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Fletcher: conduct of the defendant is likely to be integral to the court’s decision

The low level of the proposed new fast-track fixed fees could make it relatively easy to trigger the ‘escape clause’ built into the regime, it has been claimed.

Under every entry in the table of proposed fixed recoverable costs scheme (FRCS) for claims outside the road traffic, and employers’ and public liability protocols – which essentially replaces and expands on the current FRCS – a 20% ‘escape’ is mentioned.

Michael Fletcher, a costs lawyer at Manchester firm Glaisyers, explained that the rationale for this is set out in the Jackson report and essentially reflects and seeks to replicate the current rules under CPR 45.12 and 45.13.

These permit a claim to be made for more than FRCS fees, the caveat and disincentive being that if the solicitor does not persuade the court to award more than 20% over the FRCS, then he has failed and must pay the defendant’s part 8 costs.

“In the current predictable fee system CPR 45.12 is little used, as at £800 plus 20% of damages, costs normally reach a similar amount to the approximate work in progress (WIP) required to conclude the necessary work. However, if fixed costs are as low as £550, which they will be in a £2,000 pre-issue case, then you would only have to persuade the court that you have reasonably incurred more than £660 in WIP to exceed the fixed-fee amount.”

Mr Fletcher predicted that if liability has been disputed, a police report is obtained and witness statements are required, then getting more than fixed costs could well be achievable.

He added: “The conduct of the defendant is likely to be integral to the court’s decision making on whether a claim can ‘escape’. The defendant’s conduct is of course one of the features of the new Jackson proportionality test, which has the overall effect of reversing the decision of Lord Woolf in Home Office v Lownds.

“Will defendant insurers sufficiently resource themselves to ensure that they cannot be accused of procrastination or conduct that has the effect of breaching the letter and spirit of a low-value fixed-fee scheme?”

The Jackson report contemplated that the Senior Courts Costs Office would see a reduction of over 700 cases per year as a result of fast-track fixed fees, but Mr Fletcher questioned whether in fact the reverse will be true.

“Will we actually see more costs litigation instead of less? For those of us old enough to remember it, is this county court scale 1 all over again?”

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Contract: who repudiated it?

Contract: who repudiated it?

A specialist motor claims handler is suing an insurance company in a row over a cancelled contract, involving almost 12,000 third-party personal injury claims.

The High Court heard that C&S Associates UK, based in Hampshire, claimed damages from Enterprise Insurance Company for terminating its contract.

In a preliminary hearing, Mr Justice Males said Enterprise argued that it was entitled to terminate, on the grounds of repudiation. C&S argued that the insurer was not entitled to terminate, and its conduct itself amounted to a repudiatory breach, which C&S accepted.

Males J described how C&S sent over 2,000 paper claims files to Enterprise’s law firm, Manchester-based Ozon Solicitors, after the insurer launched a file review.

The judge said that after reviewing around 290 files, the law firm claimed to have identified about £500,000 in “savings”, leading the insurer to decide that Ozon should settle as many claims as possible and that the relationship with the claims handler should be terminated.

After only around 80 files were returned to C&S, Males J said the claims handler “took the view that this rate of return was far too slow and was impeding its ability to manage the files and thereby to protect Enterprise’s interests”.

Delivering judgment in C&S Associates v Enterprise Insurance [2015] EWHC 3757, Mr Justice Males said the two companies were introduced to each other at the end of 2011.

“C&S was told that Enterprise was dissatisfied with its existing motor claims handlers and that it was hoping to grow its business, which would lead to an increase in the volume of claims. It was therefore looking for a new claims handler with the capacity to handle its third party motor claims.”

Males J said a contract was signed, taking effect in July 2012, as a result of which C&S handled 11,995 claims on behalf of Enterprise until the contract was terminated in January 2014.

The judge said the order for trial of the preliminary issues provided that Enterprise was not required to prove allegations of defective performance by C&S.

Despite this, he said both parties gave evidence on the issue, particularly from Michael Smith, a director and founder of C&S, and Andrew Flowers, the chief executive and principal shareholder of Enterprise, “no doubt because it is an issue which gives rise to strong and (as I accept) genuinely held feelings on both sides”.

The judge ruled that C&S was not obliged to send a “further batch of 1,500 claims files” to Ozon, and “even if it was under such an obligation, its refusal to do so was not repudiatory”.

He went on: “The breaches of C&S’s duties alleged by Enterprise are capable, if proved, of amounting to a repudiatory breach of the contract. Whether, if proved, they do so amount is a matter to be determined at trial.

“If Enterprise’s case on repudiation fails at trial, its purported termination of the contract by Ozon’s letter dated 13 January 2014 was itself repudiatory. C&S’s solicitors accepted Ozon’s letter as a repudiation bringing the contract to an end by their letter dated 16 January 2014.”

Males J further ruled that the contract had been varied by an exchange of emails in October 2013 so as to increase the fees payable to C&S and provide that the contract should run for at least two years from October 2013.

The judge ruled that the insurer was entitled to restrict “the number of claims handled by C&S on its behalf to whatever level it saw fit and to refuse to allow C&S to handle any new claims on its behalf”.

However, it was not entitled to withdraw from C&S those claims it “had hitherto been handling”, unless the claims handler had repudiated the contract.

Mr Justice Males warned: “Bearing in mind the wide-ranging nature of the allegations made by Enterprise and the number of claims being handled by C&S, the parties will need to give careful thought to the further conduct of this action in the light of this judgment.

“A cost-effective and proportionate way of resolving the remaining issues will need to be found.”

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Only 7% of employees completely rejected conciliation

More than 17,000 people used the Advisory, Conciliation and Arbitration Service (Acas) early notification scheme in its first three months, it has emerged.

The scheme was introduced on 6 April 2014, but only became compulsory for anyone considering making an employment tribunal claim on 5 May, under the Enterprise and Regulatory Reform Act 2013.

In its first quarterly update on early conciliation, Acas said that 17,145 people used the new service from 6 April 2014 to 30 June.

Only 7% of employees and 9% of employers rejected the offer of conciliation completely.

However, a spokesman for Acas said it was not clear at this stage how many cases would settle, be abandoned or go ahead to a tribunal.

The statistics showed that settlements formalised by Acas by using its COT3 document accounted for 16.5% of cases which ended their early conciliation period between April and June.

Claimants who do not end up with a COT3 are given a certificate to say they notified Acas about a potential tribunal claim. Of these almost a fifth, 19%, told Acas they had decided not to take any further action.

Acas said that other cases were resolved informally without the need for a COT3 and in some cases conciliation continued after the end of the early conciliation period.

“Some employees go on to lodge a tribunal claim,” the spokesman said. “Information about the proportion that do so and what then happens in these cases will be important in judging the impact of early conciliation.

“It is as yet too early to provide data on this, as in many quarter one cases there is still time for the claimant to submit a claim and for the details of the claim to reach Acas.”

Anne Sharp, chief executive of Acas, added: “Early conciliation has only been running for three months and it is still too soon to give a comprehensive analysis of the full impact of our new service, but early indications are very positive.”


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Security for costs: order excludes part of budget relating to ‘contingent costs’

Security for costs: order excludes part of budget relating to ‘contingent costs’

A deputy High Court judge has made a security for costs order whose value is contingent on the outcome of a forthcoming costs management hearing.

Having decided to order security, Mr Richard Salter QC described the pending hearing as a “practical complication, since nothing I say in the context of this application can bind the judge [hearing it].

“It would also be undesirable (to say the least) were I to make an order for security in an amount greater than the costs budget settled for the relevant part of the litigation.”

Ruling in Eminent Energy Ltd v Krässik Oü & Ors [2016] EWHC 2585 (Comm) – a dispute over a joint venture and supply agreements – the judge made a three-stage order.

First he made a lump sum order for security up to the completion of disclosure, given that those costs were almost all likely to have been incurred prior to the costs management hearing.

He then made orders for security to cover first for the period up to the pre-trial review, and thereafter the trial period.

“Those orders will be for a percentage of the costs budget for the action for that period, including any allowance in that budget for ADR/settlement discussions (which ought to take place in every case) but excluding any part of that budget relating to other ‘contingent costs’.

“That seems to me to be the fairest way of dealing with costs that may never be incurred. If any of those contingencies in fact comes about, and makes a really significant difference to the level of their costs, it would always be open to [the claimant and the third parties] to make an application to increase the amount of security on the grounds of a material change of circumstances.”

An eight-day trial is expected and the claimant and two third parties have filed costs budgets amounting to approximately £1.5m. The defendant’s budget is about £500,000.

