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Denham: complex policy issues

The Irish Supreme Court has ruled that third-party litigation funding is champertous, citing statute dating back to 1634, and so banned Harbour Litigation Funding from backing a major commercial case.

Chief Justice Susan Denham, giving the lead judgment, said changing the law was a matter for legislation, not the court, given the “complex” policy issues involved.

“The proposed investment agreement is a funding agreement which is champertous, and hence it is unlawful,” she ruled simply.

That the case was described as one of “immense public importance” was not relevant. It concerns allegations that there was impropriety in a tender process resulting in the award of a mobile phone licence in 1996 which caused the claimants loss.

Denham CJ said she was, however, concerned that the defendants and third party “who vigorously opposed the plaintiffs’ motion are beneficiaries if the case does not proceed”.

She continued: “This may be a matter for consideration at another time and place. There is a long history at the Bar, and amongst solicitors, of taking cases on a ‘no foal, no fee’ basis. Many of the most important cases have been taken in such circumstances. Or, perhaps an alternative route may be found, whereby the litigation would cost less.”

The court upheld, by a majority of four to one, a High Court ruling, which the judge noted that it was not a constitutional challenge where the court was asked to examine the constitutionality of the offences and torts of maintenance and champerty.

Mr Justice Clarke, concurring, said it was “at least arguable that there is a very real problem in practise [sic] about access to justice. An assessment of the precise extent of the problem would require detailed evidence and, therefore, nothing which I say should be taken as indicating a concluded view.

“Nonetheless it is worth recording that the experience of the courts suggests that there may well be problem, that it may well be significant and that there are at least arguable grounds for suggesting that it is growing.”

Susan Dunn, Harbour’s head of funding, said: “Both we and the claimants are disappointed by today’s outcome. We spent a lot of timing reviewing this claim and still believe it to be one of the most meritorious cases we have ever considered, and one in the public interest, and that it should be pursued.

“It is a shame if meritorious claims such as this still cannot be pursued in Ireland, simply for lack of funding.”

Steven Friel, an Irish solicitor who is chief executive of Woodsford Litigation Funding, said he thought the concerns expressed by Denham CJ’s indicated that she would prefer that litigation funding be permitted in a case like this.

“Notwithstanding the decision, I am confident that it is only a matter of time before Ireland permits litigation funding. The Supreme Court has effectively invited the Irish parliament, the Oireachtas, to legislate.

“Just as Singapore and Hong Kong are legislating to get rid of the ancient principles of champerty and maintenance, which are not fit for purpose in a modern dispute resolution system, so too should Ireland.”

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Norris: costs order must be “practically workable”

Judges should be content to do “broad justice” when making costs orders to avoid “complicated attempts” to attribute them between a number of cases, the High Court has ruled.

The ruling follows the success of Redstone Mortgages last October in two of four negligence test cases it brought in the against Home Counties law firm B Legal.

Mr Justice Norris said a costs order must do justice between the parties, but “the judge must be content to do broad justice if an attempt to do exact justice is likely to involve the parties and the costs judge in complicated attempts to attribute what are essentially common costs between different claims and different issues within those claims.

“That is particularly true where (as here) these were four separate sample actions directed to be tried together.”

Norris J went on: “Whilst of course one has to consider the order for costs on an issue by issue basis, one ultimately has to arrive at an order that fairly reflects the outcome, that is practically workable (bearing in mind the difficulties faced by skilled costs judges) and which does not commit or encourage the parties to indulge in expensive satellite costs litigation.

“My solution is not perfect, but its imperfections are no greater than the alternatives.”

Delivering judgment on costs in Redstone Mortgages v B Legal [2015] EWHC 745 (Ch), the judge said the general principles to be applied were not in doubt.

“First the court must decide whether to make an order about costs at all. Second, if the court decides to make an order about costs then it will in relation to each action seek to identify who is the successful party, in which event the general rule will be that the successful party is entitled to its costs.

“Third, before making such an order the court must, however, consider all the circumstances of the case, which might indicate a departure from the general rule.”

Norris J said the court was “not confined to considering the costs as a whole”, and may make an issues-based costs order, but in this case it must bear in mind that “almost invariably overall success involves losing on some issues”.

In the two of the four test cases which Redstone lost, Welch and Sher, the judge ordered that the lender should pay B Legal’s costs on the standard basis, together with a quarter of the “generic costs” of all the cases. He defined “generic costs” as costs incurred by B Legal which were not attributable to a particular case.

In the other two, Howard and McOwen, Norris J said Redstone established at the earlier, preliminary issues hearing that B Legal had failed in its duties to the lender, but causation and damages had still to be determined.

Rejecting arguments put forward by B Legal in a “35 page and 92 paragraph skeleton argument”, the judge ruled that Redstone’s costs in Howard and McOwen should be treated as claimant’s costs in the case. In each of them, a quarter of the generic costs should be added, and the parties should be free to apply to vary the order if a part 36 or other offer was made.

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Gummer: implementation as soon as possible

Gummer: implementation as soon as possible

The government has admitted that it will not be able to introduce fixed recoverable costs for clinical negligence cases on 1 October as planned.

A letter from health minister Ben Gummer to the Association of Personal Injury Lawyers (APIL) acknowledged that the delay in publication of its consultation meant the implementation timetable was not achievable.

The consultation was first scheduled for last autumn but has been repeatedly delayed to the point where there was simply not enough time for a consultation and then amendments to the CPR to be made in time.

Mr Gummer said implementation would happen “as soon as possible following the consultation, in line with Civil Procedure Rules”. APIL would not release any more information from the letter.

An APIL spokeswoman said: “This will be a considerable relief to our members who will need time to prepare their businesses and provide clarity and certainty for clients about changes to how cases are to be costed and conducted.

“In the meantime, we will continue ongoing talks with the Department of Health about how the NHS can save money without compromising on access to justice for injured patients.”

One of the great unknowns is the upper limit of the proposed regime, with the government having mooted claims up to a value of £100,000 or even £250,000. The consultation will not be published before the EU referendum on 23 June.

Legal Futures understands that the Law Society, APIL, the Society of Clinical Injury Lawyers, and Action against Medical Accidents are in talks to resurrect a scheme first discussed with the NHS Litigation Authority four years ago for a fixed costs scheme for claims worth up to £25,000.

We reported last week that the senior judiciary has agreed with Lord Justice Jackson that fixed recoverable costs should not be introduced in clinical negligence cases in isolation, but as part of their extension across the entire fast-track and ‘lower’ end of the multi-track.

Julie Say, a partner and head of clinical negligence at Hodge Jones & Allen, said: “Ever since the October deadline was announced, it was obvious that any implementation was going to be too tight. I hope that the government will now allow a proper consideration of how clinical negligence cases are actually run before releasing any consultation.

“It would be very ill advised, if not downright irresponsible, for the government to introduce a fixed costs regime without adequate consultation, particularly given that the impact of the Jackson reforms is still to be assessed. As a consequence of the Jackson reforms, lawyers’ fees are already tightly controlled, capped and limited…

“The government should be looking at remedying underlying causes of negligence by, for example, providing proper, more regular training, if they want to reduce the negligence bill.”

The Forum of Insurance Lawyers has expressed regret at the news, however. Mike McKenna, a member of its clinical negligence sector focus team and partner at Hill Dickinson, said: “It’s a pity that other issues appear to have delayed the consultation but it’s obviously a topic still very high on the government’s agenda and we look forward to debating this important issue later this year.”

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Chris Bogart

Bogart: litigation finance becoming “corporate finance for law”

Litigation funder Burford Capital has agreed to provide over £30m in litigation financing for a FTSE 20 company, in the first publicly announced deal of its kind.

Burford said the deal addressed the need of “companies of all sizes” to avoid paying lawyers by the hour.

