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Spamalot: granting relief avoided windfall for defendant

A High Court judge has granted relief from sanctions where a successful party failed to serve a notice of its funding arrangements on form N251.

Though the judgment was drafted before the Court of Appeal handed down Mitchell last week, Mr Justice Norris said he took account of the decision and did not need to revise his draft ruling, “which I consider proceeds upon correct principles”.

The costs ruling in Forstater & Anor v Python (Monty) Pictures & Anor [2013] EWHC 3759 (Ch) – which followed a high-profile claim for royalties arising from the play Spamalot – heard that when the second claimant was joined to the first claimant’s conditional fee agreement (CFA), it failed to complete and serve form N251.

This meant that, under CPR 44.3B, upon winning it was unable to recover any part of its success fee unless the court ordered otherwise.

The defendants were later made aware of the CFA through correspondence.

Norris J said the failure to serve the N251 was “simple oversight” and that there was “no good explanation” for it.

While not suggesting it had suffered any prejudice, the defendant said this made no difference, relying on the observations of Mr Justice Floyd in Supperstone v Hurst [2008] EWHC 735, who said that relief should not be granted lightly and that if a party does not have a good explanation, “relief from sanctions will usually be refused”.

He continued: “It is vitally important to the administration of justice that the rules of procedure are observed.”

Norris J said that while he agreed with this “statement of principle”, it was not the statement of a rule.

He drew a distinction between a failure, through human error, to comply with a rule of general application – as in this case – and “a conscious failure to comply with a specific order made in the action itself”.

The judge said that when the defendant had been informed of the CFA, “the policy embodied in CPR 44.3B had… been fulfilled (albeit not in a technically correct way) and the substance of the rule was then complied with. The conveying of the requisite information in letter instead of on form N251 had no discernable impact on the conduct of the action.”

Norris J was also clearly influenced by the fact that to refuse relief would leave the second claimant liable to pay the success fee and possibly lead to litigation with its solicitor, while granting relief would deprive the defendant “of what may properly be regarded as a windfall (in that it received the relevant information on the wrong piece of paper)”.

As a result, he granted relief from the date when the letter was sent.

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

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

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

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

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

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

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

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

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

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

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

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

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Jackson: proposals mean strong claims at proportionate cost

Lord Justice Jackson has comprehensively rejected most of the government’s suggested “refinements” to his blueprint to reform the costs of litigation.

Publishing his response to the Ministry of Justice’s green paper to make clear his position to others, the judge told Lord Chancellor Ken Clarke that if he accepts the recommendations to abolish recoverability of after-the-event insurance and success fees, and to raise general damages by 10%, “the package should be implemented in full”.

Sir Rupert continued: “It would be the worst of all worlds to retain elements of recoverability (subject to qualifications and exceptions) thus adding to the present morass of rules and case law. Likewise, it would be a disaster to raise general damages in CFA [conditional fee agreement] cases but not in other cases. Any such approach would create perverse incentives and undermine the structure of the reforms.”

He rebuffed the suggestion that an element of success fee recoverability could be retained for judicial review, housing disrepair and complex personal injury and clinical negligence claims.

He said: “The reality is that the present CFA regime incentivises the bringing of strong claims, but at disproportionate cost and in an environment where the claimant has no interest in controlling costs. The reforms proposed in [my final report] will also incentivise the bringing of strong claims, but at proportionate costs and in an environment where the claimant has an interest in controlling costs.”

Jackson opponents are coalescing around his fallback option of retaining recoverability with various restrictions. Sir Rupert said this would just add further complexity and cost to an already complex and costly system.

He gave various reasons for rejecting the idea that ATE premiums could still be recoverable in relation to disbursements, pointing out that losing claimants or their solicitors are liable for their own disbursements in every other jurisdiction outside England and Wales. “Personal injury cases seem to be causing particular concern in the present consultation. But disbursements in the vast majority of unsuccessful personal injury cases are well within the means of claimants and their solicitors,” he said.

The judge hit back strongly at claims that the 10% increase in damages will be insufficient to compensate serious injured claimants for what they will lose in paying a success fee of up to 25% of damages.

He pointed out that this was “precisely the regime that prevailed before April 2000 and was regarded as satisfactory for non-legally aided cases. This has been confirmed by well informed claimant representatives… Success fees will be highest in those few cases which proceed to trial. In those cases, however, the claimant can dramatically improve his position by making a part 36 offer, reflecting the true value of his claim. If the defendant does not accept that offer, the claimant will make a substantially enhanced recoveryand will be well placed to pay the success fee.”

He was similarly robust over any changes to his recommendations on qualified one-way costs shifting, arguing that they do not increase uncertainty, and that the government’s changes would increase complexity.

He did, however, accept a handful of the government’s proposals, most notably its approach on proportionality, and on various minor issues.

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Roth: deliberate policy

The Competition Appeal Tribunal (CAT) has refused solicitor Walter Merricks permission to appeal its decision to deny him a collective proceedings order (CPO) that would allow him bring a £14bn action against Mastercard on behalf of 46m people.

It said there was no right to appeal the decision, and even if there was, it would have refused permission.

The claim was a follow-on action after Mastercard was found to have infringed EU law by imposing charges (known as ‘interchange’ fees) on the use of MasterCard debit and credit cards. It was claimed that this increased costs for retailers and consumers.

It was brought on behalf of a class of 46m people who used a Mastercard over a 16-year period, but the CAT dismissed Mr Merricks’ application for a collective proceedings order because it was not satisfied that his experts would be able to get the evidence to show that the illegal fees were then passed on to consumers in the form of higher prices.

Further, it said there was “no plausible way of reaching even a very rough-and-ready approximation of the loss suffered by each individual claimant”.

Ruling on the permission to appeal, the CAT said the threshold question was whether there was jurisdiction to appeal the refusal of a CPO to the Court of Appeal or whether such a decision can be challenged only by judicial review.

It decided that there was not jurisdiction. Mr Justice Roth, president of the CAT, said there was no provision in the Competition Act 1998, as amended by the Consumer Rights Act 2015, to appeal a decision on a CPO.

“We consider that, if the legislature had intended that the novel form of decision by the tribunal making or refusing a CPO should be subject to appeal, [section 49 of the 1998 Act] would have included express provision enabling an appeal to the appropriate court.

“Accordingly, we conclude that there is no jurisdiction to grant permission to appeal under section 49(1A) CA.”

Roth J said this appeared to reflect a “deliberate policy”. He explained: “If a decision refusing a CPO could be appealed by the applicant, then it would seem that a decision granting a CPO would similarly be susceptible to appeal by the respondent.

“Experience from other jurisdictions with a regime of certification of class actions, in particular the United States and Canada, shows that decisions refusing or allowing such actions to proceed typically generate appeals.

“In the attempt to craft an effective system of collective redress for the UK, the legislature has restricted this procedure to the specialist tribunal, so that although there is effectively a parallel jurisdiction in the ordinary courts for competition claims for damages, only the tribunal can hear collective proceedings; and, secondly, it has sought to confine the right of appeal in collective proceedings to decisions on the substantive claims and preclude prolonged litigation in the process of approving the use of the collective procedure for the pursuit of those claims.”

The CAT added that, even if it had considered there was jurisdiction for an appeal, it would have refused permission on the ground that it would have any real prospect of success as Mr Merricks was not claiming in his two grounds of appeal that the tribunal had been wrong as a matter of law.

Mr Merricks and his solicitors, Quinn Emanuel, declined to comment.

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Neuberger: costs management to have salutary effect

Satellite litigation may be necessary to work out the new rule on proportionality in costs, the Master of the Rolls has said, but it will be a “very small price to pay”.

Lawyers were also warned that if they fail to submit a budget under the new rules for costs management coming in next April, then it will by default comprise only the applicable court fees.

Speaking at an event on costs management at the Law Society last night, Lord Neuberger also revealed that two specific members of the Court of Appeal will sit on all appeals arising out of the Jackson reforms “to ensure consistency and efficiency”.

Giving the latest lecture in the Jackson implementation programme, Lord Neuberger emphasised that proportionality will apply throughout the life of a case, rather than just at the end. The rule will enable courts to judge the reasonableness of individual items in a bill and then stand back and consider whether the total figure is proportionate.

He said: “The effective, and consistent, implementation of case and costs management informed by the new costs rule should have a salutary effect on litigation conduct and costs.

