

Leading legal expenses and insurance add-on specialist ULR Additions – which last year set up an alternative business structure – has been acquired by investment company 116 Cardamon Ltd.

It follows the retirement of the founder and chairman of ULR, the trading name of MotorPlus Limited.

Chorley-based 116 Cardamon’s business strategy is to invest and develop in the claims management industry, and ULR joins a group that already offers medical reporting (through Speed Medical), rehabilitation services and document signing facilities. The group now has a turnover in excess of £60m.

ULR Additions currently works with over 100 insurance brokers, providing in-house claims management and first notification of loss services. It also has a portfolio of 50 insurance add-on products in the motor, commercial, landlord, household and more specialist areas of insurance. In 2013 ULR turned over £19.4m.

The Norwich-based company set up its ABS so it could continue to handle small-scale work in-house following changes to the provisions on in-house lawyers in the SRA Handbook, and also to provide the legal advice helpline the company runs.

Graham Pulford, 116 Cardamon’s group managing director, said: “The acquisition of ULR Additions not only strengthens our group structure and abilities, but it allows us to come together with an already successful firm and assist them in the future developments of the company.

“We can now focus on combining all of our resources and abilities where necessary to grow and prosper in the claims management markets and further afield.”

Rob Kay, chief executive of ULR Additions, said: “The industry we operate in is still evolving and becoming increasingly more competitive. This was therefore a necessary change to remain a fundamental market leader of quality products and services and to grow to the level we wish to.

“Graham and his team bring market knowledge and experience to ULR Additions and with the now enhanced infrastructure combined with the support they offer I am satisfied the new shareholders will create a very powerful and exciting future ahead for all. The priority for me now is to ensure we develop successfully and as ULR Additions and 116 Cardamon Limited share the same values and similar philosophies, I am confident in the success of the whole team.”

Speed Medical is one of the biggest suppliers of medical reports and rehabilitation services in the UK. It was established in 1998 and has over 150 members of staff.




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Parliament: bill in ping-pong mode

The House of Lords yesterday reinstated two of the three amendments it previously passed on the government’s judicial review reforms as it emerged that Lord Chancellor Chris Grayling had given MPs incorrect information over a key aspect of them last week.

Peers supported Lord Pannick QC in amending clause 64 of the Criminal Justice & Courts Bill to give judges greater discretion over whether to reject a case if the defendant showed that it was highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred.

They also backed a change to clause 65 so as to allow judges to grant leave where “appropriate” to pursue a JR without details of how the case was being financed.

However, they rejected Lord Pannick’s bid to reinstate the previous change to clause 67 in favour of judicial discretion over granting costs orders against interveners. This came after the government reformulated the clause when it was in the House of Commons last week so that a costs order would not be made if certain conditions were met.

The bill is currently in its ‘ping-pong’ stage where two Houses try to reconcile the conflicting versions that they passed.

However, during the hour-long debate last week, Mr Grayling had suggested to fellow Conservative MP Geoffrey Cox – who was against the government’s position – that clause 64 included an ‘exceptional circumstances’ provision that gave judges discretion.

But in a letter to Mr Cox, Mr Grayling admitted that he had “inadvertently” got this wrong, indicating that he been confused by a similar provision in clause 67.

Without apologising for the error, he said: “It is my view that the clause does have a level of judicial discretion within the ‘highly likely’ test.

“I would like to make it clear that the clause as introduced strikes an appropriate balance, and that where there is any real doubt that there could have been a substantial difference for the applicant, the court will be able to find that the threshold had not been met and can grant permission to proceed with the judicial review.”

Peers criticised Mr Grayling for this error. Lord Woolf said he had “misled” the House of Commons, adding: “It is extremely important that the one member of the lower House who has a statutory responsibility of a particular nature with regard to the rule of law and the administration of justice should have made that mistake, because he dealt very summarily and quickly with the position which was before this House in some detail.”

Conservative Lord Cormack said: “The fact is that the House of Commons made its decision having been wrongly advised and made it in a very short space of time.”

Former Conservative Lord Chancellor Lord Mackay said: “I would like to see this amendment going back to the House of Commons, not necessarily to change the result – that is a matter for the Commons – but so that the debate should proceed on a basis that is 110% correct.”

The bill will now return to the Commons.




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Joanna Kingston-Davies, CEO at full-service law firm, Lees Solicitors, talks about how Proclaim helps to provide the ultimate in service delivery and client care.

About Lees Solicitors:

  • Full-service law firm with over 100 staff
  • Multi-disciplinary Proclaim solution used practice-wide
  • Committed to delivering excellent levels of customer service

 




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Polycarpou: new issue fee is heavy burden to bear

Polycarpou: new issue fee is heavy burden to bear

The rise in court fees this week has removed one of the standard objections to arbitration – that it costs more than litigation – and is likely to drive the take-up of this form of ADR, a City lawyer has argued.

While claimants face paying 5% of the value of their claim as a court fee, up to a cap of £10,000, the registration fee payable to the London Court of International Arbitration for starting an arbitration is £1,750, said Eleni Polycarpou, head of arbitration at Withers.