A spokesman said the $45m financing arrangement with the company, which has not been named, “encompasses a portfolio of pending litigation matters”.

He went on: “Previously, the company paid for the significant legal fees and expenses associated with litigation out of its own revenues, thus reducing operating profits. With the Burford arrangement, it has transformed how it manages litigation expense.”

The spokesman said the deal provided multiple corporate benefits, including the ability to use Burford’s capital “either to relieve legal expense budget pressure or for corporate purposes unrelated to the litigation matters”.

He said Burford would receive a portion of the profits from litigation on a “cross-collateralised basis”, meaning that it was protected against the risk of any single matter losing.

The spokesman added that Burford was providing capital on a “non-recourse” basis, in a way that enabled the client to treat it as income received, without waiting for the result of the underlying litigation matters.

Christopher Bogart, CEO of Burford, commented: “This transaction is another example of the continuing transformation of litigation finance into corporate finance for law, and our focus on constructing innovative solutions for businesses of all sizes, including the world’s largest companies.

“More and more, in-house counsel see the value of innovating how they finance litigation, and deals like this show how easy and straightforward we can make it for them.

“Equally, financial executives are increasingly aware of the accounting and finance benefits of this approach, including the value of being able to move risk from corporate balance sheets, and the tremendous benefit of being able to recognise income from a claim when it’s advantageous to the business instead of when it’s convenient to the courts. Put these together, and we see continued appetite for this kind of transaction.”

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Parliament: Labour eyeing more defeats of government

With the government under pressure following last week’s votes, Labour frontbenchers Lord Bach and Lord Beecham, a solicitor, have laid an amendment calling for the maximum penalty for breaching the ban to be two years in prison.

Other amendments relating to referral fees include a bid by former House of Commons speaker Lord Martin to exclude payments made to trade unions from the ban, and changes suggested by Conservative solicitor Lord Hunt to close loopholes, such as ensuring that the ban covers payments that are not made directly to the referrer.

Liberal Democrat Lord Clement-Jones is seeking to extend the ban to payments made to provide marketing services by unsolicited SMS text message, unsolicited telephone calls or any marketing in a hospital or other primary treatment centre.

Lords Bach and Beecham also want to halve the fees payable to claimant solicitors under the RTA portal, taking them to £200 for stage 1, £400 for stage 2 and £125 for stage 3.

Lord Beecham is trying to introduce the 10% rise in damages to the face of the bill, and to limit the exceptions to qualified one-way costs-shifting to claims that are fraudulent or so unreasonable that they were or could have been struck out.

There will be attempts to carve out overseas human rights, industrial disease, insolvency, and environmental cases from the scrapping of recoverability of success fees and after-the-event (ATE) insurance premiums.

Lord Lester of Herne Hill QC and former Labour deputy prime minister Lord Prescott have laid an amendment on defamation and privacy cases that would allow recoverability of a success fee of up to 50% and an ATE premium where the litigation would not have been commenced but for the conditional fee agreement; the winning party’s base costs, success fee and ATE premium are proportionate to the remedy claimed; and it is in the interests of justice for the losing party to pay.

Alternatively a success fee of more than 50% and ATE would be recoverable if the losing party was responsible for the base costs being disproportionate.

Further changes sought by LibDem peer Lord Thomas would introduce statutory regulation of third-party litigation funding and of third-party capture by insurance companies.

The first two days of the bill’s report stage last week saw peers vote to retain legal aid for welfare benefit appeals, all victims of domestic violence, and medical reports in clinical negligence cases. However, the government narrowly survived the vote to bring clinical negligence as a whole back into the scope of legal aid. It is likely to argue in the Commons that the measures are financial in nature, meaning the Commons can override the amendments.

The report stage resumes today with more votes expected first on bringing areas of work back into the scope of legal aid before attention turns to the Jackson reforms.

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Lord Neuberger

Lord Neuberger: diversity about more than the “familiar issues”

The judicial system should be “more ready to accommodate academics” who were “more notable for their quality than for their quantity”, Lord Neuberger has said.

The president of the Supreme Court said: “The need for diversity should not concentrate solely on the familiar issues of gender, sexuality, physical condition and ethnicity, important as they of course are.

“Diversity of approach, training and experience are also significant, and it is good that we now have academics at all levels of the senior and more junior judiciary, although some might say that they are more notable for their quality than for their quantity.”

Lord Neuberger said it was “interesting and gratifying” to see how many distinguished retired judges now accept visiting professorships.

“It is not only good for them to contribute to academic discourse, but it must be excellent for law students – and not just law students – to attend lectures, seminars and discussion groups with former experienced judges.”

On the issue of whether the Supreme Court should issue several judgments rather than a single one, Lord Neuberger said separate judgments were likely to be “inappropriate” if the ruling was laying down good practice for the lower courts or dealing with statutory interpretation, but there was “a lot to be said” for more than one where the law was being developed.

In a speech at the annual conference of the Centre for Commercial Law Studies, part of Queen Mary, University of London, Lord Neuberger said that while the “primary duty” of appellate judges was to be independent, they also had a “collegiate function”.

He went on: “I do not regard it as my function to dissuade colleagues from writing a concurring or dissenting judgment, but I do regard it as my duty to point out to a colleague any difficulties for the future which I foresee if his proposed judgment proceeds in its presently proposed form.

“I should perhaps add that this is not only my function: other colleagues have expressed such views to me about my draft judgments from time to time – and no doubt also to each other.”

Lord Neuberger added that he had agreed to a proposal from one of his colleagues that “insults and hyperbole” could be included in draft judgments circulated only among justices of the Supreme Court.

Having made it clear that he deprecated “any sort of abuse or hyperbolic criticism”, Lord Neuberger said: “When we Supreme Court Justices discussed this among ourselves recently, one of my colleagues suggested that insults and hyperbole could be included in drafts of judgments when exchanged between ourselves, but would be deleted when the final version of the judgment was prepared for publication.

“I was happy to agree this, not least because one would then have the fun of seeing the insults without the embarrassment of having them deployed in public.”

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Members of Yorkshire-based Eclipse Legal Systems, the UK’s largest independently owned legal software developer, successfully organised and participated in a series of charity events throughout 2013 raising thousands of pounds for their three nominated charities.

  • Candlelighters, based in Yorkshire, provides essential services and support to children with cancer and their families.
  • Barth’s Syndrome Trust, which is dedicated to saving lives through education, advances in treatment and finding a cure for Barth’s Syndrome – a sometimes fatal, often debilitating genetic disease affecting boys.
  • Martin House, a hospice for children, young people and their families from throughout the Yorkshire region.

The Eclipse fundraising events included auctions of surplus IT equipment and a series of four physical sporting challenges which included the Leeds Half Marathon, Jayne Tomlinson’s ‘Blockbuster’ hike, the Leeds 10k and finally the 71 mile Otley Sportive Cycle.

Dolores Evelyn, Sales Director at Eclipse Legal Systems, comments:

“Congratulations to all those who took part in the events and a huge thank you to everyone who rewarded these efforts by donating and making this a record breaking fundraising year for Eclipse.   The £8,000 raised will help to make a huge difference to all who rely upon the valuable support our chosen charities provide.”

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Foskett J: “clearest possible case” for indemnity costs

The NHS Litigation Authority (NHSLA) has been ordered by the High Court to pay indemnity costs after sending a last-minute surveillance video to the claimant’s lawyers which resulted in a trial being vacated.

Mr Justice Foskett said he could “quite understand” why the claimant’s lawyers believed they had been the victims of a “deliberate ambush”.

He went on: “The sending of an edited video (with no reference to the unedited material) by registered post over the Easter weekend, with no courtesy e-mail warning of its impending arrival, was exactly the kind of initial approach that would engender suspicion on the part of the recipient.