“It should focus the minds of all involved on the need to consider the costs and benefits of each step proposed to be taken in proceedings, not least because parties will need to be made fully aware of the fact that certain steps taken may, or will, be at their own cost, or may be futile.”

The judge deliberately steered away from saying what precisely would constitute proportionality and how it would be assessed. “It would be positively dangerous for me to seek to give any sort of specific or detailed guidance in a lecture before the new rule has come into force and been applied…

“The law on proportionate costs will have to be developed on a case-by-case basis. This may mean a degree of satellite litigation while the courts work out the law, but we should be ready for that, and I hope it will involve relatively few cases. It will be a very small price to pay.”

Despite the new arrangements in the Court of Appeal, Lord Neuberger called for “a strong respect for, an inclination to uphold, first instance decisions on costs issues. When making costs decisions, first instance judges should not be looking over their shoulders, and parties should not be encouraged to appeal costs decisions”.

In an accompanying lecture on costs management – which for the first time released the new rules – Mr Justice Ramsey told the event that all parties will usually have to exchange budgets within 28 days of service of the defence, which will then be checked by the court. In default the budget will only comprise applicable court fees, which he said would come as “something of a shock” to those who have hitherto been ignoring budgeting.

Ramsey J emphasised that there will, in most cases, be a presumption in favour of making a costs management order.

Addressing concerns that the costs of costs management will themselves prove a problem, he revealed that the costs of initially completing precedent H (the budget form) should not normally exceed £1,000 or 1% of the approved budget, and the costs of the process should not exceed 2%.

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Jackson: momentum is heavily for reform

Jackson: momentum is heavily for reform

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Making submissions

Written submissions should be sent by 16 January 2017 to:

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

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

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

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

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Award-winning: the Neil Hudgell TV ad in production

Another personal injury (PI) firm has sold a large caseload to acquisitive Yorkshire firm Neil Hudgell Solicitors ahead of the Jackson reforms kicking in.

Manchester-based Apple Legal Solicitors has transferred its road traffic accident claims practice for a six-figure sum.

Neil Hudgell last year set up the website to acquire business from practices looking to shed PI work ahead of alternative business structures and the Jackson reforms. In June it sealed a £1m-plus deal with Solihull-based Forum Law Ltd to acquire its high-value public liability and clinical negligence work, opening in Solihull as a result.

In recent months the firm has also purchased PI files from north Yorkshire-based Williamson Hill and the PI and clinical negligence caseload from former Peterborough-based Carters Solicitors, in addition to buying three other practices outright last year.

The firm’s eponymous managing director, Neil Hudgell, said: “Taking on this new caseload is part of our ongoing strategy to grow our business by 100% by 2014, both organically and through acquisition.

“The changes underway at present in the legal profession have led many practitioners to weigh up their options and decide to exit the industry. However, thanks to the business model we have developed, our expertise in niche areas and our commitment to customer care, we are confident that we will continue to develop and expand our business.”

Adam Tulk, a partner at Apple Legal, said: “Apple Legal has decided to sell its RTA practice to Neil Hudgell Solicitors as a result of new challenges in the field of personal injury law.”

Neil Hudgell Solicitors was advised by Phil Jordan of Ward Hadaway, with due diligence conducted by niche law firm ZL Consulting.

In June, a television advertising campaign run by Neil Hudgell Solicitors won the multi-platform production award at the Royal Television Society Yorkshire Awards.


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High Court: solicitor criticised in judgment

A solicitor has accepted a rebuke and a fine of £2,000, after a High Court judge found he had misled the court and failed to make a proper note of a hearing.

The misconduct related to 2014, when Gareth Ward Fatchett, then a director of a West Midlands firm trading as Regulatory Legal Solicitors, sought an order on behalf of six clients to freeze the assets of a company involved with an investment scheme.

According to a regulatory settlement agreement published yesterday by the Solicitors Regulation Authority – which means the case will not be referred to a disciplinary tribunal – Mr Fatchett supplied the court with brochures purporting to prove the company was promoting the scheme but which were later accepted to have been produced by another company.

In a 2015 judgment after the freezing injunction was lifted, in critical remarks the unnamed judge said that “at best” the “misrepresentation” had amounted to “serious non-disclosure[s]” which were “obviously highly material and substantial”.

He continued: “In my judgment, they justify if not require the setting aside of the freezing order and the refusal of further relief.

“That is so, characterising the non-disclosure as mere non-disclosures. That conclusion may be all the more compelling in view of the positive misrepresentations that were made, although I do not say… that they were deliberate.”

He acknowledged that a “misunderstanding” may have occurred.

Further, the judge found that a “very inadequate” note of the hearing, recorded and then prepared by a paralegal, had been handed to the defendant company, whose assets were frozen.

It did not include his remark that particulars of the claim should be served within 14 days, or a full explanation be given why not, with the judge adding that the claimant may be in “big trouble” if this was not done.

Mr Fatchett admitted that in one or more of a skeleton argument, affidavit, and oral submissions he had misled the court and failed to ensure a proper note of the hearing, in breach of professional rules.

He agreed to a rebuke, a fine of £2,000, and to pay £9,250 in costs

In mitigation he submitted that the defendant “had not responded to requests for information which would have assisted his understanding” and that an “administrative error” had led to brochures being included in court papers, although the content was similar to the correct brochures, which were also supplied.

The paralegal who had prepared the note was “inexperienced”, he said, while “all members of the team have undergone training to ensure that the errors made in this case are not repeated”.

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Jackson LJ

Jackson LJ: partner did “no more and no less” than her duty

Lord Justice Jackson has dismissed a negligence claim against Veale Wasbrough, now national firm Veale Wasbrough Vizards, and the barrister it instructed to advise on a personal injury case.

Rejecting the claim against the law firm, Jackson LJ said: “It is frequently the duty of lawyers to give unwelcome advice to their clients.

“If they conclude that a claim or a defence has no real prospect of success, it is their duty to say so bluntly. It is no kindness to the client to soften the advice or to encourage them to press on anyway.”

The Court of Appeal heard the parents of a girl who suffered severe birth defects, and died at the age of 11, were advised by the firm not to go ahead with a medical negligence claim in 2001 and accepted that advice.

However, when they divorced eight years later, the father’s law firm advised the couple to sue Veale Wasbrough and barrister Karen Rea for professional negligence.

Jackson LJ said Jan Markland, the partner in charge of the case, did “no more and no less than was her duty”, when she wrote a discouraging letter to the girl’s mother.

Rejecting the claim against the barrister, he said: “Of course there were documents in the bundle that were supportive of the proposed claim for clinical negligence.

“As any practitioner in this field knows, that is the case in many clinical negligence actions which ultimately founder on either breach of duty or causation.

“Counsel advising a claimant, whether legally aided or self-funding, is under a duty to examine the supportive material critically and to consider how that material will play out in the crucible of the trial.

“That is what counsel did in the present case. She put the crucial documents to the claimants’ experts and ascertained how far they would really support the proposed claim.”

Delivering the leading judgment in Chinnock v Veale Wasbrough and another [2015] EWCA Civ 441, Lord Justice Jackson ruled that even if the lawyers had been negligent in 2001, the claim against them were statute-barred under section 14A of the Limitation Act.

He rejected the conclusion of the trial judge that Ms Chinnock had “actual knowledge” that her legal advice could have been wrong in 2001, and held that instead that she had “constructive knowledge” by reason of section 14A(10).

Under subsection 10, a person’s knowledge includes “knowledge which he might reasonably be expected to acquire” through “appropriate expert advice”.

Jackson LJ said: “Ms Chinnock was deeply unhappy with the legal advice which she received in 2001. According to her evidence she was dumbfounded. She therefore had a choice. She could either consult other lawyers or she could let matters rest.”

Jackson LJ went on: “I do not think that it was open to Ms Chinnock to abstain from further inquiries for more than six years (in this case eight years) and then to seek legal advice.

“It is true that during 2009 a firm of solicitors acting in the divorce proceedings happened to ask the husband if advice was required on any other matter. That, however, is not a justification for waiting eight years before taking legal advice.”

Mr Justice Roth agreed that negligence claims should be dismissed and in any case were statute-barred. However, on the limitation point, he agreed with the trial judge that Ms Chinnock had “actual knowledge”. Lord Justice Longmore agreed with Jackson LJ on both points.