In opposing the application for security, the defendant argued that it was being used oppressively. Mr Salter QC said that though the cost budgets filed by the claimant and third parties – which formed the basis of the claim for security – were three times that of the defendant’s budget, “that is a circumstance that can properly be dealt with both in considering the appropriate amount of any order for security, and at the stage of costs budgeting”.

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Kightley: firms need to “flex” the fixed-fee regime

“Litigate, don’t procrastinate” was the message yesterday to claimant solicitors as one way to ameliorate the financial loss they will suffer from the new portal and fast-track fixed fees.

Speaking at the Association of Personal Injury Lawyers (APIL) annual conference at Celtic Manor, Stuart Kightley of north London firm Osbornes, said that taking the maximum success fee from all claimants’ damages would not be enough to make up for the impact of the new fees.

Instead firms need to “flex” the fixed-fee regime by being more ready to issue proceedings in cases that fall out of the road traffic accident, employer’s liability and public liability (RTA/EL/PL) portal schemes. “Don’t mess around – just issue,” he said.

He modelled how this would work, and more generally the impact of the new fees, by taking a basket of 300 successful cases at average damages levels – 100 in each category – where the current fee levels (using the figures produced by Professor Paul Fenn) were put up against the new fixed fees with a success fee charged to the client to the maximum level.

Mr Kightley – APIL’s new secretary – then assumed that half of the RTA cases would settle inside the portal, 35% would settle outside the portal and 15% would conclude after proceedings have been issued.

On this basis RTA cases currently generate average costs of £1,750 per case. Under the new fees, it falls by 16% to £1,470 per case. However, by issuing more readily – with 25% of cases concluding after issue – average costs would be £1,720, a fall of just 2% on the present level.

In EL – assuming 80% settling pre-issue – he put averge current revenue at £3,550 per case. Modelling 24% of cases settling within the new portal, and 56% pre-issue, fees would fall 16% to £2,960 per case. But issuing in 30% of cases, rather than 20%, would take it to £3,230, a more modest fall of 9%.

The figures were worst in PL. Average current fees – based on 75% settling pre-issue – are £4,330 per case. Under the new regime, with 19% settling in the portal and 56% pre-issue, it sinks to £3,140. Issuing in 35% of cases, rather than 25%, improves things a bit to £3,410, still a 22% fall.

Put all together, the 300 cases in the basket currently generate £963,000. Even with the maximum success fee, the effect of fixed fees will reduce that revenue by 21% to £757,000, Mr Kightley said.

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Grayling: JR should be used for the right reasons

A raft of changes to the costs regime for judicial review (JR) proceedings – including greater use of wasted costs orders and possibly scrapping protective costs orders (PCOs) – has been proposed today by the government.

The “rebalancing” of the financial incentives is part of a series of measures put forward by the Ministry of Justice (MoJ) which it said are “designed to speed up the judicial review process and drive out meritless cases which clog up courts and slow the progress of legitimate applications”.

The number of JRs has more than doubled over the past decade, to 12,400 in 2012, with immigration and asylum cases the driver. Around 40% of applications ended by being withdrawn before consideration of permission by the court while the majority of applications that do reach court are refused permission at the first consideration on the papers. Where an oral hearing was then requested, permission was granted in 12% of cases.

For cases lodged in 2011, around 4% of all applications reached a final hearing, when around 40% of decisions were in favour of the claimant.

In a consultation paper published today, the MoJ has identified five areas of possible costs reform. First, following strong opposition, it has modified an earlier proposal that legally aided claimants should only be paid if permission is granted. It suggests giving the Legal Aid Agency discretion to make a payment in meritorious cases which conclude before a permission decision is made.

Second, at present a claimant who is refused permission to bring a JR is liable only for the defendant’s costs of completing the acknowledgement of service. The consultation asks whether in fact the claimant should usually be liable for the reasonable costs of defending the unsuccessful application.

Between March 2011 and June 2013, only around 50 wasted costs orders were made – at an average value of £400 – all of them in relation to immigration and asylum cases. So third, the MoJ is seeking views on “whether the current approach to wasted costs orders should be modified to enable the making of such an order to be considered in respect of a wider range of conduct”.

It explained: “The legal representative is in the best position to advise their client of the likelihood of success, first prior to the initial application on the papers for permission and then again at the oral renewal hearing. Many claimants will make decisions on the basis of that advice.

“The government considers that a greater incentive might be beneficial for legal representatives to consider the strength of a case prior to submitting and renewing applications for permission, and that legal representatives should have a greater focus on the appropriateness of putting forward points that have already been considered and dismissed by a judge, particularly when there is not a high likelihood of success.”

It has also suggested that legal representatives who contest a wasted costs order and request an oral hearing should be required to pay a fee for the cost of that hearing, and asked whether that fee should be contingent on the case being successful.

The fourth change concerns PCOs, with the MoJ suggesting that the courts have gone beyond the principles set out in the landmark Corner House case so that cases no longer need to be “exceptional” to merit an order, while PCOs have increasingly been granted where there is a private interest at stake. It said it was also concerned with the “inequality” in the current use of cross caps, to the detriment of defendants.

The consultation indicates a preference to remove the right to a PCO for claimants with a private interest in a JR claim. “Further, and if ‘political’ and ‘campaigning’ judicial review claims continue to be brought where there is no claimant with a private interest, the government seeks views as to whether these sorts of claims ought to be given cost protection and whether it is right to remove the use of PCOs in non-environmental claims.”

As an alternative to removing PCOs, the MoJ asks if the principles as set down in Corner House “strike the right balance” or whether they should be modified. It also suggests that when applying for a PCO, it should be mandatory for the claimant to provide details of who is funding the case and a statement of assets, including any third-party funding.

The government is also proposing that there should be a presumption when making a PCO that the court considers setting a cross-cap for a defendant’s liability for the claimant’s costs.

The final issue is costs arising from the involvement of third-party interveners and non-parties. The MoJ’s provisional view is that where a party seeks to intervene in a case, the rebuttable presumption should be that it should bear its own costs of doing so, whatever the result of the claim.

Further, where an intervening party has raised issues that have resulted in either party incurring legal costs to a significant degree over and above what would otherwise have been required, the intervening party ought to be liable for them.

The other non-costs proposals put forward by the MoJ today include that only those with a direct interest should be able to bring a JR – “so that the process cannot be exploited for campaigning or publicity purposes, at the expense of others” – and strengthening the court’s powers where a rectification of a claimed flaw would be likely to have made ‘no difference’ to the original outcome.

Justice Secretary Chris Grayling said: “We want to make sure judicial review continues its crucial role in holding authorities and others to account, but also that it is used for the right reasons and is not abused by people to cause vexatious delays or to generate publicity for themselves at the expense of ordinary tax-payers.”

The new proposals follow changes implemented in July, including stopping people from having a ‘second chance’ hearing if their initial written application is ruled totally without merit by a judge.

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High Court: Mitchell decision not confined to the examples cited

The new emphasis on courts considering a “wide range of interests” beyond just those of the parties before them when deciding applications for relief from sanctions is not “an enhanced tactical weapon” for non-defaulting parties, the High Court warned last week.

Robin Knowles QC, sitting as a deputy High Court judge, also suggested that parties were wrong to think that the examples given in the Court of Appeal’s Mitchell ruling defined the limits of the decision.

In SC DG Petrol SRL & Ors v Vitol Broking Ltd [2013] EWHC 3920 (Comm), the judge refused to grant relief from sanctions – an automatic strike-out – for the claimant’s failure to comply with an unless order for security for costs.

The claimant acknowledged that the breach was not trivial, meaning the burden was on the claimant to persuade the judge to grant relief. Mr Knowles comprehensively failed to be persuaded, and refused relief. He said it would have been the same result before Mitchell or even before rule 3.9 was amended.

However, he then offered two observations arising from the way the Mitchell case was used in the hearing (emphasising that he was not criticising either counsel or the solicitors).

He referred first to the Court of Appeal’s statement that the court should seek “to have regard to a wide range of interests”, and not just the case in hand, when considering granting relief.

“I respectfully offer the observation that there are limits to the contribution that a party, especially a non-defaulting party, can usefully make in evidence or argument in respect of circumstances extending beyond the case in hand – for example on what is needed ‘to enforce compliance with rules, practice directions and orders’.

“This is pre-eminently an area for the judge. In Mitchell, the Court of Appeal was not putting an enhanced tactical weapon into the hands of non-defaulting parties to the litigation. This is clear from the nature of the factors specified at (a) and (b) of CPR 3.9(1). It is reinforced by the concern of the Court of Appeal to reduce satellite litigation.”