“Then to be told that the application for permission to rely on it would be made on the first day of the trial, just before the claimant would give evidence, is exactly the way this kind of issue was dealt with in the past, when ambush was precisely the objective.

“To add to that the suggestion that, on effectively the eve of the trial, the claimant’s solicitor, who will have considerable responsibilities for the arrangements for the trial, should travel to the offices of the surveillance company some 60 miles away to view the unedited footage, was reflective of an obstructive attitude.

“It may not have been intended to be obstructive, but that is undoubtedly how it would have appeared. Some proper professional co-operation at a time like this is essential.”

The High Court heard in Hayden v Maidstone and Tunbridge Wells NHS Trust [2016] EWHC 1121 (QB) that Lorna Hayden, a cardiac physiologist at the hospital, seriously injured her neck while lifting a patient. She sued the trust for almost £1.5m.

Foskett J said there was a dispute about “the extent of her continuing symptoms”.

The defendant’s solicitors applied to the court for permission to rely on video surveillance evidence, but the evidence was not received by the claimant’s solicitors until the first working day after the Easter weekend – eight working days before the trial.

Foskett J said the claimant’s legal team “undoubtedly” regarded themselves as “the victim of an ambush”, and he ordered the trial date to be vacated so they “had the opportunity to consider the position more fully”.

He went on: “A very significant factor in deciding whether to accede to a late application, in my judgment, is the time when a defendant ought reasonably to commission such evidence.

“Once the claimant’s case, both in relation to the disabilities relied upon and their consequences, is clearly articulated and the defendant is possessed of an opinion from an expert upon whom it relies that the claim is ‘suspect’, it seems to me that the obligation actively to obtain surveillance evidence arises if it is considered a proportionate approach to adopt in the particular case.

“The longer it is left and the nearer the time gets to trial, the more likely it is that the court will regard the delay as culpable.”

Foskett J said that, “with considerable misgivings”, he had decided that the interests of justice required that the video evidence should be considered by the court.

He said the claimant and one of her main experts had been able to answer the new material “in a strong fashion”, and the playing field had remained level.

However, rejecting the defendant’s arguments that the costs thrown away by the vacation of the trial date should be dealt with by the trial judge, Foskett J said there was “the clearest possible case” that the defendant should bear them on an indemnity basis for its “unreasonable litigation behaviour”.

In a summary assessment of costs, he awarded the claimants £15,000 for the initial hearing of the defendant’s application, £20,000 for the adjourned hearing and almost £5,000 for expert cancellation charges.

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Scott-Moncrieff: looking forward to seeing improvements

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

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

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

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

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

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

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

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


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Consumer Rights Act has completed its parliamentary passage

Consumer Rights Act has completed its parliamentary passage

Opt-out collective actions will become a reality in England and Wales later this year after the Consumer Rights Act received Royal Assent last week.

But the government has proposed introducing a presumption that law firms and third-party litigation funders should not be able to front such cases.

Expected to come into force on 1 October 2015, the Act facilitates private enforcement of competition law by introducing a competition-specific opt-out regime in the Competition Appeal Tribunal that allows cases to be brought by a defined group of people with similar claims either as follow-on or standalone actions.

The tribunal has to certify opt-out actions and can order them to be opt-in. It will also have to subject them to a preliminary merits test, while there will be a ‘fast-track’ procedure for simpler cases. The tribunal will have to approve any settlements.

To counter fears that the regime will import the excesses of US litigation, the tribunal will not be able to award exemplary damages – although it can award damages without quantifying the loss of each individual claimant – and actions cannot be brought under damages-based agreements.

Where not all of the damages awarded are claimed, the extra funds will go charity, generally the Access to Justice Foundation, or the tribunal can order that they go towards the group representative’s legal costs and expenses.

Last month the Department for Business, Innovation and Skills issued a consultation on changes to the CAT’s procedures – following a review led by former Court of Appeal judge Sir John Mummery – and this includes changes to be made to implement the Act.

In line with the government’s stated policy throughout the consultation process for the Act, it asked whether there should be presumption that law firms, special purpose vehicles and third-party funders should not be able to bring cases.

The consultation explained: “Government believes that only those who have a genuine interest in the case, such as genuinely representative bodies (for example, trade associations or consumer organisations) or those who have themselves suffered loss should be allowed to bring cases.

“Government policy is therefore that claims should not be brought by law firms, third-party funders or special purpose vehicles. How to achieve this aim has been subject of debate in both Parliament and with stakeholders. In order to achieve a balance between claimants and defendants, Government is minded to introduce presumption into the rules that organisations, that offer legal services, special purpose vehicles and third-party funders should not be able to bring cases

“It is intended that such a presumption would act to bar non-genuinely representative bodies from bringing cases, but would permit the CAT to decide that a consumer organisation or a trade body that offers legal advice would be suitable to bring a case.

“The same is also true of special purpose vehicles: an organisation created with the sole purpose of bringing a case. However, there may be cases with multiple claimants who decide to create a separate entity for bringing the case to make case management easier. Again, the CAT should therefore have the ability to override the presumption.”

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Kain Knight’s global acquisition

Kain Knight, one of the UK’s largest firms of costs lawyers, has acquired costs and debt management company SettleFirst, based in Dubai.

SettleFirst specialises in advising insurance companies, banks and other institutions on debt recovery and collections, and also works closely with the legal community in the United Arab Emirates.

Mitesh Modha, Kain Knight’s head of technical and special projects, is managing SettleFirst in the short term and is in the process of developing an enhanced business plan with the current SettleFirst team.

Kain Knight intends to develop SettleFirst’s existing income streams and also use the business as a platform to provide Kain Knight’s services to firms based in the UAE and throughout the rest of the GCC region.

To support this, a Kain Knight team, together with costs expert Nicholas Bacon QC from 4 New Square, is visiting law firms in the GCC during the week commencing 21 September to promote traditional costs services, as well as new services targeted at the alternative dispute resolution market including costs arbitration, costs mediation and pricing advisory services.

Peter Petyt, Kain Knight’s chief executive officer, said:
“The acquisition of SettleFirst is an important step in our growth programme, providing valuable geographical and service line diversification. There are compelling synergies between SettleFirst’s existing client relationships and Kain Knight’s target clients in the GCC region, and we intend to grow SettleFirst’s existing services alongside the provision of existing and new legal costs services.”


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Gibson: prolonged uncertainty will increase financial instability

Any further delay in announcing the way forward on whiplash reform – after the minister responsible left her post in this week’s reshuffle – risks financial instability in the legal market, the government has been warned.

The minister for civil justice, Helen Grant MP, was moved to the Department for Culture, Media and Sport as part of David Cameron’s reshuffle, and has been replaced by Shailesh Vara MP. The Ministry of Justice has not yet announced whether he will assume her portfolio of responsibilities, but it seems likely that he will.

A decision on whiplash reform was expected shortly and Simon Gibson, managing partner of Liverpool claimant firm SGI Legal, said he was worried that the reshuffle will cause unnecessary and costly delays.

He said: “Both the legal and insurance sectors have been waiting for this decision, which has already been postponed, so they can move forward and ensure they are best placed to maintain sustainable business models as well as access to justice for those who have suffered genuine personal injury.

“Any further delay now will prejudice both law firms and insurers and, in an already challenging sector, mean budgeting and business planning cannot be dealt with properly with such a degree of uncertainty.”

In May Ms Grant announced a delay to the Ministry of Justice’s planned response to the whiplash consultation so that it could take into account the outcome of the transport select committee’s whiplash investigation. The committee reported in late July; while MPs supported the creation of independent medical panels, they opposed the government’s proposal that the small claims limit for personal injury claims be increased from £1,000 to £5,000.

