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Martenstyn: Ambitious strategy

The seemingly inexorable growth of Burford Capital continued yesterday after strong half-year results sent its share prices soaring.

The AIM-listed third-party funder’s shares leapt 16% yesterday to an all-time high of 1896p

A recent Legal Futures analysis of listed legal businesses showed that Burford has been a stand-out performer for investors.

Having been 121p at the end of 2014, it was 193p 12 months later, 573p at the end of 2016, 1152p when 2017 drew to a close, and hit 1498p at the end of last month.

Burford saw its income up 17% in the first half of 2018 to £156m, with profit after tax increasing similarly to £126m.

Other financial highlights were that earnings per share increased 21% to 58p, and cash generation grew 61% to £227m.

This upward spiral has led to substantial demand for capital, and it made record new investment commitments of £410m in the first half of 2018, compared to £373m in the same period last year. Total assets were up by more than a third to £1.24bn

Burford chairman Sir Peter Middleton said: “Burford has experienced another stellar half-year, setting new records for income and profit. Burford continues to set the pace for a growing industry, in its scale, product development and risk-adjusted returns.”

CEO Christopher Bogart added: “The expansion of the litigation finance industry continues, with more demand for our capital, growing opportunities for us to invest, continued vigilance in investment selection, and another increase in our profits.

“This past half-year affirms the trends we’ve increasingly set for more than eight years, with Burford’s superior growth reflected in rising scale relative to longstanding competitors.

“The simple fact that we committed half-a-billion dollars to new investments in the first half of the year, historically our slower period, fills us with excitement for the continuing potential of the business.”

Meanwhile, fellow third-party funder Vannin Capital has named Paul Martenstyn as its new managing director. He joins from Fountain Court chambers, where he is deputy senior clerk.

Vannin Capital CEO Richard Hextall – who himself only joined from global insurer and reinsurer MS Amlin earlier this year – said: “Having spent more than 20 years immersed in the world of chambers and litigation, Paul has established himself as a highly astute commercial partner.”

Paul Martenstyn added: “Vannin is clearly on an upward trajectory, with an excellent reputation in legal finance and an ambitious strategy to capitalise on the continued growth of litigation funding internationally.”

Earlier this month, Vannin opened an office in Bonn, its first in Germany and ninth globally.




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Brennan: being resolute is the prudent way forward

International litigation funder Juridica has announced a gross cash profit of $38m (£25m) for 2012 – up almost 200% from the previous year.

The AIM-listed funder boasts a portfolio of anti-trust, patent and commercial claims, and saw its profits grow from $13m in 2011.

Juridica is chaired by Lord Brennan QC of Matrix Chambers and operate in both the US and the UK.

The results for the 2012 calendar year showed the proceeds came from final settlements in two cases, partial settlement in several cases with multiple defendants, and recovery of expenses related to an antitrust case.

It also recorded four successful verdicts, and two judgments that were favourably affirmed on appeals.

These investments took between two-and-a-half years and just over four years to be determined.

Juridica invested $5.6m in four existing cases – two of which signified a substantial percentage increase in potential proceeds; a third which helped a case advance through “additional legal effort”, and a fourth which represents a multi-party pre-litigation settlement opportunity.

Lord Brennan said: “[Juridica] is showing how things should be done in a very competitive and sensitive field. Despite the economic downturn in both the US and the UK, we have proven that staying on course and being resolute is the prudent way forward.”

Richard Fields, chairman and chief executive of Juridica Capital Management Limited, the investment manager of Juridica Investment Ltd (JIL), said: “I am confident in the strength of our existing portfolio of claims and believe that we will see significant activity on these claims during 2013.”

The funder has now generated proceeds of around $87m since its inception five years ago and is predicting further “significant cash returns” for its shareholders in the next 12 months.

Juridica’s portfolio is heavily weighted towards antitrust and competition. It does not back shareholder class actions, personal injury, product liability, or mass tort claims.

Its accounts show that since Juridica was founded, it has put in $24m to eight completed investments, paying back $40m, whereas the $107m it has invested into six partially settled cases has yielded $47m.

Juridica currently has 16 investments representing 21 different cases or legal actions.

It has one investment of $97m into six antitrust cases, eight separate investments in patent cases, totalling $34m, and seven individual investments into commercial cases, amounting to $18m.




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Dan Bell, IT Manager at Chadwick Lawrence

Heavyweight Yorkshire practice, Chadwick Lawrence, has implemented the Proclaim Practice Management Software solution from Eclipse Legal Systems.

With 7 offices across the West Yorkshire region, Chadwick Lawrence employs 250 staff and provides a full range of legal services to both corporate and private clients.  Founded in 1840, the practice has a rich history and has expanded both organically and through acquisition to position itself as the go-to firm in Yorkshire.  To cement this position, and as part of a strategy to implement superior client service, Chadwick Lawrence is rolling out Proclaim for its personal injury and conveyancing teams.

A total of 70 staff will utilise Proclaim, including the practice’s financial accounting team.  To provide practice-wide management information, the firm will be utilising the Proclaim Data Warehouse.  The Data Warehouse tool enables Chadwick Lawrence to amalgamate Proclaim data with data from its other departmental software systems – to be manipulated and utilised as one core data repository.

As part of the solution, the personal injury team at Chadwick Lawrence will be using Proclaim’s direct integration with both the EL / PL (Employer and Public Liability) and RTA (Road Traffic Accident) Portals.  For client self-service, the firm has rolled out Eclipse’s FileView online matter tracking solution.

Dan Bell, IT Manager at Chadwick Lawrence, comments:

“In the current climate it is vital to build the very best levels of client service into our processes.  At the same time, building automation and standardising our matter management means that fee earners can really focus on value-adding work, without getting tied up in administration.”

 




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Stark: demoralised group of people

Claimant personal injury lawyers have painted a grim picture of what life will be like after the Jackson reforms, with less work, redundancies and firms looking to move away from this type of work.
Nobis Jackets Men

A snapshot survey conducted by the Association of Costs Lawyers also found strong opposition to government plans to extend the RTA claims process to higher-value and other PI cases.

Some 78% of the 50 respondents predicted that they would have less work after part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 comes into force next April, with 84% believing it will reduce their profitability too – most (90%) expect competition to drive down success fees once they are no longer recoverable from the losing side. More than two-thirds (70%) think the reforms will make their firms less willing to take on riskier cases.

There was uncertainty about who would pay for after-the-event insurance if it is needed – 28% said the client, 24% the solicitor and 38% reckoned it would be a mixture of the two.

Some 62% of firms expect to make staff redundant as a direct consequence of the Jackson reforms, while 28% did not know at this time – only 10% said for sure that they would not. Nearly six in ten firms (58%) are now looking to move away from personal injury and diversify into other areas of law.

On the RTA claims process, the majority (72%) said that it falls short in some areas (22% said it delivers what it is supposed to). Asked what improvements or changes they would like to see, 32% wanted it easier to use, 22% higher fixed costs, and 16% for fewer cases to fall out – the majority of respondents (54%) said that between a quarter and a half of cases they deal with fall out of the process, which is consistent with other findings.

Four in five solicitors opposed both vertical and horizontal extension of the process, citing the increased complexity of such cases as the main reason and the fact that one size cannot fit all; the lack of an insurer database was also highlighted in relation to employer’s liability claims specifically.

A third of respondents said they were likely to move to contingency fees/damages-based agreements for non-portal cases once allowed under the Act.

Iain Stark, chairman of the Association of Costs Lawyers, said: “It is easy for the public and policymakers to be indifferent to the impact of the Jackson reforms on claimant lawyers, but the responses to our survey indicate a demoralised group of people who will not be able to hold open the door so that injured people can access justice.

“It is often said that, like water, lawyers will find a way to continue, but at what cost? As one respondent said: ‘Lower fees means less-qualified fee-earners representing clients and less compensation recovered. The actual cost of providing the professional Rolls Royce standard service which clients expect will be out of proportion to the Mini costs recoverable.’”




