Civil Process Articles

The New Law Journal/2013 Volume 163/Issue 7564, June/Articles/RICS launches property expert witness register 163 NLJ 4 (2)

New Law Journal

163 NLJ 4 (2)

14 June 2013

RICS launches property expert witness register

Legal World News

Jan Miller

020 7400 2582

[email protected]

© Reed Elsevier (UK) Ltd 2013

RICS has launched an accredited scheme for expert witnesses in the construction and property sectors, in response to the Jackson reforms and the decision in Jones v Kaney, where the Supreme Court held that experts could be sued for negligence. Lord Justice Jackson's reforms to civil litigation costs, which took effect in April, place a higher emphasis on the quality and value for money of experts.

As part of the scheme, experts will undergo training and will be assessed and regulated by the scheme, Expert Witness Accreditation Service (EWAS). Experts in this sector have not previously been subject to professional regulation.

Sue Ryan, partner at Wragge & Co, said: "If the scheme expands the field of credible expert witnesses and raises standards through reports being more concise and restricted to relevant matters within the expert's area of specialism, then the change can only be positive. It will lead to a reduction in the overall cost of expert evidence in litigation/arbitration, in keeping with the Jackson cost reforms."

The New Law Journal/2013 Volume 163/Issue 7564, June/Articles/Cause & effect -163 NLJ 6

New Law Journal

163 NLJ 6

14 June 2013

Cause & effect

Legal World Comment

David Greene

NLJ consultant editor & senior partner at Edwin Coe LLP ([email protected])


David Greene takes issue with excessive & ineffective political grandstanding

Lawyers are not the most popular band of professionals. Certainly from a politician's point of view, much easier to blame greedy lawyers for the ills of society than portray them as the upholders of the rule of law, human rights and the justice process.

The issues in relation to Legal Aid betray the easy criticism that lawyers are simply looking to line their pockets at public expense. This is of course far from the truth with Legal Aid practitioners working at rates and returns which place substantial economic burden on them to maintain practice.

For lawyers it is not an easy sell. The fact is that if rights are to be effective then it has to be in the economic interests of someone to pursue them. If it makes no economic sense for a lawyer to represent clients, they will not do so. There are many examples in recent years in which legislation is invoked without consideration of how it is actually going to work in practice, how rights are to be pursued and by whom.

A prime example

Perhaps Legal Aid is the primary example. The proposals now being made by the government in relation to legal aid, which are meeting so much opposition, will undoubtedly cause many lawyers to have to turn away from criminal defence work because it is simply uneconomic. The result will undoubtedly be the closure of firms or consolidation into provincial centres. The elderly and those unable to travel will not have access to a local lawyer, for whom offering assistance is uneconomic, and they may ultimately be denied access to the justice process.

When practice trumps theory

On the civil side we can see three fairly recent examples of legislation that meets a laudable policy objective but in practice is utterly meaningless because the pursuit of it provides no economic r

eturn.

Section 47B Competition Act 1988 was intended to allow consumer bodies to bring proceedings on behalf of consumers where there was anti-competitive price fixing. The process simply does not work. Which? (formerly the Consumers

Association) brought proceedings under the Section in relation to the sale of football shirts but they would vow never to do so again. The idea behind the Section is laudable but putting it into practice is a non-event.

Rather similarly and more recently with damages-based agreements we have regulations the effect of which is causing lawyers to say that they will not touch them. The Ministry of Justice has listened to the protests and may be planning to look again at the regulations during the course of the year.

We also now have the prospect in the Consumer Rights Bill of seeing practical provisions bringing into effect the plans announced by the Government to introduce opt-out for follow-on claims for price fixing on behalf of consumers along the lines of US style class actions. When you start, however, to examine the detail of how this might be put into effect, it is rather difficult to see whether there would be ever such a class action. First, the certification process looks extremely complex and expensive. Who is going to take that on? Rather like the changes in DBA's, it will be a brave soul who steps into the ring for the first time. Further under the proposals, there will be no DBA's in opt-out actions. It is difficult to understand the rationale behind that save a general political railing against US style litigation.

When we look at litigation in the US we often fall back in horror because of the stories of bizarre claims brought before the courts. On the other hand, the one thing that the American system does provide is a form of access to justice for the consumer. It does so by making the process economically attractive to lawyers. One might say that it is over-attractive, particularly with contingency fees biting on large jury awards. There is much prejudicial commentary on the US system but even if it is true the over-remuneration of lawyers undoubtedly opens up courts to claimants.

It would be rightly said that access to justice for the plaintiff in the US is at the expense of access for the defendant. Such is the potential exposure for the defendant without the discipline of costs shifting that defendants may be forced to settle unmeritorious claims. This was part of the rationale of the Jackson reforms in this jurisdiction although with costs shifting as a safeguard it may be said that the Jackson reforms favour defendants too far excluding altogether many meritorious claims.

We do not, however, need the excesses of the US system but still the process has to be practically and economically viable for lawyers to ensure that claimants have access to the court. Absent a business case for lawyers to enjoin they will not do so. Litigants in person can bring proceedings on their own but if they are up against a large corporation with experienced and substantial lawyers on the other side, they start at a severe disadvantage.

It is a difficult sell. Putting money in lawyers' pockets is not a popular cause

. Absent meeting that business imperative, however, some changes in legislation including those mentioned here are merely political grandstanding. They may look good but actually do not achieve anything. Not only do policymakers need to consider the economics of representation but also the practicalities. Section 47B and the DBA Regulations are cases in hand, they may look good in concept but are difficult to put into effect. Hopefully the opt-out proposals will not suffer the same fate. Unfortunately, however, that is almost inevitable from what we see of the policy development thus far.