Mr Gibson said a decision was needed: “Whilst law firms may gain short-term comfort from a delay, ultimately prolonged uncertainty will increase rather than reduce financial instability in the legal sector. I hope that the ministry will follow the evidence and common sense conclusions put forward by the select committee and publish its decision this autumn as planned, notwithstanding the reshuffle. Any further delay helps nobody at all.”

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Stark: ruling gives carte blanche to ignore the new rules

The Court of Appeal ruling in Henry yesterday has been met with disappointment and criticism from lawyers for failing to send out a clear message about the importance of costs management, and for risking an onslaught of satellite litigation.

Iain Stark, chairman of the Association of Costs Lawyers, said: “This judgment sends out completely the wrong message to anyone involved in litigation. The government has made it clear that it wants costs budgeting to help constrain the spiralling costs of litigation, yet the decision flies in the face of this intention. Not only does it undermine the government’s efforts, but it also gives licence to further undermine costs judges and places yet more burdens on them.

“A budget is there for good reason. Ignoring it just begs the question of what is the point of having one in the first place? This ruling gives litigants carte blanche to ignore the new rules – and satellite litigation is certain to follow. Post April it looks like we will be waiting, as in the bad old days of the Costs War, for cases to reach the Court of Appeal, thus paralysing the courts underneath and the everyday administration of justice. This will produce greater uncertainty, exactly what these reforms were supposed to stop.”

Rod Evans, president of the Forum of Insurance Lawyers, said: “This is an extremely disappointing judgment. Lord Justice Jackson made clear that cost budgeting was a key proposal in his raft of reforms to tackle the disproportionate and unbalanced costs of civil litigation and that his reforms were intended to be implemented as a whole and interlocking package.

“We now have major concerns over the adherence to the new cost budgeting rules from the 1 April and what sanctions will be available to apply against those who don’t adhere. We are disappointed that the Court of Appeal has seemingly undermined the implementation of the Jackson reforms which are needed as a matter of urgency to tackle the current dysfunctional costs of civil litigation.”

Fellow defendant lawyer Christopher Malla, a partner at City firm Kennedys, said the appeal court had missed its first opportunity “to assert its authority to control escalating litigation costs and dismiss the appeal. The judgment is now an open door to satellite litigation, having failed to provide clear guidance as to when a court will exercise its discretion to depart from an approved budget.

“Litigators are, however, warned by the Court of Appeal that post 1 April the new rules impose a greater obligation on the parties and the court to manage costs and stick to cost budgets which provide a ‘prima facie limit on the amount of recoverable costs’. To be safe any departure from an agreed cost budget will require communication and judicial approval. We now have to wait and see how the courts exercise their discretion post 1 April.”

Graham Huntley, London Solicitors Litigation Association executive committee member and partner in Signature Litigation LLP, said that rather than produce hoped-for clarity, “the judgment helps to confirm that there will be many future disputes over non-compliance with the requirement in the practice direction to file and agree revised budgets”.

He continued: “At the core of the decision was the issue whether, despite the fact that there was ‘good reason’ to depart from the existing approved budget, the court should nonetheless decline to do so because the mandatory requirement to update the budget had not been complied with. We at least have been told that non-compliance does not shut the door to the courts assessing costs outside the approved budgets.

“The reason is clear – the overall objective of proportionality trumped the out-of-date budget. The Court of Appeal has tried to meet the risk that this will open the door to future non-filing of revised budgets and storing-up of ‘good reasons’ to use at the end of the case.

“However, we can expect vigorous argument as to whether, as the Court of Appeal appears to have thought, the new rules coming into effect in April 2013 are so materially different from those in the pilot scheme as to justify future courts being less lenient than the Court of Appeal in this case.”

Thomas Blackburn, national advocacy manager at Just Costs Solicitors, said that while on its facts the ruling was “a victory for common sense and indeed the underdog”, it raised “serious concerns” over costs management – the ruling has “watered down” the new rules before they have even come into force, he suggested.

“Unfortunately the legacy of Henry v NGN might be to encourage all parties (claimant and defendant alike) to spend millions of pounds in satellite litigation, as the clarity which was intended by Lord Justice Jackson… has just disappeared.”

This view was shared by Rani Mina, partner at City law firm Mayer Brown, who said the ruling was “not the strong message” that had been expected. “One of Lord Justice Jackson’s concerns was that his reforms should not increase the level of satellite litigation over costs. This decision must surely increase the likelihood of appeals in relation to tough cost budgeting decisions at first instance.”

However, a briefing from costs firm John M Hayes emphasised the unusual circumstances of Henry, saying the huge reputational damage that was done to the claimant, along with the awkward manner in which the respondent conducted the case, “evidently weighed heavily” on the judges.

“The Court of Appeal has made it clear that it will only be in rare circumstances that the court will depart from budgets when assessing costs. The fact that a party will not recover its costs will not be sufficient to cause a departure. The preparation of an accurate budget and the ensuring that budgets are adhered to when conducting a case are no less important following the Court of Appeal’s ruling than they were following the SCCO’s judgment.

“On a final note, the respondent attempted to adduce an argument in terms that a receiving party could not ask the court to depart from a budget if that budget was plainly inadequate. Due to the very late notice given that this argument was to be raised, the Court of Appeal refused to hear the same. As such, this question remains unresolved.”

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Hutton: all are agreed on the 6 April 2018 date

Practitioners have been warned that they can no longer ignore the electronic bill of costs, which now seems certain to become mandatory in the Senior Courts Costs Office (SCCO) and county courts on 6 April 2018.

The initial plan was that it would become compulsory in the SCCO alone this week, but in June the Civil Procedure Rule Committee delayed it until 2018 so that it could happen across the board.

Speaking at the Costs Law Reports Conference in London last week, Alex Hutton QC of Hailsham Chambers – who heads the committee overseeing the new bill format – indicated that there would be no further delay.

“The Civil Procedure Rule Committee has accepted the principle that the new bill will not be widely used until its mandatory,” he said. “The Ministry of Justice is behind it and all are agreed on the 6 April 2018 transition date.”

This view was echoed by the Senior Costs Judge, Andrew Gordon-Saker, who pointed to the latest update to the CPR, which came into force on Sunday.

The amended rule 47.6 now provides for the filing of electronic versions of the bill of costs, while an amended Practice Direction 47 will be published – probably by the end of the year – as part of the practice direction making document supporting the rule changes.

Mr Hutton said the practice direction would require electronic bills for part 7 multi-track claims except for cases in which the proceedings were subject to fixed costs or scale costs or cases in which the receiving party was a litigant in person, or cases where the court has made another order, and where the bill related to costs recoverable between the parties for work undertaken after 6 April next year.

The bill would have to either be in the form of Precedent S or any other spreadsheet format which reports and aggregates costs on

Chief Master Gordon-Saker said the new rules would apply to provisional assessments but, for now, not legal aid claims or Solicitors Act assessment.

For cases which straddle 6 April 2018, parties could submit a paper bill for the work done before that date and electronic bill for the time after then, “but frankly we are working possibly on the false assumption that if you’ve got to prepare an electronic bill, you’re probably going to do it for the whole case rather than just a bit of it”.

Over the next two years, the judge said, the SCCO would go completely digital and everything would be handled electronically.

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Stark: sausage factory approach

The government’s plans to reform the county courts have attracted criticism from both claimant and defendant lawyers as well as costs specialists – albeit for different reasons.

A range of changes was unveiled yesterday, including extending the road traffic accident (RTA) portal to higher value cases as well as employers’ and public liability, subject to a full evaluation of the first two years of the portal’s operation. Fixed fees will also become more widespread.

However, while insurance interests backed the direction of travel, Kate Lotts, head of policy development at leading defendant firm Weightmans, said the announcement  350-001 dumps was “frustratingly silent on specific detail”.