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RBS: pioneering litigation

A number of third-party funders have stepped in to back RBS shareholders in a “David and Goliath” claim against the bank.

A group of 21 claimants issued proceedings last week seeking compensation in a “pioneering” multi-million pound claim over the bank’s 2008 cash call.

Their case, alleging investors in a rights issue of new shares were “misled”, is being run by Stewarts Law head of commercial litigation Clive Zietman.

However, in order to bring the case, the claimants – including several pension funds – have been bankrolled by litigation funders.

The claim is the first to be filed in the UK over RBS’s record £12bn cash call just before the credit crisis in 2008. It alleges the bank published a defective prospectus littered with “mis-statements and omissions”.

Argentum is the majority third-party funder of the case, which is testing section 90 of the Financial Services and Markets Act 2000. Other funders are providing financial support but their details have not been disclosed.

Those bringing the claim allege the bank was portrayed as being in good health, but that the reality was different and the take-up of shares would have been limited or non-existent had the ‘truth’ been known. Among the claimants are the Coal Staff Superannuation Scheme, the Mineworkers’ Pension Scheme, pension schemes for electricity workers in the UK, a number of ING funds and the teachers’ retirement system of the US state of Illinois.

Matthew Reach, solicitor and head of legal review at Argentum, said the funder has had to take “bold steps” to make its mark in the litigation funding sector, but believes the case is not high risk because of the merits.

He said: “This is truly a case of David and Goliath. Without litigation funding from Argentum these shareholders might never have had access to justice.

“It is important that these shareholders, who lost substantial sums, have their day in court and the bank is held accountable for its actions. This is a pioneering piece of litigation, but we feel it is compelling and are proud to be supporting such a cause.”

Mr Reach said that usually, third-party funders only provide capital for claims involving well-established areas of law in order to limit the risk of losses. But he said without the third-party funding, the claim would not have happened.

He explained: “These institutions already had losses many years ago that their boards had probably written off and would not have been happy to take the risk of further costs to take on RBS.

“This is a risk-free litigation option for them. They will give away a share of any reward, but don’t have the financial exposure.”

Mr Reach said the presence of third-party funders often strengthens a case in the eyes of the defendants and, as happens in the US market, can help prompt the banks to settle.

He added: “My view is this case is not high risk, based on its merits. However it is pioneering because it is not professional negligence or breach of contract, it is untested legislation, looking at the avenue for redress against a financial institution that it is claimed didn’t play by the book.

“It is the first high-level piece of shareholder litigation to come out of the Financial Services and Markets Act and there is no authority to say how the courts will interpret and apply the law.”

Significantly, Argentum is also looking to benefit from bankrolling the claim to gain itself “traction” in an increasingly crowded litigation funding market.

Mr Reach said: “Litigation funding is relatively new to the UK, only in the last five years has it gained momentum and funders have always gone for the safe ground.

“More funders are emerging in the market. We are one of few with direct access to capital, but there is now more competition.

“We are not as well known as some others, but want to break the mould and take bold steps to look at alternative ways to get traction and invest our capital.”

In a separate claim, the RBS Shareholders Action Group yesterday launched a case based on the same principles against the bank, reported to be worth a potential £4bn. Led by Steven Baker, co-head of dispute resolution at City firm Bird & Bird, he is believed to have spent the past four years building the case. The action group represents 12,000 ordinary shareholders and 100 institutions also alleging they were misled by RBS.

There is speculation in the sector that the two claims could even be joined by the court.

RBS has instructed Herbert Smith Freehills to defend the claims.

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David Spencer

Spencer: Rule will not become ‘stick’ to bear claimants

Insurers’ tactics are likely to “remain the same” after the introduction of the government’s new ‘fundamental dishonesty’ rule for personal injury cases, a leading defence lawyer has argued.

The government has promised that the rule, requiring courts to dismiss in their entirety personal injury claims which they find ‘fundamentally dishonest’, will become law before the May general election.

The measure is contained in the Criminal Justice and Courts Bill, currently awaiting Royal Assent.

David Spencer, partner at BLM, acted for the defendants in the leading case of Summers v Fairclough Homes [2012] UKSC 26, which considered whether a genuine claim could be struck out because of exaggeration. He said fraud in personal injury cases was already a “significant issue” and investigation methods were unlikely to change.

“We need to be careful as defence lawyers only to challenge cases where we have sufficient evidence,” he said.

“The concern expressed by claimant representatives that this statute will be a ‘stick used to beat every claimant’ is baseless.

“An application to dismiss the entire claim can only be made with evidence in support and the courts are unlikely to look kindly on defendants who offer a speculative plea.”

Mr Spencer said there were “delicate cases” where defence lawyers “could not quite get to the point of saying the claimant is a liar”.

He said that the defence may have “some video evidence” that a person who claims not to be able to work is capable of working but it may not be the kind of “smoking gun” you require.

“The first few test cases will set the boundaries as to when a claim is ‘fundamentally dishonest’”, Mr Spencer said.

He said that although the Summers case provided authority for the courts to strike out an entire claim at any stage for abuse of process, the courts could still award fraudulent claimants compensation for the “genuine” element of their claim.

Mr Spencer said the discretionary power “lacked consistency in its practical application” and the publicity around it had “a limited deterrent effect”.

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We have been asked to take down this story due to confusion over the current status of the judgment reported. Once this has been cleared up, we will repost it.

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Rob Horner

Rob Horner has been appointed as ATE Underwriter for Legal Protection Group

Legal Protection Group is delighted to announce that Rob Horner has been appointed as ATE Underwriter and will be working alongside Steve Ruffle and Dan Quinn in our London office in Fenchurch Street.

Joining from DAS where he was also an ATE underwriter, Rob has gained experience of insuring a wide range of cases including insolvency, defamation and professi

onal negligence disputes. More recently Rob has been closely involved in several competition law cases.

Rob has a strong legal background, following completion of his LLB at Coventry University he spent some time working for a leading Midlands Law Practice. Subsequently Rob completed the Bar Professional Training Course (BPTC) in London and was called to the Bar at Lincoln’s Inn in 2015.

Rob’s role at Legal Protection Group is to support the ever expanding broker accounts whilst helping to further establish our London office. This will entail risk assessing ATE cases with regards to their suitability, whilst at the same time providing the highest level of customer service to our clients.   Rob will report to Steve Ruffle, ATE Underwriting Manager, who manages the London branch of Legal Protection Group.

Rob is delighted to be joining Legal Protection Group as an established and ambitious legal expenses provider and to help continue the company’s successful growth within the ATE sector.  Commenting on his appointment, Rob said “I’m really pleased to have been offered this opportunity and I am looking forward to working with the great team at Legal Protection Group.”

Phil Bellamy Director of Underwriting said “It’s great to see another experienced and talented legal expenses expert choose Legal Protection Group. Rob has a great understanding of the needs of our brokers, law firms and their customers when it comes to ATE insurance. He will be a great asset to our growing business”.

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Turner J: Failure to “fully and adequately” engage with ADR

The High Court has sliced a third from the costs of a defendant who won “on every substantive issue” because of failure to engage in alternative dispute resolution (ADR).

Mr Justice Turner found that the Metropolitan Police was not justified in deciding that there was no reasonable chance of ADR being successful in whole or in part.

His ruling in Laporte & Anor v The Commissioner of Police of the Metropolis [2015] EWHC 371 (QB) followed a failed action against the police by two protestors against budget cuts following a meeting of Haringey council.

They argued that there should be no order for costs because the defendant refused to engage in ADR. The defendant responded by not only seeking an award of costs but contending that they should be assessed on an indemnity basis, and demanding a payment on account of £100,000.

Applying the six factors listed by the Court of Appeal in the Halsey ruling, extended by further guidance in 2013, Mr Justice Turner said the case was not one in which the nature of the dispute made it unsuitable for mediation.

Turner J said the defendants conceded that the merits of the defence were not “so strong in themselves to have justified a refusal to engage in ADR”.

He said the Metropolitan Police had made no offers to settle the case before ADR was suggested and had conceded that the cost of the process would not be ‘disproportionately high’.

Turner J said there was no reason why mediation in this case would have had the effect of delaying the trial of the action and he was “satisfied that there was a reasonable chance that ADR would have been successful in whole or in part”.

Mr Justice Turner held that, taking into account all of the factors listed in Halsey and all other relevant matters, the defendant’s failure to “fully and adequately” engage with ADR process should be reflected in the costs order.