The New Law Journal/2013 Volume 163/Issue 7562, May/Articles/Judges form Jackson Five -163 NLJ 4 (3)

New Law Journal 163 NLJ 4 (3)

31 May 2013

Judges form Jackson Five

Legal World News

Jan Miller

020 7400 2582

[email protected]


A quintet of Court of Appeal judges has been appointed to hear all appeals arising from the Jackson reforms--including Lord Justice Jackson himself.

They are Lord Dyson, the Master of the Rolls, Lord Justice Stephen Richards (Deputy Head of Civil Justice) and Lord Justices Jackson, Davis and Lewison.

At least one of the five will be on the bench for all appeals arising from the reforms. They will hear appeals relating to the interpretation or application of the new Civil Procedure Rules, which came into effect on 1 April and which implement Jackson LJ's civil justice reforms.

Recommendation 87 of Jackson LJ's Final Report of the Review of Civil Litigation Costs, said the Master of the Rolls should designate two Lord Justices to consider issues concerning the Civil Procedure Rules arising from the reforms. Lord Dyson has appointed five judges to allow for greater flexibility of listing.

The New Law Journal/2013 Volume 163/Issue 7562, May/Articles/Jackson reforms hit home -163 NLJ 5 (1)

New Law Journal Jackson reforms hit home 163 NLJ 5 (1) 31 May 2013 Legal World News Jan Miller

020 7400 2582

[email protected]


Landmark decision on "stricter" Jackson rules

The courts' discretion to allow parties more time has been "radically amended" by the Jackson reforms, a judge has said in a landmark ruling on missed deadlines.

The decision will serve as a sharp reminder to civil litigation lawyers that a tougher regime is now in force.

Mr Justice Edwards-Stuart, refusing to grant a claimant a time extension, said a "stricter approach...must now be taken by the courts towards those who fail to comply with rules following the new changes to the Civil Procedure Rules".

Before the introduction of the new rules last month, he said, the courts used to consider nine factors and take account of all the circumstances when deciding whether to extend time.

The case, Venulum Property Investments Ltd v Space Architecture & Others [2013] EWHC 1242 (TCC) involved a dispute over a property development in Northamptonshire. Edwards-Stuart J is the first judge to interpret the new provisions governing relief from sanction under r 3.9.

Venulum first became aware of its potential loss in 2007 after a mistake was discovered concerning the supporting pillars of an underground car park. However, it waited five years before instructing solicitors, and a further year passed before proceedings were issued, just before the expiry of the limitation period. Venulum then waited another four months before serving the proceedings on the defendants, and in doing so wrongly calculated that it had a further 14 days in which to serve its particulars of claim. It then had to apply for a time extension.

Two of the 13 defendants--the Miller defendants--opposed the application. The judge's refusal to extend time ends Venulum's claim against the Miller defendants since a fresh action would now be statute-barred but its action against the other 11 defendants continues.

Edward Lewis, partner at Weightmans LLP, who advised the Miller defendants, said the judgment was "extremely important in highlighting the tightening of standards and the approach that is to be expected of the courts under the new CPR".

"This ruling offers a stark reminder to all practitioners that we are operating in the context of a much altered litigation landscape."

The New Law Journal/2013 Volume 163/Issue 7561, May/Articles/MASS: PI lawyers should keep up the fight -163 NLJ 4 (3)

New Law Journal 163 NLJ 4 (3) 24 May 2013

MASS: PI lawyers should keep up the fight

Legal World News

Jan Miller

020 7400 2582

[email protected]


Claimant personal injury lawyers have been urged to keep fighting against changes to the small claims limit and warned they face "tough" times ahead.

Craig Budsworth, chair of the Motor Accident Solicitors Society (MASS), called on claimant lawyers to report any problems with the new system, at the Manchester Law Society Personal Injury conference this week.

The Ministry of Justice postponed its decision on the small-claims limit last week until after the Transport Select Committee has looked at proposals on whiplash claims and the Ministry has studied the impact of the Jackson reforms and road traffic accident portal claims cuts.

"This is fantastic news but no one in the sector should be lulled into a false sense of security," Budsworth said.

"We must keep telling the parliamentarians and the public about what the change would mean for accident victims and how difficult and expensive it would be for innocent injured parties to seek legal support."

The New Law Journal/2013 Volume 163/Issue 7561, May/Articles/Budget control: a sceptic's view -163 NLJ 9

New Law Journal 163 NLJ 9 24 May 2013

Budget control: a sceptic's view

Legal World Speakers' Corner

Richard Harrison

partner, Laytons Solicitors LLP ([email protected]; www.laytons.com)


Richard Harrison criticises the over-simplistic approach to costs management post-Jackson

Commentary on the Jackson reforms as implemented in this year's April rule changes tends to be influenced by the conventional view that budget control by the courts is an overwhelmingly good thing, that it enables sensible clients abetted by sensible judges to keep profligate lawyers in check, and that the manner in which it has been implemented is somehow beyond criticism.

This approach is over-simplistic. A judge sees the end result of case presentation in the form of trial bundles and live witnesses. The package is presented to him so he thinks it must have been a forecastable and linear process to get to that stage. This perception creates a judicial tendency to believe that litigation costs budgets can be both straightforward and realistic. This is rarely the case.

It has been said many times that a piece of litigation is like a construction project. However, not many buildings are put up while trying to avoid the malign attentions of a wily demolition expert. The analogy to quantity surveyors is misplaced.