“Of course, there are other costs associated with arbitrations, most notably the fact that arbitrators charge an hourly rate whereas judges do not. Even so, the new issue fee is a heavy burden to bear so early in the proceedings, in circumstances where only around 3% of claims issued get to trial.”

She said the rush to issue claims last week indicated that parties regarded the new fees as a significant outlay.

“Of course, that in itself may cause problems to come: although the benefit of taking advantage of the reduced issuing fees is obvious, there is a danger that, by hastily issuing in such circumstances, solicitors may find themselves liable to costs orders against them where savvy defendants successfully seek an order for strike-out due to the premature issuing of a claim form.

“In the alternative, ill-informed clients unaware of the excessive increase may also seek to bring claims for negligence against their solicitors for not issuing their claim prior to the increase in the issue fee.

“Either way, it will drive potential litigants away from the traditional route of court proceedings and lead them to look to alternative means by which to resolve their disputes,” Ms Polycarpou said.




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RTA: review responses back change to prevent skewing of market

RTA: review responses back changes to prevent skewing of market

There should be a complete ban on pre-medical offers, claimant representatives have argued in responses to the government’s call for evidence on the MedCo portal, while insurers called for the regulation of medical reporting organisations (MROs).

But the Ministry of Justice’s call for evidence, part of the review of MedCo announced in July, which ended earlier this month, saw agreement on the need for changes to prevent the skewing of allocations of experts offered by MedCo to instructing parties, brought about by some large MROs registering multiple smaller companies.

Responding to the ministry’s call, the Association of Personal Injury Lawyers (APIL) observed that the audit and accreditation of MROs should have occurred before MedCo went live in April.

It argued that:

  • The definition of a “national” – that is, tier 1 – MRO should mean that it should not just cover sufficient postcodes, but that it should also be able to provide a medical report within 25 miles of the client within four weeks of the instruction;
  • An algorithm should be used in MedCo’s random selection of experts which “links the ratio of tier one and tier two MROs/experts offered for selection with the total number of tier one and tier two experts registered”. This would prevent market skew; and
  • Each expert selected should be accompanied by “an indication of quality and client care” offered.

APIL said there were insurers that still made offers to settle without a medical report, a practice that was “grossly unjust to the claimant” and should be subject to a “complete ban”.

In its submission to the MoJ, law firm Thompsons Solicitors, which said it spent over £15m on 20,000 medical reports in the year to July 2015, including those in relation to RTA cases, agreed with APIL on the ban, saying: “If the government is really interested in refining a system to the benefit of the consumer – the claimant – not the corporate entities in the market, it should outlaw pre-medical offers with immediate effect. Instead the consultation paper talks merely of ‘discouraging pre-medical offers to settle’.”

The Association of British Insurers (ABI) argued that MROs should be subject to independent regulation, because MedCo was ill-equipped for the role and was currently being forced to act as a “pseudo regulator”.

It continued: “The dysfunctional behaviour witnessed has almost exclusively emanated from MROs in their attempts to undermine the system of random allocation for their own commercial gain.”

The ABI said the statement of financial links made by registering MROs should be widened to prevent connected businesses from appearing in random allocations of experts. But there should be no adjustment to the existing formula for ‘offers’ by MedCo at this point, until the question of multiple registrations was resolved.

Litigation Futures revealed recently that MedCo had started to sanction some MROs for breaches of registration conditions.




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PrintOne of the most prestigious events within the legal sector, the Law Society Excellence Awards celebrate brilliance and outstanding achievement across a range of areas from pro bono to technology to marketing and communications; and this year Harmans are very proud to have been recognised in the business development category.

The announcement, made on Wednesday 5 August, shortlisted the costs firm in the business development category for its innovative app Costs Expert.

Costs Expert is a bespoke mobile application which features the first ever interest calculator for the costs industry.

The app, available on both iPhone and android, is free to download and acts not only as a valuable industry resource but also as a tool to help solicitors with their everyday workload.

Matthew Harman, partner, says: “It’s absolutely fantastic to be shortlisted for the Law Society Excellence Award and is testament to all the hard work that went into developing Costs Expert. We set out to improve our client service, at no extra cost to clients, and to be recognised by the Law Society for achieving this is so rewarding.”

Winners will be announced at the awards ceremony in London on Thursday 22 October.

Download Costs Expert now –

iPhone version: https://itunes.apple.com/gb/app/costs-expert/id875061911?mt=8

Android version: https://play.google.com/store/apps/details?id=com.andr.harmans




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Insurer: late allegation of fraud

Insurer: late allegation of fraud

An insurance company which was dilatory in dealing with a personal injury claim and only alleged fraud after default judgment had been entered has been refused relief from sanctions by the Court of Appeal in a decision it acknowledged may seem “harsh”.

Lord Justice Vos said: “In my judgment, Mitchell and Denton represented a turning point in the need for litigation to be undertaken efficiently and at proportionate cost, and for the rules and orders of the court to be obeyed.

“Professional litigants are particularly qualified to respect this change and must do so. Allegations of fraud may in some cases excuse an insurer from taking steps to protect itself, but here this insurer missed every opportunity to do so.

