The Jackson Reforms took effect one year ago today. With nearly a year of lessons under their collective belt, Personal Injury (PI) solicitors need to shift their thinking from surviving the imminent threat to their businesses, to setting strategies for profitable growth going forward.

Insurance Services Office (ISO) has today released a new White Paper which highlights five key metrics firms can measure their performance against and look to gain advantage.

1. Cuts to claim lifecycles by an average of 40 days
2. Stage Two claim lifecycles halved – from 24 days to 12
3. Settlements achieved within 5 minutes in 22 per cent of claims passing through the system
4. Settlements achieved upon first counter-offer in 46 per cent of cases
5. Reduced time elapsing from settlement pack to response by 70 per cent on average

The statistics are from ISO clients who have seen these five key benefits using PICAS Plus, and translate to lower costs per case and the ability to handle more clients with fewer resources – exactly the balance firms need in order to start reclaiming the profits eroded by the reforms.

The white paper is available from ISO for free download here.

Edwards-Stuart J described the offer as “purely commercial”

A part 36 offer which did not reflect an “available outcome of the litigation” was nonetheless valid, the High Court has ruled.

Mr Justice Edwards-Stuart was ruling on a claim by the Jockey Club against developers Willmott Dixon over problems with the roof of a new grandstand at Epsom racecourse.

Mr Justice Edwards-Stuart said that “one knows from experience” that cases were “frequently settled” on the basis of an assessment of risk which combined both the risk of failure and the uncertainty as to the true value of the claim.

“An offer which is made in the light of those considerations will not usually reflect a result that is a likely outcome of the litigation if fought to judgment.”

The court heard in Jockey Club Racecourse v Willmott Dixon Construction [2016] EWHC 167 (TCC) that the roof of the new grandstand was damaged twice by strong winds – but not exceptionally so – in 2012, with further damage the following year.

The Jockey Club made an offer to settle in January 2015, on the basis that the defendant would “accept liability to pay 95% of our client’s claim for damages to be assessed”. Willmott Dixon made no response, and the 21-day period for acceptance expired.

Edwards-Stuart J said: “This is not a case where there is any possibility of a reduction for contributory negligence. Either the defendant is liable for the full extent of the claimant’s damages, as assessed or agreed, or it is not.

“Accordingly, a decision that the defendant is to pay 95% of the claimant’s damages, as assessed or agreed, is not one that is open to the court. The offer, therefore, does not reflect a possible outcome, but is purely commercial.”

The judge said the 5% discount probably represented a reduction that the claimant was prepared to accept in order to achieve “a certain and early outcome”, but it “probably” did not matter.

“All that is, or may be, relevant is that the offer did not reflect an available outcome of the litigation.”

The defendant argued that the Jockey Club did not make a valid offer.

Referring to the ruling of Mr Justice Henderson in AB v CD [2011] EWHC 602 (Ch), in which the judge said the concept of a settlement “must, by its very nature, involve an element of give and take”, Edwards-Stuart J said: “Although the claimant’s offer in this case was hardly generous, in my view it cannot be described as ‘all take and no give’.”

Edwards-Stuart J said he was persuaded by the authorities, including the Court of Appeal ruling in Huck v Robson [2003] 1 WLR 1340, that the Jockey Club’s offer was a valid one within the meaning of part 36 and a “genuine attempt” to settle the claim.

“Whilst the discount was very modest, even in the context of a claim of some £400,000 it amounted to £20,000, which in my view cannot be described as derisory.”

Edwards-Stuart J awarded the claimant indemnity costs, not from 21 days after the date of the offer, because the defendant had “only just been made aware for the first time that the claim against it had been increased to about £850,000”.

Instead he said the Jockey Club should be entitled to indemnity costs “from the earliest date after that by which the defendant could reasonably have put itself in a position to make an informed assessment of the strength of the claim on liability”.

Edwards-Stuart J decided that this was four months from the date of the offer, and ordered that the claimant should have costs in relation to liability on the standard basis up to 29 May 2015 and after that on an indemnity basis.

Facebook: Claimant’s posts contrasted with his claim

The High Court has dismissed in its entirety a £850,000 personal injury claim on the grounds of fundamental dishonesty.

Her Honour Judge Coe QC, sitting as a High Court judge, said film director David Pinkus not only exaggerated his symptoms while giving evidence, but “deliberately and consciously lied to me”.

HHJ Coe said that at the trial in January, Mr Pinkus was “often angry and loud”, sometimes “shouted” and questioned counsel for the defendant’s right to challenge his credibility.

“I specifically find that he has exaggerated his symptoms. I find that he has done so consciously. In particular he has given inconsistent accounts of post-traumatic stress disorder symptoms deliberately to relate his ongoing illness to the accident.

“Additionally, he has exaggerated his memory difficulties. I found his performance in the witness box was unconvincing.”

HHJ Coe said it was noteworthy that Mr Pinkus’s memory failed him when he was being asked more challenging questions about his credibility but “his memory was clear when he wished to make a point about the extent of his difficulties”.

The judge said Mr Pinkus “deliberately lied about his ability to follow a newspaper or a book”, lied when he said he had not told his wife about his illness and “deliberately and consciously lied to me” on other occasions.

From the claimant’s Facebook posts, HHJ Coe said “it would seem that he was able to present an entirely normal face to the world”.

She went on: “He has been on enjoyable holidays and partaken in normal family activities. He enters into light-hearted and joking banter with friends. He enters into emotionally warm interactions with friends particularly at times of anniversaries and birthdays and so on.”

The judge said that by reference to Facebook posts Mr Pinkus “seems to have been living his life normally”, yet by reference to the accounts he gave experts and his presentation in the witness box, “he is a broken shell of a man unable to do almost anything”.

The court heard in Pinkus v Direct Line [2018] EWHC 1671 that Mr Pinkus sued for damages after a road traffic accident in August 2012 on the M4 motorway.

He argued that although the physical injuries were minor, the “terrifying accident” triggered post-traumatic stress disorder, leading him to lose his job and adversely affecting family relationships.

Direct Line argued that Mr Pinkus sustained minor physical injuries and “some short-lived travel anxiety/adjustment disorder which resolved by early 2013”. They argued that the claim was exaggerated/fabricated and worth no more than £2-3,000.

HHJ Coe said she had reached “the clear conclusion” that the claimant had not established on the balance of probability that he suffered from post-traumatic stress disorder.

“The consequences of the accident were short-lived. I have no doubt that he has been dishonest.”

The judge found that the claimant suffered “some minor physical injuries and a period of travel phobia which was not sufficient to stop him driving but which did develop into a minor adjustment disorder with anxiety (to which he was vulnerable) and mild depression, resolving by about March 2013”.

HHJ Coe awarded Mr Pinkus £4,250 in general damages, plus a possible £250 to cover the insurance excess.

However, the judge went on to consider the ‘fundamental dishonesty’ set out in section 57 of the Criminal Justice and Courts Act 2015, which allows the courts to dismiss in a claim in its entirety.

She found that Mr Pinkus had not been honest “in many respects” and had deliberately exaggerated symptoms and fabricated memory loss in a way so “extreme” it prevented the claimant’s doctors from reaching a diagnosis.

“In the witness box his ‘performance’ was so extreme that I raised an issue as to his capacity to litigate.”

HHJ Coe concluded that Mr Pinkus had been fundamentally dishonest.

“In this case the primary claim must be dismissed. I am not satisfied that the claimant would suffer any substantial injustice beyond the loss of the valid part of his claim.

“The obvious reason for such fabrication is financial gain. I can think of no other reason why this claimant would behave as he has. The pleaded schedule of loss is for a significant sum of money.”

Kain Knight team enjoy a day at Newmarket racecourse

Kain Knight treated over one hundred of its staff to a day at the races recently.  On a very sunny Saturday morning two coaches set off from Head Office at Bishops Stortford bound for Newmarket racecourse where a hospitality pavilion awaited.

After a sumptuous barbecue lunch on arrival the serious studying of form began.  The racing produced several very happy staff members and luck seemed to carry on throughout the course of the day.

Another highlight, for the younger members of staff, was the fact that most of the cast from Hollyoaks were located in the pavilion right next door to ours!

Corey Grey one of the newest recruits to  the firm said, “It was great to have been treated to such a fun day out and to mix and mingle with many of the cast from Hollyoaks.”

Matt Kain, Director of Kain Knight said “As a busy and rapidly expanding firm it is not always possible to get to know all of the staff and it was good to chat and see everyone enjoying themselves  in such a relaxed atmosphere.”

High Court: no evidence to contradict claims of costs savings

The High Court has described the cost savings that can be achieved by using predictive coding for disclosure rather than a standard keyword search as “extremely significant”.

In the first reported decision on predictive coding following a contested application, Mr Registrar Jones said the cost of predictive coding in the case before him was “in the region of £132,000”, compared with “at least £250,000” for a keyword search or £338,000 in a “worst case scenario”.

City law firm Berwin Leighton Paisner (BLP) claimed victory on the issue in May, acting for the respondents in Brown v BCA Trading [2016] EWHC 1464 (Ch), but the full ruling has now been published.

The court heard that David Brown claimed over £20m from the respondents through an unfair prejudice petition brought under Section 994 of the Companies Act 2006.