Two practical points about litigation that are ignored in most of the commentary are:

· many difficulties can be caused by clients, whether by reason of funding difficulties or lack of perspective (for further discussion, see below, under "Contingencies");

· the opposition will be trying to undermine your relationship with your client, however co-operative they manage to appear to the outside world.

It is also said that the business discipline in which lawyers must excel (apart from Excel) is project management. In the real world, disputing parties and their advisers are rarely capable of having a business meeting to plan a project. If they could do that, there would be no need to litigate. In my experience of litigation, the most relevant business discipline is probably ad hoc crisis management.

Precedent H & its shortcomings

As we know, "Precedent H" is the form that needs to be completed at the time of the first directions questionnaire. Unless a case has been run as a predictable exercise through a well-managed prot

ocol process with a co-operative client and a reasonable opposition, this is going to be at an alarmingly early stage in your real knowledge of the pathology of the dispute. Yet if you do not produce one, your recoverable costs will be confined to court fees. If you underestimate, you will be held to the lower figure. If you overestimate, you may be restricted to what a judge thinks are "proportionate" costs.

It only takes an attempt to produce a working Precedent H in a live case for its absurdities to become apparent. The

producer of the form appears to be a technical spreadsheet expert with only a limited classroom exposure to the theory of civil litigation. Those practitioners who approved it appear to have ignored their experience in practical litigation for the sake of the legal establishment's version of "political correctness".

The absurdities

Division into artificial stages

This is my fundamental objection and most constructive suggestion for reform. Most litigation outside very standard case types is messy and does not fit into clearly separate "stages". The theory adopted by the framers of the precedent is that you can identify 10 distinct phases of a case (or eight if things have gone to plan and directions are happening after "investigations" and "statements of case". The remaining eight are, for ease of reference: case management conference, disclosure, witness statements, experts reports, pre-trial review (PTR), trial preparation, trial and settlement.

This is not how litigation works in the messy real world. It is unhelpful to have to do at least eight different calculations (in the real world investigations are still going to be going on and pleadings are going to be changed), trying to determine how much time will be spent on each stage, when what we know is that in fact everything is going to overlap.

As well as being artificial, it exacerbates the inaccuracies in the hourly rates methodology discussed below. In summary, the risk is that it multiplies errors by up to 10 times.

How much better it would be to work out a realistic time period over which the litigation will pan out, and then try to plan for the peaks and troughs and periods of intense activity over that period. It would be one calculation based on projected activity over months rather than splitting that activity into "work-types". It would make for an easier and more accurate process.

I use such a spreadsheet because I am a keen advocate of realistic case planning and budgeting. I find it a much more valuable tool than the prescriptive Precedent H.

Hourly rates

Once you have hourly rates for different categories of fee earner, it is tempting to put in a reasonable balance of hours split over those categories and to try to estimate the bare minimum that you think the exercise might merit if done reasonably. But such are the sanctions for coming up with an underestimate that it is even more tempting to make use of the spreadsheet's capabilities by putting in a large amount of hours for each of the categories of fee earners. The fact that this might then be done 10 times over the artificial categories outlined above is a recipe for unduly high estimates.

Counsel: brief fees and refreshers

We are asked to calculate counsel's involvement by time and hourly rates. The suggested sample spreadsheet appears to recognise that this is not the normal way in which counsel's fees are calculated by not

163NLJ9at 10

performing the calculation. Counsel's main involvement is at the trial, where fees are calculated on the basis of a brief fee plus a daily refresher for each trial day beyond the first. This suggests a spreadsheet model under which a variable number of days of trial is applied to the refreshers and the estimate of the solicitors' daily trial costs. It would be helpful if Precedent H enabled this because it is such an obvious tool.

Contingencies

There are two obvious contingencies which will probably be calculated in every matter, because they are given by way of example: the "specific disclosure application" and "mediation". All sorts of other contingencies could be dreamed up, were there sufficient time and interest. I have mentioned two of them: further investigation and amended statements of case.

Of course, the main contingency cannot be planned for: that is how reasonable, cooperative and responsive the client is going to be. I emphasise that most clients of course are excellent. They know who they are. But the most difficult also tend to feature in the most difficult cases. The battle with the other side and the courts is easy and predictable: the battle with the clients can often be what causes the uncertainty, delay and frustration.

Assumptions

"Assumptions" are apparently treated differently from "contingencies". The threat is that they will be ignored. There will be a need to refer to them and use them if it is sought to revise a budget for any reason. The temptation is going to be to spend an immense amount of time drafting detailed assumptions to cover all eventualities on the basis that you do not want to be caught out in the future.

"Fee earners work"

Assembling bundles for PTR's and trial is said not to be "fee earners work". There is a difference between "copying" (which can properly be said to be an overhead or disbursement) and assembly or collation which can be quite a skilled job of assessment and ordering. We tend to assemble bundles electronically these days. It is part of the process of managing and presenting a case and should not be denigrated.

So, a sweeping assumption by the creators of an unrealistic form somehow compounds the resentment.

Conclusion

I have by way of sample (and reductio ad absurdam) an expanded form costs estimation spreadsheet that is so detailed it is pointless. It forecasts what each fee earner may be doing on a weekly basis for a year. The reality is you do not know. But the detail when entered looks meretriciously impressive.

Of course, you want to get it right. You can enter figures that you believe will be right. However, you do not want to be penalised for "low-balling". So you beef it up with a worst case scenario in mind. The worst case is influenced by the two "practical facts" set out above. You are then criticised for lack of proportionality. But it seems that an unduly high estimate is going to be better than one that is too low.