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Petyt: only the very largest firms of costs lawyers will thrive

Leading costs firm Kain Knight has begun its plan to consolidate the market by acquiring Quantum Costs.

London-based Quantum is a chambers-style business set up in 2005 by former barristers’ clerk Nicholas Clark, who has a network of 10 costs lawyers around the country. It also has a Liverpool office.

Quantum, which mainly handles insurance-based work but some commercial as well, will continue to trade under its own name for the immediate future and maintain its network of lawyers. Mr Clark will remain with the business and also take on a business development role targeting high-value commercial work for the Kain Knight group.

Last month new Kain Knight chief executive Peter Petyt unveiled plans to grow the firm from a £6m business to one with a turnover of £12m-15m through five or six acquisitions.

Mr Petyt said Mr Clark’s “expertise, dynamism and contacts adds considerably to the strength of our London team”.

He added: “Quantum Costs is the first in a series of acquisitions Kain Knight will be looking to make around the country. We believe, post Jackson, that only the very largest firms of costs lawyers will thrive in this new marketplace, therefore we are firmly on the acquisition trail.”

Mr Clark said the shift in the costs market away from personal injury and towards budgeting meant he wanted to be aligned with a practice that could deal with heavyweight commercial litigation.




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Accident

New rule will “send strong message” to claimants

The government believes its new ‘fundamental dishonesty” rule could lead not only to the number of personal injury claims being reduced but may “have some form of deterrent effect” against exaggeration, it has emerged.

The rule, contained in clause 45 of the Criminal Justice and Courts Act, would require courts to dismiss claims in their entirety where the claimant had been ‘fundamentally dishonest’, unless this would cause substantial injustice.

In a recently published impact assessment on the new rule, the Ministry of Justice (MoJ) said the change would “send a strong message to claimants that if they act in a fundamentally dishonest way there is a greater probability that they will lose all compensation”.

The MoJ went on: “The government anticipates that this will reduce the number of fundamentally dishonest PI claims, and the associated costs of paying compensation, which are met by insurers and by bodies such as the NHS which are not insured.

“In addition, as a behavioural response, the government expects that other PI claims may be exaggerated less, again leading to lower compensation paid by defendants.”

Clause 45 was added to the Act at a late stage and initially met some spirited opposition in the House of Lords, before peers relented and let it pass.

The assessment said the government does not record data on the number of claims involving ‘fundamental dishonesty’ and the MoJ accepted that only a “small number of claims” would be considered by the courts to fall into this category.

“In the absence of a firm body of evidence to the contrary, it has been assumed that, overall, the amount of legal work required to settle claims in future will remain broadly the same, both on the part of defendants and claimant lawyers.

“It could be that less work is required to resolve some claims in future if the claim appears to defendants to be less exaggerated and if defendants accept the claim with less discussion and negotiation. Conversely it could be that claimant lawyers devote more resource in future to demonstrating that a claim is honest.”

The MoJ said the government had made “no assumption” about the “aggregate reduction in compensation paid” as a result of some settlements being lower.

However, it added: “The government believes it is reasonable to consider that the increased prospect of a claim being dismissed with no compensation paid at all may have some form of a deterrent effect on other cases.”




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Napier: contingency fee working party to report by end of July

Implementation of the Jackson reforms is set to dominate the work of the Civil Justice Council (CJC) in the coming year, its newly published 2012/13 business plan has shown.

Top of the agenda at the moment is the advice being given to the Ministry of Justice (MoJ) on the operation of qualified one-way costs-shifting, with an announcement from the MoJ – along with publication of the report of the CJC working party, chaired by Berrymans Lace Mawer partner Alistair Kinley – due either this week or next, Litigation Futures understands.

The contingency fees working party chaired by Michael Napier, which is looking at issues of principle and practice to underpin the introduction of damages-based agreements, is due to report by the end of July.

The CJC’s other two Jackson-related pieces of work are a review, chaired by HHJ Graham Jones, of the raft of pre-action protocols, with a view to making recommendations for reform that promote consistency of approach in the protocols; and work on publishing an ADR Handbook, the aim of which is “to ensure better and more consistent ADR services and to improve client application of the value and nature of ADR services”.

The CJC’s other work includes a review, chaired by District Judge Margaret Langley, of whether senior Fellows of the Chartered Institute of Legal Executives should be entitled to claim automatically the same hourly rates as solicitors with comparable post-qualification experience. This will then go to the Master of the Rolls, who is also awaiting a report from the MoJ’s advisory committee on civil costs about whether the guideline hourly rates need changing.

The other projects on the CJC’s agenda are: a review of the protocol on expert evidence; its working party on access to justice for self-represented litigants (the new name for litigants in person) pursuing those recommendations from its report on the issue which do not require legislative change; and a study of the present state of ADR education at university level and in vocational training courses.




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Court of Appeal: judges should not recuse themselves too readily

The Court of Appeal has overturned the ruling of a High Court judge who recused himself from committal proceedings that relied on his own previous findings – which the defendant argued made him at least appear biased.

Mr Justice Eder had decided – “with extreme reluctance” – that although the claims of bias were groundless, they were so serious “that the appropriate course is that I should recuse myself”.

He was due to hear committal proceedings against George Urumov, who in the substantive trial was one of several defendants found to have conspired to defraud his employer, Otkritie.

Otkritie launched proceedings against both Mr Urumov and other defendants for contempt. Those proceedings include an application for the committal of Mr Urumov to prison (or other relief) for a range of matters, two of which required High Court permission to pursue.

Mr Urumov – by this stage acting for himself – applied to the judge to recuse himself from the hearing of the application for permission on five grounds of either apparent or actual bias, including that “a fair-minded and well-informed observer would think that the judge had already decided the committal application against Mr Urumov in the light of the many adverse findings in the judgment”.

Having recused himself, Eder J gave Otkritie permission to appeal, saying not only it Otkritie had a real prospect of success but also that he would welcome his decision being overturned.

Lord Justice Longmore, giving the decision of the Court of Appeal in Otkritie International Investment Management & Ors v Urumov [2014] EWCA Civ 1315, said that contrary to Eder J’s reasoning, there was “a consistent body of authority to the effect that bias is not to be imputed to a judge by reason of his previous rulings or decisions in the same case (in which a party has participated and been heard) unless it can be shown he is likely to reach his decision ‘by reference to extraneous matters or predilections or preferences’. There can be no suggestion that Eder J would proceed in the present case by reference to such matters”.

He noted that Eder J applied the observation in Locabail (UK) Ltd v Bayfield [2000] QB 451, that if there is any real ground for doubt, that doubt should be resolved in favour of recusal. “But he does not explain what the real ground for doubt is in this case. The judge specifically said… that the allegations of bias are ‘groundless’ and ‘spurious’.”

Further, the fact that the matter could be dealt with by another judge of the Commercial Court – which was Eder J’s third ground for recusing himself – was not a good reason.

Allowing the appeal, Longmore LJ said: “Usually this court will be astute to support judges exercising what I have called ‘this delicate jurisdiction’ of recusal. But it is also important that judges do not recuse themselves too readily in long and complex cases otherwise the convenience of having a single judge in charge of both the procedural and substantial parts of the case will be seriously undermined.”




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Cath Townley, case manager of the year

Proclaim CARE is delighted to announce that our very own Cath Townley was awarded Case Manager of the Year 2013 at the recent CMSUK annual dinner in London. Congratulations to Cath.  One of the other finalists was another Proclaim CARE case manager, Sue Mosiezny. Congratulations to Sue for also making it through the final nominations.

It was a very proud night for Proclaim CARE and marks another milestone in our history.

There were numerous testimonials for both Cath and Sue from Insurers, Solicitors, Clients and treatment providers.  Below are just some of the testimonials that Cath received:-

Solicitor Testimonial

“This was a case of serious orthopaedic injuries as a result of a motorcycle accident which would have long term significance.  Nothing was too much in terms of assistance for our client, he felt emotionally supported and empathy from early on and he grew in confidence with Cath as his case manager.   I believe she is an asset to her company and it ought to be recognised that she goes the extra mile”

Client Testimonials

“I feel that due to Cath’s knowledge, skills, experience and personal qualities she has helped me to return too full physical, mental and emotional health and most importantly returned to work and continue my life as it was before my accident.  I cannot thank her enough”.