Mr Registrar Jones said the respondents sought electronic disclosure using predictive coding, rather than the “more traditional” keyword approach.

He said the “majority of the documents” were in the hands of the respondents, which did not “determine the outcome”, but was “relevant to take into account when their lawyers identify the favourable difference in cost which they expect to incur if predictive coding is used instead of keyword searching”.

The registrar said there was no “factual or expert evidence” to contradict the respondent’s assertions about the “favourable difference” in cost.

He said this was “relevant and persuasive” only to the extent that predictive coding would be effective and achieve the disclosure required.

“When the size of potential disclosure is significant both in terms of quantity of documents and the time required to be spent on the disclosure process, it is particularly important for the lawyers to identify by reference to the true issues, the anticipated categories of documents and to enter into discussions to seek to minimise the work required and therefore the costs.”

The registrar went on: “The statements of case from both sides within this section 994 Companies Act 2006 petition present extremely broad issues of factual dispute.

“Realistically, however, experience shows that issues will narrow significantly by the time the trial is reached. This can mean that what may have appeared to be necessary disclosure based upon the statements of case at this stage, will turn out to have been unnecessary and indeed to a large degree irrelevant to the way the case will be heard at trial.”

The registrar said it may be difficult for solicitors to foresee the outcome, but they should make a “reasonable attempt” at doing so.

“A successful outcome from the use of predictive coding must, at least to some extent, depend upon the success of the parties having been able first to narrow down the issues and therefore the categories/types of documents relevant to the disclosure process.”

The registrar referred to Pyrrho Investments v MWB Property [2016] EWHC 256 (Ch), the first ruling endorsing predictive coding in England and Wales, but that was a case where the parties agreed to its use.

Mr Registrar Jones said all of the 10 factors cited in Pyrrho by Master Matthews applied to the case, apart from the one referring to agreement by the parties. He said an additional factor, that there were “no factors of any weight pointing in the opposite direction”, did apply.

The registrar concluded that it was right to make an order for predictive coding disclosure. “There is nothing, as yet, to suggest that predictive coding will not be able to identify the documents which would otherwise be identified through, for  example, keyword search and, more importantly, with the full cost of employees/agents having to carry out extensive investigations as to whether documents should be disclosed or not.”

Bankruptcy case: wasted costs order against solicitors

Our monthly summary of key costs-related court decisions is provided by CaseCheck

Ali v Ali & Ors [2013] EWHC 1233 (QB)

Application by a defendant to revoke a direction that an assessment of costs proceed upon the basis that it was reasonable for insurers to be separately represented in a road traffic claim, on the ground that the information giving rise to the direction was inaccurate and did not properly reflect that one of the insurers was indemnified by the other on the condition of co-operation.

Held: It was in the interests of justice that the court exercise its power under CPR 3.1(7) to revoke the direction. The costs direction was made as a result of an inadvertent misunderstanding as to the true funding position between the insurers, which would have had a significant effect on the costs assessment. Insurers ordered to pay the costs of the application.

Full ruling here.

Gavin & Anor v Community Housing Association Ltd [2013] EWCA Civ 580

Appeal against, inter alia, an order to pay costs, including reserved costs of all interlocutory applications, on an indemnity basis.

Appeal dismissed. Held: The judge's power under CPR 44.4(3) to award costs on the indemnity basis is exceptional, justified where the circumstances take the case out of the norm.

Although it is not necessary to show misconduct on part of the paying party, in the present case an indemnity basis was justified due to a complete disregard of procedural rules and the making of unfounded and exaggerated claims. It was also within the trial judge's discretion to direct that costs of interlocutory applications follow the event where the costs of those applications were reserved, so that the ultimate burden would be decided by having regard to the outcome in the action.

Full ruling here.

R (Hemming & Ors) v Westminster City Council (Rev 1) [2013] EWCA Civ 591

Appeal concerning, inter alia, the operation of CPR 36.14(3) in cases where the party which has rejected a settlement offer is a public authority and the dispute is about a new and untested legal regime.

Held: When considering whether it would be just to make an order under CPR 36.14(3), the court must take into account all the circumstances of the case, including the terms of the part 36 offer, the stage in the proceedings when it was made, the information available to the parties at the time the offer was made, and the conduct of the parties with regard to giving or refusing to give information enabling the offer to be made or evaluated.

That the unsuccessful party is a public authority faced with the interpretation of new and untested legislation is arguable but not, prima facie, a relevant consideration.

Full ruling here.

Elvanite Full Circle Ltd v Amec Earth & Environmental (UK) Ltd [2013] EWHC 1643 (TCC)

A successful defendant sought twice the amount approved in a costs management order and covered by the claimant’s after-the-event (ATE) insurance.

Held: The starting point of an assessment of costs, on either a standard or indemnity basis, is the budget approved in a costs management order.  The primary function of an approved costs budget is to ensure that costs are reasonable and proportionate to what is at stake. As such, the court will be slow to revise or depart from an approved budget unless it is satisfied in all the circumstances that there is good reason to do so (per Henry v News Group Newspapers Ltd [2013] EWCA Civ 19).

Whether an award of indemnity costs is a good reason to depart from the order depends on the particular facts of the case. Although it is always open to a party to seek to depart from the original approved budget on the basis that there is good reason to do so, prima facie it is not possible to seek retrospective approval to amend.

Should a party wish to change its budget, it must seek formal approval as soon as it becomes apparent that the original costs have been significantly exceeded, so the court can consider whether there was good reason to depart from the budget. The mere making of a mistake in a budget, absent of any indication of error, does not, of itself, amount to a good reason.

Indemnity costs are only justified where the conduct of the paying party takes the case out of the norm and amounts to a forfeiture of the rights to the benefit of the doubt on reasonableness, such as in pursuing a hopeless or disproportionately wide claim.

In the present case, indemnity costs were not justified as the claim was arguable and it was reasonable and proportionate for the claimant to proceed to trial. Although the defendant had not demonstrated good reasons for not making an application to amend costs or for the court to depart from the costs management order in relation to expert's fees, it was for the costs judge to assess whether some of the increases constituted good reason.

Full ruling here and Litigation Futures story here.

Thames Chambers Solicitors v Miah (Rev 1) [2013] EWHC 1245 (QB)

Appeal against a wasted costs order against solicitors instructed by a bankrupt claimant granted on the ground that they conducted litigation in the absence of consent by the trustee in bankruptcy.

Held: A wasted costs order application may be made orally in the course of any hearing (CPD (CPR part 48) paragraph 53.3(2)), provided the scope of the application is narrow and clear (Regent Leisuretime Ltd v Skerrett [2006] EWCA Civ 1032). It is negligent for solicitors to commence an action for a bankrupt in relation to a cause of action which is vested in the bankrupt's trustee, unless the client has grossly misled them (Pickthall v Hill Dickinson LLP [2009] EWCA Civ 543; Nelson v Nelson [1997] 1 All ER 970f).

Appeal dismissed. In the present case, it was not necessary for the defendant to issue a part 23 application as there was a strong prima facie case that the solicitors acted improperly, unreasonably and negligently – any competent solicitor must know that proceedings to enforce a claim by a bankrupt can be pursued only with the consent of the trustee.

Full ruling here.

United Marine Aggregates Ltd v G M Welding & Engineering Ltd & Ors [2013] EWCA Civ 516

In an appeal against a finding that a fire was not caused by breaches of contractual and tortious duty, the public liability insurer of the successful defendants appealed an award of 50% of its costs.

Held: The judge erred in making an order substantially influenced by the view that the insurer incurred disproportionately high costs: pursuing some issues on which it lost or which proved peripheral were not matters which justified depriving it of any part of its costs. The order was therefore unsustainable and substituted for an order awarding the insurer all its costs.

Full ruling here.

Re Atrium Training Services Ltd & Connor Williams Ltd [2013] EWHC 1562 (Ch)

Application for an extension to comply with a disclosure order and cross-application to vary an order for costs of disclosure applications to an indemnity basis.

Held: Where applications are applied for in time and involve no significant fresh prejudice to the other parties, considerations of cost and proportionality are highly relevant: depending on the circumstances of the case and the stage in the proceedings when the order was made, there may be a need for reasonable extensions or other adjustments.

The wide power of the court to vary or revoke an order may be exercised only where there has been a material change of circumstances or where facts or arguments leading to the original decision were mis-stated or omitted (Tibbles v SIG Plc (t/a Asphaltic Roofing Supplies) [2012] EWCA Civ 518).

In the present case, extension was justified, while a variation of the costs order was not. The latter application was an expensive and unnecessary piece of satellite litigation.

Full ruling here and Litigation Futures story here.

Budget: guidance needed

A second regional costs judge has ruled that an approved budget does not hinder a detailed assessment, but also called on the higher courts or the rule committee to give a definitive view.

District Judge Hale in Nottingham explicitly agreed with the ruling of his Birmingham-based colleague, District Judge Lumb, in Merrix v Heart of England NHS Foundation Trust.

In Bhojani v University Hospitals of Leicester NHS Trust, DJ Hale said: “Like Judge Lumb I think the answer… has to be more nuanced than the claimant’s contention for a fixed figure and the defendant’s contention for an entirely unfettered entitlement to attack a bill on detailed assessment.