In my experience, courts tend to be noticeably underequipped to understand the process which happens before everything arrives before them in neat bundles. They will be reduced to mechanistic and formulaic decisions driven by the culture of sanctions. The result will be higher risk, higher cost litigation. And no real benefit for clients.

The costs management process presently threatens to be a shambles with a smug and complacent faith in the benefits of the present Precedent H being the major contributing factor.

The New Law Journal/2013 Volume 163/Issue 7560, May/Articles/Judges face costs dilemma -163 NLJ 5 (1)

New Law Journal

163 NLJ 5 (1)

17 May 2013

Judges face costs dilemma

Legal World News

Jan Miller

020 7400 2582

[email protected]


Bench criticised for being patchy and inconsistent

Judges need more training to cope with their new costs management duties under the Jackson reforms, an 18-month pilot study indicates.

From 1 April, all represented parties must propose and exchange costs budgets ahead of litigation, and judges must approve and enforce the budget unless there is good reason to depart from it. The reforms have been piloted in technology and construction courts and mercantile courts since October 2011.

"Some solicitors (and judges) regard it as a substantial problem that barristers in the past had little involvement with costs issues; and that most judges were barristers before being appointed as judge," the costs management pilot final report said.

It reported that one judge with 16 years' experience on the bench complained that he felt "under-equipped" for detailed costs management. Solicitors complained that judges were often "patchy and inconsistent" in their approach.

High Court and district court judges have been given one day's training on costs management at Judicial College seminars held around the country.

A costs lawyer with 40 years' experience told the pilot's monitoring team that his major concern was "a woeful lack of training for the judges". Professor Dominic Regan, who assisted Lord Justice Jackson with the reforms, said: "Since budgeting was a centrepiece of the Jackson reforms it is essential that judges feel competent and comfortable with the process."

The New Law Journal/2013 Volume 163/Issue 7560, May/Articles/Litigation hotspots -163 NLJ 7

New Law Journal

163 NLJ 7

17 May 2013

Litigation hotspots

Legal World Comment

David Greene

NLJ consultant editor & senior partner at Edwin Coe LLP ([email protected])


David Greene predicts where the main areas of dispute will arise as a result of the civil litigation shake up

1 April has come and gone. We now live in the partial light of the Jackson World. Of course, the changes invoked by his proposals are but a small part of what happened on 1 April and since. No doubt of equal or greater importance have been the cut in the scope of legal aid and the cuts in recoverable fees for road traffic accident (RTA) claims. Clearly in both the cuts in scope and the Jackson changes, the access that claimants have to the justice process has been cut substantially.

A waiting game

It is, of course, only a partial light because everyone on the claimants' side was busily signing up conditional fee agreements (CFAs) and after the event (ATE) insurance policies until the last minute (we received a notice of a CFA at 11.59pm on 31 March). Whether they did what they needed to secure recovery will play out in the coming years.

It will be some time before we see the impact of the Jackson reforms and before the dust settles in any litigation to follow. Perhaps, however, we are already starting to predict the areas of argument. We all predict that there will be substantial satellite litigation. Many are critical of the way in which the legislation has been changed. There is no doubt that it was rushed and this has led to problems with amending legislation quickly rushed through to make corrections. We wait to see if it will cause longer term problems and what the courts can do about them. It is unfortunate that in the common law system it is the clients that will have to pay for the mistakes and the uncertainties through the costs process.

Areas ripe for litigation

Some areas look ripe for litigation either resulting from the uncertainties of the legislation or slips by practitioners in the last minute rush. Transitional provisions are often a core point of debate where there are changes to a regime. We can see some doubts about the transitional provisions which are likely to be the subject of litigation because the win for either side may be substantial, such as the cost of the ATE policy or the uplift on the CFA.

CPR 44.3 provides that the new proportionality rules will have no application to cases in which proceedings have been commenced or work undertaken prior to 1 April. What in those circumstances does commencement mean? The modern court administration takes in the paperwork but may not issue the proceedings for some time. Everything is shuttled off to Solihull and comes back duly issued. For limitation purposes the date of the lodging at the court is the date that applies but is that lodging date the same date as the date of issue?

Section 44(6) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 provides that the new regime on the recovery of the success fee does not apply where a CFA has been entered into prior to 1 April or services have been provided in accordance with that agreement. What are services under that agreement? Do they have to be substantive or is any work of the smallest nature sufficient to get under the wire? It was suggested recently that it might be enough simply to advise on the CFA itself but that seems difficult to maintain. Does the work have to be of substance or is a simple letter of no substance at all sufficient?

One major question that has been raised in relation to the new regime is whether third party funders have become claims management companies (CMCs) and thus fall to be regulated like CMCs. This is raised under the Damages-Based Agreement Regulations 2013 (SI 2013/609) (the Regulations). Clearly, third party funders have no desire to become regulated as CMCs. There is a view that the Regulations do that. CMCs are caught by the Regulations and this would bring third party funders into a regulatory atmosphere which they have thus far sought to avoid.

DBA Regulations

The Regulations give rise to all sorts of questions about that regime. Such are the questions that the Law Society has rejected the idea of preparing a model damages based agreement (DBA). They have recently produced a model CFA agreement. In relation to DBAs they are likely to produce simply guidance. This is because there are great uncertainties about the DBA regime. The Ministry of Justice, however, is aware of the shortcomings highlighted by practitioners and is reviewing the Regulations. One uncertainty, for instance, is whether you can combine a discounted DBA with a CFA and/ or an ordinary retainer. This might address questions on the indemnity principle. Also, it gives greater flexibility to the contracting parties to fund a case. The general view appears to be that you

cannot do so. I am not sure that that is the case but, on the other hand, if there is uncertainty no-one is going to want to become a test case in relation to what may be a substantial amount of money.