“Could you please pass on my sincere thanks and gratitude to Cath Townley for all the help, advice and care she has given to me to assist my recovery following my accident.   She is a true professional and a great ambassador for your company”.

Insurer Testimonial

Cath quickly and comprehensively identified the rehabilitation needs of this client, both upon initial instruction and as the rehabilitation progressed and additional requirements arose.  She has initiated, co-ordinated and monitored all of the investigations and treatments promptly and with the clear goal of minimising the impact of a serious accident upon this client’s life.




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Cameron: warned of impact on public purse

A coalition of six leading business groups has called on Prime Minister David Cameron to make permanent the exemption from the Jackson reforms currently applied to insolvency litigation.

The bodies warned that said that ending the exemption on 1 April 215 could cost creditors over £160m per year – “with rogue directors the big beneficiaries” because only the largest creditors would be able to afford to pursue litigation.

The letter – also sent to Chancellor George Osborne, business secretary Vince Cable and justice secretary Chris Grayling – was signed by the Institute of Credit Management, the British Property Federation, the Institute of Chartered Accountants in England and Wales, the Association of Chartered Certified Accountants, the Institute of Chartered Accountants Scotland, and insolvency trade body R3.

The government indicated only last month that it would not rethink ending the exemption in the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which means at the moment that successful claimants operating under conditional fee agreements (CFAs) can still recover success fees and after-the-event premiums from defendants.

The letter said the change is “anti-business, will increase tax avoidance and evasion, and will benefit directors of insolvent companies who have committed fraud or behaved recklessly.”

It was R3 research earlier this year that estimated the loss to creditors, including HMRC and small businesses, at £160m if the exemption is ended, and the letter said that the current funding regime also protects the public interest and public money.

“We are concerned that the government has not carried out a review of this policy nor provided a sufficient explanation as to why insolvency litigation will not receive a permanent exemption. Officials from HMRC and the Ministry of Justice have asked that alternative funding regimes are found to replace the current regime; but academic research shows that there are no satisfactory alternatives.”

The R3 research said 78% of CFA-backed insolvency litigation returns up to £100,000 for creditors, which it claimed would be too small to attract third-party funding.

Giles Frampton, president of R3, said: “Quite rightly the government has stressed the importance of cracking down on directors who misbehave, but it’s these directors that will be the big winners from the end of insolvency litigation’s Jackson exemption. Creditors – including the taxpayer and small businesses – will be the ones who lose out.

“The government’s commitment to ending the exemption is misguided. The decision flies in the face of the available evidence and there has been no impact assessment on insolvency litigation.

“Insolvency litigation does everything the Jackson reforms were designed to protect. It’s in the public interest, it keeps legal costs down, and it protects public funds. It makes no sense for the exemption to end.”

Earlier this month, the High Court ruled that the Ministry of Justice had not properly reviewed its much-criticised decision to end the exemption from the Jackson reforms for mesothelioma cases.




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Royal Opera House: No reported cases of acoustic shock

A viola player whose hearing was damaged during a rehearsal of Wagner’s Ring Cycle at the Royal Opera House (ROH) can claim damages for “acoustic shock”, the High Court has ruled.

Christopher Goldscheider is believed to be the first person in the music industry to have made a successful claim for acoustic shock.

Mrs Justice Nicola Davies said: “The concept of acoustic shock is relatively new and thus far primarily associated with reports emanating from call centres. Mr Jones, the defendant’s expert who retired from clinical practice some five and a half years ago, was dismissive of the concept.

“I do not regard the absence of reported cases of acoustic shock amongst professional musicians as being determinative on this issue of causation. Medical learning and knowledge is an evolving concept.

“The description of acoustic shock, namely an index exposure to any sound or cluster of sounds of short duration but at a high intensity reflects and is consistent with the evidence of the claimant as to the playing of the principal trumpet at or close to his right ear.

“The sound or sounds would have been unexpected because the claimant had only his own musical part in front of him, the trumpet player had his own part.”

The High Court heard in Goldscheider v the Royal Opera House Covent Garden Foundation [2018] EWHC 687 (QB) that Mr Goldscheider, aged 45, began playing the violin at the age of five and the viola from about 21. He studied in Prague and the UK, and in 2002 he joined the viola section of the orchestra of the ROH.

He was seated “directly in front of the brass section of the orchestra during a rehearsal of Wagner’s Ring Cycle” in September 2012 when the injury occurred, which had “prevented his return to music”.

The musician alleged that the ROH had breached its obligations under the Control of Noise at Work Regulations 2005, along with other regulations and its common law duties.

“Having played in orchestras throughout his professional life, the claimant was used to noise but the sensation from so many brass instruments playing directly behind him, in a confined area, at the same time at different frequencies and volumes, created a wall of sound which was completely different to anything he had previously experienced.

“The lack of space and the proximity of the trumpets to the claimant’s ears meant that he was in the brass section’s ‘direct line of fire’. It was excruciatingly loud and painful. His right ear was particularly painful because the principal trumpet was directed at that side of his head.”

Nicola Davies J said was “not uncommon” for musicians playing in the orchestra of the ROH to complain about noise levels and different methods have been used to attempt to reduce them.

She said that in its defence, the ROH said there was nothing in the “extensive available guidance” to suggest that acoustic shock was a recognised risk for musicians of which it should have been aware. There has never been a case of acoustic shock in the music industry.

The ROH argued that its conduct should “reasonably have been governed by the risk of established conditions, namely noise-induced hearing loss associated with long-term exposure”, or the risk of “acoustic trauma”, associated with peak exposure in excess of 135 decibels.

Nicola Davies J said the ROH claimed that exposure at around 90 decibels, the level experienced by Mr Goldscheider would only be expected, on a daily basis, to “cause a small amount of noise-induced hearing loss after a period of 10 years” and there was “no foreseeable risk of injury posed by such a level of exposure in the context of a single day’s rehearsal, particularly when hearing protection was worn”.

The ROH provided the claimant with “custom-moulded earplugs” shortly after he joined in 2002, fitted by a specialist in Harley Street. Additional foam earplugs, which gave greater protection, were provided at the entrance to the orchestra pit.

However, Nicola Davies J concluded: “I am satisfied that the noise levels at the afternoon rehearsal on 1 September 2012 were within the range identified as causing acoustic shock.

“The index exposure was the playing of the principal trumpet in the right ear of the claimant whether it was one sound or a cluster of sounds of short duration.

“It was that exposure which resulted in the claimant sustaining acoustic shock which led to the injury which he sustained and the symptoms which have developed, from which he continues to suffer.”

Nicola Davies J gave judgment for the claimant, with damages to be assessed.




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RCJ

Kitchin LJ: “Far too late” to re-allocate case

A claimant who took a credit hire case from the small claims court all the way to the Court of Appeal must pay her own costs because the defendant insurer’s behaviour was not “unreasonable”, appeal judges have ruled.

The only ways Louise Conlon to claim her costs would be for the court to rule under CPR 27.14 that the defendant, Royal Sun Alliance (RSA), had behaved unreasonably, or for the case to be reallocated to the multi-track.

Lord Justice Kitchin said he could see “nothing unreasonable” about the RSA’s behaviour. “The claim was properly allocated to the small claims track and RSA defended it as it was entitled to do,” he said.

“The deputy district judge had a wide discretion as to how he dealt with the hearing and, in accordance with the rules, conducted it in a relatively informal way, no doubt in an attempt to arrive at a just decision but at proportionate cost.”

Giving the leading judgment in Conlon v Royal Sun Alliance [2015] EWCA Civ 92, Kitchin LJ said that, following Ms Conlon’s appeal, both sides were represented at Bradford County Court by junior counsel, where the judge “derived a good deal of assistance” from them.