She continued: “This is thematic across the board for civil litigation reform; as the Legal Aid, Sentencing and Punishment of Offenders Bill grinds through the parliamentary  Cisco 642-902 dumps process, policy decisions and implementation rules are missing.

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“The reform journey is moving forwards but for defendants faced with a steady drip feed of announcements on it, the need for clarity as to the bigger picture and how the claims process will be affected is becoming ever more pressing.”

David Bott, president of the Association of Personal Injury Lawyers, welcomed the intention to consult further, but said that extending the portal would tilt the playing field further away from injured people given that it “still has serious technical and administrative flaws”.

He added: “It is critical that the government fully considers the combined impact of proposed changes to the ‘no win, no fee’ system

, the proposed end of legal aid, the introduction of alternative business structures and other planned  vcp-510 exam dumps reforms on injured people.

“The government must avoid over-focusing on needlework and forgetting the full tapestry. Too much change, too quickly, would be reckless.”

For Iain Stark, chairman of the Association of Costs Lawyers, the portal will need to be changed significantly to deal with bigger claims where psychological injuries may need to be considered. The level of costs will also have to rise for the bigger cases: it would not be possible for “true professionals” to handle a claim worth £25,000 for the fees currently paid under the portal but the government has so far made no reference to fee levels.

“What the government seems to be forgetting is that personal injury and clinical negligence work is highly skilled litigation currently attracting hourly fees of around £200 per hour. The reforms will result in skilled practitioners refusing fixed-fee work, leaving consumers in the hands of trainees and inexperienced solicitors. Where is the justice in that?”

He said the impact would be a “sausage factory approach with one senior litigator overseeing work carried out by inexperienced staff” and an increase in litigants in person, “which will be a disaster in this specialist area”.

Andrew Dismore, co-ordinator of the Access to Justice Group, described the government paper as a damp squib. “The government should have come clean and given some clear indications, especially on proposed implementation timescales, if this is not headed for the long grass.”

Francesca Kaye, vice-president of the London Solicitors Litigation Association said the government needed to commit the necessary funding to the proposed expansion of the county court “to enable the intended increased access to justice to be realised”.

She pointed out that doubling the small claims limit to £10,000 would increase the number of litigants in person, while raising the High Court limit for non-personal injury claims to £100,000 will increase the number of more complex claims in the county court.

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Doerries: timely move

Doerries: timely move

The details of the joint working group set up to investigate the viability of a contingent legal aid fund (CLAF) at the urging of Lord Justice Jackson, have finally been published today – even though it has now already had two meetings.

The group is chaired by Justin Fenwick QC and has representatives of the Law Society, Bar Council and Chartered Institute of Legal Executives (CILEx).

For the purposes of the working group, a CLAF is defined as “a self-sustaining pooled fund to cover the legal costs of a claimant’s civil money claim, where (i) in cases that win, the claimant’s legal costs are recovered from the losing party and a portion of the damages or other sums recovered by the client is paid into the fund, and (ii) in cases that lose, the claimant’s appropriate legal costs are reimbursed by the fund”.

Last week Law Society chief executive Catherine Dixon said the group was seeking to identify “the most promising areas where a CLAF might have a role to play. If the group concludes that there are no areas that appear sufficiently promising, it will report accordingly.

“If areas are identified where a CLAF could have a useful role, the group will undertake further work to establish whether an economically viable model can be set up.”

A key issue the working party will have to address is where the initial funding could come from – in his speech in February, Lord Justice Jackson suggested it could come from the government, the National Lottery or ‘quasi-debentures’ bought by individual lawyers and/or institutions.

Bar Council chair Chantal-Aimee Doerries QC said: “The Bar Council has examined this as a possible alternative source of funding civil justice over many years. Our first report was published as long ago as 1998. Since our last report on the subject in 2011, the civil justice landscape has changed considerably.

“The Legal Aid, Sentencing and Punishment of Offenders Act 2012 resulted in significant cuts in civil legal aid and in some cases the removal of public funding from entire areas of civil work.

“It is therefore timely to re-examine the feasibility of an independent, not-for-profit CLAF established by the legal profession, in the public interest, to promote access to justice.”

Law Society president Robert Bourns agreed that a CLAF “could provide a valuable method to fund litigation and facilitate access to justice for those who lack the means to pay for legal services”.

He added: “We are keen to discuss ways to overcome the obstacles that prevented this idea from proceeding in the past. It is also important to consider any unintended consequences on existing funding options, which are presently working well for people.”

CILEx president Martin Callan noted that CLAF models “do operate successfully in other jurisdictions”.

The group plans to produce an initial report by the end of September and a final report before the end of the year.

Its terms of reference are:

  1. To investigate and report whether a CLAF could be viable in any area(s) of civil litigation and in particular as to whether it could be self-sustaining.
  2. To consider whether there are any gaps in civil litigation funding which could be filled appropriately with a CLAF.
  3. To consider whether a CLAF could provide a satisfactory means of civil litigation funding alongside, or as an alternative to, existing funding methods.
  4. To identify how a CLAF could be funded and what funding arrangements with lawyers, clients, insurers, funders or others would be necessary to make it viable.
  5. Against that background to set out the essential characteristics of a viable CLAF, including how it would operate and the outcomes it would deliver for clients, lawyers and the wider justice system.
  6. To make recommendations as to whether any and if so what changes would be needed to make a CLAF viable, in particular: (i) changes to other forms of funding (abolition or amendment); and (ii) legislative changes (primary or secondary legislation, including any changes to the Civil Procedure Rules).
  7. To make recommendations as to how a CLAF could be established (including its initial finance).
  8. To provide an initial feasibility report by September 2016 and a final report before the end of December 2016.

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Amey: Conn3ct delivers a lifeline for clients

Leading litigation funding broker TheJudge has launched a bespoke funding service for smaller business disputes that combines after-the-event (ATE) insurance cover and low-cost litigation funding.

The Conn3ct facility offers “far leaner pricing models” than traditional big-ticket third-party funding, reflecting both the lower financial risk and often faster litigation timetable associated with smaller commercial and professional negligence claims.

TheJudge argues that claimants involved in non-injury litigation will be hardest hit by the Jackson reforms from next April, and practitioners will have to decide whether smaller-value commercial and civil claims are economical to pursue, especially given the limited availability to date of litigation funding products aimed at smaller commercial claims has to date been limited.

The company argued that Conn3ct is superior because it involves shopping around for cover, and provides exclusive access to some funders.

Director Matthew Amey said: “For litigators handling small and medium-sized business and professional negligence disputes, Conn3ct delivers a lifeline for clients who need litigation finance support, but whose cases don’t allow for the large cost normally associated with litigation funding.”

Senior broker Helen Smith added: “A key advantage of Conn3ct is that the client is free to pick and mix what funding or ATE insurance cover they require. Conn3ct is supported by multiple-capacity providers, so in addition to having various options, clients can be sure that competitive market testing is undertaken before they sign up to a given deal.

“We will undoubtedly see more combined insurance and funding packages in future, but only through real market comparisons can clients be sure their terms are competitive.”

Conn3ct follows the launch of TheJudge’s “Insolv3ncy” service, which is specifically designed to provide insolvency practitioners with low-cost funding solutions to maximise creditors’ recovery. The appeal of Insolv3ncy was bolstered by the government’s announcement to defer abolishing success fee and ATE premium recoverability for insolvency cases.

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Costs management: case likely to head to Court of Appeal

A social worker involved in the Baby P case faces a £300,000 shortfall in the costs she can recover after a successful libel claim against The Sun because there was no good reason to depart from the court-approved costs budget, the Senior Costs Judge has ruled.

This was despite the fact that she would have a “very good case” to justify the extra costs in a detailed assessment.