There is remaining doubt also on the 50% cap on DBAs; in commercial claims what does the cap relate to in terms of damages and does an ATE premium fall within the cap or outside.

Insurers are on the up, having the ear of the government. They have succeeded in securing most of the Jackson plan. One can expect them to litigate the rest. It will be a period of uncertainty until the Court of Appeal gets hold of the new regime. The last costs war however might tell us that the resolution of all the questions will not be speedy.

The New Law Journal/2013 Volume 163/Issue 7559, May/Articles/Costs on the Web -163 NLJ 6 (2)

New Law Journal

163 NLJ 6 (2)

10 May 2013

Costs on the Web

Legal World Movers & Shakers

Budgeting

Jan Miller

020 7400 2582

[email protected]


Proportionality is trumps, says HH Judge Simon Brown

"The budgeting of multi-track litigation is the most important of costs reforms that lawyers should prepare for" advises Professor Dominic Regan, the leading expert in civil litigation ("Not the end of the story?", NLJ, 8 February 2013, p 120). So, how should we--judges and professional civil litigators--"prepare" now that the Jackson reforms are a reality? The short answer is CPD Training: Chapter 40 and Recommendations 89 and 90 of the Jackson Report (Review of Civil Litigation Costs: Final Report, December 2009)

Chapter 40 of the Jackson Report is currently being implemented--judges who sit in civil courts are being trained at the Judicial College in both costs budgeting and costs management. So, tick the box "Recommendation 40". But is the preceding Recommendation of similar CPD training by both professions being taken up?

Having conducted the pilot here in Birmingham for 3.5 years and just having received my judicial training, I sincerely hope it is. Otherwise, you should not undertake civil litigation in multi track cases or you will risk the following "bullets":

· sanctions with limited scope to apply for relief from them;

losing your professional indemnity cover or increase in premiums;

· disciplinary action for professional misconduct; and

· counterclaims for professional negligence by your clients most probably after sanctions being imposed upon them for your defaults or after landing them with a large bill for demonstrably poor expensive hourly service. Note that these cases are no longer rare--there is an increasing number in the courts being conducted by perilous litigants in person (LiPs) much to the despair of the court service and judges. Remember that marketing for new clients is an expensive overhead--it is far more efficient to satisfy your existing ones. Cut your marketing budget--concentrating on customer care and satisfaction at proportionate cost is the best form of marketing.

This is a serious health warning...

HHJ Simon Brown QC

The New Law Journal/2013 Volume 163/Issue 7557, April/Articles/Avoiding the Balva trap -163 NLJ 8

New Law Journal 163 NLJ 8 26 April 2013

Avoiding the Balva trap

Legal World Comment

Frank Maher

is a practising solicitor and partner in Legal Risk LLP, specialising in advising law firms, insurers and regulators on professional indemnity and compliance.


Was Balva an accident waiting to happen, asks Frank Maher

Balva--a name which will cause trepidation among members of the 1,300 law firms--one in eight of the profession--who insured with them.

There is no suggestion that they are insolvent. But then equally, what reassurance is available? The unaudited fourth quarter accounts for 2012 will not, on their own (if at all), provide that assurance.

As the English section of Balva's website states: "Activities of Balva have not stayed unnoticed by international professional organisations." The Financial Conduct Authority register notes: "The Latvian regulator has prohibited this firm from writing any new business in the UK, effective 1 March 2013." It is not clear when this note was added, but it first appears to have come to the attention of the press around 12 April 2013, a worrying time lapse.

A secure future?

Now, it is entirely possible that the measures taken by the Latvian authorities will secure Balva's future, but it will require a degree of faith from policyholders to come to that conclusion. It is not just a question of whether they will continue in business until the end of the policy year on 30 September. Firms will have notified, and in future be notifying, circumstances which may give rise to claims. Those claims may not come through for years, and may take many more years to resolve before payment is required.

In addition, the state of the economy and the commercial pressures on law firms from the Jackson reforms, legal aid cuts, the referral ban and lack of conveyancing will force many to close their doors before the next renewal. If they do so without any successor practice, they will have to fall back on run-off insurance for six years from 1 October 2013. Firms which are insured with Balva will have to obtain their run-off insurance from Balva too, upon payment of an additional premium. They may wonder if it is money well spent, but they are almost certainly contractually bound to pay it.

Why choose Balva?

So why did so many firms choose Balva, despite Law Society warnings of the dangers of using unrated insurers, reinforced by the recent failures of Quinn and most recently, in September 2012, Lemma? Provisional figures for the renewal, which took place on 1 October 2013, show that 12.504% of the profession's total premiums of £239,300,522 were paid to unrated insurers.

Some were no doubt tempted by costs savings and decided to take their chance. However, I suspect that many did so because they had a claims history which meant that they had no real choice--it w

as a case of going with an unrated insurer, or going out of business and taking out run-off cover. It is right to observe that as ratings are applied for and paid for by the insurers, it does not follow that an unrated insurer is unsafe, but it makes it harder for buyers to satisfy themselves as to their financial strength. Independent, another insurer of solicitors, was AA rated immediately prior to its collapse in June 2001.