“The budget will be a strong guide to what will be allowed on a detailed assessment and because the receiving party’s costs have already passed scrutiny once, the scope for further reduction might prove to be limited.”

Describing the budgeting stage as involving “a consideration of the landscape and assessment as a more detailed survey of the terrain” he said budgeting was not intended to replace detailed assessment.

“Had that been the intention of the rule committee, they would have made the appropriate and specific changes to CPR parts 44 and 47 and they did not.”

He added that whether or not the case management judge recorded an opinion that incurred costs were disproportionate, those costs must always be subject to a line-by-line detailed assessment.

DJ Hale said: “It seems clear to me that without an authoritative and binding ruling from the higher courts or a clear and unequivocal change to the Civil Procedure Rules, parties and judges alike will continue to operate in an atmosphere of uncertainty.

“Clarification and guidance is required urgently and whilst I have reached a conclusion, I have not done so without significant hesitation. For those reasons I have indicated to counsel that I shall readily grant permission to appeal and would hope that any appeal would be dealt with as speedily as possible.”

In December, the rule committee heard that this was a difficult issue that needed to be put out to consultation.

The judge did not accept that his decision was inconsistent with Lord Justice Jackson’s intentions. “At a detailed assessment the budget will still be an important factor in the judge’s mind. In particular he is likely to be reluctant to reduce the receiving party’s costs on grounds of proportionality when the budget has already been approved as being proportionate.

“In fact I would go as far as to say that in most cases there will be little if any scope for a further reduction on the ground of proportionality alone in the absence of a significant change of circumstances since the approval of the budget.”

But he did acknowledge that this approach would not do much to reduce the number of detailed assessments. “So far there is much anecdotal evidence that budgeting has done little if anything to reduce the number of detailed assessments taking place and the points of dispute are no shorter than they ever have been.

“However, this was not the primary objective of costs budgeting. Costs budgeting does bring with it a degree of certainty in the sense that the parties will know at the outset what the upper limit of recoverable costs will be at the end of the case unless there is a significant change of circumstances.

“It is true to say that a party cannot be certain that his recoverable costs will not be further reduced at a detailed assessment but it seems to me that certainty can never be achieved except where a fixed costs regime is put in place.”

The decision of the Court of Appeal last year in SARPD Oil has also caused confusion, and in light of that, rule 3.15 is to be amended on 6 April to make it clear that the case management hearing is not the forum to debate incurred costs, although the judge will be able to record comments on them to be taken into account at a later assessment.

Christopher Perry, instructed by Shakespeare Martineau, acted for the claimant. Robin Dunne, instructed by Acumension, the costs firm which also worked on Merrix, represented the defendant.

Rolls Building: Brexit cases expected

The financial markets test case pilot scheme is to be extended in time and scope because senior judges have seen its value – even though not a single case has gone through it in nearly two years.

It could prove especially useful in dealing with issues that arise from Brexit, it is said.

The scheme is due to end in September but the Civil Procedure Rule Committee has decided to extend it for a further three years and align it with the Financial List – currently it only applies to some of the matters covered by the list.

Both the Financial List – for claims linked to the financial markets and worth over £50m – and the pilot were introduced on 1 October 2015 in the Rolls Building as a single specialist list in the Chancery Division and the Commercial Court together.

The purpose of the test case scheme is to provide a procedure which enables issues to be brought before the court by interested parties without the need for an underlying dispute.

In a newly published report to last month’s rule committee meeting, Mr Justice Birss said that despite the lack of cases, a meeting of Financial List users in February considered the availability of the scheme to be “important and useful”.

Further, the senior judges responsible for the Financial List – the Chancellor of the High Court, Sir Geoffrey Vos, and the judge in charge of the Commercial List, Mr Justice Blair – supported widening the scope of the scheme “as a matter of urgency” and in time implementing it on a permanent basis.

The report said: “The market test case scheme was recently considered, but not ultimately used, in a very serious potential piece of litigation. The details of it cannot be explained because they are highly confidential, but the Chancellor has said that the possibility of its use in that situation demonstrated to him its potential and its importance.

“Had it been used, it would have offered a solution to a very delicate financial situation. The fact that another route ultimately commended itself to those affected does not detract from the utility of the process having been available – quite the opposite, it served to highlight the fact that the current scope of the scheme is too narrow and that successful take-up of the scheme would depend on its expansion.”

Birss J added that the senior judges were agreed that the Brexit process was “likely to throw up the need for speedy market test case determinations, such that the future utility of the test case scheme is not in question.

“Accordingly, it would be a big mistake to abandon the pilot now, just when people are becoming aware of its existence and looking at the possibility of making use of it. The procedure involves quite a culture change, so cannot be expected to show its value immediately.”

Professor Dominic Regan of City University, London

The last 18 months have seen significant growth in the use of litigation funding particularly by large corporate organisations concerned about the financial pressures placed on in-house legal budgets in managing risk and future costs. Such organisations are balancing the opportunities that litigation funding can provide against the costs and returns from litigation activities. Litigation funding facilitates all types of cases from single cases to portfolios of claims. Each proposal presents a unique opportunity to support litigation in a predictable cost effective way whilst maintaining independence and control for individuals and companies involved.

Acasta Europe Ltd and Sparkle Capital Ltd in conjunction with Acasta European Insurance Company Ltd & Partners in Costs, together with The Birmingham Law Society are hosting a half day conference in Birmingham city centre on Thursday 14^th September 2017 at the offices of DWF LLP to look at these modern litigation trends for all litigators, together with a comprehensive overview of the latest developments, news and updates relevant to the legal sector in 2017 and those potentially on the horizon, including,

• Litigation Funding process, contractual arrangements, cost/terms.
• Litigation Funding, “non-recourse”
• Litigation Funding with After The Event Insurance or Financial Guarantee Insurance
• Litigation Funding and Conditional Fee Agreements & Damages Based Agreements
• Litigation Funding and evolving trends, Just “David v Goliath”?
• Litigation Funding sees return of Champerty & Maintenance?
• Litigation Funding & After The Event Insurance and Security for Costs.

Our main headline speaker at the conference will be Professor Dominic Regan of City University, London, who assisted Lord Justice Jackson with the LASPO reforms back in 2013 as well as being a columnist on the New Law Journal and a special adviser to the Association of Costs Lawyers.

Also speaking at the conference will be David Kearns who is the Director and Head of Underwriting & Legal at Acasta European Insurance Company Ltd on ATE Insurance & Litigation Funding, Reuben Glynn who is the Managing Director of Partners in Costs on Tactical Costs, Paul Joseph who is a Barrister at No. 5 Chambers on How to Instruct Counsel Effectively and Michelle Garlick who is a Partner at Weightmans Compli regarding Solicitors Ongoing Compliance Requirements.

The event will commence at 12:00 noon for Registration with Lunch from 12:30 – 13:00 with the Conference starting at 13:00 and Closing at 16:40. There will also be a chance to put your questions to all of the panel at the end of the conference.

There is up to 3 Learning hours of Continued Professional Development available by attending this half day conference with fees set as £40 + VAT for Members of Birmingham Law Society and £60 + VAT for Non Members with Lunch also included.

Why not join us for what will be an excellent conference and an opportunity to hear 5 industry experts speaking on important subject matters as well as a great opportunity to network with many of your fellow Litigators.

To register your interest in attending this conference, please email andrew.williams@acastaeurope.co.uk or alternatively ring 0800 668 1350.

Posted by Neil Rose, Editor, Litigation Futures

Survival of the fittest – the new motto for PI lawyers?

So here we are at last, nearly five years since the then Master of the Rolls, Lord Clarke, announced his intention to launch what turned out to be the Jackson review (a story I broke, if I can be allowed the immodesty of mentioning it). It has certainly had its ups and downs since then, the biggest up undoubtedly being the 2010 election result, without which Sir Rupert’s report may well still be lying in the long grass.

It is moot now for those on the claimant side to look back and wonder whether anything more could have been done to prevent what they would consider the worst of the reforms. But I will, for one last time, dwell on it in light of the recent ‘Save the Legal Industry’ campaign, headed by well-known Manchester personal injury solicitor Martin Coyne, a subsidiary part of which has been to call for heads to roll at the Law Society for failing to stand up for the profession.

I have long felt that the Law Society has been far more visible on the legal aid part of LASPO than Jackson, and it has thrown more internal resource at it too. This is a highly sensitive subject for Chancery Lane, which is why it has recently been highlighting its work and achievements over Jackson given the much higher profile efforts of APIL and MASS. Of course it is impossible to determine if any one particular body was responsible for such concessions as were won, and so let us put these claims to one side.

The society would say that it undertook a lot of work behind the scenes which the profession did not see, which no doubt it did (although being quiet about such things is not the Law Society’s usual style) – indeed some of the feedback I’ve had about Martin Coyne’s campaign is that it is ‘unhelpful’ for the continuing behind-the-scenes negotiations over the whiplash reforms. But then behind-the-scenes activity hasn’t been a roaring success to date, so let’s not get too worked up about that either.

