New MR: full steam ahead with Jackson, but watch out for risks posed by ABSs

Dyson: costs management is key

There is no doubt that the Jackson reforms will begin as planned in April 2013, the new Master of the Rolls, Lord Dyson, confirmed yesterday in his first speech since taking office.

Meanwhile, the judge underlined risks posed by external investment in alternative business structures. He warned that if legal regulators and others treated the issue with complacency, it could lead to a “crisis in the provision of legal services” comparable to the recent failure to regulate the financial system.

Lord Dyson described costs management as the “key” to the success of the Jackson reforms and urged the Court of Appeal to maintain consistency and “speak clearly” through its judgments on the application of the revised Civil Procedure Rules in order to minimise satellite litigation. But he nevertheless predicted “a lot of early cases testing the boundaries of the new rules”.

Speaking at a civil litigation conference at the Law Society in London, Lord Dyson, who took up his post on 1 October, said that even after just over two weeks in office, “the enormity of the civil justice reforms has become immediately apparent to me”.

He observed that the “legal landscape today bears little resemblance to the landscape I first encountered when I started out… at the end of the 1960s”. This “period of unprecedented change” involved the convergence of the Jackson reforms, the Legal Aid, Sentencing and Punishment of Offenders Act 2012, and the Legal Services Act 2007.

He commented that reductions in legal aid and “inevitably an increase in the number of self-represented litigants will produce increased pressure on the courts as well as all sectors of the state, operating as all of us have to do with a reduced budget”.

The civil justice reforms were taking place “against a background of far-reaching reforms to the structure of the legal profession”, he said. The potential for external investment in law firms “may be a benign development”, or it may “present in practice a real risk to the public interest”, namely that “the external investor will set the parameters of practice in their favour rather than in the consumer’s best interests or the public interest”.

Lawyers, regulators, representative bodies, the courts, and the government should take “a great deal of care to ensure the risk is properly managed” and not ignore the issue or treat it with complacency. Drawing a parallel with the financial crisis, he pointed out that “a complacent attitude to inherent risk” had contributed to it. “We cannot afford a similar crisis in the provision of legal services,” he warned.

On the Jackson timetable, Lord Dyson said he had heard “some whispers to the effect that it may not be possible to complete the legislative process by April.” He added: “Let there be no doubt about it, the reforms will come into force next April.”

The successful implementation of the Jackson reforms hinged on the Court of Appeal, which “will need to speak clearly through their judgments in explaining how the reforms are intended to operate”.

He continued: “If the Court of Appeal fails to provide consistent guidance, then no-one will be surprised if that breeds more litigation. A lack of clarity and consistency on its part will only generate confusion in the county courts and the High Court, and amongst the profession, and ultimately it will undermine the aims of the reforms.”

The judge also insisted that “consistency of approach will also be important where costs management is concerned… It would not be an exaggeration to say that from my perspective costs management is the key to the Jackson reforms. If it succeeds the reforms will succeed. If it doesn’t, then we run a heavy risk that costs will unnecessarily and otherwise avoidably increase and the reforms will fail”.

If the Jackson reforms or the wider legal services reforms produced “unexpected flaws and consequences”, it was essential that further changes to the civil justice system were carried out rather than “maintain a slavish adherence to the reforms”. But changes would only be made “on the basis of proper evidence”.

Lord Dyson concluded: “I do not want to give the impression that I do not have faith in the reforms. It might seem that I am already expecting disaster. That is very far from the case. But one has to be realistic.”



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