“It admitted liability before satisfying itself that the claim was genuine, perhaps because it mistakenly thought the claim was a small one. That does not excuse the months of delay that then followed. The insurer must in these circumstances face the consequences of its own actions.”

In Gentry v Miller & Anor [2016] EWCA Civ 141, the claimant appealed that Mitchell and Denton should be applied so as to refuse to set aside the default judgment and damages judgment against UK Insurance Ltd.

After the judgments had been entered against the defendant, the insurer contended that the two parties to the accident actually knew each other and alleged fraud.

District Judge Henthorn concluded that “claims of alleged fraud are the one type of claim which should now be exempt from the strictures of the current CPR rules and the views of the Court of Appeal in Mitchell and other recent cases”.

Balancing the windfall to the claimant if the judgment was not set aside and the claim was fraudulent, against the delay in getting paid if the claim was genuine, he decided that the interests of justice required the default judgment to be set aside, the defence having reasonable prospects of success.

On appeal, Mr Recorder Gregory found the decision within the judge’s ambit of discretion, ruling that the applications to set aside were, in context, made promptly by the insurer once it had the relevant information available.

Moreover, he decided that the insurer had shown that it had a good reason for not attending the disposal hearing and had a reasonable prospect of success at trial.

But on second appeal to the Court of Appeal, it was accepted that the district judge should not have considered that allegations of fraud provide an exemption from Mitchell and Denton, meaning the Court of Appeal had to reconsider the matter.

Giving the judgment of the court, Vos LJ found that the insurer did not promptly apply to set aside the default judgment; indeed, “it delayed inexcusably”. Going through the Denton test, it was common ground that the breach was serious or significant, and while there was some reasonable excuse for the failure, it was not “complete”.

On the final limb of the test, he said that “insurers are in a particularly good position to conduct litigation efficiently and proportionately and to comply with rules and orders”.

As a result, the appeal succeeded. “This is a case where the insurer will have to pursue what remedies it can by way of a new fraud action,” Vos LJ concluded.




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Budsworth: reforms not aimed to help boost the profits of insurers

The government’s “reasoned approach” to whiplash reform is encouraging, the Motor Accident Solicitors Society has said.

The Ministry of Justice announced yesterday that its response to the whiplash consultation will be delayed until after the transport select committee inquiry’s on whiplash has concluded, and to assess the full impact of the LASPO reforms on the motor insurance industry before making further changes to the system.

MASS chairman Craig Budsworth said: “This is something that MASS has long been calling for. It is vital that we understand the full implications of the LASPO reforms and address any unintended consequences for consumers before further change is considered. The present reforms bring down costs and will help tackle fraud and a full assessment of the changes should show that there is no need to take Draconian measures such as raising the small claims limit.

“As part of this assessment we are pleased to see that the government will be looking at whether or not the reduced legal costs in the system are being passed on to consumers. These changes were designed to help individual policy holders in these difficult times, not to help boost the profits of insurers. We are encouraged by this reasoned approach from the Ministry of Justice.”

MASS has also estimated that the insurance industry will collectively save as much as £1.4bn from the LASPO reforms and challenged the insurance industry to commit to passing all of the savings onto their customers via reduced insurance premiums.

The figures are based on the government’s estimate of 828,000 RTA claims a year. Assuming average costs of £2,500 for RTA claims (adopting Aviva’s figure), this represents a success fee saving of £375 per claim (including VAT), leading to £310m.

MASS’s estimate for an average after-the-event (ATE) insurance premium across all RTA claims is £500; around half are run under before-the-event cover, leaving the other half under ATE, meaning £207m.

The revised costs will reduce recoverable costs by around £850 (£1020 when VAT is included). Assuming this saving will apply to all RTA claims, the saving for at-fault insurers will be in the region of £844m.

Mr Budsworth said: “It was great to hear Chris Grayling challenging the insurance industry to bring down premiums last week. For too long, the ever rising cost of motor insurance has been attributed to legal costs. We must all now look to the insurance industry.

“Legal costs have been falling for 10 years and the reforms introduced last month mean that legal costs are going to fall even further. Premiums may have dropped slightly last year, but the change pales in comparison to massive hikes we have seen in recent years and the healthy profits being made across the industry.

Citing the Confused and Towers Watson Car Insurance Price Index, MASS said premiums fell by 5.6% in the first half of 2012, having risen by 38% in 2011.




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ARAG 200x200ARAG Legal Services has again been voted best Legal Expenses Team of the Year and Managing General Agents Team of the Year at the 2016 Underwriting Service Awards, held at the Montcalm Hotel in London, last week.

The awards are presented following a detailed insight study which gathers the opinions of UK commercial and specialist broking professionals to determine the companies delivering the best service in different areas of the insurance market.

Leading legal expenses and assistance provider ARAG retained the MGA team award, after winning it in 2015, and has achieved an unprecedented fourth successive title in the legal expenses team category, having won the award every year since 2013.

“There is always something a little special about winning one of these awards”, comments David Haynes, head of underwriting and marketing at ARAG “because they directly reflect the opinions of our peers and partners in the insurance industry.”