All I can say is that from my perspective as an external observer, APIL and MASS seemed to run more dynamic and determined campaigns (equally, it is fair to note that they didn’t have to worry about legal aid).

The odds are that nothing could have changed the course of government policy but my criticism of all the groups – not just the Law Society – is that the best chance they had was to present a united front. Instead they all went it alone and only came together at the death of the bill’s passage through Parliament, by which time it was far too late.

I think most involved would agree with this, and I have never got to the bottom of why it didn’t happen; policy nuances may have seemed important from within but perhaps ignored the bigger picture. Somewhat more than a nuance was the Law Society’s support for the referral fee ban, while its general desire always to have the lead role probably didn’t help (it has been similarly criticised for how it conducted its legal aid campaign alongside the large Justice for All lobby).

I’ve written several times before of my incomprehension that the society didn’t see the RTA portal fee cut coming straight behind the ban (and if it did, it wasn’t acting in the interests of many thousands of members by pressing for it – the society, let’s not forget, is now a representative body) and that its submission that the fee should go up rather than down was totally unrealistic.

But that was then and this is now. The long tail of recoverability caused by the mad rush to sign up to clients to CFAs and ATE before Monday means that the full impact of the reforms won’t be felt fully for some time; it is the portal fee cut that will hurt first and worst.

So what can we expect now? Satellite litigation is clearly part of the future, such is the unsatisfactory nature of the CPR amendments as highlighted by the likes of Kerry Underwood and Simon Gibbs. Already there is talk of challenges to the reasonableness of solicitors signing up CFAs and top-up ATE in the last few weeks. Will the Court of Appeal take the firm lead promised by the new MR, Lord Dyson? It will need to rule less ambiguously than it did in Henry, that’s for sure. Hopefully Lord Dyson himself will sit in those cases; it was a surprise he didn’t in Henry.

Further, will his speech to the District Judges’ Annual Seminar, warning of a low tolerance approach to non-compliance with rules, directions and orders, translate into action? It will certainly be a nasty shock if so, recalling the experience of similar reforms in Singapore and Malaysia. In the latter, I’m told, the chief justice would personally call lawyers to gee them up. Imagine being told Lord Dyson was on the blower about your failure to comply with a part of the CPR you had forgotten even existed?

But it is not lost on most observers that had the courts, over the past 14 years, used the powers that they had in the CPR to sanction non-compliance, rather than let it slide, we wouldn’t have needed the Jackson review. Amidst the lecturing, let’s not absolve the judiciary of blame for the state litigation has got into, which Lord Dyson kind of admitted in his speech. And the lamentable lack of judicial training is also of great concern.

So there will be a degree of chaos and more than a degree of uncertainty, and I certainly expect to have plenty to write about. But is this the end? For some, such as PI firms unable to adapt to the referral fee ban or ‘kitchen table’ costs draftsmen who have seen their traditional work go up in smoke, very possibly. Yet I suspect many will find a way to go on, at least for now.

Heining: it is surprising that solicitors take such risks

The new chairman of the Association of Costs Lawyers (ACL) has pledged to launch a campaign that will highlight to solicitors the risks to their own income of not using a fully qualified and regulated costs professional.

Murray Heining, who practises on his own account, took over as chairman at this month’s ACL Annual Conference. He warned solicitors that they are shouldering all the risk if they use unqualified costs draftsmen – ACL-qualified Costs Lawyers, by contrast, have full indemnity insurance, are independently regulated and are subject to the jurisdiction of the Legal Ombudsman.

He said: “It is surprising that solicitors take such risks when it comes to securing their costs, although we suspect that this is simply because they do not appreciate that the person holding themselves out as a costs expert does not have the credentials to back up their claim. We intend to put that right by explaining that as professional people, solicitors should only deal with other professionals.”

Mr Heining’s areas of practice include legal aid and as well as launching the ACL’s legal aid group earlier this year, he recently helped established a formal relationship between the ACL and the Legal Aid Practitioners Group, along with ACL colleague Sue Nash.

He said the ACL will take a more active role in the law reform debate. “Costs lawyers are often at the sharp end of dealing with the Legal Services Commission and it is time our voice was heard on how the reform agenda will truly impact law firms.”

Other plans include an expanded programme of training events for members across the country, revision to the training regime to qualify as a costs lawyer, a new category of ‘affiliate’ membership for those with an interest in costs but are not in competition with full members – such as judges – and greater support for members, including the appointment of an independent ethics adviser.

Mr Heining added: “The new council of the ACL has benefited from the work and successes of its predecessor and that has allowed us set major goals for the association in the coming year. I am very optimistic that we can achieve them as we build on our position as the legal profession’s costs specialists.”

Deadman: giving clients a good night’s sleep is the aim

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

A few years ago, I attended a workshop for entrepreneurs in the legal sector. Apart from my long-held view that anyone who uses the word ‘workshop’ outside of a light engineering context needs to give their head a serious wobble, it got me thinking about what people really expect from their legal teams.

The event itself was populated almost entirely by individuals who, were they fashioned from chocolate, would have no further need of sustenance. Young and perfectly coiffured professionals, primped, preened and thrusted their way through various networking sessions (another term for ‘meeting people’) and break-out groups (I have no idea what this means).

At the end of the event, they all roundly declared that they and only they had found the key to what their clients really want and left to create websites bearing such legends as ‘We at Smug & Vain really understand the needs of YOUR business’.

Like some maiden aunt playing a version of dead relative bingo, over the years I have kept pace with the fortunes of these proto-entrepreneurs. Most, if not all of these businesses, have risen without trace. It would seem that they did not understand the needs of business quite as well as they had predicted.

My knowledge of what clients are after does not extend beyond litigation. I do, however, recall a conversation several years ago with a very experienced litigator who told me that, more than anything, clients involved in litigation (particularly owner-managed businesses) wanted simple piece of mind.

He said that we often forget that the months preceding the client walking through the door of the lawyer’s office were filled with uncertainty, fear, sleepless nights and marital stress, all of which were a direct result of this nameless thing hanging over them.

It does not matter whether they were a claimant or a defendant – both sides were worried about the outcome and the effect that failure would have on their finances and employees.

Up to that point, they had probably exhausted themselves stemming the tide of correspondence, telephone calls and the ever-increasing volume threats. By the time the lawyer is instructed, the client invariably just wants someone to share the burden and make the problem go away. Or to put it another way, a good night’s sleep.

And at its very essence, that’s what litigation finance provides.

Forget about its ability to ‘unlock the value of a claim’ or the manner in which it can turn a ‘contingent liability into a contingent asset’. Whilst both of those statements are true, the biggest benefit is that it removes the worry associated with the cost of litigation and delivers genuine peace of mind for the claimant.

Not the most shattering of conclusions, I agree, but one which is likely to last longer than ‘Smug & Vain’.

RTA: review responses back changes to prevent skewing of market

There should be a complete ban on pre-medical offers, claimant representatives have argued in responses to the government’s call for evidence on the MedCo portal, while insurers called for the regulation of medical reporting organisations (MROs).

But the Ministry of Justice’s call for evidence, part of the review of MedCo announced in July, which ended earlier this month, saw agreement on the need for changes to prevent the skewing of allocations of experts offered by MedCo to instructing parties, brought about by some large MROs registering multiple smaller companies.

Responding to the ministry’s call, the Association of Personal Injury Lawyers (APIL) observed that the audit and accreditation of MROs should have occurred before MedCo went live in April.

It argued that:

• The definition of a “national” – that is, tier 1 – MRO should mean that it should not just cover sufficient postcodes, but that it should also be able to provide a medical report within 25 miles of the client within four weeks of the instruction;
• An algorithm should be used in MedCo’s random selection of experts which “links the ratio of tier one and tier two MROs/experts offered for selection with the total number of tier one and tier two experts registered”. This would prevent market skew; and
• Each expert selected should be accompanied by “an indication of quality and client care” offered.

APIL said there were insurers that still made offers to settle without a medical report, a practice that was “grossly unjust to the claimant” and should be subject to a “complete ban”.

In its submission to the MoJ, law firm Thompsons Solicitors, which said it spent over £15m on 20,000 medical reports in the year to July 2015, including those in relation to RTA cases, agreed with APIL on the ban, saying: “If the government is really interested in refining a system to the benefit of the consumer – the claimant – not the corporate entities in the market, it should outlaw pre-medical offers with immediate effect. Instead the consultation paper talks merely of ‘discouraging pre-medical offers to settle’.”

The Association of British Insurers (ABI) argued that MROs should be subject to independent regulation, because MedCo was ill-equipped for the role and was currently being forced to act as a “pseudo regulator”.

It continued: “The dysfunctional behaviour witnessed has almost exclusively emanated from MROs in their attempts to undermine the system of random allocation for their own commercial gain.”

The ABI said the statement of financial links made by registering MROs should be widened to prevent connected businesses from appearing in random allocations of experts. But there should be no adjustment to the existing formula for ‘offers’ by MedCo at this point, until the question of multiple registrations was resolved.

Litigation Futures revealed recently that MedCo had started to sanction some MROs for breaches of registration conditions.

Bellamy: part 36 is a very real risk

Claimants and their solicitors will continue to demand after-the-event (ATE) insurance HP2-K37 post-April, meaning an ATE market – “albeit a much leaner one” – will survive, a leading insurer has predicted.