Lord Justice Kitchin said it was only when Ms Conlon appealed again, and the parties were told that the case would be listed with Stevens v Equity Syndicate Management [2015] EWCA Civ 93, which resulted in a major credit hire ruling, that it was clear that the small claim was being treated as a test case.

The judge went on: “Until that time it had treated the claim in just the same way that it would have treated any other low-value claim proceeding in the small claims track.”

Having considered its position, the insurer “decided that it had no wish to incur the associated costs of engaging further with the substantive issues arising on the appeal” and made two offers to Ms Conlon, both on the basis that it would pay the amount she claimed, but not her costs.

“I am satisfied that was a perfectly reasonable and responsible course for it to have taken and I do not believe it can be criticised for so doing,” Kitchin LJ said.

He also rejected the argument that the case should be re-allocated to the multi-track under CPR 26.10.

Kitchin LJ said it was “implicit” in CPR 46.13, that if that occurred, the court could backdate the re-allocation for costs purposes, as long as there were “good reasons”.

However, he said it was “far too late” to make a re-allocation order in this case, and the application for re-allocation was made four months after the filing of notice of appeal.

Lord Justice Kitchin dismissed the application for re-allocation and made no order in respect of the costs of the claim, including the latest appeal. Lord Justices Jackson and Floyd agreed.




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Gordon-Saker: Stretch QOCS as far as it will go

The Senior Costs Judge has called on the Law Society to remind personal injury solicitors of their obligation to undertake individual risk assessments in low-value cases and not just apply a blanket 100% success fee.

Master Gordon-Saker also called for a broad extension of qualified one-way costs shifting (QOCS).

He was speaking at last week’s Civil Justice Council seminar on the government’s post-implementation review of part 2 of LASPO.

Master Gordon-Saker said: “One of the unintended consequences of LASPO is that there is a growing industry in challenging solicitor and own client bills, in part because a surprising number of solicitors seem to think that the success fee payable under the CFA by the client is fixed at 25% of the damages and that there is absolutely no need to make any assessment of the risk or to apply the resulting percentage to the base costs that were actually incurred.

“I think that the Law Society could do a bit of educating on that but I also think now may be the time to review the Solicitors Act 1974 and in particular part III, which deals with remuneration.”

The 100% success fee model is under scrutiny following a High Court ruling in March that said solicitors still needed to undertake individual risk assessments before setting the success fee.

In its evidence, the law firm involved, Hampson Hughes, said that, like most of the market, it had adopted a post-LASPO model of routinely charging a 100% success fee, capped at 25% of the damages.

The issue will be debated at our PI Futures conference on 18 September in Liverpool.

Master Gordon-Saker said he would extend QOCS “as far as it will go”.

He explained: “Recoverable ATE premiums were introduced because legal aid costs protection was lost. Now those ATE premiums are no longer recoverable, QOCS needs to fill the gap that was filled before ATE by legal aid costs protection.

“There is no reason it should not be extended to, for example, claims against the police or to claims for professional negligence where the claimant is of modest means. There is scope for means-based QOCS.”




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Slade J: Master Rowley “erred in principle”

The High Court has demanded that further cuts be made to costs of over £1.6m claimed by Eversheds, overruling a costs judge.

Mrs Justice Slade said the amount claimed by Eversheds from litigation client Mark Harrison was 4.8 times higher than the firm’s first estimate and about 2.9 times more than a second.

Slade J said that while an estimate was not the same as a quote, Master Rowley had “exceeded the broad measure of his discretion” in considering a reasonable upper limit on profit costs to be twice as high as the second estimate.

“In my judgment the award by Master Rowley of an increase of more than £300,000 in profit costs above those anticipated in the second estimate required explanation and justification.

“Master Rowley erred in principle in relying on the level of the increase in the profit costs of his opponent’s solicitors when nothing was known about the assumptions, advice and information on which it was based.”

Slade J said the master had also erred in the way he calculated the costs of Mr Harrison’s opponent, Lord Laidlaw, which failed to take into account that the first allocation questionnaire figure was net of VAT and the second final figure included VAT.

“The increase was therefore wrongly inflated. Master Rowley based part of his assessment of the figure it was reasonable for the claimant to pay on a mistake.”

The court heard in Harrison v Eversheds [2017] EWHC 2594 (QB) that Mr Harrison was invoiced for just over £1.6m net of VAT for representing him in a property dispute with Lord Laidlaw. The total was made up of over £863,000 in profit costs and over £739,000 in disbursements.

Slade J said the first estimate given by Eversheds in October 2012, including billed profit costs, came to £333,000. By February 2013, an allocation questionnaire provided by Eversheds showed that this figure had increased to £548,000.

In October 2013, Mr Harrison was provided with an estimate showing that profit costs had risen to £692,000 net of VAT. In a Precedent H produced in January 2014, the total for profit costs and disbursements had increased to over £1.6m. The case was settled in March 2014 on a confidential basis.

In a decision in November 2016, Master Rowley ordered that the defendant’s profit costs be limited to £650,000 plus VAT but did not limit disbursements.

Slade J said counsel for Eversheds and Mr Harrison agreed on the legal principles to be applied in the case.

“The overarching question is the sum which it is reasonable for the client to pay. A solicitor is not restricted to an estimate. An estimate of costs is not a quotation.

“A client is not required to establish an estoppel before reliance on an estimate is to be taken into account in assessing costs. In determining what is reasonable for the client to pay the costs judge is to have regard to the estimate. An estimate of costs is not a quotation.”

A quotation was an offer which is accepted, the judge emphasised. “An estimate is what it says. It gives an idea, which from a professional firm can be taken as reasonably and carefully made taking into account all relevant considerations, of what the future costs of work on a case is likely to be.

“A solicitor cannot be held to be restricted to recovering the exact sum set out in an estimate. However, a client is entitled to place some reliance on the estimate. The nature, degree and reasonableness of that reliance will no doubt be one factor in the view taken on an assessment under section 70 of the Solicitors Act 1974 of how much more than the estimate it is reasonable for the client to pay.”

Slade J said of the final total of over £739,000 for disbursements, counsel’s fees amounted to £476,500, experts to £167,600, and accountants to £65,000.

She said that Master Rowley erred in “relying upon the fact that the claimant did not include counsel’s fees in the CFA as a reason for not making an overarching reduction in counsel’s fees” and the fact these fees were outside the CFA “did not absolve the master from considering whether it was reasonable” for Mr Harrison to pay £476,000.

Slade J concluded that Mr Harrison’s first ground of appeal, that Master Rowley “erred in taking the second estimate as the starting point for what costs could be recovered” should be dismissed.

However, she upheld the second ground, that the Master erred in holding that (subject to the impact of the CFA) it was reasonable for the defendant to recover profit costs which were up to double the amount stated in the second estimate.

Slade J upheld the third ground, that Master Rowley should have limited the recovery of disbursements, in respect of counsel’s fees only. Detailed assessment of the defendant’s profit costs and counsel’s fees was remitted to Master Rowley for determination.




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Heining: fit-for-purpose education

The Legal Services Board (LSB) has approved a significant revamp of the costs lawyer qualification.

The proposal from the Costs Lawyer Standards Board (CLSB) followed a comprehensive review of its qualification regime.

To qualify as a costs lawyer, students need to pass the three-year course and undertake three years of supervised practice; most ‘earn and learn’ at the same time.

As well as revised aims and objectives, changes include examinations at the end of each year, rather than just the last year, a marking regime that now allows for passes with merit and distinction, and credits indicating depth of study.

The first two years of the course covers all the fundamental building blocks to become a costs lawyer – from knowledge of procedure to ethics and advocacy – while in the third year there are options to allow for specialisation. Students have to study three of five modules covering personal injury/clinical negligence, land law, family law, criminal law and company/commercial law.