“Regardless of this aspect of the case I would not have been minded to have made an order for indemnity costs in his favour,” he said.

“My adverse findings on the conduct of some of the police officers involved and the reasonable way in which the claim was presented on behalf of the claimants procedurally would militate against that.

“Further, I am not satisfied that public bodies should normally have a stronger claim to indemnity costs than other litigants.”

However, Turner J said that the scale of the defendant’s shortcomings in terms of his failure to engage with ADR did not justify disentitling it from claiming any of its costs.

He said the Metropolitan Police “did ultimately win on every substantive issue and, although ADR made settlement a sufficiently likely possibility, it would have been by no means certain”.

Exercising his “broad discretion” under the rules, Mr Justice Turner awarded the defendant two thirds of its costs, on the standard basis, and ordered the claimants to pay £50,000 on account.

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Porter: clients increasingly demand choice

Well-known after-the-event insurance broker Universal Legal Protection (ULP) is to ramp up its third-party litigation funding offering after recruiting the former UK head of sales and marketing at Burford Capital.

Tim Porter joins ULP as business development director, responsible for developing all existing and future product lines in response to the increased demand for litigation insurance and funding.

Richard Myrtle, ULP’s managing director, explained that because litigation funding is currently an unregulated activity, most insurance brokers feel unable – or are not allowed – to provide any sort of service in this area.

He said ULP will be careful neither to give advice nor make recommendations, but the aim is to remove the legwork from the client or solicitor by sourcing all of the options for them to consider.

He added: “Tim’s appointment demonstrates our confidence in and commitment to the litigation insurance and funding markets. We continue to deliver new products in response to the ever-changing economics of litigation and we continue to work with law firms, funders and their respective clients to create risk transfer solutions to reflect risk appetite, tolerance and budget.

“Like us, Tim is passionate about giving clients choice and he understands that to consistently grow your business you need to put your clients’ needs before your own.”

Mr Porter said: “I’m delighted to be joining ULP. The role of the broker is essential in an ever-changing marketplace where clients will increasingly demand choice. There is plenty of litigation risk capital available in the UK, and competition will force funders to consider a broader portfolio of investments.”

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Bacon: acted for successful party

Bacon: acted for successful party

A defendant whose conduct forced the claimant to seek third-party funding to take its case to arbitration has to pay the £2m owed to the funder following the claim’s success, the High Court has ruled.

HHJ Waksman QC, sitting as a High Court judge, said litigation funding costs fell within the arbitrator’s general costs discretion, which was not to be confined by what may or may not be allowed in a court governed by the CPR.

We reported the outline of Essar Oilfield Services Ltd v Norscot Rig Management Pvt Ltd last month, but the full ruling ([2016] EWHC 2361 (Comm)) has now been released (it can be downloaded from the website of 4 New Square here).

Norscot was the successful claimant in an ICC arbitration – the arbitrator was former Court of Appeal judge Sir Philip Otton – and was awarded around $12m, of which $4m was the costs order.

The case concerned Essar’s repudiatory breach of an operations management agreement. Sir Philip was highly critical of Essar’s conduct both during the currency of the agreement and also for most of the arbitration period. He said Essar had set out to cripple Norscot financially in not making payments under the contract and then exerted commercial pressure throughout the arbitral process.

It was a “David and Goliath battle”, he said, and Essar made a “blatant attempt to drive Norscot ‘from the judgment seat’”. Nonetheless, Norscot pursued its claims “with courage and determination” and Sir Philip accepted that it was forced to seek third-party funding.

The third-party funder, Woodsford Litigation Funding, advanced £647,000, which was repayable either at 300% of the sum advanced from the damages recovered, or 35% of the damages, whichever was the greater. As a result, Norscot sought from Essar the £1.94m due to Woodsford.

Sir Philip held that he had the discretion to make such an order, because they were “other costs” for the purposes of section 59(1)(c) of the Arbitration Act 1996. This defines the costs of the arbitration as including the “legal or other costs of the parties”.

Essar challenged this. HHJ Waksman rejected Essar’s contention that Sir Philip had exceeded his powers in making the order, and went on to find that “as a matter of language, context and logic, it seems to me that ‘other costs’ can include the costs of obtaining litigation funding”.

He continued: “The expression should not be confined by some legal straightjacket imposed by reason of what a court might or might not be permitted to order.”

The judge described this case as a “telling example of the good sense of reading ‘other costs’ in this way”.

He explained: “This was a case, perhaps unusual, where the arbitrator ruled in detailed and robust terms that Essar drove Norscot into this expensive litigation because of its own reprehensible conduct going far beyond technical breaches of contract, in order to vindicate its rights.

“Further, as the tribunal found, Norscot had no option, but to obtain this funding from this third-party funder. As a matter of justice, it would seem very odd and certainly unfortunate if the arbitrator was not entitled under section 59(1)(c) to include the costs of obtaining third-party funding as part of ‘other costs’ where they were so directly and immediately caused by the losing party.”

Laura Beagrie, a professional support lawyer at Surrey firm Stevens & Bolton, said: “It is notable that the only requirement for the recovery of the third-party funding costs (an ICC arbitration with an English seat) is one of reasonableness (article 31(1) of the ICC Rules).

“This arbitrator thought it was reasonable based on the fact that the Essar had behaved in an reprehensible manner which had forced Norscot to take out third party funding, but other ICC arbitrators in other disputes could in theory find that recovery is reasonable without making any adverse findings against the unsuccessful party.

“This decision should enhance the attractiveness of England as an arbitral seat for those who wish to take out third-party funding. Those involved in the arbitration and third-party funding industries will no doubt want to review the chances of recovery of third-party funding costs in other seats and under other arbitral rules.

“It does make you wonder whether recovery of third-party funding costs really is impossible in English litigation. The Civil Procedure Rules don’t specifically disallow it, has it ever been argued and what might the chances of success be?”

Nick Bacon QC of 4 New Square and Chirag Karia QC of Quadrant Chambers (instructed by Davies Johnson) acted for Norscot, while Andrew Hogan of Ropewalk Chambers in Nottingham (instructed by Squire Patton Boggs) represented Essar.

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Lord Dyson

Lord Dyson: “Great majority” of responses were not favourable

Lord Dyson, the Master of the Rolls, has made it clear that he is “personally opposed” to changes in the costs rules for judicial review oral permission hearings.

The Ministry of Justice (MoJ) is pushing for the rules to be rewritten in a way that favours defendants as part of its programme of JR reforms, though the measure does not feature in the Criminal Justice and Courts Act 2015.

Minutes of last month’s Civil Procedure Rule Committee (CPRC) state: “The committee did not agree in principle with the proposal for a change to the costs provisions for oral permission hearing, which in their view raised an important access to justice issue.

“The Master of the Rolls noted that the great majority of consultation responses on this issue had not been favourable and added that he was personally opposed to the change.

“The committee considered it particularly unfair for a successful claimant to be prevented from recovering the costs of a contested permission hearing where that hearing had been instigated by the defendant raising a ‘no difference’ argument.”

Under the Act, defendants can argue that permission should be refused if the court is satisfied that it is highly likely that the outcome for the applicant would not have been substantially different had the conduct complained of never happened.

Under the existing regime, courts have a general discretion on costs where permission applications are refused on the papers and oral hearings are granted.

However, where an applicant is unsuccessful, it is normal practice for the courts to award the costs against them only of completing an acknowledgement of service and not of those attending the hearing.

In its September 2013 consultation on judicial review, the MoJ proposed that successful defendants should not generally have to pay their own costs for permission hearings.

The vast majority of respondents to the consultation were against the change – 121 against, compared to 23 in favour.

In a paper presented to the CPRC meeting, the MoJ said arguments in favour of change were that claimants tended to seek an oral renewal “irrespective of an application’s merits” and there should be “some financial implications” for those with weak cases.

Common reasons for opposing the change included that an oral permission hearing was for claimants to prove their cases, not for the defendants to disprove them, and so defendants should bear the costs risks if they chose to be represented.

The CPRC concluded that the MoJ should seek the “views and agreement of the lead judge of the Administrative Court” on the drafting of any new rules on the issue, “in particular with regard to how they would fit in with the existing procedures”.