“We have always believed that providing a better quality of service, regardless of changing commercial pressures, sits at the very heart of our success. That has to be as true for the service we provide to our business partners as it is for the service we give to their clients. It is truly gratifying that our efforts don’t go unnoticed and have been recognised again.”

Now in their sixth year, the Underwriting Service Awards are organised by Incisive Media, publishers of Insurance Post, which has been providing news to the UK insurance industry since 1840, and its monthly sister title Insurance Age.




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Pipkin: a most positive decision

Pipkin: a most positive decision

AmTrust Europe has acquired well-known legal expenses insurer Composite Holdings Limited from its existing shareholders for an undisclosed sum.

Headquartered in Cardiff, Composite, through its subsidiaries Composite Assistance and Composite Legal Expenses, provides insurance and administration services to insurance companies, brokers and affinity groups.

Max Caviet, president and CEO of AmTrust International, said: “The acquisition of Composite represents a significant step forward for AmTrust Europe in establishing ourselves as a leading market for legal protection insurance products in the UK.

“We have provided underwriting capacity to Composite for the past four years and this acquisition marks a natural step in the evolution of our relationship. We are also delighted that Composite’s senior management team will be remaining with the business.

“The combination of the skills and experience within Composite and AmTrust makes for a compelling and exciting business going forward.”

Meanwhile, Temple Legal Protection has reported that its post-LASPO premium for clinical negligence cases has been ruled fully recoverable by Master Leonard in the Senior Courts Costs Office.

In Nokes v Heart of England Foundation NHS Trust, the insurance policy was taken out by Ms Nokes to cover the costs of expert reports for her claim. Temple reported that Master Leonard found the policy was fully compliant with the statutory requirements and the premium of £5,680 + IPT was reasonable and proportionate.

David Pipkin, director of underwriting at Temple, said “This is a most positive decision from an experienced member of the judiciary which will comfort the thousands of victims of medical accidents who, without ATE insurance funding, would be unable to pursue their claims.

“It is important there should be some certainty that ATE insurers can obtain reasonable returns in what is a very risky area of litigation.”

POSTSCRIPT

We have now reported the Nokes judgment in full. Click here.




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High Court: Privilege extends to documents that ‘evidence’ legal advice

The High Court has ruled that a set of litigation funding documents were protected by privilege because they inferred the substantive legal advice that had been given in the underlying dispute.

Mr Justice Morgan rejected the submission that “the possibility that one could infer the substance of a party’s legal advice from a document did not suffice to make that document privileged”.

He also said that it was “not part of our law as to disclosure that every conceivable stone must be turned over”.

The arguments arose during unfair prejudice proceedings brought pursuant to section 994 of the Companies Act 2006 and concerning leading hotel company Edwardian Group.

The petitioners own approximately 20% of the shares in the company and want to be bought out. One of the acts of unfair prejudice they allege is the removal of one of the petitioners as a director in July 2009.

However, the petition was presented more than six years later, and the first respondent argued that, because of this, the petitioners should not be granted any relief.

One of the reasons the petitioners gave for the delay was that they spent five years “actively but unsuccessfully” seeking funding to commence the litigation.

The respondent wanted to see proof of this but the petitioners either did not provide the relevant document or heavily redacted them on disclosure, arguing that they revealed “directly or indirectly the nature, content or effect of privileged communications”.

Morgan J said it was clear that this head of privilege was not confined to communications between lawyers and clients, but extended to other material which “evidences” the substance of the communications.

The test to apply, he concluded, was laid down in the 1884 case of Lyell v Kennedy, restated by the then Lord Justice Bingham in Ventouris v Mountain in 1991.

Bingham LJ said: “The ratio of the decision is, I think, that where the selection of documents which a solicitor has copied or assembled betrays the trend of the advice which he is giving the client the documents are privileged.

“[Counsel] for the plaintiff put this forward as an exception to what he claimed was the general rule, that non-privileged documents do not acquire privilege simply by being copied. If the ratio I have given is correct, the authority is consistent with the fundamental principle underlying the privilege.”

Morgan J said he could also “derive assistance” from Australian cases, which drew a distinction “between a case where there is a definite and reasonable foundation in the contents of the document for the suggested inference as to the substance of the legal advice given and merely something which would allow one to wonder or speculate whether legal advice had been obtained and as to the substance of that advice”.

Applying this to the facts, Morgan J – who had not seen the documents – said the description of the documents provided by the petitioners’ solicitor “would satisfy the test set in Lyell as to giving a clue as to the legal advice given and the test in Ventouris v Mountain as to betraying the trend of the legal advice”.

He added: “I also consider that [the] description of the basis of the claim is on the right side of the line between documents from which a party’s legal advice can be inferred and documents which allow one to wonder or speculate as to whether legal advice had been given and as to its possible substance.”

Thus he rejected the application for an order.

He also rejected an application relating to the disclosure of documents from the petitioners’ former solicitors, Magwells.

Morgan J said: “The information before me as to the Magwells Documents does not allow me to form a clear view on many of the large number of disputed matters of fact.

“Overall, I think it is likely that disclosure of all of the Magwells Documents would result in massive duplication of documents which have already been disclosed by one or other of the parties and that any new documents which might be disclosed would be few in number.”