Phil Bellamy, group underwriting, ATE and special risks manager at DAS, also confirmed for the first time that the legal expenses insurer will stay in the ATE market.

He told last Friday’s Motor Accident Solicitors Society conference in Manchester: “With average motor injury disbursements of up to £400 each pre-issue, a case failure or abandonment rate in excess of 13%, and the fact that part 36 trumps QOCS [qualified one-way costs shifting] protection, potentially wiping out all of a successful claimant’s award, we are of the opinion that there is the possibility of an ‘ATE Lite’ type product.”

He added that while not many cases enter stage 3 of the RTA portal, at which point claimants are exposed to a costs risk, “we have had to pay out on a number of occasions, so the risk is certainly higher than zero”.

For those cases that fall out of the portal, the part 36 risk is considerable, Mr Bellamy emphasised. “With historic part 36 claims ranging from £125 right up to £100,000, and an average cost of £8,000, HP2-N29 this is still a very real risk to claimants, and could easily wipe out, all of a claimants damages awarded, post LASPO.”

He also pointed to research by the Access to Justice Action Group which indicated that eight out of 10 potential claimants would not pursue a case without full costs protection.

He said one form of ‘Lite’ product may take the shape of a traditional ATE insurance contract, between the insurer and claimant, but with the lower insurance premiums being paid out of a claimant’s damages in successful cases, following the abolition of recoverability.

Another variation being considered is that of ‘portfolio protection’, whereby law firms provide costs indemnities to their clients – which last year in Sibthorpe the Court of Appeal confirmed they could – and then lay off this costs exposure to an insurer, on a whole account basis each year.

Mr Bellamy said: “The advantage with this model is that it saves on time and administration, as individual insurance policies are not issued. Difficulties could arise with pricing, and accurately estimating a firm’s work load and costs exposure for future annual periods.”

The insurer also warned larger firms about providing Sibthorpe indemnities without any backing: “This ‘speccing’, as it used to be called, is entirely legal and even endorsed by the courts, but with the ever increasing scrutiny on insurers and funders capital adequacy and solvency ratios, in the run up to Solvency II, how long will it be before the Solicitors Regulation Authority starts to take notice of the growing liabilities these firms have committed to, without any form of robust reserving to pay for the eventual claims costs as and when they arise?

“With the Financial Services Authority already looking into this area of potential risk, it may well become compulsory for firms to insure these liabilities through a regulated insurer in the not too distant future.”

Malla: Lord Chancellor will be attracted to the mixed portfolio option

There is a case to cut the discount rate to 0% – and a case to keep it at 2.5% depending on the kind of investments it is based on, a debate on the current government consultation heard last week.

The discount rate is the rate of return to be expected from the investment of a lump sum award of personal injury damages for future loss, and applied to the lump sum to ensure a claimant is not over-compensated.

The rate has been 2.5% since 2001, set largely by reference to yields from index-linked government gilts (ILGs). This is on the basis that claimants would seek low-risk investments. But the yield from ILGs has fallen in recent years and there is pressure from claimant representative to cut the rate; the impact would be to increase the cost to defendants. The government also asks whether the rate should instead be set by reference to a ‘mixed portfolio’ of investments.

Speaking a debate organised by City defendant law firm Kennedys, Dr John Pollock, actuary and founder of Pollock & Galbraith, told the audience in London that the government should stick to ILGs, arguing that only they guarantee a return relative to the retail prices index (RPI). “If a claimant invests in a suitable portfolio of ILGs at a yield equal to the discount rate at which his compensation has been calculated, he will be fully compensated without risk.

“Even ILGs do not provide full compensation if the losses of expenses grow faster than the RPI. All other investments, even if offering the prospect of higher returns, cannot guarantee full compensation.”

Dr Pollock said that given the decline in yield in ILGs in recent years, the rate should now by 0%.

However, Doug Hall, head of forensic services at Smith & Williamson, a firm of both accountants and wealth managers, explained how his firm has advised clients on a mixed portfolio where the net return in a balanced index over both an eight- and a four-year period would justify the rate remaining the same.

“You can effectively manage risk over the long term [with a mixed portfolio],” he said, “but you can’t eliminate it.” Mr Hall added that tax is a big issue for claimants, and shows how one size does not fit all – there should be multiple discount rates. Keeping the rate where it is now is “the least worst option”, Mr Hall suggested.

But pressed by top legal commentator and event chairman Joshua Rozenberg as to what they thought the outcome is likely to be, Mr Hall said he saw “a lot of momentum to make a reduction. If it came down by 1-1.5%, it will be a good result for the defendant community”. Dr Pollock said he could not see how the rate would not fall to between 0% and 1%.

Mr Hall added that the second consultation due on the rate – which will examine the legal basis for setting it – could yet play an important role in the final figure the government chooses.

Kennedys partner Christopher Malla said: “If there is any reduction in the discount rate, it will increase a claimant's damages. The larger the future loss, the greater the increase in damages will be… Bearing in mind the potential impact a reduction to the discount rate will have on the NHS, other government departments and local authorities, I anticipate the Lord Chancellor will be attracted to the mixed portfolio option.”

House of Lords: strong criticism

Justice minister Lord Faulks yesterday defended the imminent court fee increases by stressing to peers that litigation is “very much an optional activity”, and suggesting that solicitors should help their clients by advancing them the money.

Meanwhile, leading administrative law QC Lord Pannick expressed confidence that the judicial review of the increases would be successful.

In a debate on the statutory instrument to introduce the increases – to which Lord Pannick sought to attach a ‘motion of regret’ – criticism rained in from other peers, with a focus on the difficulties they will cause in bringing mid-size claims, such as those brought by SMEs and people suing over personal injuries or clinical negligence.

The new fees are set to come into force on Monday.

Lord Faulks suggested that the current fees are “very modest”, adding: “It is also worth bearing in mind that litigation is very much an optional activity. Anybody who is deciding whether or not to sue will have all sorts of factors that they bear in mind.

“There are plenty of reasons for not bringing proceedings, one of which is uncertainty of outcome. Anyone advising a claimant will probably need to satisfy that claimant that there is at the very least a better than even – probably a 75% – chance of success before they commence proceedings. Another relevant factor is the solvency of the defendant or the likelihood of recovery.

“All those are matters that will inhibit somebody in deciding whether or not to sue. Of course, there is also the factor of the cost and extent of their lawyers’ fees. What is important is that the court fees generated here would be recoverable from any defendant in the event of a successful claim.”

He said this was relevant both to the question of access to justice “and also as to whether a solicitor will feel able, as is often the case in personal injury or clinical negligence cases, to provide assistance with the upfront costs on the basis that they will be recovered in the fullness of time”.

Similarly he thought after-the-event insurers could help in personal injury claims. “In appropriate cases where an insurer thinks that a claim has merit, it enables court fees to be incurred, which are, as I said earlier, recoverable from the other side.”

The minister also highlighted the fee remission provisions and that the government did listen to consultees by amending some of its proposals. He insisted that it bore in mind the wider choice of jurisdictions that international claimants have. “[We] are satisfied, having consulted widely, that this is a reasonable and proportionate increase for these large claims.”

Asked about the 80% fall in employment tribunal claims since fees were introduced, Lord Faulks agreed with the comments of crossbencher Lord Brown of Eaton-under-Heywood, who in a speech otherwise hostile to the rises, said that while the tribunal fees had “no doubt” discouraged a number of meritorious claims, “I suspect that it has discouraged at least as many unmeritorious claims – speculative claims, which used regularly to be brought and then bought off or settled because, frankly, that was a cheaper option for the defendant employers than successfully resisting them and then being left to bear their own costs, which were quite likely to be very substantially more”.

Lord Pannick poured scorn on the notion of litigation as an optional activity. “As the minister well knows from his experience as a very successful barrister, for many people – those suing for debts or to recover compensation for personal injury – litigation is often a necessity to keep your business alive or to maintain any quality of life…

“The fee remission provisions to which the minister, perhaps somewhat desperately, referred are not going to assist other than in exceptional cases.”

The power to charge court fees at above cost price is contained in section 180 of the Anti-social Behaviour, Crime and Policing Act 2014. Lord Pannick asked: “But is it a fair, reasonable or proportionate exercise of that power? Plainly not. For litigants to have to pay such substantial sums in advance of bringing a legal claim will inevitably, in practice, deny access to the court for many traders, small businesses and people suing for personal injuries.

“The government have suggested that court fees will be a small fraction of the legal expenses which a claimant will incur, but many claimants will not have to pay their legal expenses at the outset of proceedings. They will not have such a substantial sum of money available at the outset of the case, or they may be able to pay these court fees only by doing without competent legal representation.”

He said section 180 does not alter the Lord Chancellor’s legal duty under section 92 of the Courts Act 2003 to “have regard to the principle that access to the courts must not be denied”.

Lord Pannick argued: “The courts will interpret the powers conferred by section 180 as not intended to authorise regulations which impose an unreasonable or disproportionate barrier to access to the courts…

“If you wrap yourself in Magna Carta, as Mr Grayling sought to do last week at the Global Law Summit, you are inevitably and rightly going to invite scorn and ridicule if you then throw cold water over an important part of our legal heritage.”