A statement from the CLSB said: “The CLSB, despite its small size, was well and truly ahead of the game in that it both identified and actioned changes needed in advance of the Legal Education and Training Review report even being issued. This CLSB-led initiative now provides a firmer and targeted educational platform for the future of the profession.”

Murray Heining, chairman of the Association of Costs Lawyers, said the new regime “will ensure that the many students looking to enter the costs profession have an up-to-date and fit-for-purpose education”.

However, the LSB has rejected the CLSB’s application to regulate trainee costs lawyers, finding that the regulator had not produced sufficient evidence that it was a proportionate response to the issues identified.

The CLSB said that as most trainees work while they study, they should have to abide “by the same level of professional expectation as their fully qualified colleagues”.

It would have added another 286 people to those currently being regulated, an increase of approximately 50%.

The LSB focused in particular on the argument that because trainees could in some circumstances conduct reserved legal activities – such as appearing in court if they had the judge’s permission – they should be regulated. It said that as “no problems have been reported for trainee costs lawyers representing clients in court, an across-the-board requirement on all trainees as a class cannot be justified”.

The CLSB said: “The CLSB is disappointed and frustrated that the LSB has refused to allow them to set and maintain standards of trainee costs lawyers who ‘earn and learn’. The application was based on a sound understanding of the profession we regulate and had consumer protection at the forefront. It was supported by the ACL and received support via the public consultation process.”

Mr Heining added: “We are disappointed that the LSB failed to recognise the public interest in ensuring that trainee costs lawyers, who can advise the public and solicitors immediately, are properly regulated and overseen by the CLSB.

“We will continue to work with the CLSB to find a practical solution to the issue of ensuring that trainees adhere to appropriate ethics and standards of delivery.”




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James Christacos, Operations Director

DAS Law is pleased to confirm that it has appointed James Christacos to the board.

As board director and head of operations James’ responsibilities will include ensuring that customer satisfaction is guaranteed and that DAS Law continues to deliver the best service possible to meet customers’ needs within a sustainable and enduring business environment.

James will also be responsible for identifying new legal services as well as making continual improvements to the firm’s existing ones.

James joined DAS Law to head up operations in September 2013. James qualified as a solicitor in 1997 and has since worked in private practice and in-house, holding a variety of legal, operational, sales, IT and project management roles across organisations from start-ups to multinational corporations and top 30 law firms.

In more recent years, he has focused on legal process re-engineering.  Aligning IT capability with service delivery to make sure that the customer experience is at the forefront of the process.  In support of this, James won the 2013 ‘Know List’ Leadership Award, recognition as the UK’s operational leader in professional service firms.

Kathryn Mortimer, managing director of DAS Law and DAS group head of legal, said:  “James is well known for his passion and commitment, and his focus has always been around making the legal process more efficient, effective and transparent for the customer.  He has been a pioneer in legal services and his expertise will be much valued by the board.”

James Christacos, operations director, DAS Law and board member, said: “Being part of a large, successful and customer centric group enables DAS Law to impart a lot of that knowledge much more quickly than traditional law firms.  My aim is to build upon that for DAS Law, creating and delivering efficient and effective services based on what our customers tell us they want.”




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Richard Percy, Chief Actuary, DAS UK Group

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

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

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

 




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Goldwater: Enough cake for everyone to have a slice

A law firm is attempting to build a group action to win compensation for students who miss out on teaching time due to the ongoing university lecturers’ strike.

Asserson, a practice with offices in London, Tel Aviv and New York, yesterday launched its bid to create a group action – permitted by the Consumer Rights Act 2015 –  with a website aimed at students, universitycompensation.co.uk.

The strike has been against proposed pension changes that the University and College Union (UCU) contends will move its lecturer members from a defined benefits package to a defined contributions scheme, which is less expensive but riskier.

In the past month, lecturers have carried out 14 strike days in some 65 universities. Further strikes are planned if no settlement is reached.

According to newspaper reports, the teaching of up to 1m students has been affected and over 100,000 have signed a petition calling for compensation.

Shimon Goldwater, a dispute resolution specialist associate at Asserson, told Litigation Futures that he expected a sufficient number of students would be willing to spend “two minutes to register via our website – that’s literally all they have to do at this stage”, potentially to qualify for “hundreds of pounds of compensation” at no risk to themselves.

He added: “The reason I’m confident we are likely to get that is that more than 100,000 students have signed petitions saying they want compensation and a petition doesn’t get you any money.

“Almost all universities have responded to those petitions by saying ‘we won’t be paying any compensation’.

“So if people are prepared to spend time filling in a petition which has next to zero chance of getting them compensation, my view is they will be prepared to spend the time filling in the form on our website.”

The claim will be brought on a ‘no win, no fee’ basis, and Mr Goldwater said his firm had been speaking to a litigation funder – “one of the big players” – which was “very interested” and to TheJudge as a broker.

He anticipated other firms would attempt to build similar actions, but that with the large number of students potentially affected, “there’s enough cake for everybody to have a slice”.

He said he would not be surprised if there were “four or five different group claims” in the end.

He said the firm had informed the National Union of Students of the claim and would be “very happy if they wanted to recommend a group claim to their members. So too with the UCU”.

Mr Goldwater said the 14 days of strike so far was significant: “You normally have 25 to 30 teaching weeks per academic year in the average university, so to lose three weeks out of 30 is [a lot].”




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Cut: costs heavily reduced

Claimant solicitors who sent the claims notification form (CNF) to the wrong insurer and then issued proceedings rather than resend it under the RTA protocol have been limited to the fees they would have received had they done so.

Master Simons in the Senior Court Costs Office said the Costs Officer at first instance had been wrong to decide that an order for detailed assessment on the standard basis prevented him from considering whether the costs should be restricted in that way.

Davies & others v Greenway involved claims by a driver and his two passengers after a rear-end shunt. Their solicitors, Lyons Davidson, accidentally sent the CNF to AXA in Ireland rather than England.

When AXA, which admitted liability, discovered this, it invited them to resubmit the CNFs. Instead, Lyons Davidson tried to correspond with AXA and, having received limited response, issued part 7 proceedings.

The claims subsequently settled for around £1,100 each, and the consent order provided that the costs would be paid on the standard basis to be assessed if not agreed. The claimants’ solicitors then sought detailed assessment on a £17,400 bill.

Costs Officer Pigott found that he did not have the power to overturn the consent order and was thus going to deal with the costs on a standard basis, rather than the fixed recoverable costs regime.

On appeal, the defendants argued that the order did not oust the court’s power under CPR 45.24 (failure to comply or electing not to continue with the RTA protocol) to limit the costs to protocol levels.

Master Simons disagreed, saying it seemed implicit from the wording of the rule that the power to restrict the costs has to be exercised when judgment is given. “If the defendant wished to seek an order under [rule 45.24], the time for doing so was after the terms of the settlement had been agreed and the parties were negotiating on the question of costs.

“He did not do so and consented to an order for there to be a detailed assessment on a standard basis. That is a contract which the costs judge does not have the power to vary. Furthermore, there is an order of the court which the costs judge is under an obligation to act upon.”

Even if this analysis was wrong, Master Simons said, the power in rule 45.24 is discretionary, not mandatory.

However, he continued that the detailed assessment allowed him to consider the reasonableness of the claimants’ conduct, fortified by the comments of Lord Justice Moore-Bick at the permission hearing of Smith v Wyatt [2011] EWCA Civ 941 that costs judges need not go through a bill on a line-by-line basis.

Stripped down, Lyons Davidson were seeking profit costs in excess of £9,000, a sum Master Simons said was disproportionate. Though criticism of the defendant’s conduct could be made, “I am satisfied that the failure on the part of the claimants to comply with the RTA protocol has led to disproportionate costs being unreasonably and unnecessarily incurred”.

Had they acted reasonably, they would not have been entitled to recover any more than RTA protocol costs, “and it seems to me that it creates an injustice if the claimants’ solicitors were to profit as a result of their unreasonable conduct”.




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Jackson: government needs to be persuaded

Lord Justice Jackson this week called for an end to the indemnity principle and for lawyers to lobby the government on the need for hybrid damages-based agreements (DBAs).

