United in battle

Following the success of the record-setting Cape case, Stephen Ward looks at the revolution of group action claims helped by improved legal aid and the introduction of civil procedure rules to reduce costs

The settlement last month agreed by multinational asbestos mining and milling company Cape, which agreed to pay 21 million into a trust fund in settlement of the landmark asbestos claim by South African miners, set a new record for a group personal injury (PI) action (see [2002] Gazette, 4 January, 5).It was the largest ever such action in England and Wales, and established that a UK company can be held responsible for the actions of a foreign subsidiary.But times were not always auspicious for these cases.

Most lawyers can identify the nadir of group actions.

In 1988, a campaign was launched for compensation for addicts of the benzodiazepine group of tranquillisers.

More than 17,000 people came forward, and 13,000 were granted legal aid.

More than 2,000 firms of solicitors, 40 barristers and dozens of psychiatrists were involved.

But six years and many preliminary hearings later, the case collapsed when legal aid was withdrawn on the basis that the final costs would dwarf any damages awarded.

More than 20 million had been spent.That case was the biggest of many similar stories in the 1980s and early 1990s, all possible under a system which has been swept away in the past three years.

The Legal Services Commission now monitors expenditure when administering claims and issues a contract to one firm to prevent duplication of work.But although the old legal aid rules for group personal injury actions used to generate far more income for solicitors than do the current rules, so far the new regime is popular with practitioners.Martyn Day is joint senior partner in Leigh Day & Co, one of the big claimant firms which has been acting in high-profile cases for the past two decades.The firm acted for two-thirds of the 7,500 claimants in the Cape case (Manchester firm John Pickering & Partners acted for the rest) and also on the abortive multi-party tobacco action of 1999.He says: 'For a number of reasons, all the worries we had two or three years ago have been met.

We're seeing a significant improvement.'This spring, Mr Day will go to court with a case for more than 100 legally aided claimants against the makers of the third-generation contraceptive pill.Pauline Roberts of south Wales firm Smith Llewellyn - another of the select group of 22 personal injury firms with a franchise to run group actions - calls the past the 'the bad old days'.Another expert practitioner, Christopher Hodges, a partner at City firm CMS Cameron McKenna and author of a recent textbook on group actions, says: 'It is very clear from the analysis and case histories in my book that the previous legal aid system was failing.

Legal aid was being effectively used to fund cases beyond the phase where it should have been clear they should no longer have been funded.

The system wasted a huge amount of money.

That was not exactly bad for lawyers, but not very impressive as a system.'There are even fewer specialist defence firms than there are claimant firms.

As well as Mr Hodges' firm, others which commonly defend group actions are all City-based - Davies Arnold Cooper, Theodore Goddard, Simmons & Simmons and Freshfields Bruckhaus Derringer.The roots of the improvements lie within the management of the Legal Services Commission, which in 1999 was set up to replace the Legal Aid Board.

It now has a specialist multi-party action unit to administer claims.

Where in the past, as happened in the benzodiazepine group action, any firm with a claimant might undertake preliminary research, contracts are now given generally to one firm, and only after all 22 firms on the panel have been invited to tender.Ms Roberts says the supply of legal aid is now carefully managed.

'You can pick up the phone and talk to the manager there,' she says.

Mr Day agrees that the multi-party unit will check detailed expenditure such as the size of a hotel bill.'The unit has been an enormous help,' he says.

'They can be very tough with you but I'd much prefer that.

You know where you stand.'They are much tougher now that you have to be very clear from the outset.

They give you seed-corn funding to get the thing looked at, but you get very specific parameters to that.

They are tight on the funding, and quite rightly, which means there is no benefit letting the thing rumble on year after year.

You get in there, decide if it's a good case and crack on, or drop it if it's not.'You get quick decisions either positive or negative, they are tough but you know where the boundaries are, there is much greater clarity which is an enormous help.

The old sticky mud years of arguing have gone.'Speaking after the Cape settlement, Mr Day's partner, Richard Meeran, went out of his way to praise the commission for 'funding people in desperate need of access to justice'.The greater certainty benefits both sides.

Mr Hodges says: 'I've no doubt at all the system is currently working more efficiently.'The second part of the revolution has been the administration of cases within the courts.

In April 2000, new civil procedure rules came into effect governing group actions for the first time.These rules, according to Andrew Tucker, a partner at Irwin Mitchell, another of the claimant panel firms, have helped bring greater certainty.Ms Roberts explains that the action is now declared as a group action in a single court, usually the Royal Courts of Justice in London.

'You used to get actions starting in courts all over the place,' she says.Under the impact of the Woolf reforms, judges are acting more proactively, and are more specialist.

Mr Day is happy with the result.

He says: 'We were tending in the past to be given judges at the end of their term of office and they naturally had a conservative ethos and they just couldn't be bothered.

In the last two or three years we've been given a lot of the newer judges.'He cites the decision on the Cape case to extend UK jurisdiction from four individual cases to a group action, as an example of how judges are now more open to arguments.At the Legal Services Commission, Colin Stutt, head of funding policy and a veteran from the Legal Aid Board days, is slightly surprised but gratified at the general air of approval.He says the commission has improved its management from what he too calls 'the bad old days'.

Senior lawyers at the commission are now allocated to focus on the high-value cases, and group actions are the highest value of all.There may be further change ahead, Mr Hodges says, because personal injury group actions are such large and unwieldy beasts and the cases coming to court now still started life, and legal aid funding, under the old scheme.'We've yet to see the more revolutionary changes in the system,' he predicts, adding: 'In future, there's the possibility for centralised support funding for the investigation phase, and maybe for the actual litigation.

It's too early to say how that will work in practice - whether funding will be available and for what.'It is still unknown how many cases will get legal aid in future, even with a development at the end of last year which allowed for the first time for cases to receive legal aid regardless of means.Mr Stutt says there has not yet been a big case to test the new system, but he says the commission hopes that in future it will be possible to fund through a mixture of conditional fee agreements and legal aid.Smith Llewellyn has already embarked on such a mixture of claims stemming from an aircraft which crashed on a flight from Cardiff to Gerona in September 1999.But Mr Day thinks there may be major problems with using conditional fees to fund cases other than disasters such as Gerona, King's Cross and Paddington, where all the claimants are identifiable and the arguments similar.The problem is the scale of expenses, which leaves each client liable for hundreds of thousands of pounds of defence costs if they lose.

As Mr Tucker says, it is not possible to get after-the-event insurance for group actions.

'The uncertainties make it difficult enough for personal injury claims, and that uncertainty multiplies for group actions.'Perhaps not surprisingly, Mr Hodges, a predominantly defendant lawyer, is sceptical about their worries.

'My answer to that would be that it depends on risk in all these things.

The risk of a lawyer, of a claimant and of an insurer.' At the end of the day, as he says, it depends if it is a good case or a bad case.l The Law Society's civil litigation committee has recently set up a multi-party action reference group to provide specialist expertise on law and procedural reform in this complex area.

For more information, contact Anna Rowland, The Law Society, 113 Chancery Lane, London WC2A 1PLStephen Ward is a freelance journalist