Morgan J added: “I recognise that this means that in relation to disclosure there may be a stone which has been left unturned. However, it is not part of our law as to disclosure that every conceivable stone must be turned over.”

Morgan J said he was “not persuaded” that the petitioner’s solicitor had “not properly applied the test for privilege” when making the redactions, “although it is possible that he has not done so”.

He went on: “Therefore, I am not ‘reasonably certain’ that the claim to privilege has not been properly made.

“In addition, I consider that if it appeared that [the solicitor] had not correctly carried out the redaction exercise first time around, the court might not (on the ground of proportionality) require him to carry it out a second time.

“The advantage to the respondents of the redaction exercise being reviewed and redone is likely to be slight. Further, the time between now and the trial in January 2018 is limited and it would be very undesirable to lose the trial date to allow time for a second redaction exercise to be carried out.”




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Posted by Carolyn Holmes of Litigation Futures sponsor TheJudge

Settlement: will part 36 rules encourage more?

Kain Knight recently hosted a seminar to discuss the Jackson reforms and the effect they will have once implemented, via the Legal Aid, Sentencing and Punishment of Offenders Act (LASPO), in April.

Although this meant much of the seminar discussed various hypotheses, the explanations given by the keynote speakers helped to provide clarity on a number of issues surrounding the reforms. The seminar also confirmed the general consensus that there are areas of the reforms which remain shrouded in uncertainty.

Simon Browne QC from Temple Garden Chambers gave an extremely helpful breakdown of the effects of section 55 of LASPO on part 36 offers. Mr Browne said “the present rules aren’t being changed, they are simply being added to”, and that they “create additional benefits to a claimant due to the sanctions on a defendant in certain scenarios”.

For example, if a claimant matches or beats their own part 36 offer at trial, then the court may award an additional 10% of damages or 10% of costs to the claimant (subject to a cap). The policy reasons behind this are to encourage the defendant to make reasonable part 36 offers and for more cases to settle before trial.

Of course, the current risk of having to pay the defendant’s costs would still 1D0-420 apply if that offer was not exceeded or matched. Yet, given that some after-the-event (ATE) insurance policies can cover failure to beat part 36 offers, perhaps this might not be such a strong deterrent after all.

What Mr Browne made clear is that the transitional provisions, which as yet are unknown, will be vital as to whether this reform is a success in practice.

Richard Banks of Kain Knight discussed the effect of qualified one-way cost shifting (QOCS), which are not part of LASPO but requires amendments to the Civil Procedure Rules. From April onwards, QOCS will apply to personal injury and clinical negligence litigation. It means that a successful claimant will be able to recover their costs from an unsuccessful defendant; however a defendant cannot recover costs from an unsuccessful
074-679 claimant, subject to the following exceptions:

  • If claimant is found to be fraudulent;
  • If the claim is struck out; and/or
  • If claimant has failed to beat a defendant’s part 36 offer.

Therefore, although QOCS was designed to reduce the need for ATE insurance in personal injury and clinical negligence litigation, there is still a risk that claimants could be liable for adverse costs. Without adverse costs insurance, there is a concern that we may see claimants accepting a part 36 offer at a significant undervalue. Consequently, many providers are creating products which will cover this risk. Although ATE insurance premiums will no longer be recoverable, the reasonable pricing of premiums will enable claimants to protect themselves from significant adverse costs orders.

The points raised by this seminar highlight the importance of knowing what products will be on the market after April to cover part 36 risks. At the moment, we are waiting to hear what insurers will offer in terms of coverage and how they will set the premium rates.




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Allianz Legal Protection

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Allianz Legal Protection is one of the longest established providers of Legal Expenses Insurance (LEI) and services in the UK. Our expertise in delivering legal expenses solutions can be evidenced through the varied distribution channels in which we operate. These include the many insurer partners, Financial Institutions, Affinity Partners and solicitors with whom we have successful, long term relationships. We are committed to providing you with: Best in class service and customer experience from a proven and trusted legal expenses partner.

Key Features:
Delegated and bespoke facilities available.  Deferred premium, provide own capacity.

Underwriter rating: AA




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Gordon-Saker: sanction proportionate to breach

Gordon-Saker: sanction proportionate to breach

The Senior Costs Judge has refused to grant relief from sanctions to two claimants in the MGN phone hacking case who delayed in providing notice of funding.

Master Gordon-Saker’s decision in Various Claimants v MGN Ltd [2016] EWHC B29 (Costs) is the latest in a series of notable rulings to have come out of the case, which saw an initial group of claimants awarded substantial damages for breach of privacy.

The first cases against MGN started before 1 April 2013, so the pre-Jackson rules applied. This meant that a party who entered into a funding arrangement before proceedings had to give notice of funding when the claim form was issued. Failure to do meant they could not recover additional liabilities for the period until they did, unless the court ordered otherwise.

The two claimants who gave notice of funding late were Nicola Horlick and Alan Yentob.

Mrs Horlick’s solicitors gave notice in relation to the after-the-event (ATE) insurance policy on 10 September 2014, the day after the policy was purchased, but failed to give notice in relation to the conditional fee agreement (CFA) with her solicitors until 20 November 2014. The agreement had been entered into on 24 June 2014 and proceedings were issued on 13 August 2014.