Master Hurst’s judgment is the first such ruling in relation to budgeting – which is set to become standard under the Jackson reforms – and is likely to head straight to the Court of Appeal because of its importance after the judge granted leave without even being asked.

London media firm Taylor Hampton acted for Sylvia Henry, who was one of the individuals named in the newspaper’s high-profile and prolonged campaign against Haringey Social Services following the death of Baby P.

It sent a pre-action protocol letter to News Group Newspapers (NGN) on 2 March 2010, the budget was approved on 20 September 2010 under the defamation costs management pilot, and the case settled on 4 June 2011, shortly before both a costs management hearing and then the trial. Ms Henry received a prominent apology in the newspaper and “substantial” damages.

Her approved budget, excluding trial costs, was £381,305, broken down into nine categories. In four of the categories the budget was exceeded by “relatively modest amounts”, the judge noted, while three others were under budget, largely because the expected 10-day trial did not happen.

However, in relation to disclosure the claimant sought £87,556, against an approved figure of £11,250, and in relation to witness statements it was £228,891 against a budget of £12,487.

The claimant argued that this was because of the way the defence was conducted, and Master Hurst said NGN’s argument that “its actions should not have had any major effect on the way in which the claimant was dealing with her case rings somewhat hollow”.

He explained: “The defendant in these proceedings mounted a vigorous and lengthy defence which was amended four times. They served 10 lists of documents. I do not suggest that the defendant was not entitled to act as it did, but it cannot now try to pass off this constantly changing scenario as being no more than a minor inconvenience to the claimant.”

However, he said the sole question was whether there was good reason for the claimant to depart from the court-approved budget. “It is true that neither side managed to keep within its budget but the defendant did at least make some attempt to comply with practice direction 51D [governing the pilot]… The claimant’s solicitors for their part do not appear to have responded to the defendant’s solicitors in any meaningful way in respect of the budgets, save for a telephone call on 20 May 2011, shortly before the case settled.”

The provisions of the practice direction – such as updating the budgets and solicitors having to liaise monthly on them – are mandatory, Master Hurst said. “I am forced to the conclusion that if one party is unaware that the other party’s budget has been significantly exceeded, they are no longer on an equal footing, and the purpose of the cost management scheme is lost.”

It was common ground that the court will not depart from the approved budget unless there is “good reason” to do so, which is not defined. The judge said: “Whilst… I have no doubt that the claimant could make out a very good case on detailed assessment for the costs being claimed, the fact is the claimant has largely ignored the provisions of the practice direction and I therefore reluctantly come to the conclusion that there is no good reason to depart from the budget.”

Taylor Hampton partner Daniel Taylor said: “We are naturally disappointed with the decision. However, what is very significant is that the Senior Costs Judge gave us permission to appeal without our having to request it.

“Given the facts of this case and the finding that the actions of the defendant had a major effect on the way that the claimant dealt with the case and that on any detailed assessment the claimant could make out a very good case for the costs claimed, we feel that there was more than good reason to depart from the budget. We will be appealing the decision.”

He explained that each time a further list of documents was served – “and there was no inkling the defendant would be serving 10 such lists” – they had to amend the witness statements. “Not only that but the defendants had contractually agreed to pay the costs of the amendments and that had been embodied in a court order,” he said. 

To read an analysis of the case by costs lawyer Andy Ellis, who advised NGN in Henry, click here.

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Australian litigation: paving the way for European claims

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

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

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

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

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

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

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

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

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

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

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

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

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

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Mark Fallon, CEO, Lance Mason

Regional law firm, Lance Mason Solicitors, has announced a 2,500% growth in headcount since implementing the Proclaim Practice Management Software solution from Eclipse Legal Systems.

The Lancashire-based practice now employs approximately 80 members of staff, having started off as a niche, 3-person firm.  Lance Mason provides a broad range of services to commercial clients and specialises in accident and injury claims.  As a small firm back in 2011, Lance Mason made the decision to implement Eclipse’s Proclaim Practice Management solution as a platform for ambitious growth plans.

Proclaim is utilised by all Lance Mason staff, providing a core centralised Matter Management solution for a broad range of practice areas.  The firm also utilises Proclaim as its practice accounting and reporting toolset, providing full integration with fee earner activity.  The Proclaim Compliance solution provides full ‘end-to-end’ risk management throughout the lifecycle of a matter – fully integrated within the overall Practice Management system.

For client service, Lance Mason utilises Eclipse’s FileView tool to provide secure, live, online access to matter data.

Mark Fallon (pictured), CEO at Lance Mason, comments:

“Our ethos has always been to provide the very best level of service, in the most technologically efficient environment.  We chose Proclaim due to its inherent scalability and flexibility – and this decision has proven to be a good one as we have enjoyed headcount growth of 2,500%.  By making sure we use Proclaim’s automation features we can build in a structured client ‘journey’ which makes our services extremely transparent.  To survive and thrive, service levels are becoming key – and that’s where we can really stand out from the crowd.”

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Bar: excluding barristers will have negative effects

The Ministry of Justice (MoJ) is storing up even more trouble in portal and fast-track cases by cutting out barristers, the Bar Council and Personal Injuries Bar Association have said.

The pair argued that instead of abolishing the disbursement basis for paying the Bar – which it said was being done without consultation and contrary to Lord Justice Jackson’s recommendations – the MoJ should introduce a low fixed-fee system for instructing barristers that would cover advice on liability, quantum and particulars of claim.

They put forward figures ranging from £125 for handling the allocation questionnaire for RTA cases worth £1,000 to £3,000, to £350 for particulars of claims in employers’ and public liability cases worth £10,000 to £25,000.

The MoJ consultation on the proposed fixed recoverable costs makes no provision for counsel at all, and also ignores Lord Justice Jackson’s proposal that a lump sum should be added to the costs in every fast-track case to cover the average cost of solicitors instructing the Bar: £110 in RTA, £225 in employers’ liability and £300 in public liability.

In their response to the consultation, the two bodies said: “Any suggestion that solicitors will share their (very low) fixed fee with the Bar is misguided. They will not do so on the fast-track (or indeed any expanded portal) any more than they currently do under the existing portal system.”

They argued that excluding claimants from access to the Bar will have “a negative effect upon access to justice, will place excessive burdens upon the court system, will result in under-settlement of claims, will cause a rise in professional negligence claims against solicitors and will place further strains upon the Courts Service, the National Health Service and the welfare system.

“It has been the government’s stated objective to reduce the cost to insurers by capping or reducing legal fees. This objective is best achieved by involving the Bar (at fixed cost). This will prevent unmeritorious, unfocussed and exaggerated claims from proceeding.”

The response argued that the low level of the MoJ’s proposed costs “will obviously mean that solicitors will either reduce their standard of service or utilise the lowest grade of fee-earner to conduct litigation”, but having a “low fixed-fee system for instruction of the Bar” would militate against these problems.

More broadly the two bodies argued against the proposed costs, saying they will deny access to justice for injured people. “The principle behind the proposals is commoditisation of work which imposes fixed prices and abolishes hourly rates. The Bar Council and PIBA accept this principle, but it can only work if the fixed process allows the lawyers involved to provide a reasonable professional service to the injured person taking into account the issues raised by insurers and the procedure for achieving resolution.

“The MoJ’s proposed fixed fees are being imposed without any substantive evidence of the average number of hours of work needed to complete each type of commoditised case or of the proposed reasonable average hourly rate.”

They called for a fuller review of the present portal, which they described as “unfit for purpose”.

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Audrey Henshaw, business development manaeger, DAS UK Group

Leading legal expenses insurer, DAS, has appointed Audrey Henshaw as business development manager for the Northern region.

Audrey will be developing relationships with brokers in key defined areas, essentially Manchester and Leeds, and she will have some management responsibility for the region and its staff.