Secondly he noted that when citing Mitchell, the parties referred him closely to the examples given by the Court of Appeal, with the defendants pressing the point that their case was not within one or more examples.

“I respectfully doubt that is the right approach. The examples are there simply to illustrate the principles described by the Court of Appeal. The court’s inquiry should be guided by the principles.

“My own view is that ideally the jurisdiction to extend time and grant relief from sanctions is one in which (as Lord Templeman urged in The Spiliada [1987] AC 456, HL in relation to service out of the jurisdiction) a judge would not be referred to other decisions on other facts.”

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Case cost: work is expensive to acquire even if you don’t pay referral fees, says APIL

Solicitors who do not pay referral fees spend around £500 to acquire road traffic accident (RTA), employers’ liability (EL) and public liability (PL) cases, figures from the Association of Personal Injury Lawyers (APIL) have indicated.

APIL also revealed that a survey of members showed that around one in six firms will stop handling personal injury claims worth less than £25,000 if the government’s proposals remain unchanged.

The association’s response to the Ministry of Justice consultation on the new fixed recoverable costs for portal and non-portal fast-track cases outlined its “grave concern” about the lawfulness of the proposed extension of the RTA claims process, particularly around the timetable and the failure to conduct the promised full evaluation of the existing scheme.

It was a judicial review process begun by APIL and the Motor Accident Solicitors Society over these issues that led to the announcement shortly before Christmas that the date for implementation is being reconsidered.

However, the government said the fees consultation is unaffected by this, indicating that cuts could happen on 1 April regardless. APIL’s response argued that “the government continues to draw conclusions about the link between referral fees and lawyers’ costs which are illogical and flawed”, insisting that it is wrong to say that abolishing referral fees will save claimant lawyers money.

The survey of APIL members who do not pay referral fees indicated that the cost of acquisition for RTA, EL and PL cases was around £550 (median) and £450 (mean). The only exception was EL disease cases, where the cost was significantly lower.

APIL said: “The figures indicate that the cost of acquiring cases is not substantially different from the [government’s] speculated level of referral fees…  The approximate £700 reduction would therefore significantly adversely affect non-referral businesses, even though the reduction is meant to directly target those firms paying referral fees.”

The association sought to illustrate the detrimental effect the changes would have on injured people’s ability to access independent legal advice with its survey of 155 members showing that 15% of firms would not continue to do personal injury work under £25,000 if they remain unchanged; 30% said they would and the rest were unsure.

Three-quarters said they anticipated reducing staff numbers (only 9% said they would not), with band D fee-earners likely to be hardest hit. “In the current economic climate, this is of particular concern as… PI practices to which they would normally apply for a new job are unlikely to be hiring new staff.”

APIL added: “The impact of the introduction of alternative business structures also needs to be evaluated and clearly understood. These appear to enable insurers to continue to enjoy at least some of the benefits of referral fees, whilst in a position of conflict of interest or potential conflict of interest, whilst preventing fair competition.

“This aspect needs to be carefully examined by the Office of Fair Trading and/or the Competition Commission. The impact on access to justice and fair competition is grave.”

The response reiterated the other key arguments against the fees reduction, including the absence of any explanation or justification for the proposed figures; the “irreducible minimum amount of work” that “seems to have been forgotten or ignored”; the failure to consider the impact of raising the small claims limit; the recommendations of Professor Paul Fenn in his review of the first year of the RTA portal; and the inequality of arms that fixed costs outside of the portal will engender.

APIL also said “it would be grossly wrong to fix claimants’ costs [for non-portal cases] without fixing defendants’ costs too”.

The association further questioned whether the “perceived high level of motor insurance premiums” could be used as a justification for the reforms, given evidence that premiums are already falling.


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Bogart: innovative arrangement

Burford Capital has raised a further £25m for its litigation funding warchest, the AIM-listed company announced today.

The issue of contingent preference shares by a wholly-owned subsidiary of the company has been fully subscribed.

This means institutional investors agree on demand to provide up to £25m in additional capital.

The completion of the offering is contingent on the admission of the units to the Channel Islands Stock Exchange, for which application has been made and is expected to occur later this week. Burford said it has privately consulted a number of its shareholders and received support for the move from shareholders representing a clear majority of the ordinary shares in the company.

In a statement, Burford said: “Litigation finance investments tend to be medium term in duration and come with some uncertainty around the timing and quantum of their cash inflows and outflows, which means there is potential for a substantial gap between cash committed to investments and cash actually deployed.

“As it is inefficient to reserve dollar for dollar against future commitments, the company believes that the facility offers an innovative alternative to manage the uncertainty around cash flows.”

Chief executive Christopher Bogart added: “We are delighted to have expanded our available capital with this £25m facility, and continue to appreciate the tremendous support of our shareholders for our efforts to grow the business while enhancing value.

“This facility is an innovative arrangement and enhances our flexibility while also continuing our move towards a more mature capital structure for the business.”

Burford’s annual report in September said that it had £164m committed to 29 live investments.

Andrew Langhoff, chief executive of Burford UK, explained the rationale of having a ‘callable’ facility with a “simple” example.

He said: “Burford signs up to do a case for up to £10m. However, that money will be spent over time – probably three years – as the case proceeds through the court system. So the company doesn’t need all that money on hand at once, or even soon.

“However, Burford can’t very easily predict when other cases are going to resolve and pay it, so it is risky to rely on being able to fund the £10m from other wins. Historically it has tended to put much of the £10m aside to be safe. That means it can do less with its capital than it should be able to because it has a lot of cash sitting around just waiting to be called in a case – £70m at last report just sitting in the bank.

“This solves that problem. Burford can now put less money aside and invest more money now, without waiting for cases in progress to resolve, because we know we can call on our shareholders to fill a funding gap if one ever occurs.”

“It can now invest more money in cases without becoming less financially conservative and without paying for the extra money. This innovative financial structuring has taken a year to develop working closely with [financial adviser] RBC and Freshfields. It even has a name – COPPS – because we suspect other businesses in other industries will copy it.”

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Litigation funding brokers TheJudge have launched five new websites specifically tailored to individual areas of litigation.  remains the company’s main cornerstone website for commercial litigators but we’ve now launched what we are calling our sub-terminals websites:

Having these individual terminals will enable us to provide content rich information that is relevant to the lawyers in that practice area, including regularly updated cases studies, news articles and other useful information.  James Delaney, director at TheJudge, says “the funding issues faced by liquidators versus say a patent litigator are often vastly different.  Similarly, investment treaty arbitrators will face very different issues to say those faced by an antitrust lawyer managing a group of claimants pursuing a follow-on claim.  Our aim is to make some of the more intricate funding issues visible for these specialist areas, which collectively make up the volume of TheJudge’s business.”

As part of the launch we’ve also put together a short animation designed as an introductory guide for clients when considering their funding options.  We hope it provides a novel and light hearted introduction for what can be for some a fairly dry subject.

Following the surge of applications for funding and insurance that took place in March 2013, application volumes have again started to rise, which demonstrates that regardless of the cost regime claimants continue to have appetite to explore options to reduce their cost liability when pursuing litigation and arbitration.

For more information contact

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Hughes: improving the availability of legal advice

The Ministry of Justice (MoJ) has tacitly acknowledged the sharp growth in litigants in person (LiPs) in the civil and family courts by unveiling a £2m package of support aimed at keeping disputes away from court and supporting LiPs if they do get that far.

Among other things the funding will facilitate the expansion of the Personal Support Unit (PSU), the RCJ Advice Bureau, LawWorks and Law for Life: the Foundation for Public Legal Education.

This will means PSUs opened in more courts across England and Wales “to provide practical information and support including emotional support”, the MoJ said.

There will be additional LawWorks clinics to increase the supply of initial legal advice, work with the local legal professions and advice agencies, and with law schools where possible.

Further, advice will be made available by phone and e-mail to local and regional centres from RCJ Advice, together with information and materials produced through working with Law for Life and via Law for Life’s online Advicenow project.

Specifically for the family courts, the Children and Family Court Advisory and Support Service (Cafcass) is to pilot a new helpline to support separating parents in disputeto test a more joined-up and tailored out-of-court service”.

As well as better online information, the final element is to ensure there is one named person in each court centre to manage the new service as well as an appointed judge in each court centre with particular responsibility for litigants in person.

Justice minister Simon Hughes said that though the priority was to avoid “expensive and confrontational court battles”, when people do end up in court “it is imperative that they have the right advice and information. One of my priorities when I became a minister was to improve the availability of legal advice” – particularly in family matters.