In a speech to the Law Society’s civil justice section, the architect of the LASPO costs reforms said the near-zero take-up of DBAs was due to fear of technical challenges arising from the indemnity principle and of hybrid arrangements falling foul of the current DBA regulations.

“It would be immensely helpful if the indemnity principle were abrogated,” he said, noting that he had recommended as such in his final report. “This is a rule of common law, to which there are now numerous exceptions. It no longer serves any useful purpose. It has given rise to a host of problems, as well as much futile satellite litigation.”

On hybrid DBAs – under which the client pays its lawyers a low fee if they lose and a percentage of the winnings if they win – Jackson LJ said he understood that the government “will need to be persuaded that there is a need” for them.

He listed eight reasons why he believed there was such a need, including that it was illogical to allow ‘no win, low fee’ conditional fee agreements but not DBAs, and also to allow third-party funding (TPF) to operate on a hybrid basis where they meet some or all of the litigation costs if the case fails, and receive a share of the winnings if they succeed.

“Indeed, it is worse than illogical. DBAs are a more efficient form of funding than TPF, because only two entities (rather than three) have a stake in the litigation. Therefore the law should not be sidelining DBAs in favour of TPF.”

His final reason was that hybrid DBAs would promote access to justice. “Following the abolition of recoverable success fees, it is important to open up as many other options for funding as possible.”

The judge suggested that opposition to hybrid DBAs is coming from those who dislike DBAs in principle – those on the receiving end of claims. He called for “those in authority” to stand up to “powerful vested interests within the ‘big business’ camp”.

He concluded: “If commercial lawyers wish to see the DBA regulations reformed and such reforms to include provision for hybrid DBAs, it would be sensible to form a working group to analyse the numerous matters of detail on which there is concern, and to assemble the evidence and make out a case for hybrid DBAs.”

Jackson LJ also touched on Denton and warned that “in the euphoria with which some have greeted” the ruling, it was important not to slip back into the “old” culture of non-compliance.




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Gabriel Fay

Fay: fundamental dishonesty “goes to the heart” of a claim

National firm DWF has secured one of the first ‘fundamental dishonesty’ rulings, denying a claimant the protection of qualified one-way costs shifting (QOCS).

Chartered legal executive Gabriel Fay, based at DWF’s London office, said the claim was brought by a security guard who fractured his shoulder.

Mr Fay said his client, Severn Valley Railway, had hired an ice rink to entertain families at its station in Worcester while the track was closed. He said the claimant, Brian Creech, sued for negligence on the grounds that he had tripped on matting left behind after the rink had been removed.

However, during the trial at Telford County Court last month, District Judge Rodgers accepted the railway’s evidence that the ice rink was still on the concourse at the time the accident was meant to have happened.

“The judge made a finding of fact that the rink had not been dismantled,” Mr Fay said. “This meant that the claimant could not have been truthful.

“Our counsel argued that this was a case where there could be no mistake, and the claimant could not have believed in the evidence being presented. The judge agreed.”

Mr Fay said the accident in Creech v Severn Valley Railway (unreported, 25 March 2015) occurred in 2011 and proceedings were issued three years later, just before the limitation period expired.

District Judge Rodgers dismissed Mr Creech’s claim, and applying the fundamental dishonesty rule, ordered him to pay over £11,000 in costs. “Fundamental dishonesty is dishonesty that goes to the heart of a claim – it can’t be an ancillary matter,” Mr Fay said.

“The court did not say it had to be specifically pleaded, and was happy to use its discretion, based on the findings of fact from the trial.”

He distinguished Creech from an earlier ruling on fundamental dishonesty in Gosling v Screwfix and Anr (unreported, 29 March 2014) at Cambridge County Court, where the claim had been discontinued.

Mr Fay added that the lack of rulings on the issue could be a result of the nervousness of lawyers in arguing it, or from cases being discontinued and not reported.

In a further case last October, insurer Admiral secured the removal of QOCS in a whiplash case where its customer claimed there was no contact between the two vehicles.

District Judge Dudley ruled that the claimant had been “fundamentally dishonest” in evidence given during a trial at Southend County Court.




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Document dIsclosure: extension sought

It would be “unfortunate” if the stricter post-Jackson approach to compliance with orders should encourage parties to refuse reasonable requests for time extensions in the hope that the court might refuse any extension at all, the High Court has said.

Mr Justice Henderson said there are some orders relating to the completion of specified stages in preparation for trial where the date for compliance cannot sensibly be regarded as “written in stone”.

He gave examples such as disclosure, the exchange of witness statements and a timetable for expert evidence.

He was ruling on an application to extend the time for a complicated disclosure exercise in In the matter of Atrium Training Services [2013] EWHC 1562 (Ch), and decided that on the facts the party seeking the extension should be granted it.

The judge had been referred to the new overriding objective, the speech of the Master of the Rolls on courts taking a stricter approach to compliance after 1 April, and the recent cases of Fons and Venulum, in which other High Court judges indicated a tougher stance.

Henderson J ruled that in this case, because the application for extension had been made before the expiration of the existing deadline, it was not an application for relief from sanctions under CPR 3.9.

He said: “It is no doubt the case that the court will scrutinise an application for an extension more rigorously than it might have done before 1 April, and that it must firmly discourage any easy assumption that an extension of time will be granted if it would not involve any obvious prejudice to the other side.

“On the other hand, I think it is important not to go to the other extreme, and not to encourage unreasonable opposition to extensions which are applied for in time and which involve no significant fresh prejudice to the other parties.”

He said that in such cases, considerations of cost and proportionality are highly relevant, and the wider interests of justice are likely to be served by a sensible agreement, or a short unopposed hearing, than by the parties adopting entrenched positions and spending a lot of money and court time over an application that could have been avoided.

Henderson J continued: “I would also observe that, although all court orders mean what they say, and must be complied with even if made by consent, there are some orders relating to the completion of specified stages in preparation for trial… where they may still be so many imponderables when the order is made that the date for compliance cannot sensibly be regarded as written in stone.

“Everything will always depend on the circumstances of the particular case, and the stage in the proceedings when the order is made, but in many cases it should be understood that there may be a case for reasonable extensions of time or other adjustments as the matter develops.

“It would, I think, be unfortunate if the new and salutary emphasis on compliance with orders were to lead to a situation where, in cases of the general type I have described, a reasonable request for an extension were to be rejected in the hope that the court might be persuaded to refuse any extension at all.”




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Dalton: new cash cow for some claimant law firms

The insurance industry is calling for the claims portal to be replicated for industrial deafness claims, along with fixed costs, as it steps up its attack on the growth of noise-induced hearing loss litigation.

The Association of British Insurers (ABI) said that in March 2014, 3,500 notifications for industrial deafness were made to the Compensation Recovery Unit, a 350% increase in two years.

Speaking at a conference organised by Weightmans earlier this week, James Dalton, the ABI’s head of liability, said: “Introducing fixed recoverable costs is key if we are to get a grip on disproportionate legal costs that have led industrial deafness to become the new cash cow for some claimant law firms. The £3 paid out in legal fees for every £1 an insurer pays in compensation must be reduced…

“As well as reducing legal costs, as these claims usually involve multiple defendants and therefore multiple insurers, we need to seriously explore if the existing claims portal can be adapted to deal with multi-defendant claims, or if there is a need for a stand-alone portal for deafness claims to reduce the 17 months that it currently takes to settle a typical industrial deafness claim.”

Earlier this week a specialist construction insurer said it had seen a “staggering” increase in deafness claims.

Meanwhile, the new chairman of the Motor Accident Solicitors Society, Susan Brown, has today expressed her concern about insurer behaviour once the provision on “fundamentally dishonest” claims in the Criminal Justice & Courts Bill is passed into law.

This will require a court to dismiss a claim where it is satisfied that the claimant has been fundamentally dishonest, unless it considers the claimant would suffer substantial injustice.