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Walliams: harassment action

A picture agency which sent photographers to David Walliams’ house when news of his divorce broke is not a news publisher and so cannot recover additional liabilities following the settlement of an action brought by the entertainer, the Senior Costs Judge has ruled.

Mr Walliams and his former wife, Lara Stone, commenced proceedings against Flynet Pictures and others claiming an injunction under the Protection from Harassment Act 1997.

It followed an incident outside the family home, during which the couple alleged that “a group of 20 to 30 photographers ran at [Mr Walliams] in the street, taking photographs and shouting questions”, recorded Master Gordon-Saker.

Flynet contended that its two photographers did not move any closer to Mr Walliams than about 20 metres and did not behave aggressively or shout.

The claim was settled on a confidential basis and under the Tomlin order, Flynet was entitled to its costs, part of them on the indemnity basis.

Flynet instructed City firm Kingsley Napley under a conditional fee agreement which provided for a success fee of 75%, and it bought an after-the-event insurance policy with a premium of £10,600.

The only question before the master was whether Flynet was a news publisher. If so, the continuing LASPO exemption for publication and privacy proceedings meant it could recover the success fee and premium from the claimants.

The definition of publication and privacy proceedings under the relevant LASPO commencement order includes “harassment, where the defendant is a news publisher”.

Master Gordon-Saker ruled: “It seems to me that to fall within the definition there must be a connection between the alleged harassment and the defendant’s status as a news publisher. In carrying out the acts alleged, the defendant must be acting in its capacity as a news publisher.

“That follows from the use of the word ‘where’. Clearly it cannot have been the intention that proceedings arising from acts of harassment unconnected with the defendant’s role as a news publisher would fall within the definition…

“It seems to me that the acts complained of were carried out by [Flynet] in its capacity as a picture agency and not in its capacity as a publisher of a website containing news or information about or comment on current affairs. Accordingly, these were not proceedings for harassment where the defendant is a news publisher and [Flynet] cannot recover any additional liabilities from the claimants.”

In case he was wrong on this, the master considered whether Flynet was a news publisher. This turned on whether it published a website containing either news or information about or comment on current affairs. Most of Flynet’s work concerned celebrities.

Master Gordon-Saker concluded that photographs Flynet published on its own website “may illustrate news or current affairs but are not, in themselves, news or comment on current affairs”.

Further, its YouTube channel was not a website – YouTube itself was the publisher of the website on which Flynet was merely a contributor of content.

The judge added: “It also seems to me that stories about the comings and goings of celebrities are neither ‘news’ nor ‘comment on current affairs’.

“There is some content on [Flynet’s] YouTube channel which could properly be described as news or current affairs… but the preponderance of the videos listed and referred to in the evidence can fairly be described as ‘celebrity tittle-tattle’. The substance of [Flynet’s] YouTube channel is not news or current affairs, it is gossip about celebrities.”

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“Overwhelming preference” for new housing court

The Civil Justice Council (CJC) has decided not to back a new housing court to deal with all property disputes, despite support for the move among lawyers in the sector.

Instead a CJC working party on property disputes has called for flexible deployment of judges to ensure all issues in a dispute are dealt with in one forum.

In its interim report, the working party said that responses to its consultation and participants at a workshop held in March this year had shown an “overwhelming preference” for the establishment of a new court.

“However, if that is not realistic, there was a consensus in favour of the flexible use of judiciary in order to avoid a multiplicity of proceedings, to effect savings and to enhance consistency and to ensure that judicial expertise was appropriately targeted.”

The new court was backed by the Housing Law Practitioners Association and Property Bar Association, but the Bar Council and Association of District Judges preferred flexible deployment.

The working party said it agreed with Lord Justice Briggs, who said in his interim report on the structure of the civil courts earlier this year that he could see “no merit in trying to cram all the relevant business” into either the county court or property chamber of the First-tier Tribunal.

The CJC said there was no reason why the tribunal, with its expert members, and the courts could not by working together “become an effective forum for deciding housing, property and landlord and tenant cases without having to set up a separate court”. The working party recommended that:

  • A list of specified property disputes where flexible deployment could be used should be drawn up by the Lord Chief Justice and the Senior President of Tribunals;
  • In case management, judges should decide whether the court or the tribunal was the most appropriate forum;
  • The county court and the tribunal should have the power to transfer cases to each other;
  • The county court and the tribunal should have the power to retain cases that they would otherwise have had to transfer; and
  • In deciding whether to retain or transfer a case, judges should take into account: the need to avoid a multiplicity of proceedings; proportionality; the desirability for the case to be decided by those with expertise in property matters; and the parties’ funding arrangements.

The working party suggested it should provide a further report by September 2016 on a range of matters including the First-tier Tribunal’s pilot deployment project, a provisional list of specified disputes and the use of ADR in property cases.

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Pipkin: a most positive decision

Pipkin: a most positive decision

AmTrust Europe has acquired well-known legal expenses insurer Composite Holdings Limited from its existing shareholders for an undisclosed sum.

Headquartered in Cardiff, Composite, through its subsidiaries Composite Assistance and Composite Legal Expenses, provides insurance and administration services to insurance companies, brokers and affinity groups.

Max Caviet, president and CEO of AmTrust International, said: “The acquisition of Composite represents a significant step forward for AmTrust Europe in establishing ourselves as a leading market for legal protection insurance products in the UK.

“We have provided underwriting capacity to Composite for the past four years and this acquisition marks a natural step in the evolution of our relationship. We are also delighted that Composite’s senior management team will be remaining with the business.

“The combination of the skills and experience within Composite and AmTrust makes for a compelling and exciting business going forward.”

Meanwhile, Temple Legal Protection has reported that its post-LASPO premium for clinical negligence cases has been ruled fully recoverable by Master Leonard in the Senior Courts Costs Office.

In Nokes v Heart of England Foundation NHS Trust, the insurance policy was taken out by Ms Nokes to cover the costs of expert reports for her claim. Temple reported that Master Leonard found the policy was fully compliant with the statutory requirements and the premium of £5,680 + IPT was reasonable and proportionate.

David Pipkin, director of underwriting at Temple, said “This is a most positive decision from an experienced member of the judiciary which will comfort the thousands of victims of medical accidents who, without ATE insurance funding, would be unable to pursue their claims.

“It is important there should be some certainty that ATE insurers can obtain reasonable returns in what is a very risky area of litigation.”


We have now reported the Nokes judgment in full. Click here.

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Experts: risk of putting cart before horse in PI cases

Expert witnesses giving concurrent evidence – or ‘hot-tubbing’ – should be the default position in the Mercantile Court and Technology and Construction Court (TCC), the Civil Procedure Rule Committee (CPRC) has suggested.

It was giving direction to a sub-committee that had told the CPRC that hot-tubbing had not caught on and was not widely taken up voluntarily.

The sub-committee was set up, under the chairmanship of Mr Justice Kerr, to consider a report last summer from the Civil Justice Council (CJC).

This found that, where it was used, hot-tubbing improved quality, saved trial time and helped judges determine disputed issues.

The CJC report called, among other things, for a re-drafted version of PD35.11 (on concurrent expert evidence), a new guidance note for judges and practitioners, and a new information note for expert witnesses.

In the sub-committee’s report to the February meeting of the CPRC – papers from which have just been released – Kerr J said that in general hot-tubbing had not caught on, was not the default position, and was not widely taken up voluntarily.

It recognised the danger that implementing the CJC proposals would not deliver hot-tubbing unless it was imposed through the rules or standard directions and the onus was on a party to opt out.

Kerr J recounted that, shortly after the sub-committee met, he tried a clinical negligence case “which was a paradigm case for hot-tubbing”, as it involved four cancer experts who gave oral evidence. “There was wasteful duplication of effort and cost,” he said,

The judge continued: “To my frustration, it proved impossible to hot-tub the experts. When I raised the issue with the parties at the start of the trial, one counsel was very hostile and the other (quite junior) looked blank as though he did not know what hot-tubbing was.

“Concurrent expert evidence had not been considered by the parties and appeared alien to their culture and experience of litigation.

“The CMC [case management conference] directions had not included any hot-tubbing direction. The trial had been timetabled for the experts to give evidence separately (sequentially by discipline).

“The evidence was complex and difficult. My preparation time for the whole case was less than half a day, wholly inadequate to include preparing for a hot-tubbing session in court on unfamiliar and difficult medical issues.”

