English Legal System

Alternative Dispute Resolution

Introduction to Funding Civil Litigation

Aims

• The aims of this lecture are to:

1. Examine the alternatives to litigating matters through the courts in civil proceedings;

2. Analyse the differences between forms of ADR and in particular arbitration and meditation;

3. Look at the public funding of civil litigation and recent reforms which have been made;

4. Examine other ways of funding litigation other than public funding;

5. To look at whether there is need for greater public funding of litigation.

Learning outcomes

• By the end of this lecture you should be able to:

1. State what is meant by alternative dispute resolution;2. Describe the differences between arbitration and meditation;3. Critically assess the advantages and disadvantages of using

alternative methods of dispute resolution rather than litigating matters through the courts;

4. Describe the current arrangements for public funding of civil litigation in England and Wales;

5. Describe the alternative funding which is available to litigants in this country;

6. Critically consider whether the present arrangements meet the needs of litigants.

ADR Definition

• ADR involves the settling of legal disputes without having recourse to the courts, to traditional adversarial litigation

• It can take a number of forms the most common of which are arbitration and mediation

• It has become particular popular in this country following the success that it had in the United States

Arbitration

• Governed by the Arbitration Act 1996

• An arbitrator who is impartial, independent of the parties will hear the case and than impose a decision on the parties

• This decision can be enforced

• This is the most formal type of ADR and is common in contractual disputes, construction disputes and other major commercial agreements

Arbitration

• Why contractual disputes?

Often involve, if a commercial large-scale organisation a lot of money – delays can cost a fortune

Also the contract itself will often include an arbitration clause, partly for the reason stated above, to avoid wasting money

Mediation

• The mediator works between the parties to promote settlement, however, any settlement reached is consensual, and generally non-binding on the parties

• Contract with conciliation

• Very informal system

• Traditionally associated with matrimonial disputes, but now being used in other more diverse areas of law such as negligence claims, judicial review etc…

Why found traditionally in matrimonial law?

• Essentially because of the continuing nature of the relationship between the parties if they have children

• Does it always works in those situations though?

Family Law Act 1996, Part II

Why avoid litigation?

• The disadvantages of traditional litigation were summarised by Lord Woolf in his reports:

1. Too expensive;2. Too slow;3. Too adversarial.

Civil Procedure Rules aimed at tackling these problems

Litigation is a lottery?

What are the advantages of ADR?

• These may be summarised as being:

1. Cheaper;

2. Faster;

3. Informal;

4. Convenient;

5. Private;

6. Agreed solutions.

The Courts’ Encouragement of ADR

• CPR Rule 1.4

• Cowl v Plymouth City Council (2001) – Lord Woolf

• Dunnett v Railtrack (2002)

A change in direction:

• Hurst v Leeming (2002)

• Halsey v Milton Keynes General NHS Trust (2004)

The cost of civil litigation - what are costs?

• Basic costs/ profit costs

• Disbursements

The cost of civil litigation

• Funding your own solicitor’s costs

• Paying for your opponent’s

• Supreme Court Taxing Office Survey 1994-1995:– In 50% of cases worth less than £12,500 costs of

one side were equal to or greater than claim value– 1991 Which? Report: 10% of people put off finding

a solicitor by cost

Access to Justice and Costs - the Government’s stated objective

• “The justice system should serve everyone, regardless of their means. People should be able to find effective solutions to their legal problems. Justice must not be restricted to the very wealthy, or the very poor, who may qualify for legal aid. At the same time, taxpayers deserve value for the money they contribute to legal aid and the courts” - Lord Chancellor’s forward to “Modernising Justice” Government White Paper 1998.

Funding Options

• Private payment

• Before the event insurance

• Pro bono work

• Law centres and CABs

• Trade Unions

• Special Interest groups

Funding Options Civil Legal Aid 1949 - late

1990s• Means test

– Disposable income no more than £7595 p.a

– Disposable capital no more than £6750

• Merits test– Reasonableness– Legal Merits

Report of Sir Peter Middleton to The Lord Chancellor (September 1997)

• Rapidly growing costs with lack of satisfactory mechanisms for controlling growth

• Inability to target resources on priority areas

• Poor value for money.

Rapidly growing costs Fewer people helped

• 1985-1990 number of certificates increase by 22%. Net expenditure increased by 145% to £153 million

• 1979 79% eligible

• 1999 48% eligible

Cost of Legal Aid

• The legal aid bill too high for the taxpayer– costs for all family and civil: £671million 97/98– costs 93/94 - 96/97 22% . Inflation was 7%

• 90% of the costs are lawyers’ fees

• Numbers being assisted falling

• Civil legal aid was entirely demand, rather than resource, led

Poor value for money

• No control over which law firms, good or bad, could obtain legal aid

• Lawyers who ran legal aid cases took no risk and were tempted to run cases that had very poor prospects of success

Conclusion reached by this government

• “Should legal aid also be offered in cases where other arrangements already exist to support litigants? I think not.”

– Lord Irvine, the Lord Chancellor

– Almost all personal injury legal aid disappeared in April 2000

• Access to Justice Act 1999 - creating the Legal Services Commission

• Community Legal Service

Some counter arguments

• Only £55 million spent on legal aid PI cases 95/96

• £518 million recovered in damages

• DSS clawback estimated at £67 million in 95/96

• Can conditional fees replace it?

The Community Legal Service (CLS)

• LSC: Legal Services Commission (set up by the Access to Justice Act 1999)

• LSC is a publicly funded body managed independently which exercises its functions in relation to funding for civil disputes through the CLS

• A controlled budget• Planning• Contracting • A new funding assessment

Contracting• S.6(3)(a) Access to Justice Act 1999 gave the

LSC the power to enter into contracts with bodies or persons for the provision of services

• s.4 (8) gave the LSC, or others it authorises to do so, power to accredit bodies to provide services

• and the power to monitor the services provided and withdraw accreditation if the services are of unsatisfactory quality

Legal Aid Franchise Quality Assurance Standard (LAFQAS) Now

known as Quality Mark

• To obtain a contract a provider must have this

• The CLS monitors management of the provider in general and of individual cases

• “Contracting will help to ensure the quality of service consumers receive; only those lawyers who meet prescribed quality standards will be able to obtain contracts, and their performance will be monitored” (White Paper, Modernising Justice para 3.18).

Priorities

• Social welfare cases

• Other cases of fundamental importance to the people affected

• Cases involving a wider public interest

Cases generally excluded from funding Sched. 2 AJA 1999

• Negligently caused injury

• Conveyancing, boundary disputes

• Making of wills

• Trust law

• Defamation

• Matters arising out of the carrying on of a business

Criticism of the new system

• Fall in number of solicitors doing this work survey of 150 firms by the Law Society Gazette:– 57% already given up legal aid contracts– 11% ceasing housing work

• Recently qualified solicitors turn their backs on work?

Summary of lecture

• You should now be able to:

1. Describe the different forms of alternative dispute resolution and in particular arbitration and meditation;

2. State what options are available for the funding of civil litigation;

3. Describe the system of public funding and the reforms which have made to it;

4. Critically consider whether those reforms have been successful in meeting the needs of litigants in civil cases.

Further reading

• Slapper, G. and Kelly, D., The English Legal System (London: Cavendish Press, 2004, 7th edition), chapter 12 generally