Audrey comes from an extensive legal expenses background and has experience of running her own business in the North West.  Her specialisms include the compliant handling of motor-related products and add-ons.

Audrey’s appointment coincides with the impending retirement of Geoff Ashton at the end of August, who has been with DAS for almost 30 years.

Andy Westall, group sales manager, DAS UK Group, said: “Audrey understands the legal expenses industry inside out and will be a great asset to our team.  We are delighted to have her on board.  I would also like to take this opportunity to thank Geoff for all of his hard work, commitment and invaluable contribution to the business over the years.  We wish him well in his retirement.”


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Manchester Civil Justice Centre: move to national county court

The statement of truth to be used in verifying a costs budget is to be changed, the latest update to the Civil Procedure Rules has revealed – but there is no word as yet about whether the level at which the costs management exemption kicks in will be increased.

The 69th update – which will take effect from 6 April – was published this week and amends Precedent H to replace the statement of truth as currently specified in paragraph 2.2A of practice direction 22.

It will say: “This budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation.”

The current version says: “The costs stated to have been incurred do not exceed the costs which my client is liable to pay in respect of such work. The future costs stated in this budget are a proper estimate of the reasonable and proportionate costs which my client will incur in this litigation.”

Publication last month of minutes and papers from the December 2013 meeting of the Civil Procedure Rule Committee indicated that a new blanket rule is likely to be introduced that will require costs management in all cases worth less than £10m. However, there is no mention of it in the update, although there is still time for supplemental changes to be made.

A change to part 42 will allow chartered legal executives, costs lawyers, patent attorneys, and trade mark attorneys – as persons authorised to conduct litigation under the Legal Services Act 2007 – to be entered on the court record.

The update also makes provision for the creation of the single county court as legislated for in the Crime and Courts Act 2013. By removing geographical jurisdictional boundaries, the county court will sit at various locations within England and Wales in a way similar to the High Court and will have a single seal and a single identity to indicate its national jurisdiction.

The court houses in which it will convene will act as hearing centres with court administrative offices attached to them.

Among other parts amended are part 16 – providing that financial claims below £100,000 must be brought in the county court from 22 April – and part 52 so that any order refusing permission to appeal will in future indicate the court to which any further application should be made and the level of judge who should hear the application. The full list of changes can be found here.

Meanwhile, the Jackson reforms apply to the rules on setting aside a judgment entered in default as much as those areas explicitly affected, the High Court has confirmed.

In Samara v MBI & Partners UK Ltd & Anor [2014] EWHC 563 (QB), Mr Justice Silber said he did not agree with the contention that the new regime did not apply to the special rules under part 13 because there had been no trial.

Although there had been no specific reference to part 13 in the Jackson report or subsequent implementation lectures, “the new regime has universal application to all rules in the CPR”, he said. “Indeed, it is based on and underpinned by the changes to the overriding objectives which apply to all parts of the CPR.”

He continued: “There is no express statement that CPR part 13 or that any part of it is excluded from these provisions and I have found nothing in the rules or in the decided cases to show expressly or impliedly that this is so.

“Further, there is no theoretical justification from excluding this rule from the new regime and the new underlying objectives. Indeed, most importantly, the Master of the Rolls, Lord Dyson, described the effect of the new regime in very general terms and as being of universal application when giving the judgment of the Court of Appeal in Mitchell v News Group.”

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Mick Thompson, Technical Director, Eclipse Legal Systems

Eclipse Legal Systems – the UK’s leading legal software provider – has announced the launch of Eclipse Capture, a new solution enabling law firms to drive efficiencies in the prospect capture and onboarding process.

Created using the very latest Microsoft software stack, Capture integrates seamlessly with Eclipse’s Law Society Endorsed ‘Proclaim’ case and practice management system – but is also available standalone for firms using other technologies. Capture can be implemented as a browser-based tool or located on-premise, and provides a suite of inception tools including:

  • Controlled data capture of initial client enquiries, either via automated import from a third party or manually by case handlers
  • Conflict checking and historical searching to rapidly view past behaviours and contacts
  • Management of ongoing communications and information gathering during the ‘prospect’ stage
  • Final collation of relevant data, enabling the creation of a ‘live’ case by a one-click process

Eclipse’s technical director, Mick Thompson, explains further:

“The way law firms are engaging with their clients is changing – and there is a growing realisation that how initial enquiries are handled is of utmost importance. Given increasing competitive pressures, every new enquiry must be managed carefully and with proper processes, to maximise the chance of converting every prospect into a paying client.

“Capture provides a dedicated platform to manage enquiry capture and onboarding, ensuring that potential clients do not slip through the net.”

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Funding facility “can keep on growing”

Cost and pricing consultancy Burcher Jennings has launched a new funding package for law firms, which it believes is “the first of its kind in the UK legal industry”.

Described as a “revolving evergreen facility that can increase in size as the firm grows”, the firm said the package had been developed with an unnamed risk capital provider, backed by an international fund management group.

Martyn Jennings, chief executive of Burcher Jennings, said the funding scheme aimed “to help counter the several long-standing structural challenges law firms face, namely, succession planning, the gradual withdrawal of legal aid and how to secure a competitive advantage by offering clients a wider range of options in terms of pricing”.

Mr Jennings went on: “Whether it is to fund disbursements, costs awards, the work in progress of clinical negligence and other CFA matters, individual commercial cases or just the firm’s day-to-day working capital, it is absolutely essential for any managing partner to have a strong understanding of its firm’s own short-term and long-term funding requirements.

“It makes no sense to us why, if a law firm is growing, it should have to repay its borrowings at a time when it really needs even more funding. That’s what our scheme aims to achieve, namely, a funding facility that can keep on growing.”

A spokesman for the risk capital provider said the funding package offered firms a “real competitive advantage” over their rivals.

“Whilst there are no restrictions on how the funding is applied, firms are already showing considerable interest in using the scheme to fund the new higher court fees, financial remedy proceedings and where they employ partners considering retirement.”

A spokesman for Burcher Jennings said the scheme was available to all firms regulated by the Solicitors Regulation Authority, and the “principal advanced does not ordinarily need to be repaid but, instead, can roll-over for so long as the facility is in place”.

Just Costs Solicitors and Novitas Loans launched a costs advance scheme in 2013 to help law firms bridge the gap between applying for and receiving their case fees.

Costs firm Kain Knight formed a strategic alliance in 2014 with funder VFS Legal to enable law firms to raise finance against their drafted bills.

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Insurance Services Office (ISO), a leading provider of personal injury claims solutions, announced today that it has extended its application-to-application (A2A) case management solution to address the extension of the Claims Portal to cover employers’ and public liability claims of up to £25,000.

The application allows compensators to streamline and accelerate the employers’ and public liability claims process to meet the deadlines set by the Ministry of Justice (MoJ).

ISO’s web-based application links directly to the Claims Portal, making it possible to see at a glance which cases are approaching the various deadlines for responses and payments throughout the process.

Because the ISO case management system integrates with ISO Claims Outcome Advisor (COA), those compensators using COA will have their cases in the system and ready for the assessment once the settlement pack arrives via the Claims Portal. Because of A2A functionality, compensators do not have to access the Claims Portal directly to see if claims have been reported to them. And the application electronically exchanges information with claimant representatives, eliminating rekeying efforts and errors.

Joe Pendle, managing director of ISO, said: “Handling employers’ and public liability claims can potentially be a very expensive exercise. With our case management application, compensators are better placed to meet the strict time frames of each of the stages effectively and avoid any additional cost penalties.

“The extension of the Claims Portal follows from the huge success of handling motor personal injury claims in this way, and we look forward to working with compensators to streamline their claims-handling process for both employers’ and public liability claims.”