The court support was developed under the aegis of the Attorney General’s national pro bono co-ordinating committee and was informed by the Civil Justice Council’s 2011 report on access to justice for litigants in person. The Attorney General’s pro bono envoy, Michael Napier, said: “This strategy will make an increasing difference over time for LiPs. It builds on existing models and experience in England and Wales and brings resources together in the way that enables them to be more effective for LIPs.

“The strategy puts the LiP at the heart of things and exemplifies the coordination and collaboration that the Attorney General’s pro bono co-ordinating committees have always sought to facilitate. The result is to unlock more assistance to the public. I congratulate all who have been involved in bringing the strategy about. We must now be patient for it to build.”

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Kelly Macha, Broker Account Manager, DAS UK Group

Leading legal expenses insurer, DAS, has appointed Kelly Macha as Broker Account Manager. The role will see her developing business relationships with brokers in South Wales, Gloucestershire, Wiltshire and Oxfordshire.

Kelly’s seven year career at DAS began in the Assistance Services Unit before she moved into Corporate Sales as an Account Technician.  In April 2012, Kelly secured promotion to Corporate Account Executive, being responsible for managing relationships with key corporate business partners.

Darren Weekes, Broker Sales Manager, DAS UK Group; “2013 was a significant year for DAS and the legal expenses market with the introduction of LASPO and the numerous Government reviews.  Kelly’s appointment is part of a strategic move to grow our sales team so we can further engage with brokers. As well as developing sales opportunities, we are able to offer them our extensive experience in the market and understanding of the legislative changes that affect them and their clients.”


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Ruling: privilege of 44,000 documents at issue

Ruling: privilege of 44,000 documents at issue

The High Court has ordered international law firm Dechert to cease acting for the principal creditor of a Russian businessman because it is also acting for his trustees in bankruptcy and has access to thousands of documents that are covered by legal professional privilege.

Mr Justice Arnold found that the safeguards which had been put in place by Dechert did not provide “adequate protection”.

He said: “They simply do not address the key fact that the solicitors acting for Avonwick [the creditor] have already read a large quantity of Mr Shlosberg’s privileged documents and cannot put that knowledge out of their minds.”

One of the other factors the judge took into account was that in reviewing the documents, Dechert had “proceeded upon an understanding of the law which I have held to be mistaken”.

“I do not suggest that Dechert acted otherwise than in good faith,” he added.

Shlosberg v Avonwick Holdings Ltd & Ors [2016] EWHC 1001 (Ch) was an application by Mikhail Shlosberg, a bankrupt Russian businessman domiciled in England, for an order directing that Dechert should cease acting for both Avonwick and his joint trustees in bankruptcy. The application was made primarily in respect of Dechert’s position as solicitors for Avonwick.

Its basis was Dechert’s possession and review of a large quantity of documents, many of which it was accepted were privileged; however, the respondents – Dechert, Avonwick and the trustees – argued that the benefit of the privilege had passed to the trustees and that there was no real risk of any misuse of confidential information by Dechert.

Avonwick lent Webinvest Ltd $100m, backed by a personal guarantee from Mr Shlosberg, Webinvest’s beneficial owner. This was not repaid and Avonwick eventually launched proceedings for $180m, including interest. This succeeded in 2014. In early 2015, Mr Shlosberg was declared insolvent and Webinvest wound up.

Arnold J said there was “nothing inherently objectionable” about a solicitor acting for both a trustee in bankruptcy or liquidator and a major creditor of the bankrupt or insolvent company, but the respondents had to establish that the benefit of Mr Shlosberg’s privilege had passed to the trustees. On the facts he found this proven with respect to only one of three categories of documents; this still left over 44,000 documents at issue.

The respondents relied on several safeguards put in place to protect Mr Shlosberg’s confidential information. These included the trustees engaging London law firm Moon Beever to advise in relation to conflicts of interest and instructing Dechert that no information should be shared with Avonwick without their express agreement.

However, after listing 11 relevant factors, Arnold J concluded that the safeguards were not sufficient. The factors included that Avonwick was “an adverse party to Mr Shlosberg in hostile litigation”; the documents had been reviewed in detail by Dechert over a substantial period of time; Dechert had not tried to set up any kind of information barrier – “on the contrary, the partner in charge of the litigation for Avonwick has led the review of the documents”; and that Avonwick wanted to make use of the knowledge that Dechert had acquired in the pursuit of its claim against Mr Shlosberg.

The judge said: “Taking all of these factors into consideration, I do not consider that Mr Shlosberg’s rights in respect of the privileged information would be adequately protected by granting an injunction restraining Dechert from using the privileged information unless a strict information barrier were created within Dechert and an entirely new team was assigned to act for Avonwick.

“The disruption and expense which this would cause Avonwick would be little short of the disruption and expense of instructing a different firm of solicitors, however, which is no doubt why the respondents have not proposed it. In those circumstances, I have concluded that an injunction should be granted requiring Dechert to cease acting for Avonwick.”

Dechert has not responded to a request for comment.

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One of the north-west's largest law firms – Asons Solicitors – has revealed record growth figures, in a challenging environment for legal services providers.

Founded just 5 years ago, Asons recently employed its 250th staff member; all based at its central Bolton premises.  The firm implemented Eclipse's Proclaim Practice Management software solution at its inception in 2008, when headcount numbered 3 employees (equating to a staff growth to date of over 8,200%).

Proclaim is utilised by all Asons staff, the system providing a core centralised solution for the full range of injury claim types – from complex high-value cases (Asons recently won a 6-figure settlement for a client, after a significantly lower initial insurer offer) through to minor RTA (Road Traffic Accident) claims.

Proclaim has enabled the firm to structure its business so that 88% of staff are revenue generating (fee earning), with only 12% dedicated to 'support' functions.  Future strategic aims include the expansion of its Industrial Disease team to be the UK's largest (it currently numbers 110 staff), and the implementation of a dedicated Clinical Negligence department.

Imran Akram, CEO at Asons, comments:

“Our aim right from day one was to build a sustainable and solid business.  The personal injury sector is fluid and challenging – the right legal software solution, one that is flexible and adaptable, is utterly vital.  Proclaim has provided us with the power to continually enhance our processes, drive out waste and increase margins.

“Proclaim is our 'blank canvas' and has enabled us to create a van Gogh.”

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Nott: Roadchef case inspired funding move

Nott: Roadchef case inspired funding move

Capital Law – the Cardiff-based practice that earlier this year became the first law firm to set up its own litigation fund – this week announced that the first case backed by the £50m pot settled on favourable terms.

The firm is backed by an unnamed hedge fund and they share profits.

It supported a claim brought by Fix Training against the Welsh government over non-payment of invoices.

In a statement, Fix directors Helen Jones and Jacqui Niven said: “Our contract with the government was the main focus of our business, and being starved of cash made it impossible for us to fight a costly battle through the courts. Luckily for us, Capital had faith in our claim…

“Without the litigation fund, we would not have been able to unlock our claim. Our opponent had deep pockets, but the backing of Capital’s fund gave us financial muscle and access to justice that we would not otherwise have had.”

Capital Law disputes partner Andrew Brown said the fund enabled the firm to cut out the “middle men” of third-party financiers and insurers. “We have the flexibility to fund cases quicker and cheaper than them. This enables us to finance smaller cases previously ignored by other litigation funders and to fund larger litigation more competitively than ever before.”

Capital Law said the inspiration for the fund came the Roadchef case that senior partner Chris Nott worked on for nearly 20 years.

In early 2015, the Roadchef Employee Benefits Trust settled its £100m claim against their former CEO, who had acquired shares held for the benefit of workers and subsequently sold them for £28m. The Roadchef employees were supported by Harbour Litigation Funding.

In that case, the original budget/funding requirement was £1.1m and the realistic damages recovery was over £26m, although eventually the claimant costs came it at £2.4m. Harbour admitted after the case settled that it should have spent more time working with the claimants and their lawyers in building contingency into the original budget.

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Newspapers: fixed fee scheme

Newspapers: fixed fee scheme

The Centre for Effective Dispute Resolution (CEDR) is to run the year-long arbitration pilot scheme for the Independent Press Standards Organisation (IPSO), the voluntary regulator set up by a host of media organisations in the wake of the Leveson report to replace the Press Complaints Commission.

Publications taking part in the pilot include national newspapers the Daily Mirror, Daily Express, Daily Telegraph, The Times, Daily Mail and The Sun, as well as the Press Association and Conde Nast UK magazines.

Under the pilot, both parties agree to binding arbitration overseen by specialist barristers recruited by CEDR to act as arbitrators. They will be able to require remedies and costs. Built into the process is an opportunity for both the claimant and the media organisation to settle the dispute prior to the final decision being delivered.

The kind of claims that could potentially be resolved are those relating to libel, slander, misuse of private information, breach of confidence, malicious falsehood, harassment and data protection.

IPSO will not process an arbitration claim at the same time as it is handling a complaint under the Editors’ Code of Practice which relates to the same subject matter.

The costs are capped at £2,800 for the claimant, though if the case is resolved after a preliminary ruling, it will only cost £300.

IPSO chairman Sir Alan Moses, a former Court of Appeal judge, said: “Arbitration is not just about reducing costs and delays associated with litigation, it is about widening access to justice for members of the public. They need a means whereby they can vindicate their legal rights without going to court.

“At the core of IPSO’s work is our support for claimants who feel wronged by the press and this pilot is part of this provision. We look forward to working with CEDR in delivering this important service.”
CEDR chief executive Dr Karl Mackie added: “We have worked hard with IPSO on the scheme to help streamline administration and manage the cost of dispute resolution to parties. This new scheme demonstrates the important role there is for alternative dispute resolution.”

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Humphries: new wave of claims

City law firm Humphries Kerstetter (HK) has secured third-party funding to launch of a new wave of claims against MasterCard and Visa on behalf of a host of companies.

The move follows the firm’s recent negotiation of a series of settlements with the card schemes on behalf of Tesco and WH Smith.

The claimants are seeking damages for losses alleged to have been caused by infringements of domestic and European competition law in relation to the setting and implementation of multilateral interchange fees and a declaration as to the unenforceability of the fees.

HK – led by well-known solicitor-advocate Mark Humphries – has been instructed by a further 27 companies and groups of companies, including a further supermarket chain, various well-known high street retailers and other merchants. It is understood that a large number of others are considering joining the funded group.

These claims are fully funded by Therium Capital Management Limited, backed by after-the-event (ATE) insurance.

Meanwhile, well-known litigation finance broker TheJudge has launched an insurance product to back damages-based agreements (DBAs).

The take-up of DBAs continues to be minimal amidst uncertainty over the legality of hybrid DBAs, in which some fees are paid on a traditional basis with the rest at risk under a DBA, meaning that firms are left with an ‘all or nothing’ choice.

TheJudge said that following a successful trial with several top-50 law firms, it has launched an insurance policy taken out by the law firm to cover a portion of the firm’s fee risk under the DBA.

As between the law firm and the client, the arrangement is an all or nothing DBA. However, if the case is lost or a judgement cannot be enforced, the law firm can make a claim under the policy to be reimbursed up to an agreed level of hourly fees incurred. Policies will typically cover around 50% of the fees to ensure some risk alignment between the firm and insurer.

The premium is only paid if and when the contingency fee is recovered.

TheJudge director Matthew Amey said: “It helps with the age-old challenge of how law firms financially account for the WIP incurred when operating on a contingency basis. The insurance provides certainty over a level of fee realisation to help firms plan for the future.

“No-one is suggesting that DBA insurance will give rise to the rampant use of DBAs in the UK commercial litigation market. Firms needs to manage their cash flow and therefore reach a sensible balance between billable hour work and alternative fees.

“However, by cherry-picking the cases the firm believes in and laying off  a portion of the fee risk, the law firm could off-set much, if not all, the discounts provided on their billable hour retainers, boosting realisation returns across the department or firm.”

Mark Shillito, UK and US litigation head at Herbert Smith Freehills said: “The flexibility to be able to offer our clients a range of innovative fee arrangements is vital if we are to continue to meet their changing needs. However, pricing arrangements must be sustainable for the law firm as well as attractive to the client.

“Being able to share the contingency fee risk with insurers enables law firms to align their interests with those of the client and demonstrate their confidence in the claim whilst maintaining an element of financial certainty when working on a contingent basis.

“This could prove to be a real game changer in the use of DBAs by law firms in the UK.”

Late last year we reported on a small City law firm that took on a major case on a DBA, which was set to net it one of the largest pay-outs yet under this form of funding.

In other funding news, Legal Protection Group – an ATE business launched last October in Bristol by several former DAS employees – has opened an office in London “to offer greater levels of local support to the important London market”, according to underwriting director Phil Bellamy.

Finally, those using ATE insurance should be aware that, as a result of the autumn 2016 budget statement, insurance premium tax rose as of today from 10% to 12%.

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Scott-Moncrieff: looking forward to seeing improvements

The Legal Services Commission (LSC) is working with the Law Society, the Legal Aid Practitioners Group (LAPG) and Resolution to address civil legal aid bill rejections, it announced last week.

Too many civil legal aid bills are returned because of errors made sometimes by the LSC and sometimes by practitioners. For legal aid providers, this means payment delays, impacting on cash flow; for the LSC, additional administration at taxpayers’ expense.

The LSC estimates that it could pay over 1,000 additional bills each week if documents did not need to be returned. This would have a positive impact on providers who would receive payments faster as well as on the LSC’s administration of payments.

The LSC said it is looking at its own processes to cut down on incorrectly rejected bills. It accepted that some bills are incorrectly rejected due to guidance not being applied consistently and is looking at how it can improve the information being given to practitioners about changes in procedures.

Chief executive Matthew Coats said: “This is a joint problem that requires a joint solution. By working together, we aim to radically reduce the error rate and the time wasted on rejects. Providers getting applications right first time is only part of the solution – we also need to get it right at the LSC.”

The three organisations are focusing on: what guidance, advice and joint communications could help prevent and reduce unnecessary rejects; the most effective and fairest method of resubmitting bills where the LSC has rejected a bill by mistake; and the outcomes of discussions with individual firms with the highest civil bill reject levels.

Law Society president Lucy Scott-Moncrieff said: “We look forward to seeing improvements in LSC processes and greater clarity about requirements. Practitioners can also assist by carefully checking their claims before submission. This should speed up the billing process for the benefit of legal aid practitioners and the LSC.”

Jenny Beck, LAPG’s co-chair, said: “LAPG receives a lot of e-mails and phone calls from practitioners who are extremely frustrated at the delays in processing bills. For some practitioners the delays can put their practices into financial jeopardy. We will continue to work with the LSC on these issues.”


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Lodder: a contingent legal aid fund can probably help access to justice

A contingent legal aid fund (CLAF) has merit but its viability cannot be assessed until the Jackson reforms settle down, a Bar Council-commissioned report has concluded.

Consultants Europe Economics, backed by the Bar Council, called on the government to back the concept of a CLAF, a private fund which would back cases in return for a portion of the damages and reinvest the money in other cases.

A Bar Council working party – under the chairmanship of Guy Mansfield QC of 1 Crown Office Row – has been investigating the viability of a CLAF as another potential source of funding for civil litigation.

The economists – who cautioned that there is insufficient data in the public domain on which to base firm findings – said it could be that conditional fee agreements (CFAs) are sufficiently profitable “for solicitors to reduce their margins while retaining volume” in a post-Jackson world.

“It is too early to say how the reforms will work through the ISC CISSP dumps  CFA regime. Some clients may accept that they will have to pay success fees and insurance premia, while solicitors and insurance companies may cut their charges in order to retain case volume…

“We cannot say definitely that a CLAF or CLAFs will emerge, nor when. The most we can say is that the CFA reforms make it more likely that, at some stage, this will happen.”

The report sa

id “there is likely to be a potential market for CLAFs”, with the numbers of cases that might be suitable for CLAF funding running into the “hundreds per annum or possibly the low thousands”.

These might initially be small, non-personal injury cases which are not attractive to claimants and/or solicitors under CFAs after the Jackson reforms, it said, although it may be that data will show that clinical negligence cases could be suitable for CLAF funding too. There might be little to choose between CFA and CLAF funding in personal injury.

Europe Economics was confident that, with “a convincing business plan”, a small CLAF should not have difficulty in raising initial funding, whether as a commercial enterprise or as a charitable/not-for-profit entity.

The report said it would help voluntary bodies to come forward on a not-for-profit basis if they received government confirmation that their CLAFs would not face adverse costs orders or at least should benefit from qualified one-way costs shifting; and that no arguments based on the doctrine of maintenance and champerty could be raised by a client who sought not to pay the due share of damages, or a losing defendant seeking to avoid an adverse costs order.

Bar Council chairman Peter Lodder QC said: “Effective access to justice is at the heart of a free democracy: it is critical to the political and economic health of this country. Faced with continuing legal aid cuts, we cannot turn back the clock to the days when only the very wealthy could afford to litigate to obtain redress for harm caused by others’ wrongdoings; a contingent legal aid fund can probably help.