The sub-committee’s report continued: “It appears that unless hot-tubbing is actively promoted and the parties warned that it is likely to be imposed on them, it may make little headway, at least in more generalist jurisdictions such as personal injury and clinical negligence.

“The position may be different in high end specialist jurisdictions such as patents, TCC and heavy commercial litigation.”

It added that there was a concern – in personal injury and clinical negligence cases at least – that “we risk putting the cart before the horse if we try to promote hot-tubbing without first reviewing more widely how the current CPR part 35 and PDs work in practice and whether wider change is required, for example to the joint discussions and joint statement procedure; especially given the absence of early judicial allocation to such cases in the QBD and county courts”.

The sub-committee asked the CPRC for a steer, including whether it should go further than the CJC report to promote and increase use of hot-tubbing.

The minutes of the February meeting recorded the CPRC’s view that dictating the use of hot-tubbing “would be a step too far but that certain types of cases could be identified where it should be the default position”.

The minutes said: “It was suggested that the standard directions or the judicial template for directions could be used to flag up hot-tubbing with parties before the CMC.

“In two courts, the Mercantile Court and the TCC, where the case management is handled by the trial judge, there is the opportunity to address hot-tubbing at an early stage and cases in those courts are such that hot-tubbing is an appropriate tool.”

The CPRC tasked the sub-committee with identifying specific classes of case or types of issue requiring expert evidence for determination, and indicating whether hot-tubbing was appropriate.

Where it was appropriate, the sub-committee should then consider how it should be raised with the parties, and where and how it should take place as part of judicial case management process, or separately.

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the internet

Tribunal not permitted to “make enquiries on its own behalf”

An employment tribunal which decided to carry out its own internet research, apparently to help a litigant in person, has been condemned by Mr Justice Langstaff, president of the Employment Appeal Tribunal (EAT).

“A judge’s job is to adjudicate impartially on a dispute between the parties in the case before him,” Langstaff J said. “It is not to advocate the case for either.”

The president said an employment tribunal was not permitted to “make enquiries on its own behalf into evidence which was never volunteered by either party”.

He went on: “The tribunal may, in an appropriate case, ask the parties whether they have thought about particular evidence or even, possibly, whether in an appropriate case the parties or one of them would wish an adjournment in order to obtain it.

“But it is not, as the judge appeared to think, for the tribunal itself to investigate the evidence and rely upon its own investigations.”

The EAT heard in East of England Ambulance Service NHS Trust v Sanders [2014] UKEAT 0217_14_1710 that Mrs Sanders, a litigant in person, claimed she had been unfairly dismissed and discriminated against on the grounds of disability.

It was agreed that the employment tribunal would decide, as a preliminary issue, whether Mrs Sanders, who suffered from depression, was disabled within the meaning of the Equality Act 2010.

Mr Justice Langstaff said the claimant’s depression had a “long history” and was exacerbated by a back injury. Answering questions from the tribunal judge, Mrs Sanders said she had taken an 80mg tablet of citalopram, an anti-depressant which she had been prescribed.

Towards the end of the first day of the hearing, Langstaff J said the tribunal retired.

“At that stage, and without prior reference to the parties, it began to conduct research on the internet. At least one of those enquiries, it may have been only one, was to ask about the dose of citalopram. It looked at Wikipedia.”

Langstaff J said the issue of dosage had not been raised by either, save in a question and answer which “gave rise to no obvious issue”. He said it was unclear why the tribunal did the research, but it “may have appeared” it was trying to find evidence favourable to the claimant.

He said the tribunal told the parties what it had done, after which “three printouts, one from Wikipedia, one from a South African electronic package inserts website, and one from, were then passed to the parties”.

Langstaff J said the judge asked Mrs Sanders if she was aware that she had been taking the maximum dose of citalopram and whether her GP had described her as “severely depressed”. The tribunal appeared to accept uncritically the accuracy and reliability of what had been discovered

The following morning counsel for the NHS trust made an application that the tribunal should recuse itself, but this was rejected.

Langstaff J said: “The tribunal may, in an appropriate case, ask the parties whether they have thought about particular evidence or even, possibly, whether in an appropriate case the parties or one of them would wish an adjournment in order to obtain it.

“But it is not, as the judge appeared to think, for the tribunal itself to investigate the evidence and rely upon its own investigations. The tribunal is… to act as the adjudicator not as advocate.”

Ordering the case to be remitted to a fresh tribunal, Langstaff J said the tribunal had adopted “an attitude, possibly in reaction to the criticism of its accessing the internet for itself, which it thought it was entitled to, that to an extent appeared to be hostile to the [defendant]”.

He added: “At one stage the employment tribunal said that what it had done by accessing the internet had done no harm to anyone, whereas to the contrary it had exposed both parties to the costs and expense of an appeal, and significantly delayed the resolution of a case the claimant wished to be resolved as soon as possible.”

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Bott: not afraid to fail

Bott: not afraid to fail

Posted by David Bott, senior partner at Bott & Co

Just because your solicitors’ practice is still trading, you cannot assume you have survived LASPO. Only when the last of the old-world cases have washed through will we know for certain which personal injury (PI) solicitors have survived.

I write that not to scaremonger but as a cautionary note, borne from personal experience here at Bott & Co. In early 2013 we established a seven-point plan to ensure we would be fit for purpose in the ‘new world’. This plan called for us to:

Re-evaluate the profitability of our work-sources

Gary Froggatt, Bott & Co’s financial director, created a profitability calculator to assess whether traditional mixed case suppliers were still providing viable work in the post-LASPO era.

Using our own figures and predictions for average ‘new world’ fees, we calculated cases from these sources wouldn’t even make a positive contribution, let alone a profit.

Bott & Co’s largest work source was an RTA-only supplier but the reduction in RTA portal fees in April 2013 saw cases from this source become unprofitable overnight. Similarly, cases from our third largest work source (a mixed RTA and EL/PL supplier) became unprofitable with the introduction of the EL/PL portal for accidents from 1 August 2013.

As a result, we served notice on both suppliers.

Despite our experience, I’m not surprised to hear many solicitors are still looking to accede to such panels. I believe this is partly due to the reduction in PI cases (as reported by the Institute and Faculty of Actuaries) as well as a determination amongst some to reinvest old-world profit without fully understanding new-world returns.

Bott & Co remain comfortable with our position towards this type of supplier but we will be interested to see how these types of cases fare in the months and years ahead.

The calculator is now freely available to other law firms to help assess their own work sources. Click here.

Re-evaluate the profitability of our fee-earners

On a macro level, 2013’s changes saw material reductions to the margins of previously profitable PI law firms. The challenge was to examine this reduction at a micro level so that we could identify and serve notice on the sources and staff that were driving this adverse position.

Old-world working practices that were profitable in a pre-LASPO environment failed to deliver once the regulations were introduced. As a result, marginally profitable fee-earners became loss makers.

Although we are discussing calculated business decisions based on facts and figures, that is not to say there weren’t some highly emotive challenges to face: we had to terminate the contracts of some of our fee-earners, many of whom had been with the business since it began in 2001.

Acquire shareholdings in the remaining work sources in order to secure supply

Our decision to serve notice on two of our biggest work sources saw a 60% drop in new case intake. The challenge was to restore this 60% whilst securing the remaining 40% through partial acquisitions.

In March 2013 Bott & Co acquired shareholdings in S&G Response Ltd (a successful accident management hire company) and Pinpoint Call Solutions Ltd (an equally successful FNOL and call centre).

These acquisitions secured a significant supply from these work sources and on an exclusive basis.

Establish a ‘new world’ break-even point

With case intake sharply down and ‘new world’ revenues being accrued, it was critical to understand our current break-even point.

We calculated that with our ongoing operating costs and with all old-world cases gone, we would need 400 net new PI cases per month. These would need to be split 90:10 between RTA and EL/PL cases.

In effect, we had to introduce 400 net new PI cases per month by the time most of the old-world WIP had run out. At this point we were trading significantly below this level but we did have the benefit of time.

We have held this as our main focus for 18 months, our key KPI if you like. We reached this point last summer and have attained it every month since. Bott & Co PI now trades profitably on an entirely new-world basis.

Create a strategy to increase the business’s number of self-generated cases

A key element of our ‘new world’ strategy was to achieve 400 net new cases via S&G, Pinpoint and by way of self-generation.

