The struggle over the financial limits for small claims is an issue which is traditionally difficult for lawyer policymakers, because of the apparent conflict between public and private interests. The raising of personal injury claim levels in the UK has caused a fuss, and now the topic has appeared on the EU justice agenda.
I can think of two different policy areas in the past where the apparent conflict also occurred. When law centres began to be established in the 1970s, there was an argument as to whether the Law Society should waive the conditions on practising certificates to allow free advice to be given to anyone off the street by someone with the status of a lawyer employed by a third-party organisation. Privately, many feared that free advice would erode the market of high street solicitors – until it was discovered that many law firms established themselves around law centres, and were making money from their referrals. The arguments disappeared.
Similarly, many countries still ban foreign lawyers from entering their jurisdictions because their lawyers fear that the big Anglo-Saxon firms will erode their market share. This is despite the fact that markets which have opened – for instance, Hong Kong or Brussels, never mind London – have found that local firms benefited from the influx of foreign lawyers, and picked up clients and expertise.
Now the European Commission is carrying out a consultation on the European small-claims procedure, and one of the issues is whether the current qualifying limit of €2,000 should be raised. In the one corner, there is the pro-lawyer argument, which can look to unsympathetic outsiders like corporatism (‘consumers need legal advice if they are to be successful in a claim’) and, in the other, the representatives of consumerism (‘claiming your rights should be cheap and easy’) - although to unsympathetic outsiders that can also look like cutting costs without concerns for justice.
When lawyers put arguments against raising the limit on small claims – the European consultation raises the possibility of an extension to €10,000 – it immediately looks as if we are trying to protect our market share, particularly in times of economic crisis. But it seems to me that the question of market share is irrelevant, since the outcome can go either way. That is why I have given the past scenarios above about the result for market share in different legal circumstances. Of course it might mean that citizens will not use lawyers for larger claims. But at present the European small-claims procedure is hardly used at all. The counter-argument is that, if the limit is substantially raised, more citizens might use it, and may well turn to lawyers for help in cross-border cases. Similarly, the consumerist argument about access to justice, and its counter about cutting costs without concern for justice, slug themselves to a standstill, at least until the test is tried.
That is why I prefer the purely public interest argument that citizens should benefit from legal advice before making a claim. It is true, and borne out by experience. I know of two liberal countries where the courts have led campaigns to bring lawyers back into litigation, on the grounds that it is more efficient in terms of time and money, and leads to a better administration of justice. (I stress that my organisation, the Council of Bars and Law Societies of Europe, CCBE, has yet to discuss the question of small claims, and so these are purely personal views.)
So what is the European small-claims procedure? It was established on 1 January 2009 in all member states other than Denmark through Regulation 861/2007. It was introduced for the usual reasons: to simplify and speed up small-scale cross-border litigation, and to reduce costs.
It has the following features: there is a written procedure, but with the possibility to hold a hearing; there are multilingual standard forms; there is no mandatory legal representation; the loser-pays principle is limited to reasonable costs; it encourages the use of IT, for example videoconferences – and the use of technology will grow, since the small-claims procedure is one of those being piloted in the e-CODEX project, linking up member states’ e-justice systems, which will in due course make more electronic legal transactions a reality; it is available for small and medium-sized enterprises (SMEs); and judgments are directly enforceable in other member states.
After almost five years of use, the European Commission is carrying out this assessment, with a view to presenting a report by the end of the year, accompanied, if necessary, by a proposal for revision. The deadline is 10 June 2013. It is not too late to give your views - only don’t mention market share...
Jonathan Goldsmith is secretary general of the Council of Bars and Law Societies of Europe, which represents about one million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs