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PrintAugusta Ventures – the UK’s leading litigation financier for the SME market – has this week launched its blog: Diary of a Litigation Fundera sideways look at the world of litigation finance.

Weekly posts from the Augusta team will provide a fresh take on the funding market, you can view the blog here: and keep up to date with new posts by following the blog on Tumblr.

Managing director Louis Young says: “Financing for litigation is no longer a last resort option for many lawyers, nor is it seen as something that is only used by mid-bracket firms to prop up their workbook. Over the past 18 months financing  demand among claimants has increased dramatically and there is a growing realisation among solicitors that those who are familiar with the ins and outs of financing will be much better positioned to secure appointments to run a matter. This blog is our way of providing firms with an insight into how a financier thinks – as by knowing what the other side is thinking you have a much better chance of getting what you want.”

Augusta is well on its way to achieving a half century of claims financed since it started operations in 2014. While other funders focus on a handful of multi-million pound investments in big cases, Augusta invests between £10,000 and £600,000 in a broad range of commercial litigation matters, making them the first choice for may law firms and claimants.

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Heskins: MedCo promotion

A structural change at MedCo kicks off our round-up of a series of significant appointments in the world of litigation.

Martin Heskins has been named as MedCo’s executive chair with responsibility for leadership and strategic direction.

Mr Heskins, formerly general manager of MedCo and before that civil justice policy adviser at the Law Society – where he was the society’s MedCo director – replaces Lorraine Rogerson.

In a statement, MedCo said that in line with its articles of association, Ms Rogerson opted to step down as independent chair in December 2016, after a two-year tenure that saw the portal’s launch and implementation of the revised qualifying criteria published by the MoJ in October 2016 to stop the creation of ‘shell’ medical reporting organisations.

Further, Leigh Evans has been appointed to oversee MedCo operations with responsibility for system functionality and user experience. Mr Evans is employed by the Motor Insurers’ Bureau, which is the appointed service provider to MedCo.

Elsewhere, there has been a major shake-up at the Centre for Effective Dispute Resolution (CEDR), with Dr Karl Mackie – who has been chief executive since it was created in 1990 – becoming founder president. It will be recruiting a new chief executive.

In a statement, CEDR said: “This new role reflects the unique contribution that Karl has made to CEDR over many years. It will allow him to concentrate both on CEDR’s Foundation activities to innovate in dispute resolution and on his prestigious mediation practice.”

Further, deputy chief executive Eileen Carroll will take on a new role as principal mediator and co-founder, enabling her to work exclusively in her mediation practice.

Dr Elizabeth Vallance, CEDR’s chairman, said: “Karl has been synonymous with CEDR since its inception, making an unparalleled contribution not only to the organisation but to the professional development of mediation and alternative dispute resolution, both in the UK and internationally.

“His experience and knowledge of the area will give a real boost to CEDR’s strategic ambitions and we look forward to working with him in this important new role.”

Dr Mackie said, “It is rare that you get to change jobs whilst still doing what you love and working with colleagues that you respect and admire. So I am thrilled that this move to become CEDR’s founder president will allow me to expand my dispute resolution practice and also to focus more on thought-leading and ground-breaking initiatives.”

The NHS Litigation Authority (NHSLA) has appointed Mike Pinkerton as a non-executive director to its board. He steps down as chief executive of Doncaster and Bassetlaw Hospitals NHS Foundation Trust at the end of this month after nearly five years, and also completing 20 years as an NHS board director.

It follows the appointment of Dr Mike Durkin, NHS national director for patient safety at NHS Improvement, as an associate non-executive director to its board so as to provide expert knowledge of patient safety in general, and national patient safety initiatives undertaken by NHS Improvement in particular.

Ian Dilks, chairman of the NHSLA, said the appointments “reflect our commitment to working collaboratively with other parts of the NHS to improve patient safety”.

Finally, third-party litigation funder Vannin Capital has named Sir Andrew Smith QC, who retired from the High Court bench last October, as a new member of its investment committee.

A former judge in charge of the Commercial Court, he will continue to sit as a deputy High Court judge, is appointed as a judge to Abu Dhabi Global Market Courts and will sit as an arbitrator.

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Documents: Argument over disclosure

Authoritative guidance on whether clients can demand their full files from previous solicitors would help the Senior Courts Costs Office deal with the large number of applications it is facing, a costs judge has said.

Master Brown’s comment came in a decision in which he granted such an application, brought again by Leeds firm JG Solicitors, in the wake of recent rulings by two of his fellow judges that went the other way.

He said: “A large number of similar applications have been made in the SCCO. As I understand it, whilst many are substantially resolved by the parties, there are significant differences in approach to the issue of the court’s jurisdiction to make the orders sought.

“Although I have set out my views on this issue (at greater length than I had intended), it does seem to me that authoritative guidance on the point may assist.”

In Swain v JC & A Ltd [2018] EWHC B3 (Costs), the claimant’s personal injury action settled for £2,807, from which the solicitors deducted £891. It is the deduction that the claimant is considering whether to challenge.

The defendant firm initially sought to deal directly with their former client instead of his new solicitors, and on the day he issued proceedings, it sent him what it said was a statute bill for £2,634. This gave credit for sums already paid but asserted that a further £927 was due.

It was “substantially redacted”, with the fee-earner’s details removed, and claimed an hourly rate of £250. The after-the-event premium was £198.75.

The claim before Master Brown ultimately focused on the disclosure of four schedules referred to in the disclosed part of the conditional fee agreement, and any other documents in the firm’s client-care pack that had not been disclosed.

Master Brown said section 68 of the Solicitors Act 1974 gave the court the discretion to order the provision of copies of the documents sought, “whether or not a proprietary right in the relevant documents has been established”.

Further, “it would be appropriate in this case for that discretion to be exercised in the claimant’s favour”.

The claimant said he had never received a signed copy of the CFA, and in any case the judge said he doubted whether many clients, particularly those bringing relatively low-value personal injury claims, “would appreciate the need to retain documents they had been provided with in the course of a claim for any length of time.

“Indeed, I would expect many clients to assume that if they were to lose or mislay the papers for any reason, their solicitor would provide them copies on request.”

It was reasonable for the claimant to seek the documents “as he is at a substantial disadvantage without them”.

He added: “Section 6.4 of Practice Direction 46 provides that if any application for an assessment concerns a conditional fee agreement, a copy of that conditional fee agreement must accompany the claim form.

“Whether or not the court might issue proceedings notwithstanding a failure to append such an agreement to the claim form, the practice direction clearly acknowledges the importance of considering such an agreement in advance of an application for an assessment.

“Further, quite apart from any concern as to the reasonableness of the fees generally and the necessity of expenses claimed in the bills in this case, it seems to me that there is a particular need to consider the status of the fee-earner and the rates that were agreed for the fee-earners.”

The claimant had been told a legal executive would be handling his claim, and the judge said “the rate of £250 per hour is perhaps a rate one would normally associate with a substantially higher-grade fee-earner in a matter of significantly greater complexity and value.

“I would expect details as to the charging arrangements to be set out in the schedules to the CFA and I think it would be necessary to consider these prior to an application for an assessment in the context of a general consideration of the reasonableness of the funding arrangements and the charges.”

There was also confusion about whether a success fee was provided for, which the schedules would clear up.

Master Brown acknowledged the “substantial and legitimate concerns about the proportionality of costs incurred in applications of this sort, and as to the prospect that allowing the production of copies of documents might encourage ‘satellite’ litigation”.

But he said: “In this case the costs that would be at stake on an application for assessment are potentially significant in proportion to the damages received such that the matter is likely to be of importance to the claimant, particularly given the recent demand for payment by the defendant.

“Indeed I do not think that these two concerns should weigh against making an order which I otherwise consider to be correct; if the sums involved are modest in proportion to the costs that would be incurred in pursuing a section 70 assessment, that might be said to be a factor which weighs in favour of giving the disclosure sought now, not against.

“Further, if the exercise of providing copies or inspection of documents is at the claimant’s expense this should deter frivolous requests; the costs involved in this application will reflect the issues arising, including issues as to proprietary interests, and thus may be higher than might otherwise be the case.

“In addition, the ‘one fifth rule’ is statutory protection against frivolous or unsubstantiated applications for assessment. Moreover, in the spirit of CPR 31.16, there is, it seems to me, at least a reasonable basis for thinking that transparency will improve the prospect that any dispute as to the defendant’s costs can be resolved without the need for the court’s further intervention.”

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Lord: scope to use budgets to understand other side’s tactics

A new practice of “budget brinkmanship” could emerge from the introduction of costs management, according to a leading costs lawyer, who said the interpretation of costs budgets is set to become a central tactical consideration during cases.

Jon Lord, principal costs lawyer at Cost Advocates, claimed that the costs management schemes piloted in the Mercantile, and Technology and Construction Courts, as well as in defamation proceedings, have seen budget forms deployed not just as a prediction of costs but increasingly to have a tactical bearing on the case.

The forms are exchanged between both sides, acting as the benchmark for assessing recoverable costs at the end of a case, meaning law firms can use them to create a profile of the strength and scope of the other side’s case. Lawyers need to see them like this, rather than just as costs estimates, he explained.

Mr Lord said: “Lawyers are required to provide the breakdown for pre-action costs, disclosure, witness statements, expert reports, fee-earners’ time, counsel’s fees, contingents and other disbursements. Trying to calculate these is a very complex procedure.”

“This means there is scope to use the budgets as a way of understanding and potentially influencing the decisions of the opposing side in how to tackle the case. A high budget for expert reports, for example, could suggest a well-built case, while a low provision for counsel fees could imply that the other side is not anticipating heavy involvement from barristers.”

Mr Lord said it is critical too for lawyers to review their own budgets before they are submitted to ensure they are reasonable and proportionate. “This could result in the emergence of ‘budget brinkmanship’, which goes beyond providing predictable costs but undertaking a detailed review of both budgets to anticipate the likely direction of the litigation.”

He added that there is certainly scope to try and use budgeting to have some bearing on the direction of a case. “For instance, if a firm went into litigation with a very high costs budget, then it could scare the opponent into mediation to avoid an expensive case.

“On the flipside, a lower budget may make the other side’s budget look unreasonable and encourage them to trim costs, such as jettisoning expensive witnesses rather than running the risk of footing a large bill.”


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Chalk: DBA fee analogous to success fee

The application of the indemnity principle to damages-based agreements (DBAs) should not mean claimant lawyers lose out if base costs exceed the contingency fee, a leading academic has claimed.

Successful claimants under a DBA will still be entitled to recover their base costs as calculated in the normal way, and last week the Ministry of Justice said the indemnity principle meant that if the DBA fee is less than the base costs, a losing defendant will only be liable to pay the former.

However, well-known legal costs expert David Chalk, of Winchester University, argued that if, under the DBA, the client is liable for costs and additionally for a contingency payment, “then the contingency payment is entirely irrelevant to the opponent and its costs liability”.

He explained: “The opponent will always be liable as usual for the costs of the work done to the extent recoverable. The client is in addition liable for a contingency fee based on damages.”

He said the DBA fee was analogous to the success fee under a conditional fee agreement.

Mr Chalk said that if this was not the case, it would produce an odd result: “The purpose of the DBA regulations is to support access to justice whilst protecting client damages, rather than provide a windfall for the opponent.”

He suggested that the confusion has arisen for two reasons: the draft regulations have been lifted from the regulations governing DBAs in employment tribunals, where there are no recovered costs; and the regime is modelled in part on the one operating in Ontario. “It is always dangerous to borrow just a part of some other system and graft it on to your own system – I fear in this case it simply confuses matters,” he said.

Mr Chalk continued: “Some will say I am wrong because, at least in personal injury, the regulations as drafted make reference to the payment being net of recovered costs and anyway the MoJ thinks there is no liability beyond the contingency fee.

“So what? That does not mean the funding agreement as a whole cannot and does not create a liability for base costs – and that is the only sensible way to use a DBA in litigation.”


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Lord Neuberger

Lord Neuberger: no explanation which justified second application

Litigants are not entitled to make a second application for relief from sanctions unless there has been a “material change in circumstances”, the Supreme Court has ruled.

It also did not seek to revisit the guidance on relief set down by the Court of Appeal in Mitchell and Denton.

Upholding an earlier ruling by the Court of Appeal, the Supreme Court ruled that under CPR 3.7, a deputy High Court judge “simply had no grounds to justify his entertaining the second relief application on its merits”.

Giving the judgment of the court, Lord Neuberger said late compliance with an ‘unless order’ could, in certain circumstances, give rise to a successful second application for relief.

“If, say, the unless order required a person or company to pay a sum of money, and the court subsequently refused relief from sanctions when the money remained unpaid, the payment of the money thereafter might be capable of constituting a material change of circumstances, provided that it was accompanied by other facts.

“For instance, if the late payment was explained by the individual having inherited a sum of money subsequent to the hearing of the first application which enabled him to pay, or if the company had gone into liquidation since the hearing of the first application and, unlike the directors, the liquidator was now able to raise money.”

However, in the case before him, Lord Neuberger said compliance with the unless order “was not accompanied by any explanation which could possibly have justified a court concluding” that there had been a material change of circumstances.

The Supreme Court heard in Theravajah v Riordan and others [2015] UKSC 78, that Mr Theravajah entered into an agreement with John Riordan and Eugene and Barrington Burke to buy the shares they owned in a property company.

Having paid £1.57m to the appellants, Mr Theravajah sought specific performance of the agreement and obtained a freezing order in May 2013 which required them to provide disclosure.

The appellants failed to comply in full and the following month Mr Theravajah obtained an unless order from the High Court, which warned the appellants that they would be debarred from defending the claim unless they complied.

After the appellants failed to comply, Mr Justice Hildyard made the debarring order later that summer and rejected the first application for relief from sanctions.

The day before the trial on 3 October 2015, the applicants provided what they considered to be full disclosure and made a second application for relief from sanctions.

Andrew Sutcliffe QC, sitting as a deputy High Court, granted relief from the debarring order. However, Mr Theravajah appealed successfully to the Court of Appeal.

Lord Neuberger said he agreed with the ruling of Lord Justice Richards in that court, and although the original trial judge, Mr Justice Hildyard, gave his decision before the judgments in Mitchell and Denton, his reasoning and decision reflected the guidance and approach set out in them.

“Quite rightly, there has been no suggestion that we should reconsider what was said in those decisions,” Lord Neuberger said. He dismissed the appeal.

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Attu: helping to minimise the impact of crises

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

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

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

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

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

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

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

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


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ARAG plc, the UK arm of the worldwide legal expenses insurer ARAG Group, has announced record profits for its seventh complete trading year (2013).

Figures confirmed by its Dusseldorf-based parent company show that its Gross Written Premium (GWP) under management increased 9% over 2012 to £46.9m whilst pre-tax and pre-amortisation profits were up significantly to £3.3m. The novel alignment to risk, because of a reinsurance share with the parent company, adds extra stimulus to profitable growth.

The number of individual personal lines policies insured rose to just under 3.5 million (up 15%) and Commercial risks were up 32% with just under 200,000 businesses now insured.

“It has been a challenging trading year once again”, comments ARAG plc Managing Director Tony Buss, “with increasing demands to initiate and respond to new situations that may require regulation or other change. Yet it is also one where product redesign and re-writing has been at the fore, new initiatives have been rolled out, additional benefits have been unveiled that widen the array of legal services available to policyholders and where there has still been time to restructure and expand our office space”.

Earlier this year ARAG acquired a further 60% office space boosting their Clifton, Bristol, Head Office to over 10,000 sq ft before announcing a new wave of recruitment to ensure its award-winning quality and service standards are enhanced as business develops further.

ARAG also retained the best Personal Injury Provider Award in 2013 for it’s After the Event (ATE) service and added the best Before the Event (BTE) Underwriting Service Award provider as voted by industry experts. These accolades were achieved despite distractions relating to the implementation of new legislation which directly affected the business.

With a new suite of commercial products having just been launched and both Home Emergency and HNW products in high demand, there are expectations that the company will retain good margins for consistent profits year on year.

“It’s impossible to look too far ahead as we await the results of post-LASPOA claims” adds Mr Buss. “There have been too few closed cases under the new rules in the past 12 months. After a record breaking year in 2013 we are buoyed up by our consistent ability to deliver strong returns and expect to do so again this year, in 2015 and beyond”.

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Wallis: providing assistance

The readiness of the extended RTA claims portal should become clear next month once the Civil Procedure Rule Committee decides the final form of the protocols, forms and rules, the company building it said yesterday.

Claims Portal Limited (formerly known as RTA Portal Co) said it has been working towards a start date of 1 April, using drafts of the protocols, forms and rules provided by the Ministry of Justice.

The rule committee should approve their final form on 8 February, after which the company will “consider the extent to which any changes mean that the software needs to be updated and then estimate the possible start date by reference to the time necessary to make the changes”.

In a statement, Claims Portal said: “In estimating the necessary time it is necessary to allow for the crucial testing of the functionality of the system before it is rolled out. At present Claims Portal does not know if software updates will be necessary or whether it will be possible to use the software as built with some manual work-rounds.”

The company – along with the rest of the personal injury sector – is also still waiting on justice secretary Chris Grayling’s reconsideration of the timing for implementation, about which there is no news.

Nonetheless, the company said there is sufficient information available to provide updates for users and potential users, and next month it will hold free talks on the 19th in Manchester, 21st in London and 28th in Cardiff.

Tim Wallis, independent chairman of Claims Portal Limited, said: “We want to introduce users to the extended claims portal and provide them with an understanding of how the portal works. We hope to provide assistance to users in how to interact with the extended portal and how to best to use it.

“The final version of the new protocols, forms and rules are not currently available but we shall provide separate workshops on the protocols once they are.”

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Harrison: Best value for clients

A commercial firm based in St Albans, Hertfordshire, has invited litigation funders to tender for a panel, in a pioneering move to cut costs for clients.

Luke Harrison, head of litigation and dispute resolution at Debenhams Ottaway, said that cutting out brokers’ fees could make the difference in deciding whether a claim was viable.

Mr Harrison said a “plethora of intermediaries” had set themselves up to broke litigation funding, often those who had previously worked in the after-the-event insurance market.

“The litigation funding market is small – there are only a handful of players. I want to get best value for our clients by going to them directly.

“A broker will get a percentage commission on the return the funder is going to achieve. For claims from £500,000 to £1m, once lawyers’ fees are taken into account, things can be quite tight as to whether they are viable.”

Mr Harrison gave the example of a claim for £1m, which settled at £750,000 shortly before trial. With legal fees of £150,000 for solicitors outside London, a litigation funder might be looking for a return of between £300,000 and £400,000 – a “large chunk” of damages.

“We want to make claims more economically viable for clients. There is no additional benefit in going to a broker, and if we put a lot of cases through a particular litigation funder and they have a bigger basket, we could reduce the cost.”

Mr Harrison said Debenhams Ottaway sent out invitations to tender to more than a dozen funders this week.

The firm’s panel will be divided into three sections – the first for claims of up to £1m, the second for claims between £1m and £5m, and the third for claims of over £5m in value.

“The point of going through a procurement exercise is so clients can see we’ve put together a panel to give them better value,” Mr Harrison said. “We’ll be looking at adequacy of funding and procedures. We don’t want to have to reinvent the wheel every time a client needs funding.”

Mr Harrison said there was now more litigation funding in the market than there were cases, and it was no longer a situation where funders could cherry pick cases.

He described Debenhams Ottaway as a “boutique litigation team within the wrapper of a multi-service commercial law firm” and said it was growing rapidly, with 11 partners, a turnover of £8.5m and former City lawyers joining the litigation team.

He added that the firm carried out a mixture of commercial work, commercial and residential conveyancing, insolvency, IP and had a strong private wealth team.

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CEDR: “a lot of growth potential” in commercial disputes

The number of commercial mediations has grown by over 5% in the past two years to around 10,000 every year, a survey has estimated.

The report by the Centre for Effective Dispute Resolution (CEDR) also found that fees earned by mediators were climbing significantly.

For the first time in the biennial audit, fewer than half the 319 mediators who took part (43%) were lawyers.

CEDR said in the report: “The data suggests that this decline in the proportion of lawyer mediators is attributable to increased engagement of other fields rather than any reduction of interest from the legal profession.

“With each successive audit, the list of respondents’ job titles reveals the increasing professional diversity of the field, with new entrants reflecting areas of progress in mediation applications (e.g. workplace, tax, medical, education).

“There are also signs, particularly amongst more recent entrants to the field, of increased interest in mediation amongst general managers and business people.”

One of the attractions may be fees, with average earnings by experienced mediators for a one-day hearing rising by almost 18% since 2014 to £4,500. For the less experienced, fees rose by 8.6% to £1,545.

CEDR estimated that mediators completing over 50 cases per year earn between £100,000 and £775,000 per annum, with an average of £400,000.

Those undertaking between 20 and 30 mediations fare much worse, earning on average £55,000.

CEDR said the “aggregate settlement rate” at mediations had remained stable at around 86%. However, the amount of time spent on them increased by over two hours since 2014, to 18.6 hours from start to finish, with more than an hour of the extra time being spent on reading briefing materials.

“The average advanced mediator continues to spend three-four hours less on each case than a less experienced individual, with the shortfall being caused by their spending less time in preparation and also less time in post-mediation follow-up.”

CEDR said a “significant proportion of mediator time continued to be unremunerated” – five and a half hours among experienced mediators, compared to only four hours in 2014. Less experienced mediators wrote off six hours.

When asked about growth areas for the future, mediators said commercial disputes “still had a lot of growth potential”, but employment, professional negligence and personal injury were mentioned most frequently.

Graham Massie, director of CEDR, said: “As with other new markets there is a concern that new opportunities attract opportunists, and there is, therefore, an emerging sense of the need to move forward with common minimum standards for training which would at least serve as a barrier to exclude the under-trained venturers.

“We should not, however, lose sight of the need also to raise our game at the top of the profession – there are signs in these audit results that mediations are becoming harder, something which should not be surprising given that lawyers’ negotiation skills are getting better. After all, no-one is going to pay us to push at an open door.”

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Budsworth: ministers need to listen to Parliament

Claimant lawyer groups have urged the government to listen to the transport select committee’s recommendations on dealing with fraudulent and exaggerated whiplash claims.

But insurers have accused the committee of ducking the tough decisions that need to be taken.

Deborah Evans, chief executive of the Association of Personal Injury Lawyers, said the report marked “a shift towards transparency and truth”.

“Finally, some realities about the whiplash claims system have been recognised,” she said. “The select committee has acknowledged that the government has, so far, largely been influenced by the insurance industry in its plans to tackle high motor premiums, and called for insurers to get their house in order. I couldn’t agree more.

“Some of the real mischief lies in credit hire and repair practices, which the Office of Fair Trading has described as ‘dysfunctional’. And we need to see an end to insurers trying to cheaply pay off crash victims before a medical assessment has been carried out.”

The recommendation for insurers to provide better data about fraudulent claims so that there is a stronger evidence base for policy decisions, is “very welcome indeed”, Ms Evans added.

“The government must listen to reason. To send whiplash claims to the small claims court will punish genuinely injured people by leaving them unrepresented. It will create an opportunity for claims management companies to take on cases in exchange for a share of the victim’s compensation, as we’ve seen with PPI claims, leading to a boom in cold calling and texting which could ultimately encourage more claims.”

The Motor Accident Solicitors Society said it was “greatly encouraged” that the committee had highlighted the role of insurers in helping to tackle fraud and called for an end to pre-med offers.

Chairman Craig Budsworth said: “The amount and extent of legal reform has already had a major impact on the balance between defendants and claimants and it’s reassuring to read that the committee has concluded the small claims limit should not be raised until the wider impact is better understood…

“We now hope that ministers listen to Parliament and accept the committee’s recommendations.”

The Association of British Insurers called on the government to “grasp the nettle and deliver the vital reforms needed to tackle the UK’s whiplash epidemic. Only fundamental changes to the current system will mean that insurers can deliver further reductions in car insurance premiums for their customers”.

Head of motor insurance James Dalton said “for too many dishonest motorists, whiplash has become the fraud of choice, increasing motor premiums for everyone”.

He said that while the committee was right to identify the need to tighten up the requirements for those submitting whiplash claims, its report has “kicked into the long grass making the tough calls for reform that are needed to help insurers combat the whiplash epidemic and deliver further premium reductions for hard-pressed motorists”.

Mr Dalton said insurers had delivered on their commitment to pass on the cost savings for the reforms to date, with average premiums falling 10% in the last year.

Nigel Teasdale, the Forum of Insurance Lawyers' (FOIL) motor sector focus team representative who gave evidence to the committee, described the report as “a valuable, common sense contribution to the whiplash debate… which provides a comprehensive framework for making progress”.

He added: “FOIL was especially pleased that the committee had taken on board its proposal for the limitation period for making whiplash claims to be reduced substantially from the current three-year limit. This step alone would reduce significantly the number of fraudulent or exaggerated whiplash claims.

“The MoJ holds the 'whip hand' here. FOIL hopes that it embraces the practical, sensible measures proposed by the committee, which will involve all sides of the industry in making adjustment to curb fraudulent claims, while dealing fairly with those suffering genuine injury.”

The Ministry of Justice had pledged not to issue its final decision before considering the committee’s report. Minister Helen Grant said: “Honest drivers should not have to bear the price of a whiplash claims system which has been abused and has contributed to increased insurance costs.

“Following the Prime Minister’s commitment last year, we have made major law changes to turn the tide on compensation culture and help ordinary people with the cost of living. We have heard this week that insurance premiums are now falling as this starts to make an impact.

“We have consulted on further measures to tackle the issue of bogus whiplash claims, including improving medical diagnosis and ensuring questionable claims can be challenged in court. We are grateful for the committee’s work on this issue and will consider their views as we decide on our next steps. We agree with them that people must continue to be able to make genuine claims.”

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Australian litigation: paving the way for European claims

Australian third-party funder IMF is eyeing up UK litigation over ratings given to “toxic” financial products.

The company last week announced its intention to file a claim in Australia on behalf of 90 councils, churches and charities against US-based ratings agency Standard & Poors (S&P), related to S&P’s granting of AAA and AA ratings to eight collateralised debt obligations (CDOs).

The investors allege the ratings given to the CDOs, the value of which plummeted during the global financial crisis of 2007 and 2008, were made without a reasonable basis.

The investors, which were almost exclusively investing public funds to facilitate public works and community services, said they required high ratings by an independent, objective ratings agency for any investment they contemplated.

They claim that they would not have invested in the CDOs but for S&P’s ratings, and therefore would not have suffered losses in excess of $200m.

IMF is funding the claims of about 70 of the investors in a separate class action against Lehman Brothers Australia – which distributed the CDOs and is now in liquidation – which may now be settled by the creation of a scheme of company arrangement.

The investors’ claims against S&P will be for the balance of their losses after receipt of any monies from Lehman.

IMF executive director John Walker said: “This filing in Australia will pave the way for further filings in Europe funded by IMF, on behalf of European pension funds, banks and other investors, seeking compensation for losses suffered after investing in complex financial products.”

These are expected to include claims against agencies in the Netherlands and the UK.

“Rating agencies played a pivotal role in the misallocation of billions of dollars worldwide from 2005 to 2008 and it is important they be held accountable,” Mr Walker said.

In a statement issued to Reuters, S&P said it believed the lawsuit was without merit, and that it would vigorously defend itself against it. “Our ratings were based on the good faith judgment of our analysts and reflect what they knew at the time,” it said.

The new claims follows a landmark victory late last year in a case brought by IMF on behalf of 12 councils against S&P involving complex financial products sold in Australia. The A$20m verdict is being appealed.

  • The board of Harbour Litigation Funding has been rejigged with the appointment of former Irwin Mitchell senior partner Michael Napier – formerly a consultation to the company – as chairman and Nicola Mumford as a non-executive director. Ms Mumford, a member of Harbour’s investment committee, is the former London managing partner of Wragge & Co.

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Hallett: programme will give candidates “tools they need to compete”

The Judicial Office has launched a pilot programme to improve the diversity of the High Court bench and encourage more applications from senior lawyers and legal academics.

Places on the programme, which includes work shadowing and mentoring with a High Court judge, will be limited to women and those from BAME or “less advantaged social or educational” backgrounds.

A spokesman said the programme would run from the end of this month to June and conclude with a one-day applications workshop, giving advice on how to prepare for a selection exercise run by the Judicial Appointments Commission (JAC).

A JAC selection exercise in July this year will, for the first time, allow those with no previous judicial experience to apply to be deputy High Court judges.

Launching the diversity programme, Lady Justice Hallett said involvement was limited to women and those from minority or disadvantaged backgrounds because those were the areas where the judiciary was “significantly less representative” of society.

“Taking part in the support programme will not guarantee appointment by the Judicial Appointments Commission as a deputy High Court judge or success in a subsequent High Court exercise,” she said.

“Appointment is on merit – and rightly so. But hopefully, it will encourage candidates to apply and provide them with the tools they need to compete.

“The judiciary of England and Wales is the envy of the world for its skill, fairness and integrity. Sitting as a High Court judge is one of the toughest legal jobs there is; but it is also one of the most satisfying and intellectually rewarding.”

A spokesman for the Judicial Office said taking part in the programme was completely separate from the JAC and no “guarantee of success” in its selection exercises, but it would provide candidates with support to help them apply.

As well as coming from the three specified groups, applicants for the 30 places on the programme should have the qualifications required to apply to be a High Court judge and must have no previous judicial experience.

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Legal changes “appear to have had an impact”

The impact of LASPO and the decline in the number of claims management companies (CMCs) cut third-party personal injury claims by 10% in 2013, the Institute and Faculty of Actuaries has said.

The Institute said this was the first time in 10 years it had recorded a drop in third-party claims, and there was also a 5% reduction in the average cost per claimant, from £5,000 to £4,750.

In its fifth annual report on the issue, which collated and analysed data for 2013, the actuaries said legal changes “appear to have had an impact on motor insurance claims”.

The report found that the numbers of CMCs fell by 35% in 2013, reducing their turnover from personal injury claims by a third, from £354m to £238m.

“The number of CMCs has now halved since 2011,” researchers said. “Regions with the highest volume of CMCs continue to record the highest frequencies of third-party injury claims. London (2.2%), Liverpool (2.0%) and Manchester (2.0%), all record the highest frequency.”

The Institute said ‘frequency’ measured the number of claims as a percentage of the number of cars, rather than just volume. It said the average density of CMCs across the UK was two for every 100,000 people.

The report also found that insurers had responded to the drop in claims, by cutting third-party premiums for the financial year to the end of March by 19%.

“We believe that the reduction reflects an anticipation of claim frequency reductions by insurers and the impact of a very competitive market,” researchers said. “Net of previous premium increases, motor insurance premiums have increased below the rate of inflation since 2007.”

They said previous reports highlighted discrepancies between falls in the numbers of property damage claims and increases in personal injury claims and the high volume of small claims.

David Brown, chairman of the working party which produced the report, said legal changes in 2013 appeared to have had a “significant impact” on motor insurance injury claims.

“However, we remain uncertain as to what the final impact of these changes will be, as well as that of other legal changes, such as the upcoming whiplash reforms.

“What is clear is that the motor insurance industry anticipated the impact of legal changes and has already passed on the reduction in costs to consumers.”

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Deadman: are you a time-waster?

Posted by Christopher Deadman, sales director at Litigation Futures sponsor Augusta Ventures

This funding game is a walk in the park. All you need is a bucket-load of other people’s cash, a good suit and a nice line in glib patter. You will drift around the country like some Law Society-enabled Willy Wonka dispensing largesse like gumballs to an open-mouthed and grateful townsfolk. You will be universally adored and feted. King Midas will be a poor relation. The Elysian Fields will look like a Brazilian favela.



Deploying finance in the legal market is hard graft. Just the other day I had a text from my old mate Sisyphus which said “rather you than me!”. I spend my days chasing solicitors for updates on cases previously notified. I make endless calls to firms for news on applications promised to me. I know the standard voicemail greetings of every network carrier by heart. In fact, should I ever fancy a change of career, I am perfectly equipped to sell penny stocks over the phone to retired dentists in Iowa.

None of this is surprising, however. Litigation in the main moves at the pace of a heavily sedated wardrobe. It is perfectly possible to keep a claim on life support for months or even years. Solicitors are also reluctant to apply for finance because of the perception that it is a complicated process and, well, let’s just hang on for a bit longer and it might just settle. All of this comes with the territory.

But what never fails to surprise and disappoint is the capacity of some firms to regard the funder as a ‘mark’, a ‘john’, a ‘rube’ to be exploited.

What do I mean? I mean that an albeit tiny number of firms enter into dialogue with funders but have no intention of entering into a financing arrangement. They are using the funder’s due diligence processes simply as a free second opinion on the merits of their claim.

Let’s face it – you don’t need the seduction powers of the fictional charmer Ralph Gorse to persuade a funder to look at a good-quality claim. If the due diligence results in the likelihood of an offer of funding being made, then that position is relayed to the other side in an attempt to expedite a settlement in advance of the funder deploying its capital.

If the funder rejects the claim, then they will almost certainly provide supporting reasons which may assist the solicitor in plugging the legal or factual gaps or encouraging them to abandon the case all together.

And it’s not just solicitors. We have seen opinions from counsel which are so optimistic that I am certain the authors believe Glenn Miller to be on the cusp of releasing new material any day now. We have also been treated to opinions which form part of a series, each from a different author, and each expressing a progressively sunnier view on success. The final iteration, brimming with hyperbole and marbled with abundant possibility, would make Polyanna look like Henrik Ibsen.

This is hugely frustrating and expensive for the funder as well as slightly depressing. No one is pretending that litigation financiers are big-hearted philanthropists with solely charitable intentions. Litigation finance companies are there to make money for their investors by sourcing good-quality opportunities in which to sink their cash.

In the main, however, they are a pretty straightforward and honest bunch of people to deal with (at least at the legitimate end of the spectrum). It is therefore disappointing when some firms think it is perfectly acceptable to prevail on the funder’s goodwill for their own purposes.

Part of the problem may rest with the perception amongst sections of the legal market that funders are somehow faintly disreputable and ‘deserve’ to be gulled. This sort of attitude says more about the solicitor than it does about the funder. Firms who exhibit this sort of behaviour are burning their bridges not only for themselves but also their clients.

The gimlet-eyed amongst you will have picked up on the slightly impish and deliberately provocative tone of the above. The overwhelming majority of legal professionals access funding for the right reasons – to enable their clients to pursue meritorious claims which would otherwise not have been possible.

A tiny number, however, look to take advantage of the process by wasting the funder’s time and eating into their goodwill.

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Sault: Things looking much brighter for motor insurers

UK motor insurers should see “a strong uplift in profits” next year as a result of the discount rate review and whiplash reforms, Big Four accountancy firm EY has predicted.

It forecast that insurance premiums would also fall by up to £21 if the discount rate rises from -0.75% to 0-1%, as suggested by the Ministry of Justice.

EY’s analysis was that motor insurers would be close to breaking even this year at 100.8% net combined ratio (NCR) – meaning that they would have paid out marginally more than they received in premiums.

But it said the NCR for 2018 was expected to be “solidly in the black” at 98.5%.

The most recent figures from the Association of British Insurers say that, at £479, motor insurance premiums in the third quarter were 10% higher on average than a year earlier, taking them to their highest ever level.

However, EY predicted that the revision to the discount rate was likely to lead to a fall of between 2% and 4% on average premiums, saving up to £21 annually for the average motorist.

The whiplash reforms should provide further relief to motorists, with an additional 8-10% reduction in premiums starting later in 2018, totalling £45 per year saving once the reforms are fully implemented.

Tony Sault, UK general insurance leader at EY, said: “The revised [discount rate] proposals in September have provided something of a reversal in the motor insurance industry’s fortunes.

“While the changes announced earlier in the year meant the insurance industry was facing an additional cost of £3.5bn, the revised proposals could see up to £2.5bn shaved off this figure.

“The reversal is also expected to have a positive effect on premium rates for consumers and we would expect the premiums to start to fall next year in anticipation of the new legislation coming into force.”

He continued: “The proposed whiplash reforms are also expected to benefit claims costs and premiums later next year, although there is a risk that the weight of Brexit legislation will not leave Parliament enough time to pass the promised Civil Liability Bill.

“The industry though, is certainly facing a much better end to the year than it had feared back in February and its prospects are looking a great deal brighter.”

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High Court: permission to appeal not yet granted

The High Court has overturned a ruling that an ARAG after-the-event (ATE) insurance policy was not good enough security for costs, it has emerged.

The company said the policy’s bespoke wording expressly stated that the policy would only be void should there be fraudulent non-disclosure (and not for innocent or negligent non-disclosure), and even if there was, the cancellation provisions expressly stated that ARAG would be liable for costs up to the date of cancellation, so minimising any risk to the defendant’s costs.

ARAG said the as-yet unreported case was not the type to have an adverse verdict at trial, as it centred on technical issues rather than contentious facts, and so there was no commercial reason why the claimant would wish to jeopardise the policy by not complying with its terms – “quite simply, the policy was for the claimant’s own protection”.

In a statement, ARAG said: “This case clearly shows that defendants will use the ATE policy as a way of making life difficult for the claimant, but fortunately in this case, the claimant had an ARAG policy that provided the safeguard for the claimant should they lose, and likewise for the defendant.

“Permission to appeal has not been granted as yet, and the claimant was awarded the costs of the application.”

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Djanogly: small claims limit for PI is cisco 640-816 out of date

The “eyes of government” and of MPs will be on the insurance industry to see that it delivers lower premiums following the civil justice reforms, according to the man who piloted the Legal Aid, Sentencing and Punishment of Offenders Act 2012 through Parliament. 642-444 exam

In his first interview since returning to the backbenches last September, former justice minister Jonathan Djanogly told Litigation Futures that he had no regrets about the reforms he introduced.

Mr Djanogly said that “when I became a minister, I spent most of my time arguing that there was a compensation culture”. He added that “10 Downing Street were very keen that insurance premiums should be brought down and they saw that the compensation culture was part of that”.

Pointing to statistics such as accidents falling by a quarter as claims rose by a third, he insisted that it is now “a rare lawyer who argues there’s not been a compensation culture”.

The acceptance of this led to a series of “incremental reforms”, starting with ending the recoverability of success fees and after-the-event insurance premiums, and moving on to the referral fee ban, the “criminal aspects of whiplash”, spam texting and finally the civil aspects of whiplash.

Despite recent warnings from the likes of Direct Line that the reforms in total may not make a difference to premiums, Mr Djanogly said: “The eyes of government are going to be on the insurance industry. Government expects them to respond and I think that’s the general feeling among MPs. We are looking for changes.”

While he was “convinced” that a large proportion of the RTA portal fee related to referral fees, Mr Djanogly said it should be kept under review. “If firms can make a good case that their marketing costs are such that a higher level is going to be needed in the future, then I don’t think that should be overlooked.”

The MP for Huntingdon also brushed aside the attacks he faced over his personal interests during the passage of LASPO, which led to some changes in ministerial responsibilities. “It didn’t bother me at all,” he said. “When people switch towards attacking you personally, you’re generally winning the policy argument. I took a lot of comfort in that.”

He said: “In retrospect the provisions of the Access to Justice Act were a disaster and created an unreal market place… and just detached the client from the advocate. Once you had a situation where the client did not care what his representative was earning, the situation was always going to get out of control.

“We are the only country in the world so far as I know where there were people arguing that a lawyer shouldn’t take a fair fee from his or her client for fair work done. I was very pleased to go to a conference recently and see the Law Society now recognise that. Lawyers should be proud of the work they and should expect to be paid a fair price for the work that they do. And lawyers in every other country work on that basis too.”

Mr Djanogly acknowledged that the issues around whiplash are more often criminal rather than civil – “it’s not realistic to assume that amending the civil law is going to cure whiplash”. At the same time, “there are aspects of whiplash where there are marginal claims being made that should not be made under a fairer system and will not be made” after the impending changes.

The government consultation suggested that only 7% of whiplash claims were fraudulent, but Mr Djanogly said his “personal instincts” were that it is much more.

He argued that the £1,000 small claims limit for personal injury cases is “out of date”, saying: “I think most people rationally say that is too low a figure… There must be a level at which it is wrong to be using lawyers.”

One benefit of the small claims track is the assumption of mediation, Mr Djanogly added.

While some of the details have been slow to emerge, and the implementation timetable was “always going to be tough”, the solicitor noted that practitioners have now had a year since LASPO was passed. “This has not come out of the blue,” he said. “Practitioners have to understand that and respond to the new environment that now exists.”

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Road traffic accidents: claimant solicitors should be able to make a fair and reasonable profit

The Association of British Insurers (ABI) may call for the fixed fees payable under the RTA portal to be slashed by nearly 90% to £150 as part of its negotiation strategy, a leaked e-mail has revealed.

The e-mail sent out by the ABI on 20 April – and seen by Legal Futures – sought to canvass views on whether it should propose that the current fee of £1,200 should fall to £150 or £350.

It said the ABI has commissioned costs consultants to examine the work involved by a claimant law firm in processing a low-value RTA claim through the portal so that it can submit a “robust and evidence-based response” to the Ministry of Justice’s (MoJ) consultation on the level of fees, which closes on 25 May.

It comes in the wake of the prospective ban on referral fees, Jackson reforms and plans to extend the portal to bigger road traffic claims and other kinds of personal injury actions.

The consultants are factoring in the averages of the salaries of the staff involved, their efficiency rates and allowing for overheads in an efficiently run claimant law firm, the ABI said.

While the work is incomplete, the e-mail said preliminary analysis suggests these claims can be processed profitably for £150 as the direct staff cost. “If we adopt an approach that uses salaries at the higher end of the fee-earner scale or more senior staff involvement, the analysis would suggest that a figure of £350 is more appropriate.”

The e-mail sought “a tactical steer”. It explained: “If we were to advance a figure of £150, it could increase cost savings to insurers from reducing the fixed fee but it runs the risk of the industry being seen to be unreasonable, with the potential for us to lose credibility in the debate with the final fee decided by the ministry being substantially increased.

“If we advance a figure of £350, this could limit the cost savings to insurers of the reduced fee but increase our credibility in the debate and the ministry may undertake a deeper analysis of the evidence we advance rather than potentially dismissing it.

“In considering the competing factors [on 19 April], the personal injury high level group was of the view that this was a decision that should be made by GIC [General Insurance Council] and their view, although finely balanced, was that we should advance the £150 figure, recognising that the ministry will inevitably set a number higher than that, ie the £150 should be advanced as a negotiating tactic.”

The e-mail’s author, James Dalton, assistant director, head of motor and liability at the ABI, told Legal Futures that these are “just options amongst a range of others we are considering before we finalise our response and provide it to the MoJ. Our preliminary analysis suggests that claims can be processed by claimant lawyers who can make a fair and reasonable profit at each of the figures we are considering. No final decisions have been taken on our preferred option”.

Andrew Dismore, who runs the Access to Justice Action Group, said the e-mail revealed insurers’ “cynical drive to the bottom”. He accused insurers of trying to price solicitors out of doing this work so as to boost their push for third-party capture and before-the-event insurance to take over.

He acknowledged that claimant groups would be also seeking to take a tactical negotiating position at the other end of the spectrum. While there is “no doubt that the portal has enabled people to make some savings”, they did not justify cutting fees to the levels being considered by the ABI, Mr Dismore argued.

The MoJ has held one meeting for all stakeholders about the portal changes, and will this week hold a series of smaller meetings with groups of stakeholders. Claimant groups are having their meeting today with justice minister Jonathan Djanogly, with insurers in on Thursday.


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Budsworth: fee cut will have far-reaching negative impact

The High Court’s rejection of the challenge to the RTA portal fee cut represents “a dark day” for accident victims, the Association of Personal Injury Lawyers (APIL) has claimed.

In a statement APIL – which brought the judicial review together with the Motor Accident Solicitors Society (MASS) – said: “Many vulnerable victims of injury will now find it impossible to obtain independent legal representation as a result of the bitterly disappointing judgment in the Administrative Court.

“As the government has now decided to slash lawyers’ fees in the road traffic accident claims process, many people will be left on their own to negotiate with insurers for fair and proper compensation for their injuries…

“This is a dark day for people who are injured through no fault of their own. We can only hope that the government does not take this judgment as a license to continue to ride rough-shod over the needs of vulnerable people in the future.

MASS chairman Craig Budsworth said the cut “will have a far-reaching negative impact on the legal system, access to justice and the public purse… We need to bring down the cost of motor insurance but it should not be by cutting independent legal advice out of the system and accident victims will be at a severe disadvantage as a result of this judgment.

“Fixing costs at an artificially low level will make it increasingly difficult for genuine accident victims to find a reputable, qualified solicitor to help them with their case and in their dealings with the defendant’s insurer.

“Reform in the sector is too fast, goes too far and has not been given adequate consideration – there will be unintended consequences.”

The Law Society intervened in the case, and chief executive Des Hudson said: “We remain deeply unhappy with the new recoverable costs rules and the process by which the government made its decision. However, it was clear that the decision, however unfair we considered it to be, was going to be difficult to challenge.

“We will continue to impress upon government the need to ensure that those injured through no fault of their own need to be able to seek redress, without putting themselves in severe financial difficulties.”

Defendant representatives and lawyers unsurprisingly welcomed the verdict. James Dalton, head of motor and liability at the Association of British Insurers, said: “The judgment is common sense and good news for customers, clearing the way for their premiums to lower as unnecessary legal costs are stripped out of the system.”

Rod Evans, president of the Forum of Insurance Lawyers, added: “It is pleasing to have a decision that ends the hiatus which has gripped the industry. We now all know where we stand… It’s time to look ahead and start moving towards making the planned reforms work successfully in the best interests of clients on all sides as Lord Justice Jackson envisaged.”

Tracy Head, a partner at insurance law firm Kennedys, argued that the government had no case to answer “having consulted extensively on the Jackson reforms over the last two years”.

She continued: “This application for a judicial review has simply delayed progress on finalising the pre-action protocols necessary for an efficient extension of the claims process. Indeed, we suspect it has been influential on the decision to delay implementation of the new rules required for managing employers’ and public liability claims to July of this year, as opposed to April as originally planned.

“In turn, it has frustrated the efforts of market practitioners to prepare for the forthcoming changes… [The ruling] hopefully means there will be no further challenge to the process of extension and implementation.”

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Richard: exceptional case for purposes of drafting cap

The chief master of the Chancery Division has outlined considerable reservations about making a comment on incurred costs as part of the budgeting process, saying there is “little or no value” in recording a general comment such as that they are “too high”.

Chief Master Marsh also exercised his discretion to remove the cap on the costs of drafting the budget.

In a ruling as part of Sir Cliff Richard’s case against the BBC and South Yorkshire Police over coverage of a police raid on his home, the BBC asked the master to make a comment along the lines of: “The incurred costs based on information available appear to be excessive and disproportionate.”

Master Marsh noted that the costs management exercise was “necessarily a summary one that often has to be undertaken briskly” where figures were approved at an “impressionistic level, unless the litigation is of a standard type where the scope for non-standard budget phase levels is more limited. In a claim like this one, the variables that may affect the level of future costs are considerable”.

He continued: “This leads me to conclude that a degree of caution is appropriate when the court considers whether to make a comment about incurred costs…

“The exercise of producing budgets and their review is, necessarily, an exercise based on limited information, even in relation to incurred costs; the amount of information that is to be included in the budget is very limited indeed.”

Sir Cliff’s incurred costs were nearly £1.2m. “The difficulty for the court, however, is that, although those figures appear to be substantial in absolute terms, it is quite impossible for the court today to form any meaningful view about whether those costs can properly be characterised as being unreasonable and/or disproportionate, let alone to be significantly or substantially unreasonable and/or disproportionate.

“To my mind there is little or no value in the court recording a general comment about incurred costs along the lines that the incurred costs are ‘substantial’ or they are ‘too high’.

“If the court wishes to record a comment that the incurred costs are ‘excessive’ or they are ‘unreasonable and disproportionate’, it will wish to be sure that the comment is made on a sound footing, rather than impression, because commenting is quite unlike the exercise of approving a figure per phase for future costs.

“The court will also wish to consider the utility of making a comment unless it is specific and well-founded.”

Master Marsh concluded that there was “no significant benefit to be gained in the court making the sort of anodyne comment that the BBC proposes”.

He explained: “A comment is not a finding of fact, but merely a matter to be taken into account. Making a comment does bear the risk, however, that on a detailed assessment disproportionate weight might be given to it, although the comment is based on limited information.

“The costs judge, on a detailed assessment, will have the benefit of a full review of all the work that has been carried out. That is a far safer basis for a review to be taken. I am not persuaded that a comment should be made for the reasons I have given.

“I am also concerned that a comment could unfairly skew a detailed assessment at a later stage.”

He also rejected the suggestion if he did not make a comment, the costs judge would proceed on the basis that the costs were reasonable and proportionate.

“That is a fanciful suggestion, given that costs judges are experienced in dealing with costs in many different types of claim and drawing conclusions about reasonableness and proportionality in a wide range of different circumstances.”

He did, however, declare that Sir Cliff’s costs in relation to preparing his budget and dealing with the costs management to be exceptional, meaning that the cap in paragraph 7.2 of PD 3E could be ignored.

“There is no guidance as to what “exceptional” means in these circumstances. In other words, it is not absolutely clear how far out of the norm the circumstances have to be to become exceptional.

“The factors put forward by the claimant here are, first, that two budgets were prepared in advance of the CMC in early May on the basis of a split trial, with the consequence, subsequently, that further work has had to be undertaken.

“Secondly, there has been redrafting of the budgets following on from that hearing, which was a hearing at which the parties were ready to deal with costs management, but it was deferred pursuant to the order of the judge. Thirdly, at today’s hearing, there has been a request by the BBC for comments to be made, that application being rejected. That is a factor which I should take into account.”

Master Marsh said that “exceptional” meant “significantly out of the norm” rather than “wholly exceptional”.

“The fact that a case may involve further unexpected work is not of itself a circumstance which is exceptional, but the factors I have indicated, taken together, and in particular the issue relating to comments, should take this case into the exceptional category and I will, therefore, lift the cap.”

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Dalton: medical reports years after the event have no value

The Association of British Insurers has hit back at MPs on the transport select committee for demanding a complete ban on pre-medical offers by insurance companies in whiplash cases.

James Dalton, head of motor insurance at the ABI, said: “Removing an insurer’s ability to settle a claim without a medical report will only serve to increase insurers’ claims costs, and consequently premiums.”

Mr Dalton said medical reports for minor injury claims produced years after a car accident added “no value whatsoever”.

He called on the government to press ahead with creating a nationwide panel of independent medical experts for whiplash cases, increasing the small claims limit to £5,000 and considering “whether general damages should be awarded for whiplash injuries at all”.

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In an interview with Radio Four’s “You and Yours”, Mr Dalton added that he thought that the three-year limitation period for bringing whiplash cases was too long and claims should be notified sooner.

The transport committee’s fourth report on the cost of motor insurance, published last week, called on the government to put pressure on the Solicitors Regulation Authority to stop personal injury lawyers “playing the system” by commissioning unnecessary medical reports on psychological injuries.

In response, a spokesperson for the SRA said the regulator was considering the report “very carefully” and its board would be “deciding on next steps in due course.”

However, MPs also strongly criticised insurance companies for paying whiplash claims they suspected were fraudulent without asking for medical reports.

Craig Budsworth, chairman of the Motor Accident Solicitors Society (MASS), described the report as a “sensible blueprint for tackling fraud” and said the society it was working with the Ministry of Justice and insurance industry on the introduction of medical panels and data-sharing to combat fraud.

He said MASS had “long campaigned for a ‘no medical report, no damages’ approach” to whiplash. He said MASS did not support reducing the time limit for bringing forward whiplash claims, as some cases could be “extremely complex”, needing prolonged medical treatment.

He added that MASS agreed with the select committee’s caution on “hasty legislation” over the issue of “fundamental dishonesty”.

The government inserted a clause into the Criminal Justice and Courts Bill at the last minute, requiring courts to dismiss personal injury claims in their entirety where claimants have been “fundamentally dishonest”. During the bill’s second reading last week, peers were divided on the issue.

John Spencer, president of the Association of Personal Injury Lawyers (APIL), said that despite the fact “fundamental dishonesty” was a complex area of law, the amendment was introduced at such a late stage it had no scrutiny at all in the Commons.

“Blanket dismissal of such cases will have damaging consequences for injured people with legitimate claims for compensation,” Mr Spencer said. “While the definition of ‘fundamental dishonesty’ remains unclear, injured people may find themselves spuriously accused of fraud by unscrupulous insurers.”

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Lidington: new structure a powerful further magnet for international litigation

The launch of the Business and Property Courts of England and Wales – the new name for the specialist business courts – will see a greater focus on High Court work being handled in the regions and the cross-deployment of judges, the new Lord Chancellor said today.

Speaking at the official launch at the Rolls Building, David Lidington paid tribute to the work of the senior judiciary in bringing about the change, which formally takes effect on 2 October.

The umbrella title, which incorporates the Rolls Building in London and many judges in the specialist district registries of the High Court outside of London, will cover: the Commercial Court, the Admiralty Court, the Technology and Construction Court, the Financial List, the Companies and Insolvency Court, the Patents Court, the Intellectual Property and Enterprise Court, the Competition List, the Revenue List, and the Property Trust and Probate list – the last two having been added since the move was first announced in March.

Other courts and lists will be added in future, while there will also be Business and Property Courts in Birmingham, Manchester, Leeds, Bristol and in Cardiff, with expansions to Newcastle and Liverpool likely.

Mr Lidington said: “A more integrated system of business and property courts will mean judges can be cross-deployed to maximise the benefit of their particular qualifications.

“But the reform isn’t just about bolstering our reputation among overseas claimants. It’s also about improving the service our civil courts offer to all the individuals and businesses in this country who seek legal redress.

“Senior judges have argued that no case should be deemed too big to be tried outside London. And rightly so, given the talented lawyers we have nationwide.

“Yet many cases at the moment migrate unnecessarily from the regions to the Rolls Building, leading to extra inconvenience, delays and expense for those based in our other great cities like Manchester, Leeds, Birmingham, Bristol and Cardiff.

“And having business and property courts across England and Wales that are served by a critical mass of specialist judges will mean that all classes of case should be capable of being managed and tried away from the capital.”

More generally, he said the new structure would be “a powerful further magnet for international civil litigation”.

Mr Lidington continued: “Today’s launch demonstrates beyond any doubt that our bench is responsive, forward-thinking and clear in their purpose.

“Not least in recognising that while our historic courts continue to flourish, the somewhat arcance names of some – ‘Chancery’, for instance, about which Dickens wrote with such scathing relish, or ‘Mercantile’ – are perhaps still beloved of many lawyers but rather less well understood by the 21st century business community outside the City of London.

“And, perhaps dare I say it, by those many people who have not been steeped in the law for decades. And at a stroke, this is now remedied.”

Sir Geoffrey Vos, Chancellor of the High Court, added: “When the Business & Property Courts go live, the specialist jurisdictions of our courts will all be using names that national and international business people can readily understand.

“The judges of the Business & Property Courts are high calibre forward looking people, who understand the importance of providing a state of the art service to court users.”

Sir Brian Leveson, president of the Queen’s Bench Division, said: “Cross deployment of judges across the Chancery and Queen’s Bench Divisions for the purposes of the Financial List has demonstrated the real value of flexible deployment in appropriate cases. This development will be of benefit both to the courts and the users of the courts.”

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Deadline: significant changes to rules will make compliant portal very difficult

The Civil Procedure Rule Committee’s (CPRC) unexpected failure this month to agree the pre-action protocols and rules to underpin the expanded RTA portal could make it even more difficult to deliver the new system on 1 April, it emerged yesterday.

There will also be no application-to-application (A2A) access to handle employers’ and public liability (EL/PL) cases in the first few months.

RTA Portal Co – which is changing its name to Claims Portal Ltd – also admitted that even if the April deadline is met, it may be some months before the system is fully up and running without “workarounds”.

The timetable for extending the portal to road traffic claims worth up to £25,000 and to include EL and PL cases up to £25,000 has long been acknowledged to be tough for the company to meet, but in a statement issued yesterday it said “a new concern has arisen”.

The protocols and rules were not finalised by the CPRC on 7 December, as had been anticipated. They are now set to be completed on 8 February 2013. In a statement the company said: “The software for the extended portal is being built on the basis of draft protocols and rules. After the CPRC completes its work Claims Portal Ltd will compare the draft and finalised protocols and rules.

“In the event that the final versions are not significantly different from the drafts, the extended portal will still be on course to be delivered by 1 April 2013, although this may be on the basis that some manual ‘workarounds’ will have to be used until the first software amendment is implemented, which is likely to be available in September 2013.”

If, however, there are more significant changes to the draft protocols, the company’s board of directors said “there would be insufficient time to deliver a portal by April that complies”.

The company also revealed that another technical issue will impact on portal access, as time constraints mean only web-based access will be available for the EL and PL area of the extended portal, with A2A access planned to follow with the software amendment in September 2013.

“Organisations that currently connect to the portal via A2A to handle RTA claims will continue to be able to do so. However, if they also handle EL and PL claims they will need to consider that these claims types will only be handled via web browser access in the short term.

“Claims Portal Ltd is aware of the cost and time implications associated with having to make post-launch changes and is working to ensure minimum disruption to the portal user community.”


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Neuberger: importance of obeying orders is self-evident

The Supreme Court yesterday emphasised the importance of compliance with court orders as it dismissed an appeal by a Saudi prince who failed to personally sign a witness statement in breach of an unless order.

The court’s president, Lord Neuberger, said that “the importance of litigants obeying orders of court is self-evident. Once a court order is disobeyed, the imposition of a sanction is almost always inevitable if court orders are to continue to enjoy the respect they ought to have”.

He continued: “And, if persistence in the disobedience would lead to an unfair trial, it seems, at least in the absence of special circumstances, hard to quarrel with a sanction which prevents the party in breach from presenting (in the case of a claimant) or resisting (in the case of a defendant) the claim.

“And if the disobedience continues notwithstanding the imposition of a sanction, the enforcement of the sanction is almost inevitable, essentially for the same reason.”

Prince Abdulaziz v Apex Global Management Ltd & Anor (Rev 2) [2014] UKSC 64 considered what approach courts should take when deciding whether to stay a default judgment entered following breach of an unless order.

A member of the Saudi Arabian royal family failed to comply with an order that he personally sign a statement of truth on a disclosure statement, on the grounds of a Saudi Arabian protocol that members of the royal family should not become personally involved in litigation.

Default judgment was consequently entered against him in a claim for US$6m. His applications to vary the original order, set aside the judgment, and obtain relief from sanctions were all unsuccessful. The Court of Appeal upheld all three decisions.

Giving the lead judgment dismissing the appeal against the Court of Appeal’s ruling, with Lord Clarke dissenting, Lord Neuberger found that the three lower court decisions were unassailable and that there were no special factors.

He said: “It is difficult to have much sympathy with a litigant who has failed to comply with an unless order, when the original order was in standard terms, the litigant has been given every opportunity to comply with it, he has failed to come up with a convincing explanation as to why he has not done so, and it was he, albeit through a company of which he is a major shareholder, who invoked the jurisdiction of the court in the first place.

“One of the important aims of the changes embodied in the Civil Procedure Rules and, more recently, following Sir Rupert Jackson’s report on costs, was to ensure that procedural orders reflected not only the interests of the litigation concerned, but also the interests of the efficient administration of justice more generally.”

Lord Neuberger rejected specific arguments that the sanction was disproportionate – saying it was hard to maintain an argument that although each decision on the way to the final result was unassailable, the final result was wrong on the grounds of proportionality – and that the prince had a very strong case.

“In my view, the strength of a party’s case on the ultimate merits of the proceedings is generally irrelevant when it comes to case management decisions of the sort [in this case],” he said.

The one possible exception could be where a party has a case whose strength would entitle him to summary judgment, he added.

Lord Neuberger said that more generally the Supreme Court should be “very diffident about interfering with the guidance given or principles laid down by the Court of Appeal”.

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Prince Harry with DAS employee and WellChild award winner, Chris Morter

Underwriter Chris Morter from leading legal expenses insurer, DAS, was last week awarded the Helping Hands Volunteer Award at the WellChild Awards 2013, where he also got the chance to rub shoulders with Royalty.

The celebrity-studded awards were held on 11th September, hosted by Vernon Kay and Tess Daly at the Dorchester Hotel in London, where award winners were invited to a private reception with the charity’s patron, Prince Harry.

Chris was nominated for the award by Lee Trunks, who is the project manager for WellChild’s Helping Hands project, which organises home and garden makeovers for sick children.

Chris was team leader for the project in Bristol creating a new garden for Clive, a teenager with severe epilepsy. Chris had to organise a team of 15 from six different Bristol and Bath companies, coming together over two days. The project was extremely successful. He was also instrumental in securing funding towards the project and negotiated a significant reduction in the cost of materials. Chris has supported WellChild with other fundraising initiatives and has already led another successful Helping Hands project, with more planned for the future.

The WellChild Awards celebrate the inspiring qualities of some of the country’s seriously ill young people and the dedication of the people who go that extra mile to really make a difference to their lives.   They were attended by celebrities including, Rod Stewart and Penny Lancaster-Stewart, Pixie Lott, Karen Brady, Duncan Bannatyne, Tim Vine, Konnie Huq and Chris Hollins.

Entries for the 2013 Awards were judged by an expert panel including children’s health researchers, former winners and health professionals.

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Sir Brian Leveson

Sir Brian: screening process could ensure right cases reach trial

Sir Brian Leveson, president of the Queen’s Bench Division, has argued that a “change in approach” is needed by the civil and family courts, including the introduction of a “screening process”.

Sir Brian said a court officer with delegated judicial powers, “most likely via an online mechanism”, could “identify the real issues” behind a claim and help the parties “identify the best means to resolve the dispute”.

He said that might mean referral to mediation, arbitration or conciliation.

“It might be reference to early neutral evaluation carried out either by a lawyer, perhaps an expert, or perhaps a judge.

“It might equally mean immediate transfer to an adjudication track with formal case management, or to a fast track procedure such as that provided by the recently introduced shorter and flexible trial procedure in the Commercial Court and Chancery Division. In this way settlement could be properly promoted in individual cases.

“Equally, the screening process could properly ensure that disputes that raised novel points of law, that had wider importance than to the immediate parties, could reach trial and judgment at proportionate cost and in reasonable time, subject of course to the parties not wishing to reach a settlement.”

Delivering the annual Isaiah Berlin lecture in London, Sir Brian said that one ways courts could strike a proper balance between settlement and trial, “without undermining the primary aim of securing the rule of law”, was to develop an “IT-dependant system through which the courts can manage disputes so that they are resolved appropriately”.

Sir Brian said the idea was not new and had been suggested by Lord Justice Briggs in his Chancery modernisation review, the report by Justice entitled Justice in an Age of Austerity and the Civil Justice Council’s Susskind report on online dispute resolution.

Sir Brian said that in the criminal justice system, it meant judge-led case management and proper identification of the issues so that trials could be conducted more efficiently and effectively.

“It means ensuring that the parties and their lawyers only come to court when it is necessary with directions provided after email exchanges or online conferencing.”

Sir Brian added that information technology was likely “to provide the means” by which the justice system could be recast.

“It, however, is a means to an end. Its use, as with all other aspects of any propose reforms, can only be justified in so far as it is a means of achieving the proper ends of justice. Principle must shape any new practice.”

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inCase200A new version of an award-winning legal app now includes a revolutionary feature designed to further enhance its security, functionality and effectiveness; as well as ensuring greater convenience to adopting firms’ clients.

The latest version of inCase, an app which enables personal injury & conveyancing solicitors to manage communications with clients entirely via their smartphone or tablet, now also provides clients with the means to remotely sign documents, entirely negating the requirement for an on-paper process.

This latest development from inCase, which also automatically stamps the date and time on the document and saves a copy of it to the client’s smartphone once they return it to their solicitor, has never been seen before and is a truly innovative use of technology in the legal sector.

Managing partner of personal injury firm Aequitas Legal and creator of inCase, Sucheet Amin commented:

“One of the challenges with inCase was to find a way to send documents securely to clients’ smartphones, enable them to sign these in their own hand and return them to their solicitor.

“After months of research and development, users of inCase are now able to do just that. We have created a seamless process which is fast, easy and safe for both the firm and client.

“While digital signatures have been around for some time, no function has existed to enable clients to review documents on their mobile devices, and sign their own signature rather than a pre-selected font and send it back to their solicitor.”

Sucheet concluded: “The inCase app now offers a genuine full service communication tool for any law firm. Not only can clients receive and send messages or updates, as well as follow their personal injury claim and house purchase / sale on the unique tracking tool, they can now sign documents on the go. In a fixed fee regime imposed by LASPO, inCase™ really gives firms an edge when it comes to delivering their services both time and cost efficiently.”

Sucheet developed inCase in 2012 in order to improve solicitor and client communications throughout the course of personal injury claims in his firm, Aequitas Legal. Realising the benefits to both his business and clients, Sucheet launched inCase as a fully integrated mobile app for other personal injury firms in October 2013. The Conveyancing version of inCase went live in January 2015 and is already creating interest from a number of national law firms

The app has since achieved far reaching success, with the technology being embraced by several high profile law firms across the UK, and picking up a number of industry accolades. Now entirely compatible with all of the major CMS’ in the UK and recently launched in its third iteration, inCase continues to lead the way in the delivery of legal technology across the post-LASPO personal injury landscape.

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Judge Murray: followed “clear language” of the rule

A daughter who lost out over her father’s will has been ordered by the High Court to pay an initial £65,000 in costs despite not actively challenging it, under a rule that applies only to contentious probate cases.

Edward Murray, sitting as a deputy judge of the Chancery Division, said there was “little modern case law” on the construction of CPR 57.7(5)(b).

This provides that where a defendant does not put a positive case in their favour, but wants the will to be proved, the court will not make an order for costs against him unless it considers that there was no reasonable ground for opposing the will.

Judge Murray upheld the father’s will and ordered that a caveat entered by the daughter, Ruth Simmonds, cease to have effect.

Under the will, made in February 2012, the father’s partner was the sole beneficiary. It replaced an earlier will which left Ms Simmonds a substantial legacy.

Judge Murray said the claimant in the case, the deceased’s partner, argued that Ms Simmonds had no reasonable ground. This meant the normal costs rule should apply and she should pay both the claimant’s costs and those of the second defendant, an executor of the estate.

Delivering judgment in Elliott v Simmonds and another [2016] EWHC 962 (Ch), Judge Murray said it was sufficient to start with the “clear language” of CPR 57.7(5)(b), “bearing in mind the principles of policy and fairness underlying the costs regime and in the light of the court’s discretion as to costs set out in CPR 44.2”.

He said a “number of arguments” had been put forward by counsel for Ms Simmonds to suggest there were reasonable grounds.

The judge said these included the argument that there was no “apparent reason” why the father should have wished to extinguish her legacy and the solicitor who drafted the will had failed to produce a detailed attendance note of his instructions.

However, Judge Murray said: “I have concluded that none of the individual arguments raises a reasonable ground on which to oppose the will. I have also considered and rejected the conclusion that somehow, taken together, they raise a reasonable ground”.

He accepted counsel for the defendant’s argument that costs should only be awarded against Ms Simmonds “from the date on which she, with her adviser, had sufficient material on which to form a view about whether there was any ground to oppose the will”. Rejecting counsel’s suggested date of April 2014, the judge made an order for costs to be applied from June 2013.

Having taken into account the claimant’s costs budget, Judge Murray ordered the defendant to pay £65,000 on account of costs. He made no order for costs in relation to the second defendant, as requested by the executor’s counsel and not opposed by the claimant.


The increasing appetite for third-party funding in Europe

Ross Nicholls

Although investors in common law jurisdictions have for sometime recognised litigation as an asset worth investing in, litigation funding remains less prominent in the civil law jurisdictions of mainland Europe. However, the European appetite is beginning to shift in favour of litigation funding, and many large dedicated funds active in common law jurisdictions such as the US, UK and Australia are starting to provide third-party capital to claimants with strong cases.

April 10th, 2018