Speaking at the MASS annual conference in Manchester, Ms Brown – director and head of personal injury at London firm Prolegal – said: “The nuances around how this provision will be interpreted by the judiciary may be interesting for lawyers, but the major impact of this will not be on what happens in court but on the behaviour of insurers and their lawyers.

“Allegations of dishonesty or exaggeration are already raised on a regular basis with a view to persuading claimants either to abandon their claims altogether or more often to accept a low offer rather than face the ordeal of having to prove that they are not dishonest and run the risk that a judge will not believe them.

“The potential windfall for insurers, who may be able to get out of claims not only without paying the claimant anything at all, but also having their own costs paid by the claimant, will make them look very carefully for any sign of dishonesty or exaggeration. It seems highly likely that we will see the allegation raised far more often.

“And how many honest claimants pursuing genuine claims will be prepared to take the risk of proceeding to court if the possible outcome is that they will come out with nothing other than a bill for the insurers’ solicitors’ costs?  We will have a fight on our hands when acting for these claimants, to support them and gather the evidence needed to demonstrate that they are not dishonest.”

More broadly Ms Brown argued that the current costs regime makes it less likely claimants will have access to justice. “I certainly now find myself turning away claims that I would in the past have taken on whether as a legally aided claim, or under either a pre-1999 or pre-LASPO CFA.”




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Judgments: until approved, they are subject to change

Judgments: until approved, they are subject to change

There was “no proper justification” for a claimant seeking to reopen an issue based on the circulation of a draft judgment, the High Court has ruled.

Judge Keyser QC, sitting as a judge of the High Court, said there was “no doubt” that the court had the power to reconsider and alter the draft judgment.

He said that, given the absence of a sealed order, the court retained the power “to alter its reasoning or its conclusions”.

Ruling in a complex professional negligence action brought against accountants Baker Tilly, Judge Keyser went on: “On the one hand, the court will not wish to hand down a judgment if it has come to the view that the judgment would do injustice as between the parties.

“On the other hand, the point has repeatedly been emphasised that the practice of providing draft judgments is intended to facilitate the avoidance of errors of typography and detail.

“It is not intended to provide an opportunity for the parties to reargue points on which they have lost or to seek to adduce new evidence to bolster cases that can now be seen to have been inadequately supported at trial.”

Judge Keyser said there might be “some degree of tension” between the two different considerations, but not in the case before him.

He said “no proper justification” had been made by the claimant, Altus Group (UK) Limited, a real estate consultancy based in Canada, for “seeking to reopen” the issue of causation after circulation of the draft judgment.

Delivering judgment in Altus Group (UK) Limited v Baker Tilly Tax and Advisory Services [2015] EWHC 12 (Ch), the judge added that if it was “intended to suggest that my draft judgment was prepared on the basis of a mistake of fact”, the suggestion was “incorrect”.

Altus argued that, if it had been properly advised on the Corporation Tax Act 2009, it would have implemented a restructuring which would have reduced its tax liabilities.

Baker Tilly admitted that it was in breach of duty, but argued that even if the restructuring proposal had been implemented, it would have been “ineffective as a matter of law for purposes of tax mitigation and would have been successfully challenged by HMRC”.

Judge Keyser rejected the claim, on the grounds that Altus had not “proved on the balance of probabilities” it would have carried out the restructuring.




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Tripp: Clients want legal representation

A before-the-event (BTE) legal expenses insurer has warned of the “unintended and very serious detrimental effect” on the market of the government’s personal injury reforms.

Jason Tripp, operations director at Coplus, told the justice select committee earlier this week that the planned increase in the small claims limit for RTA cases would “cast doubt” on the ability of the BTE industry to provide legal representation as a standard part of the service.

He described the reforms as a “one size fits all” approach, which did not distinguish between the “primary market”, consisting of claims made shortly after the accident, and the “secondary market”, arising from those generated by claims management companies (CMCs) “months or often years” afterwards.

Mr Tripp said the secondary market was responsible for the sharp rise in personal injury claims over the past five years and not the primary market, which “works well and is much better behaved”.

Referring to the planned increase in the small claims limit for RTA cases from £1,000 to £5,000, he told MPs: “The question is not so much the value of the limit as the complexity of the claim and at what point a claim is capable of being handled by an individual by themselves.

“We survey our clients regularly. They say that in the absence of legal representation they would be left very unclear as to how to proceed. A consequence of that would be that they would be more likely to turn to CMCs.

“There is very little distinction in complexity between a claim valued at £1,500 and one valued at £5,000.”

Mr Tripp agreed with Labour MP Bambos Charalambous that the reforms could be described as “a sledgehammer to crack a nut”, which would have an “unintended impact” on BTE insurance, when the real issue was the regulation and control of CMCs.

He said BTE insurers would have a “stark choice” between stepping away from personal injury claims worth less than £5,000 or funding those cases on the small claims track, making the product more expensive.

He said the take-up of legal expenses insurance had fallen, in the wake of tougher regulation by the Financial Conduct Authority and increased premiums.

In its written evidence to the committee, Coplus described the personal injury reforms as having an “unintended and very serious detrimental effect” on the operation of the BTE market.

Coplus estimated that around 10m customers had BTE motor legal expenses insurance, and around £250m in increased costs could be transferred to them following the personal injury reforms.

Increasing the small claims limit would “shut off the supply of income” to both the primary and secondary personal injury markets.

“The problem is that it could cripple the primary BTE motor legal expenses insurance market and would not stop the secondary market operating”.

In particular Coplus predicted that BTE “costs and therefore premiums” would rise, with “many policyholders, some with quite serious injuries” left to their own devices in the small claims court.

The insurer called on the government to conduct a detailed impact assessment of the BTE market, ban CMCs from cold calling or marketing personal injury services, and set the small claims limit “at a level commensurate with inflation in the range £1,600 to £2,000” – at the same level as other types of personal injury.

A report on BTE published by the Civil Justice Council in November predicted that an increased small claims limit “may increase the need for BTE”, since lawyers would no longer want to take out “large numbers of lower-value personal injury claims” under conditional fee agreements.

However, the working party came to no conclusion on whether the change would increase BTE premiums.




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Mackie: ADR entering the mainstream

The government-backed tenancy deposit protection scheme and a pioneering group championing commercial mediation were among the winners at the Centre for Effective Dispute Resolution’s (CEDR) biennial awards.

The tenancy scheme, my|deposits, won the excellence in ADR award for its “innovative” ADR process and “for working steadily to find ways of improving this service, creating better outcomes for users of the scheme”.

In the ADR and civil justice innovation category, the Commercial Mediation Group (CMG), founded by Linklaters partner and head of property litigation, Katie Bradford, was joint winner.

The 60-member group of private practice solicitors and in-house counsel advise in relation to the mediation of commercial disputes, the first group of its kind. CMG was recognised for its ‘mediation purchasers’ initiative, “which ensures that disputants receive the best process possible”.

The other winner was Croatian judge Srđan Šimac for “his energetic work in bringing and popularising mediation in Croatia”.

Ms Bradford said: “The CMG contributes a different perspective on achieving progression and development in ADR. Our survey of the mediation community in January 2012 revealed differences in opinion and approach between mediators and users of mediation. Linklaters values the impact and assistance which mediation can deliver to resolve disputes and is proud to have initiated the CMG.”

In the ADR champion category, Geoff Lloyd of Ernst & Young was recognised for his work on tax disputes as part of HM Customs & Revenue Service. Mr Lloyd headed up a government initiative which uses mediation to free up resources tied up in tax disputes.

Dr Karl Mackie, CEDR’s chief executive, said: “We are delighted by the innovative work… and the dedication shown by all of the winners and finalists to furthering the cause of alternative dispute resolution.

“The record number of finalists for this year’s awards shows clearly how these practices are entering the mainstream, and their potential for transforming the way we approach conflict. As the diverse entrants show, the field of dispute resolution is changing to reflect the diverse needs of modern society.”