“We invite the government to take this report seriously, support the concept and provide necessary encouragement for its promoters.”


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Royal Courts of Justice

Breach not a “serious or significant one”

The High Court this week granted libel specialists Carter-Ruck relief from sanctions after an assistant solicitor “misread” the Civil Procedure Rules and was almost four months late in sending out a funding notice.

Applying the decision in Denton, Mr Justice Warby accepted that in this case the breach was “not a serious or practically significant one” because Carter-Ruck had sent a letter, before the claim form was issued, containing all the information which should have been set out in the notice.

“Relief from sanctions should not be granted lightly,” Warby J said. “The requirement to serve notice of funding is an important one. No defendant should be exposed to the risk of an additional liability of which they have no, or no adequate notice.

“There is a purpose to the requirement of the rules that notice should be given in a particular form to specified persons at a particular stage in the action.

“It helps to ensure that all the right information is provided in advance to other parties against whom a claim might be made, or who have a legitimate interest in knowing the potential costs involved in the litigation.”

Mr Justice Warby was ruling in a libel action brought by chairman of the Commons energy select committee Tim Yeo MP, over claims in The Sunday Times that he coached a paying client before they gave evidence to the committee.

Ruling in Yeo v Times Newspapers [2014] EWHC 2853 (QB), Warby J said Carter-Ruck represented Mr Yeo under a conditional fee agreement, backed by ATE insurance. The ATE policy provided cover in respect of Mr Yeo’s potential costs liability of up to £100,000, with staged premiums.

Warby J said Andrew Stephenson, a consultant at Carter-Ruck, asked the solicitor to make sure when he filed the claim form that “whatever needed to be done by way of notification of the CFA had been done”.

The court heard that Times Newspapers was notified of the funding position and the insurance policy by a letter in December 2013, which contained all the information which should have been set out in the form.

However, Warby J said Form N251 was not filed or served when the claim form was issued in March 2014. “The assistant solicitor misread the CPR and mistakenly thought that the December 2013 letter represented compliance,” Warby J said.

“On Friday 11 July 2014 the omission was brought to Mr Stephenson’s attention by his assistant solicitor and on his instructions she filed and served form N251 on Monday 14 July 2014.”

Warby J said the claimant’s application for relief from sanctions was not opposed by the other side, and he accepted that in this instance the breach was “not a serious or practically significant one”.

“I can deal shortly with stages two and three of the Denton approach,” he continued. “The reason the breach occurred was an error by the assistant solicitor and not a deliberate decision. The error was promptly rectified once noticed. The impact of the oversight on the efficient and proportionate conduct of litigation was negligible, consisting principally of the need to make this application which was made promptly, and the additional costs incurred for which Mr Yeo has undertaken to compensate [Times Newspapers].”

Earlier in the ruling, he rejected an application by Times Newspapers for the case to be heard by a jury.

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Supperstone J: firms’ costs budgets “disproportionately high”

The High Court has taken an axe to costs budgets submitted by nine claimant and defendant firms involved in a group litigation claim brought by construction workers, cutting the combined total from £30m to less than £19m.

The claimant firms include Thompsons and Leigh Day, the defendant firms Herbert Smith Freehills, Macfarlanes and Eversheds.

Mr Justice Supperstone said the total incurred and estimated costs for the whole case were £22m for the claimant firms and £27m for the defendant firms – “aggregating just short of £50m”.

He said the court was “presently concerned” with 28 lead cases, out of a total of around 570. The judge said the parties accepted the suggestion of Senior Costs Judge Master Gordon-Saker, who sat as an assessor in the case, that the eventual costs of the claims, with additional liabilities and VAT, could reach £100-£150m.

The court heard that the claims involved allegations of the “secret vetting of activities carried out by a group of major construction companies over many years”. A group litigation order was made in August 2014.

The case was treated as a pre-2013 claim, with the court using its case management powers under CPR rules 3.15 and 44.4, practice direction 3E on costs management, and the approach to proportionality set out in Home Office v Lownds.

Delivering judgment in Various Claimants v McAlpine and others [2015] EWHC 3543 (QB), Supperstone J said: “Recognising that this is a complex case which raises a number of difficult legal and factual issues, nevertheless, in our view, the costs appear to be disproportionate.

“In reaching this conclusion we have had regard not just to the monetary value of the claims, and general and aggravated damages, but also to the important non-monetary remedies.”

Supperstone J said that having taken the view that the costs were disproportionate, the court had considered whether the work set out in the costs budgets of the nine law firms for the period after 2 October 2015 was “necessary and whether the total figure for each phase is reasonable.”

The High Court cut the costs budgets submitted by Thompsons from £5.07m to £2.65m, by Leigh Day from £2.96m to £2.19m, by OH Parsons from £3.45m to £1.87m and Guney Clark Ryan from £2.83m to £1.79m.

The five defendant law firms fared little better. The costs budget of Macfarlanes was cut from £7.66m to £5.23m, Eversheds from £3.18m to £1.75m, Wragge Lawrence Graham from £2.6m to £1.44m, Herbert Smith Freehills from £1.7m to £1.45m and Paul Hastings from £576,000 to £466,000.

Supperstone J said that in considering the costs budgets, the court had regard to the number of counsel and solicitors, which firm was said to be leading a particular exercise, the number of hours of work claimed/reasonably required, hourly rates and costs incurred before 2 October 2015.

Concluding that the costs set out in each law firm’s Precedent H were “disproportionately high”, Supperstone J said: “When considering reasonable and proportionate costs post 2 October 2015 we have taken into account the costs that have been incurred before that date, and have proceeded on the assumption that of such incurred costs only those which are reasonable and proportionate will be allowed on detailed assessment.”

The High Court made a costs management order in accordance with CPR 3.15(2), reducing the firms’ costs budgets.

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Foskett: Claimant ordered to pay 25% of defendant’s costs

A High Court judge has disapplied qualified one-way costs shifting (QOCS) for part of a failed claim by a solicitor that Oxford University was to blame for a worse-than-expected degree that he said has affected his career to date.

Making an order that will cost Faiz Siddiqui up to £75,000, Mr Justice Foskett found that, while much of the claim was for personal injury (PI), there was also a claim for pure economic loss that was exempt from the impact of QOCS.

Mr Siddiqui took action over the teaching of one part of his modern history degree. In the substantive ruling, Foskett J found last month that, though there were some problems with the delivery of the course back in 1999/2000, the evidence did not show it was “negligently inadequate”.

He said the evidence also did not support the claimed consequences that Mr Siddiqui’s low mark in the paper made a material difference to the level of his degree and that the level of his degree led to his failure to get into US law schools or sustain a successful legal career.

As a consequential issue, Mr Siddiqui argued that the whole claim was for psychiatric injury and so fell within QOCS.

But Oxford – whose costs were £300,000 – said part of the claim also included claims in contract and tort for “straight financial loss as a result of alleged negligence”, such as loss of opportunity to study at a US law school.

This meant that it was a claim “made for the benefit of the claimant other than a claim to which [QOCS] applies”, as per rule 44.16(2)(b), and so the judge had discretion to make a costs order.

There was an argument over whether an overlap between the evidential basis for a PI claim and a non-PI claim precluded the operation of the rule, but Foskett J agreed with Mr Justice Morris’s ruling last year in another mixed claim, Jeffreys v The Commissioner of the Police of the Metropolis, that it did not.

He said “the essential question” was whether the claims advanced were for different forms of loss, one attributable to PI and the other not.

“That being so, I consider that the circumstances of the present case do fall within the exception provided by CPR 44.16(2)(b).”

The judge said the issue of the alleged effect of the ‘poor degree’ on the claimant’s ability to obtain a place at a US law school occupied “a not insignificant amount of time at the trial (and indeed in the preparations for trial)”.

He continued: “Obviously, part of that aspect of the overall case involved consideration of whether the defendant had been in breach of duty, an issue that had to be addressed in relation to the personal injury element of the claim too.

“I cannot see any reason in principle why I should not reflect some part of that time in the order made pursuant to the exception to the QOCS provisions, though plainly I must be careful not to make an order that unfairly deprives him of the legitimate QOCS protection to which, by virtue of the acknowledged personal injury element of the claim, he is entitled.”

Foskett J that his initial view was that an order for one-third of the costs would be appropriate, “but to ensure that the legitimate QOCS protection is not lost, I have reduced that proportion to 25%”.