He decided not to push his amendment to a vote given his “optimism that the courts will inevitably add this order to the long list of Mr Grayling’s regulations which have been declared unlawful in the past three years”.

Hancock: Support for scheme

The Independent Press Standards Organisation (IPSO), the voluntary regulator, is to launch a compulsory version of its dispute resolution scheme that costs claimants just £100 to use – if newspapers sign up to it.

The change means that someone with a claim against a newspaper who could have gone to court can ask for arbitration instead and the newspaper cannot refuse.

Under the current scheme, which only started last November, the newspaper can decide not to arbitrate on any given case.

National newspapers have been asked to confirm whether they will be joining the compulsory scheme by 4 May, with the new scheme going live by 31 July.

Culture secretary Matt Hancock tweeted his approval of the move yesterday, saying: “I welcome IPSO’s announcement of binding low cost arbitration – an important step forward for a press that’s both free and fair. Now the papers need to sign up.”

It has been suggested that it would also head off Conservative MPs keen both to see the second part of the Leveson inquiry take place, and to resurrect section 40 of the Crime and Courts Act 2013, which provides that newspapers outside a recognised self-regulator would have to pay the claimant’s costs, even if the publisher won in court.

In March, the government said it would not proceed with the second part of the inquiry – which was to investigate the relationship between journalists and the police – and also pledged to repeal section 40, which has not been implemented, at the earliest opportunity.

With an effort in Parliament to reverse these positions, there were concerns among newspapers that some Conservative MPs would rebel and support it.

The IPSO scheme covers claims for defamation, malicious falsehood, breach of confidence, misuse of private information, data protection, and harassment. It must be made within 12 months of publication.

Once IPSO has accepted the claim, a senior barrister is appointed by CEDR as the arbitrator.

He or she makes a preliminary ruling on some core issues in the dispute, which provides a basis for settlement talks and may indicate the likely success of the claim. If one of the parties wants to continue the claim, it goes to a final ruling, after which the arbitrator can award damages and fees, if the claim is successful.

The current damages cap of £50,000 will rise to £60,000 under the new scheme, and successful claimants can also be awarded up to £10,000 in costs, or £1,000 if representing themselves.

Losing claimants are not required to pay the other side’s costs, unless an arbitrator judges the claim was wholly without merit or vexatious.

IPSO chief executive Matt Tee said: “Lord Justice Leveson stressed the importance of having a low-cost means of people that had been wronged by a newspaper getting compensation, without the expense of court and legal fees.

“The new IPSO scheme does exactly that and the papers are not able to choose which cases they take.”

IPSO was created in the wake of Lord Justice Leveson’s inquiry to replace the Press Complaints Commission. It is not recognised by the body set up to approve applications under the Royal Charter on Self-Regulation of the Press – the Press Recognition Panel.

However, it represents most national newspapers as well as the Press Association and Conde Nast UK magazines, but not The Guardian and Observer, the Financial Times, or the Independent titles.

DBAs: take detailed notes when signing up clients

Solicitors advising on damages-based agreements (DBAs) should make detailed notes at the time agreement is made in case they are later accused of exploiting the client, one of the leading barristers in solicitors’ regulation has advised.

Speaking at a seminar on costs held this week by 39 Essex Street, one of its silks, Greg Treverton-Jones QC, predicted that the Solicitors Disciplinary Tribunal would be sent cases in which “allegedly avaricious solicitors have entered into agreements which are punitive to the client”. The tribunal would have to “wrestle” with the problem, he said.

Complying with conduct rules on treating clients fairly and acting in the best interest of clients would be hard to judge when discussing funding options, he said. “At the outset of a case nobody knows how long it’s going to take… whether it’s going to settle… whether you’re going to go off and have extensive barristers and experts… so how are you, at the coalface, going to be able to advise your clients?,” he asked.

He gave the example of a commercial claim for £2m undertaken with a DBA at 50%, where costs after trial of £200,000 are recovered from the other side. The client recovers £1.2m and the solicitor receives £1m. However, under a conditional fee agreement (CFA), the same case would have yielded £400,000 for the solicitor even with a 100% success fee, whereas the client would have received £1.8m.

“I think it’s really difficult in those circumstances to be able to justify a solicitor charging £1m,” Mr Treverton-Jones said.

The difficulty in deciding whether an agreement was compliant with professional rules was structural, he added. “The problem with all of this is that there is an in-built conflict of interest between the solicitor and client because the more the solicitor gets, the less the client may get and vice versa.”

The Solicitors Regulation Authority (SRA) was likely to prosecute at some point, he expected, and when it did, the factors influencing a client’s decision to choose a funding agreement would be critical. “Just to give you a steer, I think that [whatever] fee arrangement you enter into with your clients, you are going to have to be able to justify it. So I would strongly advise that if that justification has to be made, a… detailed attendance note is made at the time you enter into the agreement.”

He said his understanding was that DBAs in lower-value personal inury cases were “dead in the water”. He explained: “Nobody is doing them because the maths tends to work in favour of the solicitor doing a CFA with 100% uplift rather than a DBA – because 25% of not very much is not very much.”

The way he has been advising solicitors to “square” this in terms of their ethical obligations has been for them to “simply say to the client ‘well, there are other solicitors out there who will be operating other funding models and there are these things called DBAs – [and] we don’t do them’.”

Haynes: reward-based approach to insurance

Legal expenses insurance provider ARAG has announced a partnership with specialist telematics based Insurethebox and will be providing legal cover for around 250,000 of its policyholders.

Mandatory legal expenses insurance is now incorporated in the standard car policy for all customers and can be supplemented with an enhanced package which includes replacement vehicle cover for at fault, fire and theft claims, together with car cloning cover, motor prosecution defence and legal services assistance such as legal, tax and counselling helplines.

It is possible to provide such significant policy benefits to drivers as young as 17 because they have shown their commitment to safer car ownership when agreeing to have their driving style monitored by the in-car ‘black box’.

Up to 21 days’ insured car hire is available following total loss arising from a fault accident, fire, theft or vandalism so that the policyholder can remain mobile in the event of a claim.

“Those who have opted for safer driving rewards may still become involved in accidents through their own inexperience,” said David Haynes, head of underwriting and marketing at ARAG.

“We can provide the benefits that many will not even know they need until such time as they have a claim. Adding all these safeguards early in their driving experience complements a reward-based approach to insurance and hopefully influences their buying choices for the future.”

Car cloning cover has a particular significance as increased automatic number plate recognition (ANPR) surveillance reveals previously undetected cloned vehicles on the roads, with fixed penalty notices or notice of intended prosecution arriving through the letterbox.

Typical claims involve appeals against parking fines or allegations of a criminal offence having been committed. ARAG cover helps defend, mitigate and resolve difficulties that ensue and is twinned with ID theft protection as well as helplines to advise and support victims.

ARAG predicts this innovative cover is the precursor to a new generation of specialist policies that, over time, will become far more mainstream.

In support of the Jackson reforms, the Court of Appeal has recently developed a robust approach to dealing with litigators falling foul of the CPR, exemplified by Mitchell v News Group Newspapers Ltd (2013).

Along with providing an overview of trends and updates on areas such as costs budgets, applications for relief from sanctions, pre-action applications, disclosure, Part 36 offers and interim injunctions, MBL’s full day course will also include an afternoon workshop session in which delegates will be able to use and discuss the tools and ideas from the morning session.

Points covered by speaker Andrew Goodman throughout the day will include:

• The Court’s approach to relief from sanctions and robust policy decisions supporting the Jackson reforms
• Pre-action strategy, including Part 36 offers
• Part 18 requests and strike out/summary judgment applications on part or all of the claim
• Disclosure, including specific disclosure requests and applications
• Interim injunctions, including freezing orders

This course is taking place in London this April – for more details and costs please give us a call on 0161 793 0984, or email lucy@mblseminars.com quoting Litigation Futures.

Vara: no new impact assessment

The government has indicated that it will not rethink the end of the LASPO exemption currently applied to insolvency proceedings, which is due to expire next year.

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 gave insolvency proceedings a two-year grace period from the end of recoverability, but it will kick in from 1 April 2015.

Earlier this year, the Association of Business Recovery Specialists, known as R3, claimed that creditors face losing more than £150m per year if the exemption comes to an end, and called for it to continue.

In a written exchange in Parliament, shadow justice minister Andy Slaughter asked whether an impact assessment had been carried out on the amount of reduced income that creditors will receive once the exemption ends.

Justice minister Shailesh Vara said an impact assessment on the LASPO reforms was originally published in April 2011.

He said: “It explained that while there may be a reduction in the number of cases brought where no-win, no-fee conditional fee agreements are used, overall the LASPO reforms will tackle excessive costs. The government does not propose to update the impact assessment in relation to insolvency proceedings.

“The LASPO reforms will apply to insolvency proceedings from April 2015.”

The R3 report also acknowledged that success fees and after-the-event insurance premiums are “rarely paid in full and often not paid at all” at the moment.

Meanwhile, Sir Vivian Ramsey, the High Court judge who has led implementation of the Jackson reforms, is retiring from the bench on 1 November. It is not yet known who will replace him in the latter role.