Other winners included John Brand and Felicity Steadman in the ADR trainer category; recognised for their work in South Africa with the African Centre for Dispute Resolution at the University of Stellenbosch. In particular, they were the “primary instigators” of a training course which has accredited more than 160 mediators so far.

Other finalists in the ADR excellence category were the Office of the Independent Adjudicator for Higher Education UK; ABTA Ltd; the Internet Services Providers’ Association; the South African Federation of Civil Engineering Contractors; and the London Organising Committee of the Olympic & Paralympic Games (LOCOG).

The judges were Lord Justice Rix, Brian Hutchinson of University College Dublin, Dr Gillian Dada of GlaxoSmithKline plc, Guy Perring of Everything Everywhere Ltd, Professor Bryan Clark of Strathclyde University, Rhys Clift of Hill Dickinson LLP, Caroline Stroud of Freshfields Bruckhaus Deringer, and author, CEO and entrepreneur Margaret Heffernan.

 




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Posted by Richard Burcher, chairman of Burcher Jennings

I’m a New Zealander, so please excuse me if I misunderstand the stereotypes. But I’m led to believe that certain Scots have a reputation for being careful with money. What I find surprising is that this might be considered a matter for embarrassment. Certainly every law firm manager, wherever their firm practices, should have their eyes firmly on the twin issues of pricing and costs.

In April this year, Burcher Jennings was created, bringing together unparalleled expertise in pricing strategy and costs management. I’m pleased to say that being between consenting adults, this marriage did not require the help of any Gretna Green blacksmith.

Nevertheless, flying in the face of three centuries of peaceful Union, in the last few weeks Burcher Jennings has led cross-border incursions. I spoke at a Law Society of Scotland big firms conference on current trends, challenges and opportunities in pricing legal services. I also presented a CPD session north of the border, attended by a broad range of Scottish firms. And alongside other Burcher Jennings colleagues I have been working closely with two significant Edinburgh and Glasgow firms to help them devise pricing strategies and manage costs.

The jurisdiction of Scottish law remains firmly independent from its English and Welsh neighbours, along with a different appetite for liberalisation of regulatory and ownership structures. However, clients’ expectations are moving in the same direction in Edinburgh, Aberdeen and Dundee as they are in London, Cardiff and Manchester.   Contrary to the assumptions of many, credible research suggests that business clients aren’t necessarily looking for the legal services at the cheapest price.

What GCs are looking for is predictability, transparency and value – in other words they desire an honest partnership with those providing professional legal advice and support. The success of such brands as Waitrose and BMW suggests that many consumers also are prepared to pay for quality and service, even in austere times, though increasing promiscuity of the online generation sees those same consumers buying essentials in Lidl and a parking a Dacia alongside the BMW in the drive.

Whatever the outcome of the September 14 vote, it’s clear that the most successful law firms on both sides of the border will be those who adopt effective pricing strategies and manage costs efficiently.  Getting price and costs right is the key to winning and retaining clients, building income and increasing profitability.




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Lord Dyson

Lord Dyson: “uncertain and testing conditions” lie ahead

The Master of the Rolls has called for an “institutional response” to unfair criticism of judges by politicians and the media.

Lord Dyson said there were “a number of hazards” in judges responding personally to attacks either by issuing press releases or “far more riskily” holding a media interview.

He said unfair criticism was liable, in rare cases, to produce “intemperate responses” from judges and had the potential to “imperil the professionalism of the judicial office as a whole”.

Delivering the annual BAILII lecture, Lord Dyson said the convention against criticism of judges’ decisions by politicians “has been eroded, even if it remains in place, albeit sometimes precariously, for government ministers”.

He went on: “Uncertain and testing conditions therefore lie ahead. In my opinion, it is time for judges (if they have not already done so) to accept these changes that have been brought about by shifts in our culture, our constitution, and our technology.

“In my view it is right that judges’ reasoned decisions should be open to public debate and scrutiny. Our courts are open and free, and the media perform a valuable job in our democracy of reporting the courts and the justice system to the wider public.

“What I hope is that the debate should be reasoned and based on the evidence. And what is not fair or reasonable is to impugn the motives of judges, or ascribe them to prejudices.

“Judges must expect criticism and, where appropriate, they must offer a robust response. This response should take the form of a well-organised, measured, institutional reply.”

Lord Dyson praised the “excellent work” of the judicial press office in distributing faster and greater quantities of accurate information, such as transcripts of judgments, “ahead of the next news cycle”.

He said the Lord Chief Justice, Lord Thomas, was “also well-placed to offer an institutional response to criticism”, while noting that the LCJ had recently regretted that his ability to do this was compromised lack of a seat in the House of Lords.

Lord Dyson added: “I hope that, if the noise of criticism from ministers and the press becomes louder, the judicial press office and the Lord Chief Justice will continue to serve as important correctives to unfair comment and misinformation about judges.”




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RCJ

Mr Hochhauser: “no authority on the point”

The High Court has ruled that a claimant’s part 36 offer was a counter-offer, meaning that an earlier common law offer by the defendants no longer remained open for acceptance.

Andrew Hochhauser QC, sitting as a High Court judge, said there was “apparently no authority directly on the point”.

Mr Hochhauser said he preferred the arguments of counsel for the defendant law firm, Jacobs Solicitors, which was being sued for professional negligence by the bank DB UK.

“A part 36 counter-offer is still a counter-offer,” he said. Mr Hochhauser said that because in the case “one is dealing with an initial common law offer, the impact on it of any counter-offer has to be addressed by reference to common law principles”.

This meant that once the bank’s part 36 offer was made in May 2016, the law firm’s earlier ‘without prejudice save as to costs’ letter was no longer available to be accepted.

Delivering judgment in DB UK Bank v Jacobs Solicitors (claim no. HC2013000358), Mr Hochhauser said the bank argued that that the law firm had “failed adequately to report” on the fact that the bank’s borrower was purchasing a new-build property by way of a sub-sale, and claimed over £162,000 in damages.

Jacobs argued that the bank would have made the loan in any event and pleaded contributory negligence. The law firm denied that the claim had been settled. The bank argued that it had.

The court heard that a few days before trial, at the end of last month, the bank’s solicitors, Rosling King, sent Caytons Law, acting for for Jacobs, a letter saying that it was accepting a without prejudice offer made by Caytons in August 2015.

The judge rejected an argument by the bank that the offer was not capable of acceptance on the grounds of uncertainty.

However, Mr Hochhauser said that in May this year Rosling King sent Caytons a letter containing a part 36 offer. Counsel for Jacobs argued that this was a counter-offer, which had the effect of rejecting the earlier without prejudice letter.

The judge agreed that once the part 36 offer was made, the law firm’s letter was no longer available to be accepted. As a result there had not been a settlement of the claim, which must proceed to trial.




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Zoe HollandZebra LC, trusted advisor and due diligence specialist within the UK legal sector, has achieved certificated approval for its quality management system under ISO 9001: 2008.

Zebra is unique, delivering client projects with a distinct market leading approach and known for advising in some of highest profile deals in the legal services market. Clients include leading law firms, banks, insurers, investors, funders and new entrants such as Fairpoint Group PLC and North Edge Capital.

The business has a specialist role, enabling a deeper understanding of law firms’ risk, value and opportunity profile by placing technical due diligence and independent review at the core of its value proposition. This includes using technical legal specialists across a multi-discipline of lawyers, costs, financial and risk and compliance experts.

Zoe Holland, managing director, “Zebra works within a highly regulated environment and as such quality and risk procedures are critical to both our business and our clients. Achieving a quality mark with ISO 9001 supports our mission to provide outstanding quality, innovation and technical brilliance in the delivery of our clients’ requirements.”

“The team within Zebra has worked hard under the helm of our head of risk, Hazel Ryan, to achieve the accreditation. We work to a bespoke Project Assurance Plan. Our clients take comfort in our risk based and measured approach to projects whether they be consultancy based, bank focused WIP profiling, diagnostic audits or M&A due diligence within the legal sector. I am delighted with this result.”