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Deadman: lawyers need to educate clients about ATE insurance at a much earlier point in discussions

Posted by Chris Deadman, director of operations at Litigation Futures Associate Invicta Capital Funding

The recent announcement by Elite Insurance to cease writing new business will have surprised many seasoned watchers of the after-the-event (ATE) insurance market. Elite enjoyed a good reputation as a well-run and experienced participant and, although we can only guess as to the role that its ATE division played in this decision, it should provide litigators and funders alike with plenty to think about.

There is no doubt that the ATE market is a tough space in which to make a profit. Successive increases in insurance premium tax, LASPO and general red tape cannot have helped, but litigators themselves must shoulder part of the blame when we consider why it is so hard to make ATE pay.

In litigating a matter, the lawyer is quite properly concerned with engineering the best financial outcome for his or her client. This means that they are anxious to avoid exposing their clients to unnecessary costs either by way of professional fees or a reduction in damages through payment of an adverse costs insurance premium.

Up and down the country, lawyers are quite properly trying to settle claims before their clients are exposed to unacceptable adverse cost risks requiring insurance cover. ATE insurance premiums are fearsomely expensive, so the argument goes, and the diligent lawyer will do everything he can to avoid his client needing to pay the premium.

This, however, poses a significant problem for the ATE insurer. Premiums will be inevitably high if the only cases the ATE insurer sees are matters which are nearing trial or where attempts at settlement have failed. High premiums are a simply numerical expression of perceived risk.

To employ a clunky example, it’s a bit like proposing to a woman only because your first choice has turned you down. No one likes to be second best. The insurer does not exist to rescue clients whose lawyers have miscalculated. And if the insurer is able to assist, you can be sure that the premium will be commensurately chunky.

The insurer wants a fair crack of the whip across a portfolio of claims. It wants a tolerable number of matters with differing risk profiles, not just the risky stuff. A portfolio containing only ‘Hail Mary’ cases will inevitably attract eye-watering premiums or outright rejections.

If we truly want to see a vibrant and competitive ATE market, and I would argue that it is in everyone’s best interests that we do, then lawyers need to educate clients about ATE insurance at a much earlier point in discussions. Lawyers need to stop thinking about ATE insurance as some ‘get out of jail’ card but rather as a rational response to commercial risk.

This will require better planning on their part in terms of considering litigation outcomes other than the ones they expect. Because, guess what, things go wrong.

By engaging with ATE insurers at a much earlier stage, clients will be rewarded not only with premium levels that reflect the inherent risk but also the comfort that the matter is fully protected against adverse costs risk whenever and however it concludes.

No one likes going to trial, least of all insurers. But obtaining cover for a matter at an early stage means that the insurer is fully committed even if it does proceed to trial and in circumstances where, had they been approached later in the day, they may have declined the risk altogether.

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

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

Hot on the heels of yesterday’s announcement that the Justice Select Committee is to undertake an inquiry into the effects of the introduction and levels of employment tribunal and civil court fees, the MoJ has today published its response the consultation on enhanced fees for possession claims and general applications in civil proceedings.

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

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

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

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

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

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



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Laird Assessors are pleased to announce that they have teamed up with The SOLICITORS Group to offer you 20% discount off the cost of a 6 hour Personal Injury Conference as a valued customer of Laird Assessors.

the SOLICITORS group are leading providers of high quality, affordable CPD training for the legal profession. Their courses are constantly reviewed to ensure that they cover all of the latest changes and developments in the law. For further details of conferences running click here to visit the website.  The dates and locations we are running this offer on are:

Please note, you will be invoiced the full amount by the SOLICITORS group and you should claim your 20% discount direct from us.  Discount applies to conferences to the following LAW2014 events; Birmingham (27th Feb), London (20th March), Peterborough (2nd April), Gateshead (30th April).

We really hope this offer will be of value to you and your teams.  For more information, please contact Pippa Saunders on 0151 342 0670.

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McCann: a charter for honest policyholders

McCann: a charter for honest policyholders

The new president of the Association of Personal Injury Lawyers was wrong to claim that insurers would dishonestly raise a defence in the hope that a claimant would die before settlement, a leading defendant firm has argued.

At last month’s APIL conference, Jonathan Wheeler said it was “anyone’s guess” what the new ‘fundamentally dishonest’ rule actually meant and asked why it only applied to claimants.

“What about defendants who pursue ‘fundamentally dishonest’ defences?” he demanded, citing examples such as “the defendant who purposefully sets out to delay a settlement brought on behalf of a terminally ill claimant, because it would be cheaper to pay out on the claim when they are dead, rather than alive”.

Ronan McCann, fraud partner at Manchester insurance firm Horwich Farrelly, said Mr Wheeler’s comments highlighted the need for insurers to be very clear on the cases they pursue.

He said that even before section 57 of the Criminal Justice and Courts Act 2015 – which requires a court to dismiss a personal injury claim where a claimant is shown to have been ‘fundamentally dishonest’ – “we have not found the judiciary to have any problem with interpreting what constitutes fundamental dishonesty and in fairly applying such a verdict”.

Describing the new power as “a charter for honest policyholders”, Mr McCann said: “Defendants who raise a defence without merit can rightly expect to have their case thrown out and be penalised though part 36 and indemnity costs.

“I do not accept Mr Wheeler’s suggestion that insurers would dishonestly raise a defence in the hope that a claimant would die before settlement. His comments illustrate a lack of understanding amongst some personal injury lawyers about the impact of fraud on honest policyholders.

“The real problem isn’t insurers trying to get out of paying claims, as Mr Wheeler suggests, but the cost of fraud raising premiums for everyone. Unfortunately due to the sheer volume of insurance fraud we are left in a position where all claimants have their claims carefully scrutinised to ensure they are genuine.

“It is this that sometimes creates some friction, but no one should criticise insurers where they are correctly using all the tools at their disposal to tackle and prevent fraudulent claims. We should welcome the changes introduced by the Act, as they will inevitably mean honest policyholders will get better value from their insurance cover.”

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Regan: no attempt to dilute indemnity costs

Masters in the Senior Courts Costs Office are mulling over whether the amended overriding objective undermines the concept of indemnity costs, it was claimed last week.

Professor Dominic Regan reported that “one senior costs judge” is arguing that the added reference in rule 1 of the Civil Procedure Rules for cases to be dealt with justly and at proportionate cost has a universal impact, including on indemnity costs.

He was speaking at a seminar run by NeoLaw, the new brand for the business services practice and London office of midlands firm Keelys, which has a well-known costs practice run by Simon Murray.

Professor Regan, however, said he disagreed with the judge’s assessment. “Yes indeed part 1 does represent the guiding principles that shape judicial discretion but it cannot contradict express measures enacted, such as the very reference to indemnity costs,” he explained.

There has been no attempt to dilute indemnity costs, he continued, and they form a fundamental part of part 36. Nonetheless he thought it would prove an interesting point to run.

Professor Regan’s case was arguably strengthened by the first speech on the reforms given by Lord Justice Jackson since his return to the bench following illness.

His address to the Australian Bar Association Conference in Bologna, Italy last week was mainly just a recitation of his reforms, but on the new proportionality test he said: “It is intended that the new proportionality rule will dominate the way in which costs are assessed on the standard basis.”

Jackson LJ also took a swipe at the “many vested interests” that came together to oppose his recommendation for fixed costs across the fast-track, in the same way as they did to thwart Lord Woolf bid to achieve it 13 years ago.

“I understand, however, that there have recently been second thoughts within the Ministry of Justice and that rules for fast-track fixed costs may be introduced later this year,” he said.

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Parliament: domestic violence vote a tie

The Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) effectively ended its parliamentary passage yesterday after one final effort by the House of Lords to force a government rethink over domestic violence failed by the narrowest of margins.

Three issues remained outstanding in the final stage of ‘ping pong’ between the two Houses, but peers were content with the concession offered on Tuesday to delay the application of the Jackson reforms to mesothelioma claims pending a review.

Lord Pannick reluctantly withdrew his amendment that sought to require the Lord Chancellor to ensure that people have access to legal services “that effectively meet their needs”, saying that peers had already given MPs the chance to rethink once.

Former Attorney General Baroness Scotland pursued her bid to make evidence of domestic violence more than two years old as acceptable for the purposes of legal aid eligibility – she said it should be six – and that evidence from specialist domestic violence organisations should count as acceptable proof of abuse. However, peers voted 238-238, meaning the amendment was defeated.

Justice minister Lord McNally insisted that the government had already moved a long way to protect the victims of domestic violence under the bill, and pointed to two “very important safeguards that will provide genuine victims with a route into legal aid even if they do not have the headline forms of evidence” – findings of fact of a court, and the exceptional funding scheme.

In the debate over the mesothelioma compromise, Liberal Democrat Lord Thomas suggested that, when the Jackson reforms are finally introduced for such claims, asbestos support groups should put together lists of law firms which have agreed not to charge success fees.

Lord Pannick was highly critical of the government’s “inflexible” approach to the bill, which he said “involved a failure adequately to assess the impact of the provisions before their implementation, a refusal to take on board the fact that many of the financial savings at which part 1 is aimed are illusory because the denial of access to legal services will result in other financial costs to the state for disadvantaged persons who will be denied the benefits to which they are entitled, and because of a refusal to recognise that the limits on the scope of legal aid imposed by part 1 will hit hardest the weakest and most impoverished sections of our society, often on complex questions of law such as are raised by immigration law”.

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Sims: With the legal services sector becoming increasingly competitive, it is essential for us to stay ahead of the game

Eclipse’s Proclaim Practice Management solution selected in six-figure deal

Leading Essex law firm, Mullis & Peake LLP, has implemented the Proclaim Practice Management Software Solution from Eclipse Legal Systems.

Established in Romford, Essex, over 100 years ago Mullis & Peake LLP has grown into one of the area’s largest and most respected law firms employing over 50 staff. Providing a full range of legal services to both private and corporate clients, the firm boasts an enviable reputation for high quality legal advice at cost effective rates. To further strengthen this position, Mullis & Peake LLP is implementing the Proclaim Practice Management Solution firm-wide for all users.

The Proclaim Solution will be utilised across all work areas including commercial, property, elderly client, family, court of protection and employment. The personal injury team will adopt Proclaim’s direct integration with the RTA (Road Traffic Accident) Portal.

As an integral part of the core Proclaim solution, Mullis & Peake LLP will also be taking the Proclaim New Business Enquiries and Compliance toolsets to provide seamless marketing, file opening, and ongoing adherence to SRA regulations. Prior to implementation of the Proclaim Credit Control Centre, Eclipse will conduct a data conversion from the firm’s incumbent financial management system. Mullis & Peake LLP is also to benefit from seamless digital dictation functionality courtesy of Proclaim’s BigHand integration tool.

Nick Sims, IT Manager at Mullis & Peake LLP, comments:

“With the legal services sector becoming increasingly competitive, it is essential for us to stay ahead of the game and cement our proud reputation for superb client service by investing in technology. Proclaim, with its array of integrated client-centric toolsets, is the perfect platform for us to achieve this.”


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EclipseFounded in 2001, Leeds based Michael Lewin Solicitors has grown into a large nationwide personal injury practice employing over 120 staff across five offices.

Back in 2009 Michael Lewin needed to replace its incumbent case management system with a platform and a supplier that were in line with aggressive growth plans. The solution needed to be easy to use, scalable and allow for high volumes of cases to be processed whilst maximising client service.

A Proclaim Practice Management System was chosen and is utilised by all Michael Lewin staff, providing a core centralised solution for a range of injury claim types from minor RTA (Road Traffic Accident) claims – processed seamlessly with Proclaim’s Application to Application integration with the Government’s Claims Portal – through to £multi-million Clinical Negligence matters. The firm also adopted Proclaim as its practice accounting and reporting toolset, providing full integration with fee earner activity. Eclipse also conducted a data migration from the incumbent solution.

Michael Lewin has announced explosive growth at a time of challenging legislation for claimant solicitors. Since implementing Proclaim in 2009, headcount has grown from 15 to over 120, an increase of over 700%. Michael Lewin’s expansion is not complete; Proclaim’s flexibility has been invaluable in allowing the firm to introduce a range of non-personal injury services – all using Proclaim – including debt recovery and employment work.

“Proclaim has delivered over and above expectations, providing an easy to use and incredibly scalable solution. We can process claims with greater speed, greater accuracy, and in greater volumes.” – Abbie Keech, Director, Michael Lewin Solicitors

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Stockwell: system out of step with public opinion

Bereaved people in Scotland are treated more fairly than those in England and Wales when claiming damages for their loss – in terms of both the sums awarded and the range of people who can claim them – according to views expressed in new research.

In the survey of 2,000 people, commissioned by the Association of Personal Injury Lawyers (APIL), 80% said the Scottish system for bereavement damages is fairer, prompting calls for the law in the rest of the UK to be reviewed.

“For years we have been calling for the law to be changed in this area, and this new survey has shown just how far out of step with public opinion the system for awarding bereavement damages really is,” said Matthew Stockwell, president of APIL.

“Everyone knows, of course, that nothing can ever replace a loved one who has died. But it’s important to remember that we are talking here about bereavement caused by the negligence of another party. The fact that the death is needless can only increase the sense of pain and loss.

“At the moment in England and Wales, this is recognised by payment of a fixed sum of £12,980, paid by those who have caused the death. In Scotland, cases are taken on their merits, damages are generally higher, and the law is much more flexible about who can receive them.”

The vast majority of those surveyed though the fixed sum was not high enough, with 57% saying a figure of more than £100,000 would be appropriate.

Currently bereavement damages in England and Wales are available to the spouse or civil partner of the deceased, the parents of an unmarried legitimate minor, and the mother of an unmarried illegitimate minor.

Many respondents suggested this list should be extended to include the parents of a child who is killed, regardless of the child’s age; children (including adopted children) of the person killed, regardless of the child’s age; the co-habitee of the person killed; and the fiancé of the person killed.

Mr Stockwell said most of these people are entitled to claim damages in Scotland. “It is particularly distasteful to me that parents of a child under the age of 18 should be entitled to bereavement damages but, once the child is 18, they are not. It is unnatural for a parent to suffer the loss of a child, and that loss is no less if the child happens to be over the age of 18.