Heath: A “simple, but quite nebulous, concept”

The new rule on fundamental dishonesty in personal injury actions, which comes into force today under section 57 of the Criminal Justice and Courts Act 2015, brings with it “a lot of potential for satellite litigation”, a leading defence lawyer has warned.

James Heath, director of counter-fraud strategy at Keoghs, described fundamental dishonesty as a “simple, but quite nebulous concept”.

The concept was first introduced two years ago in CPR 44.16, meaning that claimants found to be ‘fundamentally dishonest’ lose the protection of qualified one-way costs shifting (QOCS).

Under the new rule, which comes into force today, where a court finds that a claimant has been fundamentally dishonest in relation to “the primary claim or a related claim”, the court “must dismiss the primary claim, unless it is satisfied that the claimant would suffer substantial injustice”.

Mr Heath said section 57 was “quite a different remedy” from CPR 44.16. “Clients will need to understand the difference between the two regimes that rely on the same concept. The challenge for the defendant is to pick the right one and fight it accordingly. The costs consequences are very different for both.”

Under section 57, courts dismissing a claim on the grounds of fundamental dishonesty must record in their order the amount of damages they would have awarded to the claimant “in respect of the primary claim”. This amount must be deducted from the costs the claimant is ordered to pay.

Mr Heath said the result was that if the defendant’s costs were less than the notional damages, the defendant recovered nothing. “The only rationale I can think of for this to prevent the claimant from having an otherwise legitimate damages claim denied and being penalised on costs.”

He said it was unclear whether defendant insurers would have to “pin their colours to the mast”, and say whether they were going for section 57 or CPR 44.16, or just mention fundamental dishonesty.

Meanwhile, he said there was still no leading authority from the High Court or above on CPR 44.16. “They’ve all been local, county court decisions so far,” Mr Heath said. “We’ve had around a dozen.

‘It’s too early to tell what the impact of the original rule will be, as the bank of cases and the publicity is only starting to build. It has not had a deterrent effect yet.”

Mr Heath added that the firm had not seen any spike in claims yet, as lawyers rushed to beat the implementation date for section 57. “The section applies to claims issued on or after 13 April, so claimants may have issued but not yet served proceedings.”

Graves: defendant/insurer tactics have changed

Specialist legal loans business Novitas has been bought by FTSE-250 merchant banking group Close Brothers in the latest development in the increasingly active legal lending market.

The Salisbury-based firm specialises in providing working capital, disbursement and costs advance funding for law firms and also loans to their clients involved in litigation such as divorce, contested probate and clinical negligence.

It will become part of Close Brothers’ invoice finance and rentals division. The plc’s services to the legal market have focused until now on professional indemnity funding, VAT loans and practice loans.

Close Brothers described the deal as a “strategic acquisition”, as the group is “focused on building leading positions in the specialist markets in which it operates”.

In a statement, it said: “Both companies anticipate strong growth in the legal funding sector, where growing strains on cash flow are becoming an increasing impediment to accessing legal services.”

At July 2016, Close Brothers had a loan book of £6.4bn, the majority of which is loans to SMEs.

David Thomson, chief executive of the invoice finance and rentals division, said: “We are committed to growing our market-leading working capital funding proposition both organically and with selective and high-quality acquisitions. The acquisition of Novitas fits perfectly with this strategy.”

Jason Reeve, managing director of Novitas, added: “In Close Brothers we have found the right partner to support our firm and allow us to unlock our growth potential. The company’s experience and approach to doing business complements ours and I know our clients will benefit from the stable funding and lending expertise that Close Brothers brings.

“The time is right to increase our already strong loan book, and working with Close Brothers will help us with our ambitious growth plans”.

With the launch last year of SpectraLegal as well, more funding options are becoming available for law firms, especially in the personal injury market.

Earlier this year, Novitas collaborated with Pure Litigation Funding – part of the Pure Business Group – and after-the-event insurer Box Legal to launch Pure Funding, which provides off-balance sheet lending to firms for claims, with the potential damages being used as security for the loan.

Pure said that this departure from the traditional approach of seeking securities and debentures from the law firm “means that it is the firm’s potential earnings which limit the funding available to them to prosecute claims rather than their balance sheet, which may be subject to other lending restrictions from their banks”.

Pure Business Group CEO Phil Hodgkinson said: “While direct client funding is not unheard of in litigation it has, in the past, been restricted to high-value cases, with third-party funders taking large swathes of the damages in return for providing the funding.

“Pure Funding has approached this from a different angle securing a significant line of funding to be lent out at some of the lowest interest rates available in the market today, and by structuring the lending in such a way so that much of the interest charges are recoverable as part of the legal action.”

He said the product allowed for the clients of law firms to pay for disbursements as they were incurred, rather than on a deferred basis and at reduced cost as a result, it also meant they could instruct barristers on ordinary terms rather than under conditional fee agreements, thus avoiding success fees.

“The product is aimed at improving the efficiency and profitability of the whole sector by removing the hidden charges for deferring payment.

“Even where disbursement providers are prepared to defer payment until the end of case this still appears as a debt on the solicitor’s accounts and the deferment inevitably increases the unit cost of the disbursement.”

Another recent development was the launch of a high-cost case funding product for personal injury claims by VFS Legal Funding and Citadel Law, the specialist personal injury consulting law firm.

It is tailored to meet the cash flow requirements of personal injury law firms that self-fund high-value and high-cost cases where liability has been admitted but no or insufficient interim payments on account of costs and disbursements to fund the case.

It allows them to draw down a proportion of incurred work in progress, disbursements and counsel’s fees during the course of the matter.

Citadel’s role is to provide independent oversight and governance for the borrower firm by reviewing claims strategy as well as overseeing WIP and disbursement drawdown.

Citadel managing director Lesley Graves said: “Defendant/insurer tactics have changed and they know that they can put the squeeze on claimant law firms by drawing out the litigation process and refusing to make interim payments on account of costs.

“The CPR and case law is clear but many law firms get a knock back from insurers when an interim payment on account of costs is requested and I want to ensure that law firms have the cash flow to support their long-tail PI claims.

“An emerging body of case law is establishing clear principles regarding defendants’ liability for interest where litigation funding has been utilised; ultimately, if defendants want to avoid liability for interest, they should pay up to claimant law firms in the first place.”

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.”

Lord Thomas: the need “even greater” to modernise English commercial law

Privatised systems of justice, such as arbitration, can result in situations where the “law can ossify” and democracy is undermined, the Lord Chief Justice has warned.

Lord Thomas said that “many have felt” that the restrictions on the right to appeal decisions of commercial arbitrators were “too tight and had stultified the development of English commercial law”.

Delivering the Lord Williams of Mostyn memorial lecture, he said: “The more disputes that are and have been determined by private forms of adjudication, the fewer opportunities the courts have had to develop commercial law.

“And the consequence of this is that the law can ossify. It cannot work itself fine; correct errors; make clear the content of rights. Its ability to provide a sure framework for the development and carrying out of social relations, business dealings and so on is undermined. It thus undermines our democracy.”

Lord Thomas said that, until 1979, a “substantial contribution” was made to the development of commercial law by appeals from decisions of arbitrators. He referred to his own experience as a young commercial lawyer, who knew that if he lost an arbitration, he could appeal to the Commercial Court.

“It is undeniable that the practice, as applied not only to the maritime market but also to the commodities market, produced far too many appeals. So in 1979 an Arbitration Act restricted the right of appeal.

“That restriction is now embodied in the Arbitration Act 1996. Many have felt that the restrictions are too tight and have stultified the development of English commercial law.

“As long ago as 2004 in delivering the Sixth Cedric Barclay Lecture, Sir Robert Finch, then the Lord Mayor, called for a widening of the scope of appeals from commercial arbitrations as a need to help the modernisation of English commercial law so that it kept in tune with the developments of the commercial world. Eleven years on, the need is even greater.”

Lord Thomas said resolution by arbitration or mediation could not “clarify or develop” the law.

“Insofar as decisions circulate, they often circulate to a narrow range of lawyers who may then gain special knowledge of the way in which groups of arbitrators decide issues.

“It therefore lacks the features that would enable it to play the wider normative role of decisions reached in litigation before the courts”.

Cameron: warned of impact on public purse

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

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

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

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

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

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

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

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

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

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

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

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

Hamblen J: Mr Bingham showed “lack of awareness”

A High Court judge has demanded that a barrister resign as the arbitrator of a construction dispute because of “the real possibility of apparent bias”.

Mr Justice Hamblen said the “starting point” was the relationship between Anthony Bingham, an experienced arbitrator, barrister and chartered surveyor at 3 Paper Buildings, and the defendant in the main dispute, claims consultants Knowles.

Hamblen J said the relationship had been disclosed by the evidence presented by the claimant, construction company Cofely.

This revealed that Mr Bingham had acted as arbitrator or adjudicator 25 times in the past three years in cases involving Knowles, either as a party or as a representative, and in 18 of those cases the barrister ruled in favour of Knowles or its client.

However, Hamblen J found that “of most significance” in his relationship with Knowles was that over the previous three years, 18% of Mr Bingham’s appointments and 25% of his income as arbitrator/adjudicator derived from cases involving the company.