Our self-generation strategy centred on online marketing and cross marketing to our flight delay clients. Our flight delay clients now outnumber PI clients 4:1, providing us with great cross-selling opportunities. The approach we have taken saw self-generated case intake increase four-fold in a year.

Diversify into non-LASPO areas of law

With so much pressure on PI work, we realised we had to balance the risk.

The European Court of Justice’s definitive ruling in the Nelson v Deutsche Lufthansa case two years ago provided us with an opportunity to set up our own flight delay department. The huge success of this department has been well-publicised; however, less well known is the start-up of our corporate debt recovery team, which has been equally as valuable to the business.

The challenges of making small claims track cases pay, run deep and wide but both departments now trade profitably in their own right. Furthermore, having three departments sharing the overhead burden and combining their synergies to obtain a common financial objective is a huge plus.

View indirect staff as profit centres and identify investment opportunities within them

The profitable new-world model discussed in the previous six points would not exist had we overlooked this final point. Operating in the post-LASPO environment required a change in mind-set where we no longer thought like a traditional law firm.

We have made significant investment in some of our indirect departments as a result, including:


We have increased the number of software programmers five-fold in the last 18 months. The new, efficient working practices introduced as a result have already paid back most of this investment.

The benefits that have arisen from our strong IT department are now embedded into our processes for the long term. This is perhaps best illustrated in our flight delay department, where a team of seven staff manage over 20,000 clients. We have learnt so much from this that we are now rolling out these efficient working methods across the rest of the business.


The marketing team has been instrumental in the success of our self-generated case intake strategy. We have doubled the number of staff in this department over the space of a year and their work has seen us regularly feature on television, radio, print and online media. The high point of the past year was being featured back-to-back on BBC News, The One Show and Watchdog.

Client first response team

The CFR department didn’t exist pre-LASPO but now employs nine staff, providing frontline customer service via telephone, e-mail and web-chat for 90 hours per week including weekends and bank holidays.

One of the key skills we have had to learn since last April has been up-selling the deduction of 25% of clients’ damages. We have been very successful in doing so, with just over 97% of clients now signing up to it.

It would lack balance to overlook the adverse effect of these changes. We started 2014 with 74 staff and by October 18 of those were no longer with us: A 24% turnover in staff in just ten months hasn’t been without its challenges.

Having said this, still underpinning the business are 11 of the original 20 staff that helped set up Bott & Co nearly 14 years ago. I have always believed Bott & Co to be a rewarding place for anyone who excels at their job as is certainly the case with this group of staff.

I fully expect Bott & Co to be amongst the law firms that survive these fundamental changes but this is a belief I’ve only recently held with any conviction. The challenges we have faced as a firm over the past 12 months have been many and our efforts to overcome them are only just starting to bear fruit.

We went into the post-LASPO world knowing we had to change but the key to our success was in not being afraid to fail. As they say, failure is not fatal but failure to change almost always is.

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Costs: budgeting needs new bill format

The new provisional assessment regime for cases with costs of up of £75,000 “just hasn’t happened”, a leading costs judge has said.

Master Peter Haworth, one of three Senior Court Costs Office masters to oppose the Jackson reforms, said it was “quite incredible” that the fate of sums of money as £75,000 should be decided on the papers.

“District judges and costs judges outside London are not asking to do this,” Master Howarth said. “I don’t know where the bills are going, but they haven’t come to the Costs Office. Having geared up for it, we’re able to relax and find other things to do.”

Provisional assessment, one of the recommendations of the Jackson report, allows judges, having decided cases on the papers, to award costs of no more than £1,500 to either side.

Early last year the Ministry of Justice unexpectedly decided to the triple the upper limit from the pilot level of £25,000.

Speaking at the Compass Law commercial litigation conference earlier this week, Master Haworth also said it was “very difficult” to have cost budgeting, which approached the issue in phases, without a new form of costs bill. He said existing bills listed items chronologically.

“The two don’t fit together at all,” he said. “Harmonisation could lead to a more seamless approach to civil costs”.

Master Howarth said a judicial sub-committee was looking at the question of harmonisation, but it “could take 18 months” to come up with a solution, because all the costs software would have to be changed.

Master Howarth said the important thing with costs budgeting was to get it right first time. “There is very limited scope for going back if you’ve made a mistake, especially post-Mitchell. What you put for assumptions and contingencies is one of the most important areas for judges. Assumptions must be clearly set out and costed.”

The master said lawyers would be in difficulties if they didn’t include an item in their budgets and something came up later, unless it was a “significant development”.

He gave, as an example, a personal injury case where half way through the defendants decided there had been exaggeration and they decided to go for surveillance. “It can be very expensive for the defendant and for the claimant who has to look at the evidence,” Master Howarth said.

He said that unless defendants had put surveillance in their costs budgets as a possibility, which was highly unlikely as it removed the element of surprise, then courts would not let them rely on it without “good reason”.

Master Howarth that the new proportionality test for costs would remain “difficult” until there was a ruling from the higher courts. “Uncertainty is the enemy of costs saving,” he observed.

Commenting on the Court of Appeal ruling in Denton, he said: “You may have seen the last of the word ‘trivial’. We’re now looking at the matter from the other end of the telescope and at what is significant in the circumstances.”

Master Howarth added that following the Jackson reforms, this country would no longer have the ‘Rolls Royce’ civil justice system that might have existed. “Perhaps it’s a bit more of a Ford Mondeo, but we’ll have to see.”

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Taussig: Broadhurst provided the answer

Taussig: Broadhurst provided the answer

A successful part 36 offer in a provisional assessment removes the £1,500 costs cap, the High Court has ruled.

Overturning a decision of Master Whalan in the Senior Courts Costs Office, Mrs Justice Laing followed the reasoning of the Court of Appeal earlier this year in Broadhurst v Tan, when it ruled that a party who beat a part 36 offer in a case where fixed fees applied was eligible for indemnity costs,

The thus-far unreported case of Lowin considered whether CPR 36.17(4) – indemnity costs on beating an offer – dislodged the £1,500 cap set out in rule 47.15(5) for the costs of a detailed assessment that concluded at provisional assessment stage.

According to a blog by Gurion Taussig, a barrister at 9 Gough Square who acted for the successful party, the master agreed that her costs should be assessed on the indemnity basis, but ruled that the cap remained intact. He drew a distinction the Broadhurst case.

Mr Taussig, who was instructed by Boyes Turner, said that on appeal, Mrs Justice Laing held that there was a conflict between rules 36.17 and 47.15(5), because the latter derogated from the entitlement to costs on the indemnity basis conferred by part 36.

“In resolving the conflict, the scheme of reasoning contained in Broadhurst provided the answer. If the draftsman of the rule committee had wished part 36 to be modified so that the cap would remain, then that would have been stated. The court further stated that the dislodging of the cap would incentivise parties to accept reasonable costs offers because, if they did not, they would be at risk of adverse cost orders pursuant to part 36.”

The matter was remitted to Master Whalan to re-assess the appellant’s costs of the detailed assessment on an indemnity basis.

Mr Taussig added: “The decision represents an important extension of the Broadhurst principle, and one that potentially affects all cases that proceed to provisional assessment of costs in part 47 proceedings.

“Parties should indeed be incentivised to make reasonable cost offers, but equally they must be aware that a failure to accept a reasonable part 36 offer is likely to have cost consequences if the offeror achieves a better result on provisional assessment.”

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Steve Rowley

Steve Rowley, Business Development Manager, Allianz Legal Protection

Allianz Legal Protection (ALP) has launched a new partnership with leading South West law firm Tozers Solicitors LLP.  ALP will provide After the Event (ATE) insurance on a range of personal injury and clinical negligence case types to protect customers against the disbursement and adverse cost risks associated with litigation.ALP’s Equity ATE insurance product will provide Tozers’ clients with financial protection against defendant costs and for any unrecovered disbursements incurred during the claim. This will include expert reports, counsel fees and court issue charges in the event that the case loses or is discontinued.

A key feature of the ATE arrangement is the damages based pricing structure which will help ensure that premiums remain proportionate. Full delegated authority is also provided. This will allow Tozers to quote and provide cover for clinical negligence and personal injury claims regardless of the damages value being claimed.

Allianz Legal Protection’s business development manager, Steve Rowley, commented: “Tozers are recognised experts for handling clinical negligence cases with a strong regional presence in the South West. This expertise was evident when we were discussing their needs for ATE insurance, and I’m delighted that ALP has been chosen as their preferred ATE insurer”.