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Thomas Blackburn, national advocacy manager at Just Costs Solicitors, considers the lessons on part 36 and indemnity costs from a recent Court of Appeal ruling

F & C Alternative Investments v Barthelemy & Anor [2012] EWCA Civ 843 is a further reminder of the need to ensure that any intended part 36 offer complies with the formal requirements in every way

It also raises some interesting points regarding indemnity costs

The background

The underlying dispute was between members of an LLP about whether ‘put options’ had been validly exercised

The claimants sought a declaration that the options had not been validly exercised and that they had no liability to pay the sums sought

The defendants made an offer to settle the proceedings by selling their interests in the LLP to the claimants for approximately £6m in total

The offer was expressly stated to be made outside of part 36

But it did state that the defendants would rely on the offer in accordance with CPR 44

3 and would invite the court to “apply the same consequences as regards costs and interest as would apply had it been possible to make the offer under part 36”

The defendants went on to obtain a more favourable result than the settlement offer they had put forward, being awarded close to £4m each

The costs

In awarding costs, the judge held that the defendants were entitled to indemnity costs and interest (significantly above base rate) from the date for acceptance stated in the offer

This was on the basis that the defendants had “good and legitimate reason” not to make the offer formally under part 36, and therefore in exercising his discretion on costs it was appropriate “by analogy” to apply the costs consequences provided under CPR 36


The claimants appealed against two aspects of Mr Justice Sales’ judgment: firstly, that the claimant pay the defendant’s costs on the indemnity basis after 16 January 2010; and secondly, that the claimant pay 3%, then 10%, then 40% then 22% inte

rest per annum on those costs (different rates applying to different periods)

The appeal

The Court of Appeal overturned the decision, finding no justification for drawing an analogy with part 36 and so no reason to award indemnity costs or enhanced interest

The court accepted that, in some circumstances, a refusal to accept a reasonable settlement offer might justify an award of indemnity costs

This was not the basis for the judge’s award in this case though, and in any event, the existing authorities make it very clear that any refusal must be unreasonable

This decision confirms that the courts will take a strict approach to the application of part 36 and, where an offer falls outside part 36, will not simply apply the part 36 costs consequences “by analogy”

Indemnity costs

In addition, it is interesting to note the fuss that parties make over indemnity costs

Costs are usually assessed on the standard basis, where any doubt the costs master (or assessing judge) has will go in favour of the paying party

Under the indemnity basis, this doubt goes in favour of the receiving party

Parties often seem to take the view that an indemnity costs order is close to a blank cheque, when it certainly is not

Master Gordon-Saker, who sits in the Senior Court’s Costs Office (and is tipped by many to become the Senior Costs Judge once the excellent Master Hurst retires shortly), is known for many first-rate judgments on difficult issues

He is also known to state that “costs masters very rarely have doubts”

And there we have it

Only when there is doubt does the standard/indemnity basis come into play

However, those seven costs masters, who make up the SCCO, very rarely express doubt when assessing parties’ costs

A lot of money is wasted chasing expensive indemnity basis costs orders, and yet it usually makes very little difference, if any

One has to wonder if it’s worth it

Finally, it is worth noting that neither party attempted to rely on the decision in AF v BG [2009] EWCA Civ 757

In that case the Court of Appeal confirmed that a defendant can be treated as a claimant in respect of its counterclaim so that it can make a “claimant’s part 36 offer” and thereby take advantage of the more favourable costs consequences applicable to such offers, including an entitlement to costs if the offer is accepted – something every litigator should note

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Osborne: surprise announcement

Osborne: surprise announcement

Chancellor George Osborne’s announcement yesterday that the small claims limit for personal injury (PI) cases will rise to £5,000, and that general damages for “minor” whiplash claims will be abolished, has sent shockwaves through the market.

Such is their seismic impact on lawyers that we have been covering the reforms on our sister site Legal Futures. There you can find these articles:

Autumn Statement: £5k small claims limit and end to general damages in whiplash

Slater & Gordon’s share price collapses in response to Autumn Statement

Breathing space for PI lawyers? General damages reform will not come in until 2017

Blog: Where now for PI lawyers?

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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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HarmansOn 27th February, Elizabeth Truss announced her decision to lower the Discount Rate from 2.5% to minus 0.75% in accordance with the law and in her capacity as independent Lord Chancellor.

The new discount rate will come into effect on 20 March 2017, following amendments to current legislation.

The law makes clear that claimants must be treated as risk averse investors, reflecting the fact that they are financially dependent on the lump sum, often for long periods or the duration of their life.

Compensation awards using the rate should put the claimant in the same financial position had they not been injured, including loss of future earnings and care costs.

Lord Chancellor and Justice Secretary Elizabeth Truss said:

“The law is absolutely clear – as Lord Chancellor, I must make sure the right rate is set to compensate claimants.

I am clear that this is the only legally acceptable rate I can set.”

The Discount Rate had remained unchanged since 2001.

This decision, as well as seeing compensation payments rise, will have a significant impact on the insurance industry and a knock-on effect on public services with large personal injury liabilities – particularly the NHS.

But in the announcement to the London Stock Exchange, four key pledges were also made.

To read the Harmans Cost Brief in full click here.

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Hickinbottom: Costs were main driver of proceedings

An appeal court judge has expressed his “dismay” after estimating that legal costs “not far shy of £2m” had been spent in a case involving over 800 claims for flight-related compensation each worth only a few hundred pounds.

Lord Justice Hickinbottom also cautioned that “who pays the cheque” is not necessarily the right guide as to who has won in litigation.

The Court of Appeal heard in Sirketi v Kupeli and others [2018] EWCA Civ 1264, that Atlasjet agreed with the government of Northern Cyprus to provide replacement flights after Cyprus Turkish Airlines, the second defendant, lost its air operator’s licence and ceased trading.

None of the claimants received their replacement flight and had to purchase new tickets with other carriers or did not travel.

The proceedings were never formally incorporated into a group litigation order, but the claims were joined and managed together by one firm of solicitors, Hudson Morgan Williams.

In a postscript to the judgment, Hickinbottom LJ said it would be “remiss if I did not express my dismay” at the way the parties’ costs had “so vastly, and so obviously, exceeded any substantive claim that the claimants may have had”.

Although the court did not have “precise figures” for costs spent so far, he said Atlasjet’s costs for the part 1 trial – an initial trial of both legal issues and lead claims – were “in the region of £800,000” and the claimants’ costs, including the success fee, would be the same if not more, making a total not “far shy of £2m”.

Hickinbottom J said that, from a “very early stage” in the litigation, it was clear that “the main driver of these proceedings was clearly not the substantive sums claimed but costs”.

He said the claimants, described by their own counsel as “modest folk”, each claimed sums “in the low hundreds” of pounds from Atlasjet.

“We do not have details of the CFA between the claimants and their solicitors; but we do know (i) that the solicitors must have regarded the claims as being high risk, as the success fee was put at 100%; and (ii) the claimants did not have the protection of after-the-event insurance.

“On any view, this litigation, for the claimants, presented a very high commercial risk out of all proportion to the potential prospective rewards.

“On the other hand, knowing that the claims were necessarily very modest in amount, Atlasjet refused to consider any form of compromise, until shortly before the trial, when, in effect, its efforts were both too little and too late.

“The judge correctly observed that this case cried out for some early, sensible consideration of compromise.”

Hickinbottom LJ said only two of ten lead claims against Atlasjet succeeded at trial before Mrs Justice Whipple in February 2016. Whipple J ordered Atlasjet to pay 33% of the claimants’ costs and £225,000 on account.

He said that “in a group claim such as this, whilst the defendant may be unitary, the claimants are not”. Of the total of 838 individual claims, following the part 1 trial, Atlasjet was successful in 792 of them and was entitled, as a “starting point”, to its costs from those claimants.

He said the purpose of the trial was not merely to “conclusively” determine the lead claims, but to help determine the rest of the claims.

“Looking at the litigation as a whole, whether a party is ‘successful’ is an issue which has to take into account both the extent to which a party has been successful in such issues and the consequences of the trial for the balance of claims.”

He went on: “In my view, unfortunately, Whipple J was wrong to equate ‘who receives the cheque’ with the successful party for the purposes of CPR rule 44.2(2) in the context of this complex group claim.

“She was required to consider who was successful, in the context of the group litigation as a whole; and that was not truly reflected by the fact that a limited number of claimants were successful in and as a result of the part 1 trial.”

However, Hickinbottom LJ said Atlasjet’s conduct should also be taken into account.

“It was certainly open to the judge to conclude that Atlasjet’s conduct in failing to engage in attempts to compromise this litigation, in circumstances which were ‘crying out for some sensible attempt at negotiation before costs racked up and the parties’ attitudes hardened’, was a matter which should be reflected, against Atlasjet, in consideration of costs as between the parties.”

HIckinbottom LJ replaced Whipple J’s order that Atlasjet should pay 33% of the claimants’ costs, with no order for costs: “In the part 1 trial, it is clear that neither party had anything close to complete success, and indeed that honours were fairly even.”

Lord Justice Davis agreed, describing the litigation as a “melancholy tale”.

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The court is ready for you

The Civil Procedure Rule Committee (CPRC) agreed minor variations that judges can adopt in orders for concurrent expert evidence – known as ‘hot-tubbing’ – but acknowledged the changes it has approved to the CPR are “not as radical” as had been recommended by the Civil Justice Council (CJC).

The amendments to PD 35 provide that to extent expert evidence is not to be given concurrently, the court may direct that the evidence is given “in any appropriate manner”.

But they continue: “This may include a direction for the experts from like disciplines to give their evidence and be cross-examined on an issue-by-issue basis, so that each party calls its expert or experts to give evidence in relation to a particular issue, followed by the other parties calling their expert or experts to give evidence in relation to that issue (and so on for each of the expert issues which are to be addressed in this manner.”

Further, whereas currently the rules allow the judge to direct the parties to agree an agenda for the taking of concurrent evidence, they will be amended to allow the court to set the agenda.

As reported last month, a sub-committee redrafting PD 35 had asked the CPRC whether it wanted to limit the concept of concurrent expert evidence to “classic” hot-tubbing, or approve an alternative approach that treated it as “embracing the full range of methods, including back-to-back, issue-by-issue expert evidence, and ‘hybrid’ procedures”.

The CPRC chose the former and agreed the amendments made as a result at its meeting last month, the minutes of which have just been published. As well as the additions to the practice direction, there are new questions for the directions and listing questionnaires.

The minutes recorded that Mr Justice Kerr, chair of the subcommittee, said that the changes were not as radical as the CJC may have hoped, given its report on hot-tubbing last year, “the changes would give court users a useful steer”.

The CJC report – which found that hot-tubbing was improving quality, saving trial time and helping judges determine disputed issues – recommended that the practice direction should be revised to reflect that hot-tubbing was “but one form of concurrent expert evidence; that sequential, back-to-back, evidence is another important format of concurrent evidence; that the ‘teach-in approach’ has great benefits for the right type of case; and that, above all, the court may give directions for any of these processes to be used at trial”.

It has not yet been announced when the changes will come into force.

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Stark: solicitors will need to bring in costs expertise from the start

New entrants to the costs world are recognising the importance of regulation and the need for specialist skills ahead of the introduction of the Jackson reforms, the Association of Costs Lawyers (ACL) has claimed after the number of people choosing to train as a costs lawyer stayed strong this year.

It has also called on solicitors to appreciate the importance of using qualified costs professionals with the introduction of Jackson.

The ACL has received 108 applications to join its training programme this year, compared to 112 in 2011, which marked a massive jump from 65 in 2010.

Study leads ultimately to qualification as a costs lawyer, an authorised person under the Legal Services Act with independent rights of audience and to conduct litigation. Several costs lawyers are also now partners in legal disciplinary practices.

ACL chairman Iain Stark said there was growing recognition of the need for and benefits of regulation. It also ensured that clients have clear recourse in the event that something goes wrong.

He said: “As in every part of the legal world, working in costs demands high standards of education and professionalism, and I am pleased that so many people are recognising that the costs lawyer qualification is the way to achieve both. It is increasingly important for instructing solicitors to ensure that they are working with costs lawyers and not unqualified and unregulated costs draftsmen.”

Mr Stark added: “The Jackson reforms will put a far greater emphasis on dealing with costs pre-emptively rather than after the event. This means solicitors will need to bring in costs expertise from the start of a case to ensure that the budget they will have to submit to the court at an early stage is realistic and defensible.

“We have already seen in the costs management pilot schemes what can happen when a solicitor either does not engage in the process or gets it wrong – it can cost an awful lot of money. This is not an area where solicitors should either dabble or cut corners.

“Our research suggests that the Jackson reforms will also lead to a rise in the number of costs disputes between solicitor and their clients once the latter have to start paying out of their own damages. Solicitors will quite literally pay the price if they do not take preparation of their costs seriously.”

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

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Sir Terence: others have claims relating to alleged rigging of LIBOR rates

LIBOR claim: others have actions relating to alleged rigging of rates

A claim against Royal Bank of Scotland (RBS), including allegations of rigging the LIBOR rate, has been transferred to the new Financial List even though the move means bringing in a new judge.

The Property Alliance Group (PAG), which claims around £29m in damages, opposed the application by RBS for a transfer.

Sir Terence Etherton, chancellor of the High Court, said the definition of a Financial List claim under CPR 63A included both cases where the amount claimed is over £50m and those raising “issues of general importance” to the financial markets.

Sir Terence said the allegations by PAG “concerning the alleged improper conduct of RBS in relation to the fixing of LIBOR rates” involved “important issues of general market significance”.

He went on: “It is well known that there are others who have claims, and are now or are likely in the future to be litigating, in relation to similar issues arising out of the alleged rigging of LIBOR rates.

“It seems reasonably clear that the judgment following trial in the present proceedings will have an impact on other cases already launched and those which will be launched in the future.

“It is also likely that decisions about provisions in the agreements between RBS and PAG limiting RBS’s exposure to claims for negligence will have relevance elsewhere in the markets.”

Sir Terence said that if the case became “viewed in a general sense as a lead or test case”, followed by others suitable for the Financial List, it was desirable for it to be dealt with by a Financial List judge, so that the judgment carried “appropriate weight and respect in the market”.

The chancellor explained that this would mean that Mr Justice Birss, who had managed proceedings “conscientiously and to a high standard”, would be replaced by a Financial List judge.

The High Court heard in Property Alliance Group v RBS [2016] EWHC 207(Ch) that RBS had filed an amended defence of 172 pages (excluding schedules) to the claims.

Sir Terence picked out a number of points which he said should be noted in connection with the application for transfer to the Financial List.

Among them was that RBS argued that PAG had “misunderstood the nature and content of the British Bankers’ Association (BBA) definition of LIBOR” and that the bank denied making “any of the implied LIBOR representations” alleged by PAG.

“It is alleged that PAG’s case in relation to many of the LIBOR allegations appears to be based entirely upon a number of misunderstandings as to the nature and content of the BBA definition of LIBOR,” Sir Terence said.

The chancellor added: “The Financial List is deliberately restricted to a relatively small cadre of judges who are not only particularly expert in the law applicable to financial markets, but they will also be abreast of important developments in the practices of those markets.”

He directed the case to be transferred to the Financial List and for a new judge to be assigned to it.

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London B&PCs: No need for transfer

The focus of the new Business & Property Courts (B&PC) structure on keeping cases in the regions and not transferring them to London unless necessary has seen a judge in Bristol refuse an application to move a piece of group litigation to the capital.

Recognising that “a core tenet of the B&PC structure is one of due recognition of specialism and expertise in the regions”, His Honour Judge Russen QC said he did not regard the case as being beyond the resources of his court.

The senior judiciary have been clear that part of the B&PC structure is that no case is too big to be tried outside London.

Arif & Ors v Berkeley Burke Sipp Administration Ltd [2017] EWHC 3108 (Comm) concerns a growing number of claims arising out of the alleged mis-selling of self-invested pension plans.

Hugh James and Wixted & Co currently have 77 claims but more are in the pipeline, and their current value is about £4m.

In his ruling in November, which has just been published, HHJ Russen decided that it would be appropriate to grant a group litigation order.

The defendant then argued that either the Commercial Court or the London Circuit Commercial Court was a more appropriate venue than Bristol for “a nationwide claim” such as this; though the claimants had no particular connection with Bristol, they wanted the case to be heard there.

The defendant argued that the claims involved considerable legal and procedural complexity, and would take up court resources that were more available in London.

HHJ Russen said: “It seems to me that, in order to be persuaded of that, the other criteria in CPR 30.3(2) upon which the defendant relies alongside considerations of convenience and fairness in relation to venue – namely, the complexity of the facts and legal issues and the public importance of the outcome – ought to provide at least one fairly clear pointer away from this court.

“The single umbrella that has been created by the B&PC courts, and to which the Chancellor’s Advisory Note refers, is such that, in my judgment, I would need to identify particular reasons why the coverage provided by the specialist business of the Bristol District Registry might be considered to be deficient for the purposes of case managing and trying these claims.”

The judge said a “core tenet” of the B&PC structure is one of due recognition of specialism and expertise in the regions.

“If this particular court is to exercise its discretion by transferring the case away from itself then, in my judgment, it needs to be comfortable that it is not offending the new ethos by doing so…

“Recognising the need to be careful that the view of the incumbent court on this issue of transfer away from it is not obscured by some mote or larger impediment in the judicial eye, I cannot presently see any persuasive reasons.”

The judge said the claims did not raise particularly complex issues judged by the standards of either London court. “The terms of the defendant’s skeleton argument, focusing more upon the demand upon the court’s resources than points of value or complexity, reinforce this conclusion”.

He concluded: “I recognise that both the determination of the substantive claims and their pre-trial management might prove to be quite challenging… [but] there is nothing in these proceedings which points to the need for a transfer away from this particular Business and Property Court.

“I do not regard this piece of litigation as being beyond the resources of this court.”

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carrot-insuranceEclipse Legal Systems, the sole Law Society Endorsed legal software provider, is implementing its Proclaim Case Management Software solution at Cheshire-based insurance company, Carrot Insurance.

Based in Crewe, Carrot Insurance was founded in 2012 with two aims – to make the experience of car insurance more rewarding for its customers, and to make the roads a safer place for young drivers.  Using the latest telematics technology, Carrot Insurance has designed a range of products, and delivers an award-winning service from its committed team of experts.

Carrot Insurance has selected Eclipse’s Proclaim Debt Recovery Case Management system to automate case progression for collections against customers that haven’t paid their car insurance.

Proclaim’s ability to automatically produce and send emails, letters and text messages at the click of a button will significantly reduce the amount of time staff spend entering information, enabling them to instead focus on providing enhanced client service. Additionally, the flexibility of Proclaim’s in-built reporting suite will mean management can not only monitor internal KPIS, but also report upon the stage of a case, and as a result, compare a range of aspects on case progression and case outcome.

To ensure high standards of effective recovery are achieved, Eclipse’s Consultancy team will work in conjunction with Carrot Insurance to create bespoke documents that will react to the status of a debt, and workflows to export data to a third party debt recovery specialist when necessary.

Alex Jones, Collections Manager at Carrot Insurance, comments:

“Although we had number of specific requirements, the off-the-shelf Proclaim Case Management system met the majority of these seamlessly, and for those minor tweaks, we’re more than confident that the expertise of Eclipse’s Consultancy team will enable us to hit the ground running.

“In such a competitive market, it’s imperative for us that we have a system with the ability to improve operational efficiencies without our team needing to constantly make amendments. This is exactly what we’ll have with Proclaim. It will be fundamental to our future success, providing an excellent fit for high volume work such as ours, and allowing us to offer even greater transparency – both internally and externally.”

Take a look at Eclipse’s website here.

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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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A funder’s dream: Plies of proposals

Posted by Chris Deadman, director of operations at Litigation Futures Associate Invicta Capital Funding 

This is my valedictory blog for 2017. I am grateful to my loyal reader for enduring the polluted flushings of my diseased mind over the past six months. It has been fun to write and I hope that I have given the reader an insight into the world of a litigation flaneur.

Before I bid you happy holidays, I would like to share with you my two wishes for Christmas. For the avoidance of doubt, these relate to litigation finance and not my personal desires, which include a solid gold house, rocket shoes and the power to become invisible at will.

My first wish is that lawyers finally understand how litigation finance operates and how it can help to build them a successful and profitable practice.

Complicated and time-consuming application processes have been a barrier to accessing external finance in the past but things are changing.

Some completed third-party funding application forms that I have seen resemble one of those fabulously intricate mediaeval illuminated manuscripts by Sibilla Von Bondorf depicting the life of St Francis. But there are funders out there who adopt a far more pragmatic approach and simply want to deploy their cash quickly and cost-effectively into suitable matters.

These financiers are a welcome departure from the cumbersome and uncertain processes which have characterised the industry in the past.

My second and final wish is for there to be a greater number of cases financed in 2018. I have no doubt that we are seeing but a small percentage of the total pool of eligible cases. I cannot help thinking that there are many decent matters lurking in law firms across the country that would benefit from external finance.

More than that, I bet there are many meritorious cases that never get as far as a solicitor because of the claimant’s perception that litigation is simply too expensive and uncertain.

These are the types of cases that I and my competitors will be working hard to identify in 2018. And on that optimistic note, I wish you and yours a happy Christmas and a healthy and prosperous New Year.

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Oral CMCs “not something to be feared”

Lawyers who make late requests for paper case management conferences (CMCs) without good reason “run the risk of sanctions”, the High Court has warned.

Mr Justice Walker said: “An oral case management conference is not something to be feared, nor is it something so unimportant as to be no more than a nuisance.

“It is a valuable opportunity in which the parties have the benefit of a judge giving the case a constructive look, working through the practicalities of what the parties have in mind, and seeking to ensure that the case is on track to proceed in a way which will be efficient, which will be fair to both sides, and will accord with the interests of justice.

“Save in the most exceptional circumstances, the appropriate course for anyone who is thinking that costs might be saved by an out-of-time request for a paper case management conference is to think again.

“The best working assumption is that the benefits of an oral case management conference will more than justify the costs involved.”

Walker J said “the moral” for anyone contemplating a late request for a paper CMC was that if the parties had not been able to agree and prepare the documents within time, the case “is likely to be one in which an oral case management conference will be of particular benefit”.

Ruling in Richardson v Glencore UK [2014] EWHC 3990 (Comm), the judge said a letter e-mailed to the court listing officer by the parties the day before the CMC, asking whether their attendance would be required, “demonstrated a failure to appreciate the role and importance” of a CMC.

It also demonstrated a failure to comply with the special provision made for case management in the Commercial Court by CPR 58.13 and the Admiralty and Commercial Court Guide.

Walker J said the general rule was that there must be an oral CMC at court, and only in “rare and exceptional” cases would it be possible to dispense with them – where the issues were straightforward and costs of a hearing could not be justified.

However, the judge said that despite what was said in the guide, he had recently dealt with several cases where lawyers had reached a “hurried agreement” at a late stage as to the orders to be made at a CMC.

“This has then been followed by an out-of-time request to the court to vacate the scheduled hearing.”

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Richards: counsel success fee concern for the Ministry of Justice to address

There will be another statutory instrument (SI) next month to tidy up the one published last week with changes to the Civil Procedure Rules, after a warning that the new rule on proportionality could affect millions of pounds worth of work already done by solicitors.

Lord Justice Stephen Richards, who chairs the rule committee, said the March SI will deal with the problem identified by the Law Society over the transitional provisions for the rule.

It seems that other faults identified in the changes to the CPR will also be addressed by the SI.

The society’s president, Lucy Scott-Moncrieff, wrote to Richards LJ with concerns about “unintended consequences” of the CPR amendments, but only received a positive response to one of them – the proposed rule 44.3(7), which provides that the new test on proportionality will not apply to those cases which are commenced before 1 April 2013.

She said: “This has been interpreted by the [rule] committee as applying to all cases ‘issued in court’ on or after 1 April 2013. However, many cases are prepared months, and in some cases years, before they are issued… Solicitors will have been preparing current cases on the Lownds test on proportionality, where ‘reasonable and necessary’ work will be recoverable…

“The rule will therefore have retrospective effect in that the more restrictive rule on proportionality (where even reasonable and necessary work will be disallowed if the costs as a whole are considered disproportionate) will be applied to work done before the rule has come into effect.

“This could affect millions of pounds of work already done in current non-issued cases to the prejudice of solicitors and their clients.”

In his response, Richard LJ said the rule committee “acknowledged the force” of the society’s argument and is to insert a further transitional provision within rule 44.3 “to the effect that costs incurred in respect of work done before 1 April 2013 will not be disallowed if they would have been allowed under the rules in force immediately before that date”.

However, the rule committee rejected three other concerns articulated by the Law Society:

  • The transitional provisions for one-way costs shifting (QOCS) are potentially unfair because the protection will not apply when the conditional fee agreement pre-dates 1 April but after-the-event insurance is not taken out until afterwards. Richards LJ responded that solicitors will have had sufficient notice of the rule to take out insurance by 1 April even if they might otherwise have delayed until just prior to the commencement of proceedings;
  • The rules prevent recovery of a success fee in respect of counsel instructed after 1 April even where the solicitor has entered into a funding arrangement before then. Richards LJ said this issue arises out of the commencement provisions for section 44 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and so is a matter for the Ministry of Justice to address.
  • There is some ambiguity in the QOCS rule 44.14(1) in that it could be read to imply that if the costs exceed damages, none of it can be recovered. Richards LJ said the rule committee concluded that there is “no realistic possibility” a court would construe it in this way.

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Sir Henry: government “angst” over the cost of clinical negligence

Sir Henry Brooke, former Vice-President of the Court of Appeal’s Civil Division, has called on government lawyers to “involve themselves in mediations even if they perceive that they may be losing business for themselves”.

He was commenting on two recent cases, reported by Litigation Futures, in which the NHS Litigation Authority (NHSLA) was ordered to pay indemnity costs on detailed assessment proceedings after rejecting offers to mediate.

As a lord justice of appeal, Sir Henry ruled in the important case of Dunnett v Railtrack that parties who unreasonably refused to mediate could lose the ability recover some or all of their costs, a principle upheld in the leading case of Halsey.

Writing on his blog following the two recent cases, Sir Henry said: “Since taxpayers’ money was at risk, it would be good if the claimants’ solicitors (who were the same in both these cases) could collaborate with the NHSLA in reporting to the public just how much money was in fact wasted by the stance adopted by the defendants’ representatives in each case.

“If, by way of illustration, the taxpayer had to pay £50,000 in each case more than he would have had to pay if those representing the NHSLA had behaved prudently and reasonably, that would mean that £100,000 of public money went down the drain for no real purpose. Oh dear.”

Sir Henry Brooke referred to the words of Charles Dickens in Bleak House: “The one great principle of the English law is to make business for itself. There is no other principle distinctly, certainly, and consistently maintained through all its narrow turnings.”

Sir Henry went on: “If the government is to be serious about reducing the cost of civil justice, it must get the message through not only to the panel solicitors but also to the costs lawyers and law costs draftsmen who represent it that this principle should now be regarded as being as dead as the dodo.

“All these professional men and women must always act reasonably in their clients’ interests. This entails being willing to involve themselves in mediations even if they perceive that they may be losing business for themselves thereby.”

Responding to a comment from Jonathan Dingle, barrister and co-founder of Trust Mediation, asking how much more public money would be wasted by the NHSLA, Sir Henry said the issue was “particularly poignant” because of “all the angst that government has been expressing about what it perceives to be the excessive cost of clinical negligence litigation”.

Sir Henry said that in both of the recent cases, “after a long delay the NHSLA’s solicitors refused an invitation to mediate the claimant’s costs bill in each case. In the first case (Reid) they gave no reasons at all. In the other (Bristow) they said only that the case had now been set down for a detailed assessment.

“In other words, they did not think there was any need for them to justify their refusal. In each case an experienced costs judge held that their refusal to mediate was unreasonable.”

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Now that the LASPO changes have been introduced and the market adjusts to the new regime the minds of legal expenses insurers are beginning to focus on the run-off scenario for After the Event insurance. The huge increases in the number of cases underwritten by LEI’s in the run up to 1st April have no doubt improved the look of the GWP book, but the eventual price could be a high one unless insurers take active risk control measures to prevent an increased loss ratio caused by cases lacking genuine and reasonable prospects of success. When considered alongside the issue of premium recovery accountability, the factors determining a healthy run-off become ever clearer.

Our experience at LAS paints a potentially worrying picture for insurers. A recent audit of a major personal injury law firm revealed the failure to account to the ATE insurer for a 6 figure sum of premium recoveries over a two year period. Our 2012 audit of a large practice showed a similar sum owing in respect of premiums recovered through miss-selling based claims. We are sufficiently confident of our ability to identify the failure of law firms to fully account for premiums recovered that we operate on a percentage of recovery basis. This cost-free service is proving very attractive for insurers seeking to optimise premium income, particularly where post-LASPO the relationship with the law firm is perhaps not as strong as it once was. These audits can be done remotely or via a physical visit.

The auditing of claims against technical handling criteria is normally undertaken on-site which provides the added advantage of enabling an assessment to be made regarding the efficacy of the firm’s supervisory structure, compliance regime and risk management culture. Against this background LAS are able to provide case-specific template reports containing key data, timelines and an independent assessment of Prospects of Success.

Recent live file audits have been conducted at firms specialising in Motor, Employer’s and Public Liability claims and Industrial Disease, Noise Induced Hearing Loss and Contract Law disputes. In general we recommend corrective action in c20% of the claims audited, having identified key factors that have been overlooked or steps that need to be taken. Examples include the failure to obtain available Police Reports, not acting in accordance with a supervisor’s instructions, failing to follow Counsel’s Advice, unacceptable delays in progressing matters, not communicating Part 36 Offers to insurers or clients and failing to contact independent witnesses. In an additional 13% of cases we recommend that the insurer withdraw cover due to a determinable lack of prospects which have been put to one side by a lawyer too busy to fully stay on top of matters. These concerns are more prevalent in medium/large practices where a high turnover of Fee Earners and supervisors, coupled with unmanageable caseloads, lead to a fall in standards.

As the market compresses in light of the LASPO changes, and previously strong business relationships come under increasing pressure, a greater prevalence of similar concerns is almost inevitable. Our advice is simple – manage the run-off before it runs away with you!

Dave Massey – Director, Legal Auditing Services (LAS), Bristol


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Medical reports: argument over choice of MRO

Medical reports: argument over choice of MRO

One of the country’s largest medical reporting organisations (MROs), which considers itself prejudiced by the new MedCo portal, is battling to take the government to court in an effort to change the way it operates, Litigation Futures can reveal.

Although an application for judicial review by Speed Medical against the Ministry of Justice (MoJ) was rejected last week by the High Court, the company yesterday issued a notice to renew its application at an oral hearing.

Since 6 April, a claimant seeking to bring a low-value soft tissue injury claim following a road traffic accident is required to instruct a medical expert from a shortlist generated randomly by MedCo’s IT portal.

This list is made up of either one high-volume national MRO (a tier 1 provider) and six other (tier 2) providers, or seven individual medical experts.

Speed is one of the tier 1 providers and in a claim lodged in late March argued primarily that only including one tier 1 provider in the list was anti-competitive.

However, Mr Justice Leggatt last week rejected the application, saying that as MedCo was not an MRO itself and the decision on the make-up of search results was made by the MoJ, it could not be reasonably argued that MedCo was abusing a dominant position.

He also found no evidence of state aid for smaller MROs and, on the irrationality of the decision, concluded: “It is evident that the policy aim is to maintain consumer choice without allowing the exercise of such choice to compromise the independence of expert reports.

“No doubt there is scope for disagreement about whether the number and mix of MROs presented on a search have been set in the optimum way to achieve those goals, but the defendant has given coherent reasons for its decision on those matters and [it] is impossible to say that the decision is irrational.”

In a statement to Litigation Futures, Speed Medical said: “The defendant [the MoJ] failed to respond to our letter before action within the extended time period they requested (by 31 March 2015). Their response letter arrived on 9 April 2015, a week after our application for judicial review had been submitted to the Administrative Court.

“The defendant then submitted to the court immediately before the May bank holiday weekend summary grounds of defence in which they raised further points not set out in their response letter. As a result of not being given the usual opportunity to consider and respond to the defendant’s position, we submitted reply submissions to the court on Wednesday 13 May 2015.

“On Thursday 14 May 2015, we received a letter notifying us that the court had already considered the matter and made an order on the papers on Monday 11 May 2015. Our correspondence had ‘crossed in the post’, so to speak.

“We have submitted to the court a notice to renew our application at an oral hearing, and it is our view that the court will be persuaded to grant our application once it has considered all of the papers.”

Speed said it was not taking on the MoJ “selfishly”. It said: “We’re doing it on behalf of all the long-standing professional MROs and solicitors who want to provide an excellent service to the consumer.”

An MoJ spokesman said: “We are committed to seeing the cost of motor insurance come down. Motorists should not continue to bear the cost of a system that has been open to abuse.

“Our reforms will create an improved system for medical evidence so that genuine whiplash claims can be settled but those without merit are stopped. We are pleased that the court refused the original application on all grounds and we will defend any further legal challenge.”

Meanwhile, Speed has also moved to tackle the problem in another way by creating 10 tier 2 agencies that went live this week on MedCo.

A separate judicial review over alleged inadequate consultation before setting up MedCo is also underway.

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Airline flights: Ryanair in sights for giant claim

Flights: airline in sights of website

A platform that builds group actions using techniques similar to crowdfunding is close to reaching the target for claimant numbers to launch its first case.

Venture capital-backed CaseHub, which uses social media and Facebook to sign up claimants for consumer actions around such issues as Ryanair’s passenger fees, letting agent fees, and private parking fines, takes a percentage if a case succeeds.

Cases involve litigation funders and law firms, with CaseHub’s participation limited to achieving claimant number targets.

CaseHub’s website uses the slogan “Fight bad guys online. Justice can be fun (sometimes)”. It describes itself as “a platform for groups of people to challenge unfair practices in the courts, without facing any risk”. It continues: “We partner with law firms to run class actions and lawsuits. Anyone who joins the case online gets a payout if it wins.”

The case against private parking company ParkingEye, which obtains car owners’ addresses from the Driver and Vehicle Licensing Agency (DVLA) – also a subject of the action – has signed up 225 claimants out of a target of 250, according to the site. Each of them have received county court judgments after allegedly being unwittingly sued for unpaid parking penalties which CaseHub claims is due to DVLA address information being out of date.

CaseHub founder, Michael Green, a Cambridge law graduate in his early 20s, told Litigation Futures he had spent the past year putting together cases. The business won backing from venture capital firm Downing Ventures last August for an undisclosed amount. It also has “angel tech investors”, said Mr Green.

He explained: “We curate the cases ourselves, but are open to suggestions from the public.”

The model for the business up to now, he said, was to take the cases to litigation funders after seeking QCs’ opinions on the legal merits. The cases were handled by “medium-sized City firms”.

He stressed: “Obviously we are not Solicitors Regulation Authority-regulated and would not want to run the cases ourselves… There is no process for choosing a law firm: we have an informal panel.”

The litigation funders and solicitors arranged damages-based agreements or discounted conditional fee agreements, he said. “We just bring them the case. They look at the merits. Then we all work together.”

He went on: “We get all the litigation finance stuff sorted before we go build the class, because you only really have one shot at getting a claimant and what you can’t do is get someone’s interest, go to a litigation funder, get all that stuff sorted, and go back four months later and say ‘you were interested before, now sign up’.

“Consumers have way too short of an attention span, so all this stuff needs to be organised in advance so as far as the individual who wants to claim money back is concerned they can just join online and they never hear from us until the case wins or loses.”

He continued: “I think the real challenge in what we do is getting very large classes using mostly social media alone.

“In part that’s a combination of picking the right sort of problem where lots of people feel very angry against a particular institution, but in addition it’s also about finding cases where people have lost enough money. Obviously if they have lost £100 each, it’s easier to do than if they have lost £10 each.”

“One of the real difficulties is you have people who come forward and say they have paid something but they can’t prove it. If you have a blanket policy of saying ‘tough, sorry’, then you lose out on a large part of your claimant group.

“The legal risk is actually not too much of a problem, it’s more of a challenge on-boarding customers and satisfying the legal system’s demands for formal due diligence.”

A ParkingEye spokesman said: “While it is a motorist’s responsibility to keep their V5C registration certificate updated, where legal action is considered to be the appropriate next step we aim to ensure we use the most up-to-date information available.

“We rely upon registered keeper information from the DVLA and, in those cases where the registered keeper has not contacted us following the parking charge being issued, we engage the services of a credit reference agency.”

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Allianz Legal ProtectionAllianz Legal Protection (ALP) has partnered with Enable Law, one of the UK’s leading specialist medical negligence law firms, which supports claimants across 7 regional offices in the South of England.

ALP will provide After the Event  insurance (ATE) for all of Enable Law’s clinical negligence and personal injury case types, to protect clients against adverse costs and cost risks associated with unrecovered disbursements in litigation.

In addition to ATE insurance, ALP will also provide Enable Law with access to its Paid as Incurred Disbursement model (PAID). This will allow them to make early claims for disbursement through its unique funding model which is available without interest or drawdown fees.

PAID is simply paying disbursements as incurred rather than at case conclusion, alleviating the cash flow burden that firms face due to disbursement expenditure.

Mike Wildy, Senior Business Developer commented: ““We’re very pleased to be working with the experts at Enable Law, and their independent broker QLP.  This new relationship is further evidence of how attractive our PAID facility is to the ATE market and legal industry. As the legal landscape continues to evolve we’re well positioned to respond and will continue to develop market leading products and services specifically designed around the needs of our clients and business partners.”

Rob Antrobus, Partner at Enable Law added: “We are delighted to have partnered with ALP who have shown their expertise and enthusiasm to meet the needs of our business and clients. Their adaptability and collaboration to date has ensured our customers are protected with a market leading ATE product”.

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Rowles-Davies: ideal platform

Burford Capital has made a significant statement of its intent to grow its stake in the UK third-party funding market by hiring Nick Rowles-Davies as a managing director to generate new business.

Mr Rowles-Davies previously led the new business and underwriting activities at funder Vannin Capital.

An experienced litigator and an accredited mediator, he was previously in private practice, and headed the dispute resolution practice at London boutique commercial firm Bridgehouse Partners.

AIM-listed Burford is the world’s biggest funder and in 2012 added after-the-event insurance to its portfolio by buying First Assist. Last week it reported a 25% increase in profits before tax for 2013, after recording significant increases in income on both sides of the business.

Christopher Bogart, Burford’s chief executive, said: “We are delighted to have Nick join Burford in this important role to help address the significant interest in litigation finance offerings which we have seen in the UK. I have known Nick for some time and am enthusiastic about what he will be able to achieve at Burford.”

Mr Rowles-Davies said: “I am very pleased to be joining the leading player in the litigation finance space. Burford’s capitalisation and its institutional resources provide the ideal platform for me to continue to grow the company’s presence in the UK market.”

Meanwhile, Vannin – which claims to be the world’s largest private equity-backed funder – has brought in Appleby Global partner Nick Verardi as a Vannin board member and commercial director of Bramden Investments, the Isle of Man-based private equity house which backs Vannin.

He is joined by Chris Smith, who has moved from London firm Olswang, where he was a senior associate in the corporate team. As well as working for Vannin, he will be Bramden’s investment manager.

The company launched in 2010 with an initial £8m investment pool but now has a £100m-plus facility. It is currently handling litigation in 10 countries with more than £5.8bn of quantum under management.

Mr Verardi said: “The litigation funding landscape in the UK and across the globe is developing constantly and that creates unique opportunities and challenges for us and our clients, opportunities that I believe Vannin can seize.”

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Jackson: momentum is heavily for reform

Jackson: momentum is heavily for reform

Lord Justice Jackson has been drafted in by the senior judiciary to work on extending fixed recoverable costs – even though earlier this year he said he would rather not do it.

The move by Lord Thomas, the Lord Chief Justice, and Sir Terence Etherton, the Master of the Rolls, comes in the wake of the commitment in September’s joint government and judiciary vision statement, Transforming our Courts and Tribunals, to look at options to extend fixed recoverable costs much more widely.

Jackson LJ, who has until 31 July 2017 to complete the review, has been chosen because the work is “a logical extension” of his 2010 report, in which he first recommended greater use of fixed recoverable costs.

Describing the current system as “exorbitantly expensive” in a speech earlier this year, he said the profession was now “more willing” to accept fixed costs, partly because it would “dispense with the need for costs budgeting, which not everyone enjoys”.

He called on the government to take a decision on whether to have fixed costs for cases worth up to £250,000, as he recommended, or for all cases.

Jackson LJ said that if the government did not “wish to pursue this reform as a priority”, it should “suggest that a senior judge who doesn’t mind being pilloried (preferably not me again)” actually draws up the scheme.

A statement put out today by the judiciary said the review has been agreed with the government “and will inform its public consultation on proposed reforms, which will follow the review after consideration of its recommendations”.

Lord Justice Jackson will formally commence his review in January 2017, but will be inviting written submissions on this topic immediately (see details below).

The terms of reference are “to develop proposals for extending the present civil fixed recoverable costs regime in England and Wales so as to make the costs of going to court more certain, transparent and proportionate for litigants”; and “to consider the types and areas of litigation in which such costs should be extended, and the value of claims to which such a regime should apply”.

Jackson LJ said: “I have set out my present views on the principles of fixed recoverable costs in the final report of my review and in recent lectures and publications.

“I have been commissioned to undertake this review because it is integral to the overall package of reforms which I originally proposed. Chapter 16 of my final report recommended that serious consideration should be given to extending fixed recoverable costs to the lower reaches of the multi-track after the other reforms had bedded in.

“Although the momentum is heavily for reform, the review will provide ample opportunity for comments and submissions on the form and scope that reform should take. I am inviting the views of practitioners, users of the civil courts and any other interested parties on these points. Seminars will be held in London and elsewhere to discuss the issues.

“There is a great deal to be done on the detail of the review, which will inform the government as it prepares proposals for formal consultation in due course.”

Law Society president Robert Bourns said: “We do not oppose the principle of fixed costs for straightforward, low-value claims as they can provide some certainty for both sides in litigation and avoid protracted disputes about the level of costs.

“But we have previously expressed concern at suggestions that costs should be fixed for all claims up to £250,000 – a tenfold increase on the current limit for many claims subject to a fixed-cost regime.

“Cases at this level of compensation include situations where people have been very seriously harmed and where the application of fixed costs would be totally inappropriate. It would also raise significant questions about people’s ability to access justice.

“Such a one-size-fits-all approach for all cases, regardless of complexity, will simply make many cases economically unviable, undermining the principle of justice delivering fairness for all.”

Association of Costs Lawyers chairman Iain Stark, a partner at Weightmans, said: “Whilst recognising the desire for wholesale reform, thereby providing certainty in the legal costs arena, this must be tempered by accepting that access to justice must be the bedrock of any consultation. We welcome the opportunity to respond.”

Nigel Teasdale, the new president of the Forum of Insurance Lawyers and a partner at DWF, said: “FOIL welcomes long-anticipated progress in the widening of fixed costs, with the launch of the review a first important step towards a positive outcome for the industry.

“It is very encouraging to see the determination for an extension, not only for clinical negligence and personal injury claims but across the civil justice system, and Lord Justice Jackson is absolutely the best-placed person to lead this review.”

Making submissions

Written submissions should be sent by 16 January 2017 to:

If evidence is being submitted of actual recoverable costs, this should identify the type of case (eg, clinical negligence, property, judicial review etc), and the source of evidence (eg, detailed assessments under the post-April 2013 rules, approved budgets, agreed budgets etc).

Material submitted should take account of the Civil Procedure Rules on proportionality, in particular the factors set out in rule 44.3(5).

Views are also sought on the level of claim at which fixed recoverable costs should stop and costs budgeting should apply instead.

Other issues that the review will need to consider, and on which views are welcomed, are how to accommodate counsel’s fees, experts’ fees and other disbursements within a fixed recoverable costs regime. Another issue for consideration is the difference which frequently arises between claimant and defendant costs.