I have advised many firms who had claims problems and have seen a number who were simply unable to obtain cover from rated insurers. Many of these involved rogue partners or employees with multiple lender claims. While the recent case of McManus Seddon Runhams v European Risk Insurance Company [2013] EWHC 18 (Ch) is undoubtedly very helpful in providing some justification for "laundry list" notifications in such circumstances, it is not the complete answer. Insurers from whom a firm seeks cover subsequently will still be concerned that the notification may be incomplete.

How to improve the situation?

So how might things be improved? There is always a challenge, if not an impossible hurdle, in seeking to protect the public. There is little protection for the public when solicitors are insured with an insolvent insurer. I am advising firms with Lemma policies whose turnover exceeding £1m means that they have no protection from the Financial Services Compensation Scheme, and the problems are real. Even if they did have protection, the scheme only covers 90% of claims, and there are other potential pitfalls too.

We have to accept that there is no perfect solution. However, I do believe that if the firm could provide the Solicitors Regulation Authority with assurance as to the extent of laundry listing which had been done in the circumstances I have described, involving multiple potential claims from rogue partner or employee X, there would be more prospect of obtaining cover if a waiver permitted another, rated, insurer to offer cover on terms which excluded claims arising from the activities of X. That might mean some claims were uninsured, but in practice they would be more likely to be claims by lenders. Under the current system, it is the entire client base of a firm which is at risk. An imperfect solution, maybe, but it might help.

The New Law Journal/2013 Volume 163/Issue 7557, April/Articles/A brighter future? -163 NLJ 20

New Law Journal 163 NLJ 20 26 April 2013

A brighter future?

Profession E-Disclosure

Georgina Squire

London Solicitors Litigation Association (LSLA) executive committee member and litigation partner at Rosling King LLP.


Georgina Squire is optimistic about the process of disclosure post-Jackson

As of 1 April 2013, standard disclosure is no longer the default provision in most multi-track cases. With disclosure often being the most expensive and time consuming part of the litigation process, this should be welcome news to litigants and solicitors alike. The recent decision in West African Gas Pipeline Company Limited v Willbros Global Holdings Inc. [2012] EWHC 396 (TCC) highlighted the significant issues encountered in the disclosure process, especially in high value claims involving e-disclosure. The new rules aim to tackle these problems by introducing stricter case management in the disclosure process.

No longer one size fits all

It is clear from the new rules that disclosure can no longer be said to be a "one size fits all" exercise. CPR 31.5(7) provides a menu of options for disclosure. The underlying objective of any order made by the court is the need to limit disclosure to that which is necessary to deal with the case justly. Gone are the days of disclosing every document in case it may be relevant. There are now various options available to the court, which include dispensing with disclosure altogether. It is clear from the new rules that standard disclosure is no longer the default provision. Solicitors and parties to litigation must think carefully about disclosure, to ensure no costs are wasted on it.

In multi-track cases, the parties are now required to file and exchange a report relating to disclosure at least 14 days before the first case management conference (CMC). This report requires a brief description of the documents that exist or may exist and may be relevant to the matters in issue in the dispute, as well as where and with whom these documents are located. CPR 31.5(3)(d) requires parties to estimate the broad range of cost that would be involved in giving standard disclosure. The parties must then specify the order on disclosure they will be seeking at the CMC.

Agree the overriding objective

Parties are required to meet and agree a proposal in relation to disclosure that meets the overriding objective. While the rule prescribes a period of not less than seven days before the first CMC for this to be done, it makes sense to start the discussions well in advance of this date. Whether a face-to-face meeting is required is not clear. It face meeting is required is not clear. It could be argued to be disproportionate in many cases. It is certainly envisaged that there will be dialogue and compromise; parties and their representatives will be expected to give this process more than mere lip service. Disclosure can be highly contentious. Starting early will allow time for a compromise to be reached by the parties ahead of the CMC. This new rule should encourage parties to agree disclosure from the menu of options to avoid incurring costs which may not be recoverable as part of standard costs on assess

ment, even if successful. If parties fail to agree, or attempt to agree a proposal, it is not clear what the costs consequences will be. However, it is expected the court will make some form of order, given the overriding objective.

The new disclosure rules are a significant departure from the previous approach of "leaving no stone unturned". We are still in the first days of the Jackson Reforms and it is unclear how they will work in practice. West African Gas Pipeline, as well as a general fear of the unknown, may make practitioners wary of adopting them in such a way as to slash disclosure with too much enthusiasm, given the yet unknown penalties for failure to handle the process correctly.

It may prove difficult for parties to embrace the new changes. The temptation will be to fall back on standard disclosure as the preferred approach. However, all indications are that the courts will discourage this, probably by strict costs management. Form H and costs budgeting will be a vehicle for the judge to do so at the CMC. Parties may well find the judge considering the parties' Form H costs estimates for disclosure, reviewing the disclosure report and proposals of the parties and giving instruction at the CMC as to how and in what form disclosure is to take. Will this be the much heralded advent of greater judicial intervention and case management? It is hard to see how judges will be able to

restrict and categorise disclosure without seeing the documents and considering the evidence and issues in the case, something that will involve far greater time commitment by the judiciary in reading in and preparing for hearings.

Doubtless the reforms will change views as to what is reasonable in terms of pre-action disclosure. It may no longer be acceptable to go on a fishing expedition for documents as part of its pre-action response to a letter of claim. Such cost could be seen as disproportionate and unjust on the facts, complexity and value of the dispute.

******

Disclosure post-Jackson

· Ensure pre-action disclosure requests are reasonable and proportionate to the issues in dispute.

· Consider likely scope and cost of disclosure in advance of preparing the Form H. Are the costs proportionate?

· Enter into discussions with the other party/ies to agree the scope of disclosure as soon as possible after issuing proceedings.

· Fourteen days before the first CMC: file and serve the disclosure report.

· Seven days before the first CMC: ensure you have met and, if possible, agree the scope of disclosure.

******

The New Law Journal/2013 Volume 163/Issue 7554, April/Articles/More civil litigation reform to come -163 NLJ 4

(1) New Law Journal 163 NLJ 4 (1) 5 April 2013

More civil litigation reform to come

Legal World News

Jan Miller

020 7400 2582

[email protected]


On the eve of Jackson reform, the Bar Council sets out its proposals for further change

Pre-action protocols should be abolished, and all cases docketed, to speed up dispute resolution and make it more cost-effective, a Bar Council working group has said.

In a discussion document, Reforming civil litigation, published this week, the Bar Council sets out its recommendations for change.

Bar Council sets out its recommendations for change. Bar Council proposals include: the allocation of a judge to each case so that the same judge is responsible for case management and trying the case; ensuring case-management conferences, conducted by the trial judge, take place no later than the close of pleadings, at which point the parties should be required to identify the issues to be decided and the evidence required; and the abolition of pre-action protocols.

The Council also recommends the abolition of the Civil Procedure Rules for witness statements, to be replaced with rules for witness summaries, subject to the judge's discretion to exclude oral evidence or direct witness statements, and the introduction of a single, electronic case-management administration system throughout the courts in the Rolls Building.

The working group refers to Lord Justice Jackson's statement, in his Review of Civil Litigation Costs, that there was no need for a commercial pre-action protocol, and that the general protocol should no longer be applied to commercial litigation.

"It is our view that formalising the pre-action process adds to the length, and thus the expense, of proceedings, and is thus against the interests of legal consumers," the group says in the paper.

On e-technology, the group points to estimates that producing just one set of trial bundles in the Berezovsky v Abramovich litigation in the Commercial Court cost £26,000 for 280 lever arch files. If, as happened in that case, they were scanned in as PDFs, fewer sets would be needed.

The working group's findings have been sent to the senior judiciary.

Michael Todd QC, former chairman of the Bar Council, says: "As part of ensuring that London remains one of the world's most attractive dispute-resolution centres, we have to ensure that we keep developing our civil litigation system to ensure it remains relevant to the needs of its consumers."

The New Law Journal/2013 Volume 163/Issue 7554, April/Articles/Jackson boosts costs roles -163 NLJ 4 (3)

New Law Journal 163 NLJ 4 (3) 5 April 2013

Jackson boosts costs roles

Legal World News

Jan Miller

020 7400 2582

[email protected]


Costs lawyers are to play a greater role in monitoring the civil justice system as the Jackson reforms bed in.

The Association of Costs Lawyers (ACL) will have a seat on the new Costs Committee being formed by the Civil Justice Council. The 14-member committee will be chaired by Mr Justice Foskett, a member of the Civil Justice Council, and will meet for the first time on 14 April. Senior Costs Judge Peter Hurst is the committee's vice-chair.

Its remit is to conduct a review of the guideline hourly rates (GHR) and make recommendations for change to the Master of the Rolls by January 2014. It will then review the GHR on an annual basis.

It will also monitor the operation of the costs rules, in consultation with the Ministry of Justice (MoJ), and make appropriate recommendations.

The committee will replace the Advisory Committee on Civil Costs, which the MoJ abolished. The MoJ decided not to follow Lord Justice Jackson's recommendation to create an independent Costs Council.

The New Law Journal/2013 Volume 163/Issue 7554, April/Articles/Culture vulture to swoop? -163 NLJ 5 (1)

New Law Journal

163 NLJ 5 (1)

5 April 2013

Culture vulture to swoop?

Legal World News

Jan Miller

020 7400 2582

[email protected]


Master of the Rolls: Jackson will address "compensation culture"

The Jackson reforms will help tackle the public perception of a "compensation culture", the Master of the Rolls has predicted.

Delivering this year's Holdsworth Club Lecture, on the subject of Compensation Culture: Fact or Fantasy?, Lord Justice Dyson said the perception of a compensation culture "has real, and negative, consequences" but is not "as grounded in reality as has been suggested".

Referring to the government's recent consultation on whiplash claims, Jackson: comp he noted that claims have increased by a third in the last three years but said there are sometimes spates of activity, such as the one-time epidemic" of pavement slips in Liverpool. Some of these cases may be fraudulent and do not therefore contribute to a possible compensation culture, he said.

Currently, the high cost of defending litigation leads some defendants to settle unmeritorious claims.

Dyson LJ said the Jackson reforms, due to come into force on Monday, will address this by increasing judicial control over costs and reforming "no win, no fee" cases.

"Through bringing costs under control, and removing the perverse incentives to settle claims lacking in merit, we should be able to make substantial improvements to this aspect of the system," he said.

"The pressure to settle such claims should be reduced, if not eliminated." He also called on the government to provide greater public legal education.

The New Law Journal/2013 Volume 163/Issue 7554, April/Articles/The Clapham claimants -163 NLJ 8

New Law Journal

163 NLJ 8

5 April 2013

The Clapham claimants

Legal World Comment

Peter Thompson

QC, general editor, Civil Court Practice (The Green Book)


Peter Thompson QC assesses the impact of Jackson on the reasonable person

The man on the Clapham omnibus is as likely as anyone to be involved in a road traffic accident and what follows applies equally to the child in the back of a Clapham mini-cab and the young woman on the pillion of a Clapham motorcycle. They are all victims of injury caused by some insured person's tortious behaviour. They will all have acted reasonably: they will have worn a seatbelt or helmet where appropriate, they will not have been out drinking with the driver and will not present exaggerated or fraudulent claims. All are entitled to access to justice if a settlement cannot be reached in correspondence.