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inCase200Just over 12 months ago inCase hit the legal sector with its revolutionary mobile app, specifically tailored for law firms specialising in personal injury. Offering an effective communication tool for firms, early adopters began to see the advantage of their own mobile app as speed of securing instructions; enhanced client satisfaction and reducing overheads began to take hold.

Today, inCase has already been radically enhanced to offer a signature feature. Allowing firms to send documents and forms securely to a client’s mobile phone or tablet within seconds using PUSH technology and notifications, clients are alerted to take immediate action.

incase your overviewContinuing to reinvest knowledge and experience built up over the last year and previous 2 years from its original conception by founder and PI solicitor, Sucheet Amin, inCase has already released a model specific for the conveyancing market and it has plans to open into other sectors in the coming 12 months.

inCase mobile appFounder and managing director, Sucheet Amin said “it is such an achievement to be shortlisted in this category of Associated Industries. Whilst being among some long established and well respected businesses, inCase has demonstrated again that it is worthy of this recognition.”


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Soole J: no question of abuse of the system

The High Court has ruled that a conditional fee agreement (CFA) was valid even though the claimant’s legal aid certificate remained in place.

Mr Justice Soole agreed with Master Rowley that the certificate had been “discharged by conduct”, and there was no need for the equivalent of a “burial certificate” from the Legal Services Commission (LSC).

Soole J said: “Whilst the correct and wise procedural course would have been to obtain a discharge of the certificate, the position was in substance the same as if the authorised funds had been completely exhausted.

“The funds were approaching exhaustion, the LSC had refused further funding and the case could only proceed if alternative funding were obtained.”

In these circumstances, Soole J said Master Rowley had “rightly held” that there was no question of an attempt to ‘top up’ a legal aid certificate nor of any other form of abuse of the system.

The court heard in Milton Keynes NHS Foundation Trust v Hyde [2016] EWHC 72 (QB) that Mrs Hyde changed solicitors twice before Ashton KCJ undertook a “risk review” of her medical negligence claim.

The law firm concluded, in March 2013, that public funding was “insufficient to complete the case” and entered into a CFA with Mrs Hyde later that month.

The claim was settled in November 2013, but the law firm “never applied for or obtained a discharge of the funding certificate”.

The NHS trust argued that that the CFA was “a private retainer running concurrently with public funding and entirely unenforceable”.

However, costs judge Master Rowley ruled in September last year that the switch from legal aid to CFA was valid and that the certificate had been discharged by conduct, enabling a “private retainer to fund the rest of the proceedings”.

Soole J said the evidence in the case demonstrated that by February/March 2013, the “funding was approaching exhaustion and the LSC had made it clear that there would be no more”.

The judge said that the law firm’s conclusion that “the only way forward was via a CFA” was “entirely reasonable and proper”.

Soole J said he accepted the NHS trust’s argument that “only the LSC can formally discharge the certificate”, and that it could not be done by the solicitor or client.

The certificate remained in existence, the judge went on, but “that was a matter of procedure” or, referring to a metaphor used by Lord Justice Ackner, a “burial certificate”.

As a “matter of substance”, and subject to the notice given to the other side, the legal aid funding had come to an end.

Soole J said there was “no concurrency” of public and private funding, apart from the one-day interval between the CFA being signed and the notice of a change in funding arrangements, an interval which he disregarded as de minimis.

Mr Justice Soole, sitting with Master O’Hare as assessor, rejected the trust’s appeal.

Earlier this month the High Court ruled against Irwin Mitchell and Slater and Gordon in two cases involving medical negligence claimants who switched from legal aid to a CFA shortly before LASPO, but in Hyde the proximity of the introduction of the Act was found not to be a factor.

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ISO 200 x 200Insurance Services Office (ISO), a leading provider of personal injury claim solutions, has brought to market a quantum assessment tool (QAT) component that combines data and analytics to advise insurers on accurate personal injury claim settlements.

Case in Point, part of the ISO Claims Outcome Advisor suite of products, is an innovative solution that delivers proven savings by advising handlers through cross-referencing prior claims with similar injuries and negotiation patterns and identifying differing behaviour patterns and the likelihood of litigation of claimant representatives.

Case in Point provides claim handlers with direct access to a list of recent injury claims with similar circumstances to the claim at hand, including first offers, counteroffers and final settlement amounts.

The powerful combination of information and analytics based on medical information and claimant representative history helps claim handlers strengthen negotiations, develop better claim settlements and make fair and acceptable offers – avoiding litigation whilst minimising unnecessary claim spend.

By combining data from the Ministry of Justice (MoJ) Portal and COA, Case in Point provides evidence of a claim’s value and can reduce the claim life cycle significantly, because claim handlers get fast access to the data they need to arrive at reasonable settlement offers. This helps mitigate the risk of over or underpayment, protecting an insurer’s bottom line and reputation.

Joe Pendle, managing director at ISO commented, “There is pressure on claim handlers to avoid protracted negotiations and possible litigation, but insurers need to give these case handlers the right tools to avoid inappropriately low offers far below a claimant representative’s expectations for a personal injury claim, while at the same time ensuring claims are not “overpaid”. Case in Point is the tool designed to deliver just that.

“Delivering data intelligence of comparable claims and settlement negotiation behaviour enables handlers to look at current claims in a wider context. They can make assessments based on accurate, comprehensive data sets and develop precise valuations that allow them to pay what’s necessary and nothing more,” he continued.

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Brünjes: clinical focus

Brünjes: clinical focus

Premier Medical founder Dr Harry Brünjes has bought the company back from Capita, some six years after selling it – although Capita remains an investor in the business.

The company, which employs 230 people in four offices across the UK, was acquired by Capita in 2010. Following the acquisition of Insurance Medical Group in 2011, the combined businesses became Capita Medical Reporting.

Following the buy-back, Capita retains a minority interest in the business but will have no operational involvement going forward.

The rebranded Premier Medical provides medical reporting, screening, rehabilitation and diagnostic services to the personal injury claims market, and is one of the small number of ‘tier one’ medical reporting organisations approved by the MedCo portal – meaning it is a national, high-volume provider. It has more than 300 clients.

The aim is to grow Premier Medical’s services and presence across the UK and it has ambitions to extend its reach into new markets within the next few years.

Dr Brünjes said: “The personal injury market is dealing with the challenges presented by the MedCo portal and the anticipated increase in the small claims limit for soft-tissue injuries, both of which are bringing a new focus on reducing costs.

“Our extensive reporting experience will help insurers and their lawyers to meet these challenges in the most cost-effective way, and I envisage our clinical focus becoming the ‘quality assurance’ standard for the industry in future.

“The business will now be much better positioned to flourish in the sector and will renew its focus on medical excellence, service quality and business process efficiency.”

Earlier this year, Capita reviewed all of its businesses and disposed of a small number which it did not see as playing a key role in its future strategy. However, while it sold off Capita Medical Reporting, it has retained an investment in the business as a sign of its confidence for its future.

Dr Brünjes will be supported by Mark Stirrup, managing director; Barry Gray, sales director; and Dr Bob Goodall, medical director.

Premier Medical retains its head office at Premier House in Ludlow and other offices in Durham, Reading and Stockport. Capita will continue to support the business in terms of systems and processes during a “collaborative transition period”.


The misleading claims behind the campaign to lower the discount rate

Matthew Best Temple Legal Protection

A coalition of organisations which represent the NHS and health professionals has made strong claims in a letter to justice secretary David Gauke that the legal costs of clinical negligence claims are crippling the NHS. Similar comments were made by the National Audit Office (NAO) in September last year and yet the case doesn’t hold water. The letter was signed by the NHS Confederation, Academy of Medical Royal Colleges, British Medical Association, Family Doctors Association, Medical Protection Society, Medical Defence Union and the Medical and Dental Defence Union of Scotland.

February 9th, 2018