Stuart Bramley, co-head of clinical negligence at Tozers LLP added: “The Clinical Negligence and Injury team at Tozers are very pleased to be working in partnership with Allianz, giving our client base the option of complete protection against defendant costs. We look forward to this arrangement benefitting our injured clients as we work to secure justice and redress for those harmed by medical accidents.”

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Vos: parties are obliged to conduct litigation collaboratively

Awards of enhanced interest after beating a part 36 offer are not intended only to compensate the successful party, but can also include a non-compensatory element as part of the “carrot and stick” approach to litigation post-Jackson, the Court of Appeal has ruled.

Sir Geoffrey Vos, Chancellor of the High Court, warned that “parties are no longer entitled to litigate forever simply because they can afford to do so. The rights of other court users must be taken into account”.

He continued: “The parties are obliged to make reasonable efforts to settle, and to respond properly to part 36 offers made by the other side. The regime of sanctions and rewards has been introduced to incentivise parties to behave reasonably, and if they do not, the court’s powers can be expected to be used to their disadvantage.

“The parties are obliged to conduct litigation collaboratively and to engage constructively in a settlement process.”

Mr Justice Flaux decided that the award of enhanced interest was entirely compensatory, but giving the judgment of the Court of Appeal in In OMV Petrom SA v Glencore International AG [2017] EWCA Civ 195, Vos LJ said he was wrong. Rule-makers could have made that clear in part 36 but did chose not to, he observed.

Vos LJ continued that “the whole thrust of the CPR after Jackson LJ’s reforms is to use both the carrot and the stick”, as shown by the appeal court’s rulings in Denton and PGF II SA

“If it were right to say that the provision for additional interest were entirely compensatory, the 10% cap would only rarely be engaged (as the judge’s order demonstrates), and then probably only in unusual cases where, for example, the period of the enhanced interest award was very short.

“First instance courts would be required to engage in a complex and unnecessary exercise aimed at identifying what the prolongation of the litigation has cost the successful party in terms of wasted management time and other on-costs. This would be the kind of undesirable satellite litigation, perhaps involving detailed evidence, of which the court spoke in Denton.

“Moreover, the range of possible additional costs that might be caused by the litigation would be boundless.”

Vos LJ added that the use of the word ‘penal’ to describe the award of enhanced interest was “probably unhelpful”.

“The court undoubtedly has a discretion to include a non-compensatory element to the award… but the level of interest awarded must be proportionate to the circumstances of the case.”

Here, the defendant had refused to engage in settlement discussions or to respond to the part 36 offer, the eventual award was very significantly greater than the part 36 offer, and “perhaps most of all”, its conduct of the litigation had been heavily criticised. Flaux J said Glencore “fought this case to the bitter end in an entirely unreasonable manner”.

Vos J said it was “by no means automatic that the 10% uplift will be appropriate”, but here “it is hard to imagine a case in which there would be greater justification for the award of a 10% enhanced interest rate”.

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Thoresen: anger and disappointment

The Association of British Insurers has stepped up the pressure over the Law Society’s controversial “Don’t get mugged by an insurer” campaign targeting personal injury clients by calling for the £300,000 campaign to be pulled.

Director-general Otto Thoresen has escalated the row in a letter addressed to new Law Society president Nick Fluck which expressed his “anger and disappointment”.

In a strong-worded repost, Mr Thorensen branded the striking strategy as “a gross error of judgment” and said that it is “little more than public name-calling”.

And he has argued that the data, on which the central claims of the campaign are based, is flawed.

Last month, Legal Futures revealed the Law Society’s new advertising campaign which, for the first time, was focusing on a particular area of practice.

The society said the campaign “deliberately takes a bold, humorous and memorable approach” to gets its message across. It features posters on public transport and stations, PR coverage in regional media, radio advertising, online advertising and a video on YouTube. Firms can request A3-size posters and postcards, as well as a rotating banner advert for their websites.

The key message of the campaign is to urge personal injury consumers to not just accept the first offer of compensation from insurers.

According to Chancery Lane, research from the Financial Services Authority following a freedom of information challenge “revealed personal injury claimants who turn down an insurer’s initial offer and take legal advice from a solicitor get on average three times more compensation”.

However, after ABI director of general insurance Nick Starling hit back at the campaign, claiming it is lawyers who are “mugging” the public, and the Forum of Insurance Lawyers also complained about it, Mr Thorensen’s letter has added more heat to the debate.

Discrediting the Law Society’s data, the ABI stated that the figures are from a study of 113 cases from three insurers, undertaken four years ago.

In the letter, Mr Thoresen says that the authors of the FSA report themselves describe the data that underpins the study as “patchy”, “limited” and that it doesn’t give a “definitive conclusion”.

In his letter calling for the campaign to be withdrawn, Mr Thoresen states: “Your campaign is a gross error of judgment, represents a deeply regrettable resort to little more than public name-calling and it comes as a matter of considerable surprise that a professional and well-respected organisation such as the Law Society is prepared to lower itself to such action.

“I am more than aware that the insurance industry and some – but by no means all – of your members have taken different positions in the on-going debates over personal injury compensation reform.

“Robust debate on key policy issues is to be welcomed and, as part of those debates, the insurance industry has always been careful to ensure our contributions are based on evidence rather than the highly misleading and selective use of statistics.

“This campaign can only be damaging to relationships between the Law Society’s wider membership and insurers. I look forward to your assurance it will be withdrawn immediately.”

The Law Society had no comment yesterday.

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phoenix solicitorsNew start-up firm, Phoenix Legal, is implementing the Eclipse Compact solution from Eclipse Legal Systems, the sole Law Society Endorsed legal software provider.

Phoenix Legal is an ambitious boutique firm, providing specialist knowledge and expertise within the personal injury sector. Recovering compensation for a range of claims, including road traffic accidents, slips, trips and falls, and accidents at work, the team is quickly gaining a reputation of excellence for its client-focused service.

As a new start-up, Phoenix Legal needed a robust case management system that would enable the team to manage its caseloads efficiently, but with an accessible payment model to suit the financial demands of a new business. After an initial demonstration, the firm selected Compact, Eclipse’s new legal software solution for small law firms and new start-ups.

A personal injury Compact solution will be rolled out across the boutique firm, enabling the team to hit the ground running and manage matters in an organised and centralised fashion. Taking the core functions of Eclipse’s Law Society Endorsed Proclaim Case Management system, Compact will enable Phoenix Legal to benefit from fast and effortless document production, high level automation and smoother case progression.

Alisha Butler, Director of Phoenix Legal, comments:

“Having used Proclaim extensively at other firms throughout the course of my career, I knew it would be the system of choice when starting my own practice. The release of Compact however, means I can benefit from a selected suite of Proclaim toolsets that are relevant to the size and requirements of my firm, and that are available on a suitable pricing model.

“This new release demonstrates Eclipse’s ability to recognise the requirements of boutique firms, and as such develop a solution to specifically cater for the smaller market, further cementing its reputation as the go-to legal software supplier.”

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Eclipse200Law Society Endorsed legal software provider, Eclipse Legal Systems, has announced superb summer quarterly results.

The 3-month period from 1 June 2015 – 31 August 2015 saw a total of 32 new client signings including 4 six-figure deals. Ranging from established high street practices through to boutique operators and new start-ups, the firms implemented an array of Proclaim Case and Practice Management Software solutions. Among the wins were:

  • Thomson Snell & Passmore, Guinness World Record holder for the UK’s oldest law firm – implementing a ready-to-go Personal Injury Case Management system
  • Niche new start-up, Consilia Legal – utilising Proclaim Case Management Software with a bespoke Mediation solution

The continuing success of Eclipse and its Proclaim solution – now with over 23,000 users – can be attributed to the complete flexibility of the system. Available in a variety of flavours to suit firms’ needs, Proclaim has grown organically to become the most tailorable and complete solution available.

Eclipse’s sales director, Dolores Evelyn, comments:

“Our recent performance is evidence of the demand for flexible robust legal software and Eclipse’s reputation as the market leading supplier. Our broad range of clients and the diversity of their requirements mean Proclaim is often not seen as just a legal case management solution, but as an all-inclusive business management solution.”



A golden opportunity for the ATE market to innovate

Enrique Gomez Head of ATE DAS UK Group

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

July 16th, 2018