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Marshall: one of three practising solicitors in group

Marshall: one of three practising solicitors in group

Lord Justice Jackson has unveiled a group of 14 assessors to help him with his review of fixed recoverable costs – including more practising barristers (four) than practising solicitors (three), along with one costs lawyer.

He also announced that the deadline for written submissions has been extended by one week, to Monday 23 January 2017, to assist respondents who are also submitting evidence to the government’s consultation on personal injury reform.

A statement from the judiciary added: “Lord Justice Jackson would also like to underline that written evidence should address the extension of fixed recoverable costs across civil litigation, the review is by no means confined to reviewing existing areas of law where fixed costs apply. In fact the main emphasis is likely to be on extending the regime to additional areas of litigation.”

His assessors are:

  • Sara Ashby, founding partner of boutique intellectual property firm Redd Solicitors LLP. She has experience of the capped recoverable costs regime in the Intellectual Property and Enterprise Court;
  • Nicholas Bacon QC, a leading specialist in costs litigation at 4 New Square and chairman of the Bar Council fixed fees working group and a member of the Bar Council;
  • Richard Disney, a professor of economics at the University of Sussex with experience of various pay review bodies;
  • Paul Fenn, an emeritus professor at Nottingham University Business School who has been involved in previous costs work, including as an assessor to Jackson LJ’s civil costs review;
  • Barbara Fontaine, the Senior Queen’s Bench Master, former commercial litigator, and a general editor of the White Book;
  • Senior Costs Judge Andrew Gordon‐Saker;
  • Richard Lander, property specialist at Kings Chambers;
  • David Marshall, managing partner of London firm Anthony Gold, past president of the Association of Personal Injury Lawyers and current chair of the Law Society’s civil justice committee;
  • HHJ Martin McKenna, designated civil judge for Birmingham and former head of litigation in the Birmingham office of Eversheds;
  • District Judge Simon Middleton, a course director for the Judicial College with particular responsibility for devising and delivering costs and costs management modules, and a co‐author of Cook on Costs;
  • Andrew Parker, head of strategic litigation at DAC Beachcroft, an executive member of the Civil Justice Council and another of Lord Justice Jackson’s costs review assessors in 2009;
  • Vikram Sachdeva QC of 39 Essex Chambers, who has appeared in some significant costs cases;
  • Nicole Sandells, an experienced Chancery commercial barrister at 4 New Square;
  • Iain Stark, chairman of the Association of Costs Lawyers and a partner and head of costs at Weightmans.

This article was amended on 24 November to reflect the addition of a further assessor.

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Head of Claims at ARAG, Chris Millward

Head of claims at ARAG, Chris Millward

Leading legal expenses provider ARAG has appointed Chris Millward to the senior management position of Head of Claims, following an extensive recruitment process.

Chris joined ARAG in 2007 and already had more than 6 years of legal expenses insurance experience when he came to the company.

He replaces Paul Upton who has headed up ARAG’s claims function since the company’s UK launch in 2006. While leaving the company as an employee, Paul will continue to work with ARAG on a number of key strategic projects.

Tony Buss, ARAG’s Managing Director, commented on the appointment: “It was important that we conducted a thorough search and selection process for such a critical role in our business, but I am delighted that we have found the outstanding candidate to join our senior management team within the company.”

“I’m equally pleased that Paul will continue to work very closely with us, to help maintain the excellent standards on which ARAG has built its success during his decade of service, at this key stage in our growth.”
Chris took up his new role on June 1st.
He added: “I’m very excited to step up into this important position and appreciate the faith Tony and the ARAG management board have placed in me. I wish to thank Paul for all his help and hard work over the years; I have learned so much from him. I’m now looking forward to building on the fantastic reputation he has established for our claims service.”

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US: hybrid contingency arrangements common

The draft Damages-Based Agreement (DBA) Regulations 2013 have “surprising implications” because they appear to preclude partial or hybrid DBAs, one of the City’s top litigation firms has argued.

Herbert Smith Freehills said its interpretation of the regulations, which were laid before Parliament earlier this week, is that if a lawyer acts under a DBA, this must be on a full ‘no win, no fee’ basis.

They would not be able to agree an arrangement where, for example, the lawyer receives a reduced hourly rate as the case proceeds which is payable win or lose, plus a contingency fee in the event of success.

In a briefing issued yesterday, the firm said: “This goes against last summer’s recommendations from the [Civil Justice Council’s] DBA working party, which concluded that there was no reason to prevent parties instructing their lawyers under partial DBAs, analogous to ‘no win, lower fee’ arrangements that are permitted where a lawyer is instructed under a conditional fee agreement.”

It said these sorts of hybrid arrangements are used by commercial claimants in US litigation. Such claimants will not normally agree a ‘traditional’ contingency fee, where the lawyer gets 30% or 40% of any recovery but no fee if the claim is unsuccessful, but may agree a modified fee arrangement, with for example a discounted hourly rate combined with a smaller contingency fee or uplift in the event of success.

“We had expected that the introduction of contingency fees for civil litigation would allow greater flexibility for firms wishing to meet the demands of commercial clients for more creative billing solutions. It appears, however, that the regulations will leave little room for flexibility,” Herbert Smith said.

“In fact, as drafted, the only payment a solicitor acting under a DBA would be permitted to receive if the claim failed would be non-counsel disbursements, which means that the solicitor would be on the hook for counsel’s fees where counsel was not acting under a DBA and those fees were incurred by the solicitor as a disbursement. This seems unlikely to have been the intention of those drafting the regulations.”

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Bogart: Potential to generate significant future income

Leading third-party litigation funder Burford Capital made $1.3billion (£960m) in new commitments last year, more than triple its 2016 level, it announced yesterday.

It also illustrated how single case financing, originally the heart of litigation funding, is now just a minor part of Burford’s business.

The AIM-listed company said the new commitments reflected “a number of dynamics in Burford’s business”.

These were: continued growth in demand for capital in its core litigation finance business; access to capital through direct balance sheet investing and its new investment management business; and continued expansion of Burford’s product offerings and investment strategies.

Just 5% of the commitments ($34m) were to single cases, compared to 54% ($378m) to portfolio finance. In 2016, 12% of the commitments were to single cases.

Recourse finance – cases where Burford has recourse to an underlying asset beyond the legal claim – made up 33% ($227m) and legal risk management, where capital is only deployed if the case fails, the remaining 8% ($59m).

The growth meant that Burford said it would hold meetings with fixed income investors with a view to possibly making another bond issue.

Chief executive Christopher Bogart said: “We are delighted with the growth of the business in 2017. The new commitments made during the year have the potential to generate significant future income in the years to come and reflect a robust legal finance market that Burford continues to lead.”

By contrast, the other pioneering funder to list on the UK stock exchange – Juridica – continues its wind-down and in an update issued yesterday said that it now has just two remaining litigation investments.

It said both investments “have the potential to generate significant value for the company” and should concluded by the end of this year.

“Investors should be assured that the board of directors will continue to operate the company efficiently and monetise the company’s remaining investments in an orderly fashion so as to preserve and realise the full value of all remaining investments.”

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Eclipse200Established in 2000, award winning Farnborough based Bakers Solicitors has grown from a one practice litigation specialist with 6 staff, to a group of 3 law firms (Bakers, OW Law LLP and Baker Law LLP) with over 70 staff across five branches providing a full range of legal services.

Initially specialising in personal injury cases referred by other law firms, Bakers Solicitors required a solution to enable its case handlers to spend more quality time on the complex legal issues, whilst still processing the cases as quickly and efficiently as possible. The solution had to be easy to use and have the built in flexibility to facilitate the rapid transformation and diversification from a single practice into a group of 3 firms, each with their own area of specialism.

A Proclaim Practice Management Software Solution was chosen for its unrivalled flexibility, allowing for a consistent approach with a single secure centralised database managing all work areas including court of protection, conveyancing, debt recovery and employment.

Proclaim’s integrated firm-wide financial management platform makes financial transactions simple for a small accounts team to manage. Proclaim’s inbuilt compliance toolset ensures risk is effectively managed and legislative requirements are met.

The highly customisable Proclaim reporting solution has been invaluable for analysing data to spot issues, deal with problems and manage staff. The batch Scanning tool has created a paperless office with no physical documents stored.

Proclaim’s integrated development toolset has allowed the firm to adapt the system to suit their own bespoke needs including the creation of a clinical negligence matter management platform.

Superb levels of customer care throughout the client journey are facilitated through Proclaim features such as the new business enquiries module which provides true end-to-end management of incoming enquiries, and SecureDocs the online document delivery and acceptance tool.