Our Clapham claimants, just described, have a particular interest in the Jackson reforms that come into force on Monday. The purpose of this article is to assess their impact on the reasonable man, or woman, who is injured and entitled to redress.

At the bottom end, the small claims limit for personal injury claims is still £1,000, despite a strong indication by the

justice minister, reported in the preface to the current edition of the Civil Court Practice, that it would be increased to £5,000 to make it "easier for insurers to defend spurious or exaggerated claims". So no change there, for the present.

For claims between £1,000 and £10,000 (the whiplash belt), the RTA portal is still open. However, the 25% success fee that used to be recoverable under CPR 45.11 and is authorised by the new Conditional Fee Agreements Order 2013, no longer appears among the costs and disbursements listed in the new CPR 45.17 to 45.19. Will the legal representatives require the litigant to pay it out of the damages? In a straightforward passenger case the litigant would have some cause to feel that this was unjust.

The client's interests may be better served by issuing a Pt 7 claim for damages. Here the case is going to be won or lost on the battlefield of Pt 36, where the canny player can win indemnity costs and a high rate of interest. As from 1 April 2013 there will be no call for after the event insurance--put out of business by qualified one way costs shifting (QOCS)--and the success fee will not be recoverable from the defendant. But a new weapon has been handed to the claimant by courtesy of s 55 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO): a damages mark-up of 10%, on top of the Simmons v Castle mark-up of 10%. The additional 10% has to be paid by the defendant when the claimant is awarded more than his own Pt 36 offer to settle: see the new CPR 36.14(3) (d). The response to a Pt 36 offer, by either side, requires extremely shrewd legal judgment. As Mr Micawber might have remarked, sixpence over, or under, makes all the difference between happiness and misery. This is not territory for the litigant in person. And litigants who are represented should not take too much comfort from the QOCS rules (the new CPR 44.13 to CPR 44.17): claimants are saved from having to pay the defendant's costs if they lose but could end up with awards that are wiped out by a clever defendant's early offer within Pt 36.

What if the limits go up again?

Ministers have already said that they would like to see the small claims limit on personal injury claims raised from £1,000 to £5,000. Maybe this October? Or next April? Such an increase would have a profound effect on personal injury litigation within this new band, not limited to deterring spurious claims. For the Clapham claimants it would no longer make economic sense to obtain legal representation on the existing models: the RTA portal would be shut and even the leanest conditional fee agreement would leave the successful litigant with a heavy bill to pay out of the damages. The determined claimant would be tempted to go it alone, unrepresented. This has been widely forecast as the consequence of cutting back on legal aid: and the same could be said about raising the small claims limit: the county courts will be over-run by litigants in person. But will district judges notice the difference? Love will find a way. With

advice from Citizens Advice Bureaux and other voluntary agencies, claimants will learn how to obtain a police report and the GP's medical notes and reports and how to tot up special damages. Then he, or she, will be ready to access Money Claim on Line to claim up to £5,000 based on a brief description of the accident, the fault of the defendant and the injuries and loss. Very empowering, but scary. All the litigant really needs, to remove the stress, is a legal representative who will explain how to obtain police and medical reports and who will then draft and issue the proceedings and bring them to a satisfactory conclusion in return for a cut of the damages. That is what happens in the US and in the employment tribunals and what most litigants expect from a no win-no fee agreement. And this is what the Damages-Based Agreements Regulations 2013 provide, by courtesy again of LASPO. The personal injury damages are to be divided 25% to the legal representatives and 75% to the Clapham claimants. Yes, but will our personal injury lawyers be up for it? If not, my prediction is that alternative business structures and claims management companies will take over this interesting slice of the personal injury market.

The New Law Journal/2013 Volume 163/Issue 7552, March/Articles/Incentives to settle -163 NLJ 277 (2)

New Law Journal

163 NLJ 277 (2)

15 March 2013

Incentives to settle

Legal World News

Jackson reforms / Costs

Jan Miller

020 7400 2582

[email protected]


Rules encouraging parties to settle early, or risk paying out more if they lose, are due to come into force next month as part of the Jackson roll-out.

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) allows for an additional amount to be paid to a claimant by a defendant in cases where the defendant has refused the claimant's offer to settle and the court has given judgment for the claimant which is at least as advantageous to the claimant as the claimant's offer. Bringing this new regime into practice, The Offers to Settle in Civil Proceedings Order 2013 sets out the percentage of damages which a defendant may be ordered to pay out on top. In offers up to £500,000 this will be 10% of the amount of damages awarded; above £500,000 and up to £1m, it will be 10% of the first £500,000 and 5% of the damages awarded above £500,000; while, for amounts above £1m, the figures are 7.5% of the first £1m and 0.001% of the damages awarded above that figure.

Janna Purdie, of LexisPSL Dispute Resolution, said apparent discrepancies between the 2013 Order and Pt 36, CPR could be explained. "Pt 36 provides for 10% of the first £500,000 and 5% above, up to £1m, namely a composite rate of 7.5% for awards of £1m. The 0.001% required by the 2013 Order arose from a requirement to set a prescribed percentage in s 55(3) of LASPO.

Following concern that a percentage of 0% or nil per cent would not comply with this requirement, 0.001% was set so that effectively no additional amount will be paid over £1m. The CPR Committee considered that, as, in practice, no

percentage will apply to figures over £1m, it need not be addressed in Pt 36."

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