Hamblen J went on: “Mr Bingham’s attitude to this, as made clear at the hearing and as maintained in his statement, is that this is irrelevant as all these appointments were made by an appointing body rather than Knowles directly.

“On this logic even if all his income derived from cases involving Knowles, there would still be no cause for concern.”

Hamblen J said that the Chartered Institute of Arbitrators’ acceptance of nomination form called for the disclosure of ‘any involvement, however remote’ with either party over the last five years.

“Acting as arbitrator/adjudicator in cases in which Knowles is a party or a representative of a party is a form of involvement.

“Further, the evidence shows that even though Knowles does not appoint an arbitrator/adjudicator directly, it is able to influence and does influence such appointments, both positively and negatively.”

The court heard in Cofely v Bingham and another [2016] EWHC 240 (Comm), that the construction company sought an order that Mr Bingham be removed as arbitrator under section 24(1)(a) of the Arbitration Act 1996 on the grounds of “justifiable doubts as to his impartiality”, involving “apparent” rather than “actual” bias.

The defendants disputed the existence of circumstances giving rise to justifiable doubts and questioned whether Cofely had the right to raise the objection under the Act.

Hamblen J said concerns raised by evidence about the relationship between Mr Bingham and Knowles were “heightened” by his response to Cofely’s enquiries and his witness statement.

“This shows that even now Mr Bingham does not recognise the relevance of the relationship information or the need for any disclosure.”

The judge said this “lack of awareness” demonstrated a “lack of objectivity and an increased risk of unconscious bias.”

He recounted a hearing Mr Bingham called to address the concerns raised by Cofley. While this was reasonable, the way the meeting “instead became a means by which Mr Bingham would arrive at a ‘ruling’ on apparent bias” was not.

Hamblen J said: “Mr Bingham gave the impression that he was seeking to pre-empt that process by pressurising Cofely into acknowledging that there was no issue to be explored.

“Of further concern is the manner in which this was done at the hearing. Excerpts of the transcript… illustrate how Mr Bingham was effectively cross-examining Cofely’s counsel and doing so aggressively and in a hostile manner.

“Although counsel had explained that all that was being sought at this stage was information and that Cofely was not yet in a position to state what it ultimate stance was to be, Mr Bingham continually pressed him to state its position and sought to demonstrate at the hearing and through his “ruling” that there were no grounds for concern. I agree with Cofely that Mr Bingham was thereby descending into the arena in an inappropriate manner.”

The judge said Mr Bingham’s witness statement suggested he regarded Cofely’s requests for information as “assertive, challenging, perhaps even bullying behaviour”.

Hamblen J said the reality was that Cofely’s inquiries were “reasonably made and expressed”, particularly in seeking a statement of the proportion of appointments and income Mr Bingham had derived from Knowles-related cases in the last three years.

The judge concluded that Cofely had established grounds for the removal of Mr Bingham as arbitrator under the Act.

He ruled that if Mr Bingham did not resign, “an order for removal will accordingly be made”.

Rees: mental elasticity and agility is required

Arbitration agreements should begin with a default position of no disclosure of documents, a leading QC has argued.

Peter Rees QC of 39 Essex Street, and a former legal director of Shell, said for many disputes, each side had “all the documents it needs” and disclosure was a “time-consuming and expensive luxury”.

In a speech given in Hong Kong in his capacity as a member of Harbour Litigation Funding’s investment committee, Mr Rees said speed and flexibility had attracted people to arbitration, but “elasticity has gone and everything takes much longer to achieve and involves severe pain in getting there”.

The QC identified disclosure and use of experts as two areas where time and cost could be saved if counsel and arbitrators were willing to “abandon a formulaic approach”, adopt new ideas and be more flexible.

Mr Rees said that despite “little or no disclosure” in civil law jurisdictions, the moment a case went to arbitration, disclosure was assumed.

“The Anglo-Saxon, common lawyers have foisted onto a previously quick and flexible system the whole paraphernalia of document disclosure. Why?”

Mr Rees went on: “It seems to me that, looking at things logically, if disclosure of documents is needed at all in arbitration, there is a strong case for severely restricting it in common law arbitrations and, perversely, being more expansive in civil law arbitrations.

“Am I really suggesting no document disclosure in arbitrations? Yes, I am. Not in every arbitration, of course. I wouldn’t want to be accused of being inelastic, but I believe there are a large number of disputes where – on proper analysis of the law and what is needed to establish each side’s case – each side has all the documents it needs and document disclosure is a time-consuming and expensive luxury.”

Mr Rees said businessmen and their in-house counsel were used to evaluating and taking risk and could take a view on the possible downside of not being able to obtain documents from the other side in a dispute.

He said the best way of including a “no disclosure” provision in an arbitration clause was to include it in institutional rules and for institutions to adopt a ‘no disclosure’ default position.

On experts, the QC said one way to overcome the problem of different terminology, different methodology and addressing different issues was for experts to meet “before they have put anything in writing, before any report has been drafted, before they have committed to specific terminology or a particular methodology”.

After a ‘without prejudice’ discussion in the absence of lawyers, experts could produce a list of agreed terminology, methodology and agreed issues, so they only wrote reports on the things they disagreed on.

“Already, a huge amount of time and costs has been saved and everyone knows from an early stage, what the experts really disagree about.”

On ‘hot tubbing’ – the colloquial term for concurrent witness evidence – Mr Rees argued that there was no reason for this to take place only after both experts had been cross-examined, and suggested arbitrations would benefit from a “more elastic” approach.

“It is probably fair to say that the impartial, objective observer could assume that arthritis is prevalent in arbitration simply by looking at the age and physical fitness of many arbitrators,” he concluded.

“We may struggle with physical elasticity, but mental elasticity and agility is what is required. All involved – whether arbitrators, counsel, clients or institutions – need to ensure that they don’t simply take a standard approach to every case, that they don’t become arthritic.”

Bogart: increased activity throughout the business

Burford Capital – the leading third-party funder and after-the-event (ATE) insurer – yesterday unveiled a 25% increase in profits before tax for 2013, after recording significant increases in income on both sides of the business.

The company’s £36m turnover was made up of £23m from funding (up 20%) and £13m from ATE (up 29%). Less operating expenses, profit before tax hit £26m. It has increased dividend payouts by 10%.

Burford is currently invested in 35 matters, with a commitment of £159m, having put in £37m during 2013.

Since its inception in 2009, 25 cases have concluded, generating £88m in gross investment recoveries and £30m net of invested capital – meaning a 52% net return on invested capital.

The company’s annual report said the past year saw “continued acceptance and adoption of litigation finance”.

It continued: “Burford’s annual survey showed sharp increases in lawyers’ views of litigation finance as a useful tool, along with an even more dramatic uptick in the views of corporate CFOs favouring its use. Investors are similarly enthusiastic, with hundreds of millions of dollars in new capital entering the asset class – which is a necessary part of continuing the establishment of litigation finance as a normal, mainstream part of litigation.

“Burford’s returns, high and uncorrelated, have delivered on our initial aspirations and have also served to fuel the overall growth of the market.”

The pre-Jackson ‘bubble’ in the first quarter of 2013 meant Burford wrote ATE with around £180m of exposure, more than the previous two years combined.

While the annual report said it was too soon to make any predictions for the future of ATE, “the significant tail of business written during and before 2013 in this business positions it for several years of sustained profitability while we wait for the market to stabilise”.

Chief executive Christopher Bogart said: “2013 was another year of successful progress for Burford, which saw continued significant growth in our income and profits from both the litigation investment and insurance businesses, and increased activity throughout the business. We are excited to be at the forefront of this rapidly maturing and evolving industry.”

Rowley: taking away cost uncertainty

Irwin Mitchell has teamed up with Allianz Legal Protection to launch ‘Support4Dispute’, a bespoke funding solution to support insolvency practitioners (IPs) manage the costs and risks of litigation.

Under the terms of the conditional fee agreement that forms part of the package, Irwin Mitchell’s legal costs and success fee is only payable by IPs once a cash recovery is made from the opponent.

The after-the-event (ATE) insurance provided by Allianz is a staged premium facility linked to the amount of damages recovered, and capped to enable IPs to retain a greater share of any recovery made. In addition, the premium is deferred until the case is settled, and only payable on successful cases.

John Vickery, restructuring and insolvency partner in Irwin Mitchell’s Manchester office, said: “This product has been developed specifically for the IP sector and addresses all of the financial issues relating to why they may be reluctant to pursue litigation claims.

“Quite simply, the Support4Dispute service that we provide takes the gamble out of insolvency litigation and enables IPs to launch legal actions far more easily following an insolvency, without having the risk of having to pay their own legal fees or a hefty ATE insurance premium where no actual recovery is made or the opponent’s legal fees if the litigation is unsuccessful.”

Steve Rowley, business development manager at Allianz Legal Protection, said: “We worked with Irwin Mitchell over several months to jointly develop a product specifically aimed at addressing the risks and issues faced by insolvency practitioners.

“Using our combined knowledge and expertise we have created a solution that meets the needs of insolvency practitioners, and takes away the cost uncertainty faced when bringing legal action against creditors.”