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Lord Briggs: Transparency will have to be improved

Commercial courts may have to use their new right to determine issues of market importance by declaration if Brexit leads to a boom in arbitration, Lord Briggs has warned.

While agreeing with Lord Neuberger that Brexit would “if anything” make English commercial law “more attractive as the chosen law”, Lord Briggs made no attempt to hide concerns over the enforceability of judgments.

The Supreme Court justice said that if Brexit or “other moves away from sharing jurisdiction” led to private arbitration and ADR taking over from public courts as the main means for resolving cross-border commercial disputes, “ways will need to be found to remedy the deficit in transparency” that resulted.

“This may perhaps include the newly created – but as yet unused – jurisdiction in the Business and Property Courts to determine by declaration legal issues of strategic market importance without there being an underlying dispute.

“It may call for a freeing up of routes of appeal from arbitrators on questions of law of general public importance, or some relaxation of privacy which might, for example, permit the publication of anonymised awards.”

On enforceability, Lord Briggs said the “available choices” appeared to be a Danish-style solution, by which the UK would voluntarily join the Brussels Regulation regime, a Lugano-type solution or a “reversion to common law rules, only slightly fortified” by rejoining the Hague Convention.

In a speech entitled Dispute resolution in uncertain times, delivered at the PRIME finance conference at the Hague, he said: “The current thinking of the UK government, which largely concurs with the view of the House of Lords EU committee, favours a Brussels-type regime in principle.

“But its implementation faces the formidable obstacle constituted by the probable demand of the EU 27 that the CJEU retain its suzerainty, while at the same time deprived of UK involvement, either in the form of members of the court (including advocates general) or the locus standi of the UK government to make submissions, which it has traditionally done with great vigour.

“That is what Denmark and (to a lesser extent) the non-EU members of the Lugano convention have signed up to.

“The current form of the Lugano Convention critically lacks the benefit of improved recognition of party choice of jurisdiction now to be found in the recast Brussels Regulation.

“An attempt to join either of those regimes will require the other members’ consent to the terms. Meanwhile, a reversion to the common law rules, coupled with the loss of EU wide reciprocal enforcement of judgments, has been described by commentators as a recipe for confusion, expense and uncertainty.”

Lord Briggs said almost 40 years of involvement in financial dispute resolution in court, through arbitration and ADR, had “quietly imbued me with the settled perception that, in this field, there was an unstoppable move towards what I will loosely call globalism”.

However, he doubted whether in 2018 most people “would still take the further onward march of globalisation in dispute resolution as a given, in quite the same way as we may have done in the past”.

Along with Brexit, Lord Briggs mentioned the “advance in several countries” of “what may be described as an ‘us first’ approach to national engagement with global problems”.

He said this was called ‘America First’ in the USA, and manifested itself in its decision to withdraw from international trade, environmental and diplomatic agreements.

“These changes may not impact directly upon dispute resolution, but they may herald a worldwide retreat from an earlier ambition to find global solutions to global problems, with adverse consequences for the continuation of the current view that a global approach to dispute resolution is a Good Thing which can safely be taken for granted.”

Lord Briggs said the UK’s membership of the EU had been seen as the “essential glue attaching the mainly civil law jurisdictions of the other member states to the common law world, including for this purpose the USA”.

He said the common law had in some respects benefited from its “enforced exposure” to European jurisprudence.

He added: “I have no reason to think that European jurisprudence will not continue to play an important part in the further development of the common law, as it has always done.”

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Graves: ‘back to basics’ approach to litigation

The Jackson reforms will force personal injury (PI) solicitors to move away from a volume process-driven approach that has led to a deskilling of the profession in recent years, a boutique personal injury consulting law firm has predicted.

Citadel Law, an SRA-regulated law firm, said high levels of legal expertise will be driven to the fore by the need to case and cost plan on the multi-track, allowing firms with such skills to charge higher rates.

Further, the Draconian new limits on low-value cases will encourage solicitors to examine claims more closely to check if injuries are more serious than they at first appear, said Citadel founder and managing director Lesley Graves.

From her past auditing work at many law firms, Ms Graves estimated that up to 10% of cases deemed to be low-value have actually involved more serious injuries – such as brain and psychological damage – missed because of IT-led processes operated by under qualified fee earners.

“There are many parts of the Jackson reforms that are positive, and client-focused law firms are rolling up their sleeves and adopting a ‘back to basics’ approach to litigation ensuring absolute focus on client care and getting the best result in rehabilitation and compensation,” she said.

“Of course there needs to be a strong element of process in low-value PI cases, but process must be underpinned by strong legal expertise at key points to ensure a proper evaluation of a case and avoid negligence. The lawyers have to lead the case, not the technology, not least because the consequences of undervaluing a serious case could be devastating to both the client and the firm. Firms without the expertise to do this will not survive much longer.

“The new requirement to prospectively set costs budgets in multi-track cases means expert case planning is vital; experienced PI lawyers who put their clients’ needs and case and cost planning at the heart of the process from day one will succeed. Many firms are increasing their hourly rates and reducing their caseloads, quite rightly, as a result of the expertise they have and they are set to be market leaders.”

Ms Graves argued that part of the problem is that in the rush to commoditisation in PI over previous years – in part driven by new entrants to the market attracted by quick profits – process has eclipsed the true expertise required to risk assess and run PI work effectively.

Ms Graves, a former partner at Irwin Mitchell, is supported by a core team of nine solicitors, plus additional consultants with backgrounds at the country’s leading PI firms, both claimant and defendant, who work with law firms to better understand their businesses by improving processes and driving the maximum profit from their caseloads.

Citadel Law said it is also instructed by banks, accountants, private investors and others to advise as technical auditors of value and risk in PI firms and enhancement of systems.

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DAS UK GroupPosted by Chris Brewin, Principal Associate, Litigation and Dispute Management, DAS Law

The recent Supreme Court ruling in Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67 will have a huge impact upon the test for ‘dishonesty’ in criminal and professional disciplinary proceedings.

Since 1982, dishonesty has been considered on the basis of the two stage, objective and subjective test arising out of R v Ghosh [1982] EWCA, – the “Ghosh Test”.

The Ghosh Test requires the Court to consider:

  • firstly, whether the conduct in question was dishonest by the standards of ordinary reasonable and honest people; and
  • secondly, whether the individual realised that ordinary honest people would regard their behaviour as dishonest.

The second subjective element of the Ghosh Test means that the less the individual’s own standards conform to society’s expectations, the less likely they are to be held accountable for their behaviour in criminal or professional disciplinary proceedings.

For some time the test in civil proceedings has also been the subject of debate. Lord Nicholls in Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 164 and Lord Hoffman in Barlow Clowes International Ltd v Eurotrust International Ltd [2005] UKPC 37 advocated an exclusively objective test.  They both felt that, once an individual’s knowledge of the facts was ascertained, it was only necessary to consider whether the conduct was dishonest by the standards of ordinary decent people.  This did not sit easily with a House of Lords decision (Twinsectra v Yardley [2002]) that the Ghosh Test should apply equally in civil proceedings.

In the recent Ivey case, Mr Ivey was a professional gambler who used a card technique, ‘edge-sorting’, which increases the chances of a player winning.  When the casino realised the technique had been used, it refused to pay and Mr Ivey brought a £7.7 million claim for his alleged winnings. Mr Ivey did not believe he had cheated and had merely sought a more advantageous position. Had the Ghosh Test been applied, Mr Ivey would have escaped a finding of dishonesty.  However, the High Court, Court of Appeal and Supreme Court all found that when measured against the standards of ordinary decent people his behaviour constituted cheating and, consequently, the casino was not required to pay him.

The Supreme Court went on to confirm that a solely objective test for dishonesty should be applied in all cases. In professional disciplinary proceedings, for example hearings in the Solicitors Disciplinary Tribunal, respondents will now no longer be able to rely on their own “lower” standards or a belief – even if genuinely held – that they have been honest, as long as ordinary decent people would consider their behaviour dishonest. I seriously doubt anyone will see this as a change for the worse.


A golden opportunity for the ATE market to innovate

Enrique Gomez Head of ATE DAS UK Group

With the key judgement in the BNM v MGN case not expected until the end of the year, and decisions in the fixed recoverable costs arena not due until 2019, the after-the-event (ATE) insurance sector – already burdened by ever-changing regulation – is playing something of a waiting game. But this could be a golden opportunity for the ATE sector – the chance to take advantage of what might otherwise be a relative lull in activity period to set in motion a time of self-analysis and transformation, to develop plans for what the future of ATE insurance will look like.

July 16th, 2018