Mr Yentob entered into a CFA on 30 September 2013. The letter of claim was sent on 18 March 2014 but notice of funding was not given until 17 April 2014.

In support of their applications, they said the defendant was aware at the material time that all of the claimants were pursuing the claims under CFAs.

They also submitted that neither default was serious nor significant, and even though there was no good reason for them, they submitted that it would be just to grant relief.

Master Gordon-Saker said: “These were specific rules which required a party who had entered into funding arrangements to give notice of those arrangements to the other party. The reason for that is obvious: the funding arrangements may well have a significant impact on the amount of that other party’s liability for costs.

“These rules were well understood. Notice had to be given at the earliest opportunity if the arrangements were entered into before the start of proceedings and, otherwise, when proceedings were issued. It seems to me that a failure to give the required notice must always be serious and significant unless it is given within a very short time after the time at which it should be given.

“Having regard to the requirements of the rules generally a failure to serve a document until one month or three months after it should have been served is not likely to be treated as insignificant, particularly where the rules provide for an automatic sanction for default.

“The failures to give notice in time would appear to have been the result of oversight and no good reason for the failures was advanced.”

He continued that the failures did not prevent the parties from conducting the litigation efficiently or at proportionate cost “but nor would the interests of justice be imperilled if relief were not granted”.

The master considered the sanction proportionate to the breach. “If relief is not granted, the solicitors would be denied success fees on the value of their work done over the one and three-month periods respectively.

“The claimants would still be entitled to their reasonable and proportionate base costs for work reasonably done over those periods. The sums lost are likely to be relatively insignificant. Because of the failure to comply with the practice directions, court time and the parties’ resources have been spent on an application to disapply the sanction. Accordingly the applications for relief from sanctions are refused.”

Master Gordon-Saker was also asked to deal with other issues around success fees, ATE premiums and hourly rates. On the latter, he had “no hesitation in concluding that, in the present case, rates higher than the guideline rates were reasonable”.

This was on several grounds: the damages were substantial – “and, in many cases, significantly more than the previous highest award in a privacy case”; the claims involved some complexity and required specialist skill, not only because of the nature of the case but also because of the nature of the opponent; and, more than anything, because of the importance to the claimants.

“It seems to me that some of the rates claimed are nevertheless too high. Taking into account all of the circumstances and based on my experience of comparable (though not similar) cases, in my judgment a reasonable rate for a grade A fee-earner undertaking this work would be £400. For a grade B fee-earner, £280 would be reasonable; £230 would be reasonable for a grade C fee-earner and £140 would be reasonable for the grade D fee-earners.”




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Brown: Cases insured under the post-LASPO regime are settling successfully with increasing frequency

Posted by David Brown, ATE underwriting manager at Litigation Futures Associate DAS UK Group

Despite post-LASPO after-the-event insurance (ATE) policies being more relevant now than ever in terms of access to justice, their premiums receive criticism.

But in the case of clinical negligence claims, LASPO explicitly allows for partial recovery of an ATE premium to protect against the risk of a claimant becoming liable for expert reports which address the issue of liability.

In the context of increasingly aggressive challenges to ATE insurers’ underwriting methodology, last week’s Court of Appeal judgment in Peterborough & Stamford Hospitals NHS Trust v McMenemy & Ors [2017] EWCA Civ 1941 has reaffirmed a number of key principles that underpin the basis on which ATE insurers operate. This should help increase understanding of a product that some may find esoteric.

Firstly, the court confirmed the decision in Callery v Gray ((No 2) [2001] EWCA Civ 1246 by ruling that it is reasonable for a claimant to purchase ATE insurance at the same time as entering into a conditional fee agreement with their solicitor.

It also stated that the degree to which it is reasonable to seek ATE should not be examined on a case-by-case basis, which leads to another important principle arising from this decision: most, if not all ATE insurers, adopt a ‘block-rated’ approach to assessing their pool of risks rather than individually calculating premium for a single risk.

Doing the latter would substantially increase premiums, resulting in the irony of further costs challenges on grounds of price and proportionality.

The fundamental point is that, to date, the courts have been satisfied with insurers adopting this approach, which was validated by the Court of Appeal in Rogers v Merthyr Tydfil CBC [2007] 1 WLR 808.

When cases are singled out in the media as involving an ATE premium labelled as high, they clearly fail to take into account all of the factors that influence price. McMenemy has brought the principles of Rogers into the post-LASPO costs regime.

A little further background might assist here: The majority of claimants pursuing a claim for clinical negligence require expert evidence to prove that they have a viable case. This expert report is the only cost for which LASPO allows a claimant to recover an ATE premium; it was one of the few recoverable premiums to survive from the pre-LASPO costs regime and was left in place to ensure that claimants continue to have access to justice.

After all, expert evidence can be expensive and there is no guarantee of it being supportive, despite the rigorous prospects assessment undertaken by a claimant’s solicitor.

With legal aid now all but abolished for such cases, ATE insurance is inevitably sought. In the event that the chosen expert cannot support an intended claim, it will likely come to an end at that point – often before the opponent is aware of a claim being brought against them.

When those cases fail, the ATE insurer suffers the ‘double whammy’ of paying a claim and receiving no premium. This point cannot be emphasised enough and is the reason why attempting a to draw a crude correlation between an ATE premium with a claimant’s award of damages is seldom appropriate, regardless of the new rules governing proportionality of costs.

The point should also be made that it is commercially prudent for an ATE insurer to only work with solicitors with a proven track record and expertise in this area of litigation. That said, being exposed to early losses during the investigation stage is part of the reality of clinical negligence litigation and these losses are factored into premiums.

Put simply, in order for an insurer’s rating model to be sustainable, the insurance premium needs to be recovered in full. A climate in which ATE insurers sustain frequent reductions in premium may mean they begin to question their continued appetite to write these risks, with ensuing implications for justice.

But as already indicated, insurers genuinely have no appetite to set rates at a level that would attract high levels of challenge from opponents. It would result in additional cost and delays in recovery which would only make their proposition less attractive to their target market; it would be self-defeating to do so.

Cases insured under the post-LASPO regime are settling successfully with increasing frequency and ATE insurers have seen this coincide with a rise in premium challenges. The decisions in McMenemy and also BNM v MGN should provide encouragement to claimants and their solicitors, as well as their ATE insurer.

However, these judgments are not the end of the story. The practical application of the decision in BNM remains to be seen, and the market also awaits the outcome of a further Court of Appeal judgment concerning post-LASPO clinical negligence ATE premiums due in 2018.

But, for the moment at least, the outlook is encouraging; at least it is for those who are enthusiastic about access to justice and a sustainable ATE market.




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Laird: ingrained values

Laird has just had its best month in terms of numbers of instructions since its inception in 2000. Given that, little over a year ago, there were grave concerns surrounding the industry and we realised we had some tough times ahead, this has been no easy task.

We wanted to share our story to highlight the importance of quality service and excellence in all that a firm does, from its internal culture right through to the service it offers its customers.

We’ve sponsored numerous industry events over the past couple of years and have spent a considerable amount of time (and money!) with our suppliers, industry professionals and customers – listening and talking to them, in the hope that we could take nuggets of information that would help us build a solid wall against the imminent legislative changes.

We continued attending the events and listening to the speakers, but one thing became very clear: no one could predict what was going to happen. We came to the conclusion that we would just have to decide the ground we were going to fight on if we were to survive.

There is a value disciplines model by Treacy & Wiersema that suggests in business there are three generic value disciplines that a company must choose from and act upon consistently and vigorously in order to become a market leader. In order to be successful, you have to choose your value, stand by it and excel in that value. Everything within your firm should reflect that decision.

We chose to continue with ‘customer intimacy’, the value that Laird Assessors was founded upon. Customer intimacy is about excelling in customer attention and service – tailoring your products and services to individual customers, providing a seamless customer experience and providing reliability, real value and exceeding expectations.

Laird has never been the cheapest in the industry, but then neither has BMW, renowned for being the ultimate driving machine. We have always offered an outstanding service, an efficient process for our customers and above all, an excellent, accurate product.

We make it easy for our principals to instruct our experts, their customer journey is seamless through the use of sophisticated IT systems and we provide an unrivalled after-sales support service. We continually look at ways we can add value to our customers – which essentially means making their experience quicker and more efficient.

Not only that, but we have worked hard to make sure these values are ingrained in the internal culture of the business. We love helping charity and participating in events, because yes, we help the wider community, but we also believe that they help develop our internal culture of going above and beyond what is just expected of you.

I don’t know if anyone has read the book by James Kerr, Legacy, 15 lessons in Leadership, but I would recommend it as a great read. The book is ‘what the All Blacks can teach us about the business of life’.

The start of the book talks about the Hakka: “Often, by the time the Hakka reaches its crescendo, the opposition have already lost. For rugby, like business and like much of life, is played primarily in the mind.”

We believe in our mindset and culture that we are the best in the business with the best reports, best customer service and best team, and our current figures are reflecting that. Let’s all choose the ground we’re fighting on and win!




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Djanogly: seeking input on appropriate level of revised costs

The RTA portal will be extended to claims worth up to £25,000 in April 2013, the Ministry of Justice (MoJ) has confirmed as it began the process of reducing the level of fees paid to claimant lawyers under it.

The planned expansion of the portal to include employers’ and public liability cases will not happen before April 2013 “at the earliest”, an MoJ spokesman added.

Among the other changes mooted in the MoJ’s recent response to the Solving disputes in the county courts consultation – which was criticised for being light on detail and a timetable – new rules on enforcement will come in this October, while expansion of the small claims mediation service is “unlikely” before April 2013.

The changes to legal aid and civil costs contained in the Legal Aid, Sentencing and Punishment of Offenders Bill are also due to come into force in April 2013.

In a letter sent yesterday to stakeholders, justice minister Jonathan Djanogly said the review of fees was prompted by the plans to extend the portal, the referral fee ban and the Jackson reforms. At the recent Number 10 insurance summit, Prime Minister David Cameron confirmed that the portal fees would go down as a result.

Mr Djanogly said he was writing to get input on “what an appropriate level of revised costs would be”, and whether and how the current scheme needs to be amended to cover public and employers’ liability.

Among the specific questions he asked were the reasons why claims have exited the RTA scheme and any ways this might be addressed, and what types of employers’ and public liability claims lend themselves to a standardised and streamlined process.

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He added: “Because of the specialist nature of the information I am seeking, and because we have recently conducted a full consultation on some of these issues, I have decided not to conduct a full public consultation.”




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Henley: strong economic motives

Henley: strong economic motives

Claimant solicitors are struggling to admit conflicts of interest which require them to stop acting for car passengers when they are also acting for the driver, a specialist barrister has claimed.

Mark Henley, a personal injury barrister at Zenith Chambers in Leeds, said a number of his recent cases have highlighted the problem, which has continued despite the ban on referral fees due to the “strong economic motives” that still encourage solicitors to try and act for both.

Writing recently on Zenith’s PI blog, Mr Henley said that as soon as primary liability is disputed in a claim, the solicitor needs to ask whether there is a conflict of interest in continuing to represent both the driver and passengers in the same vehicle.

“The key question which the solicitor has to ask at this early stage is whether there is any conceivable chance (however slight) that a passenger could fail to establish any liability against the driver of the other vehicle, and, at the same time, that the court could find that some element of blame rests with the driver of the passenger’s own vehicle.

“If there is any such chance, then the passenger cannot rely solely on a claim against the other driver [and] needs to bring claims, in the alternative, not only against the driver of the other vehicle, as first defendant, but also against the driver of their own vehicle, as second defendant.”

This would mean the driver’s solicitors could not also act for the passenger.

Mr Henley said: “By way of example from my own recent cases, I have had to reassure one solicitor that there was no conflict of interest involved in continuing to act for both driver and passengers where primary liability is admitted and the only allegation made is that the alleged passengers were not present in the vehicle, and to point out to another solicitor that there is a conflict of interest involved in continuing to act for both driver and passengers where it is alleged that the driver had deliberately caused the accident by braking sharply and without any reason.”

The barrister said there were “still strong economic motives encouraging claimant road traffic solicitors to remain reluctant to admit conflicts of interest which require them to ‘let go’ claimant passengers, in vehicles where they also represent the driver”.

He explained: “Even if referral fees have no longer changed hands, the structure of fixed costs, for road traffic cases which exit the portal, make claims with multiple claimants unusually lucrative as every claimant is entitled to the sum of fixed costs.”

Mr Henley concluded by warning: “A reluctance to grasp the nettle where there is a conflict of interest can leave solicitors being sued by their own clients, as innocent passengers who have failed to bring a claim against the only driver found at trial to be to blame for an accident.”




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Hurley: NHLSA "foot dragging"

Hurley: NHLSA “foot dragging”

The NHS Litigation Authority (NHSLA) has until the end of next month to settle cases and avoid paying extra tax on ATE premiums, a leading insurer has warned.

Paul Hurley, director and head of ATE at ARAG, said the firm would be charging insurance premium tax (IPT) at the higher rate of 9.5% from 31 January 2016.

The increase from 6% was introduced on 1 November this year, but under the rules litigants can avoid paying at the higher rate where the policy was issued before that date.

From 1 March 2016 all IPT must be paid at the higher rate, and Mr Hurley said premiums must be remitted to ARAG by 31 January 2016 to allow enough time for them to reach HMRC before the deadline.

In medical negligence cases, which benefit from an exemption to LASPO, most of the ATE insurance premium is payable by the NHSLA when the case is settled, rather than being taken from claimants’ damages.

Mr Hurley, said the NHSLA’s delaying tactics might make it liable for tax at the higher rate.

“Defendant solicitors should warn their clients of the additional liability they are risking if  the premium is not paid at the conclusion of a clinical negligence case,” he said.

“Obviously this is money that is coming out of the public purse and rather than using delaying tactics without extremely good reason, then quite simply they should be settling the cases more quickly and saving the taxpayer money,” he said.

Mr Hurley said he “could not speak for the competition, but I am sure we are all in the same boat. The [NHS Litigation Authority] I’m sure are dragging their feet in settling cases, so it wouldn’t just impact us.”

He estimated that the additional liability could amount to “many thousands of pounds” if the situation was replicated across the country.

David Pipkin, director of the underwriting division at legal expenses insurer Temple Legal Protection, agreed that in certain circumstances “delay could result in higher insurance premium payments”, although this would “depend on the historical way in which the providers have dealt with the revenue”.

Another problem, he said, was the 8% annual interest that was being run up on the whole bill, which could amount to “an appreciable sum” if it resulted from defendants “significantly obstructing the bill”.

In October, a leading broker warned that solicitors failing to deduct and pay the correct amount of IPT after the budget increase may find that insurers charged them the balance.

An NHSLA spokesman said it was “aware of the change in [IPT]”, adding: “However, this does not influence our decision to challenge ATE insurance premiums where this challenge is deemed appropriate.”


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The misleading claims behind the campaign to lower the discount rate

Matthew Best Temple Legal Protection

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

February 9th, 2018