Key elements of Lord Justice Jackson’s reforms are six months old. Eduardo Reyes quizzed senior practitioners on their impact so far
The Expert Witness:
Thayne Forbes, joint managing director, Intangible Business
‘The new costs budgeting rules have enforced a more transparent approach around litigators’ spend at each phase of litigation – including how much is spent on expert witnesses. This increased scrutiny over costs has meant that we are seeing a more collaborative approach come into play, with a wider use of single joint experts to share costs between both parties and hear evidence from expert witnesses concurrently rather than consecutively.
‘With careful planning (early identification of when an expert witness is integral to the success of a case and clear instruction), the use of expert witnesses is still beneficial and cost-effective. This is particularly so in those areas such as loss of value or profits, where an independent expert can provide much needed clarity on issues at stake in court.’
The Full-service Litigator:
Francesca Kaye, partner, Russell-Cooke; president of the London Solicitors Litigation Association
‘Far from improving access to justice, the reforms are having the reverse effect. For those still able or willing to use legal representation there are increased costs at an earlier stage in the process as a result of the additional procedural steps implemented by Jackson in relation to costs management and disclosure. There has been an upsurge in opportunistic applications/resistance to applications to try to take advantage of the stricter approach to compliance. Legal representatives are less able to predict the likely outcome of applications or the court’s approach.
‘The extra early costs are a significant disincentive to being able to pursue or defend claims, particularly for individuals and SMEs. Perhaps we may see some decisions from the Court of Appeal which will clarify the approach to be adopted in relation to robust case management.’
The City Litigator:
James Farrell, partner, Herbert Smith
‘For commercial cases, the reform that has probably had the most immediate impact is one that received little attention before 1 April: the new emphasis on enforcing compliance with court rules, practice directions and orders. As well as getting tougher on those who break the rules, the reforms have meant the courts are less willing to grant extensions to comply with procedural deadlines. But it has not all been one-way. In some cases, the courts have granted relief from sanctions and been critical of those who tried to take advantage of an opponent’s technical breach. As ever, each case will turn on its facts.
‘Another reform that may soon be felt in larger commercial cases is the introduction of costs budgeting. To date, such cases have been exempt from the procedures, but that may change, depending on the conclusions of a sub-committee considering this issue, which is expected to report this month. The case law so far suggests that the courts are quite willing to hold parties to their budgets, so it will be important to get this right to avoid clients losing out on recoverable costs.’
The Claimant Solicitor:
Jock Mackenzie, partner, Anthony Gold
‘A recent case relating to a case management decision on legal costs – Baker v Hallam Estates Ltd & Another – demonstrates a more stringent attitude on the part of the courts to procedural time limits in civil litigation, in particular with regard to the penalising of material non-disclosure and missed deadlines.
‘Two key practice points emerge from the case that all present-day civil litigators would do well to heed. First, the courts will not now tolerate failures of compliance with rules without extremely good reason and any application for a relief from sanction will be rigorously scrutinised.
‘Second, in a without notice application – as was seen in this case – full and frank disclosure remains of paramount importance, regardless of whether the application is for a freezing injunction in heavyweight commercial litigation or merely for a short extension of time in costs proceedings.’
The Litigation Funder:
Ross Clark, chief investment officer, Burford Capital
‘Solicitors really did their best to get cases on cover under the old rules. However, we have seen a number of lower-value cases where the economics simply do not work under the new rules. This is particularly acute in areas to which qualified one-way costs shifting does not apply – for example professional negligence.
‘Lawyers are struggling to come to terms with costs budgeting, and the apparently hard-line approaches taken by the courts amplify this issue. But so far, we’ve not seen evidence in our normal cases that this is reducing the amount the claims cost. There has been a surge of interest in litigation funding, which we attribute in part to the damage done to other funding models (although interest was growing pre-Jackson too). Many cases are too small for a standalone deal, but our ability to do portfolios of cases can assist here.
‘We have seen little evidence of damages-based agreements. The lack of a hybrid option and some of the small print around them has made DBAs less attractive than most had hoped.’
The Exit Adviser:
David Johnstone, managing director, Recovery First
‘In England and Wales, access to justice is currently spread across 4,500 firms for personal injury, of which at least 4,000 don’t get anything like the same service as the other 500. So, one of the results of LASPO and for access to justice is going to be that once the catastrophic change is overcome, in the next two or three years, you will be left with brands that are driven by customer service and not by almost anything else.’
The Group Action Lawyer:
Lianne Craig, partner, Hausfeld & Co
‘From the perspective of our practice – competition litigation – access to justice for claimants has been compromised. The key reason for this is the rule in section 46 of LASPO that ATE insurance premiums can no longer be recovered from the other side on success.
‘The practical consequence is that insurance cover will in most cases either involve the payment of a sizeable up-front insurance premium, or it will need to be paid for by a litigation funder in return for a share in the damages eventually recovered. Such litigation funders are only going to fund claims of sufficient financial value to make funding the case worth their while, thereby reducing access to justice for those with smaller claims who are unwilling to face the risk of paying the other side’s costs if they lose.’
The Insurance Lawyer:
David Johnson, partner, Weightmans; vice-president Forum of Insurance Lawyers
‘Some litigators are taking a tougher approach when opponents breach directions timetables and some judges are adopting a more draconian approach to requests for the extension of timetables. However, there is a sense that some judges are biting harder than others, and the emerging case law is far from consistent.
‘There are some early indications of a changing approach to part 36, with claimant offers coming through that, on the face of it, appear aimed at taking advantage of the damages-related penalties for defendants, and defendants looking at part 36 offers as a means by which to mitigate the effect of qualified one-way costs shifting.
‘The wave of CFA notices served in the runup to 1 April means that the impact of QOCS has not been as immediate as other changes and it will be some time before the full effect of that particular reform becomes apparent. However, serving a CFA Notice has not always stopped claimants from attempting to assert their entitlement to a 10% damages uplift on claims, which is meant to be applied only to cases with a recoverable success fee.’
The Policy Analyst:
Robert Khan, head of law reform, The Law Society
‘We are experiencing a “phoney war” and it is unlikely that it will be possible even to begin to assess the full ramifications of the reforms until spring 2014 at the earliest. The one exception is the effect of the new rules on case management and costs budgeting. Some practitioners have, regrettably, discovered that non-compliance has resulted in severe sanctions being imposed. However, anecdotal evidence still indicates a lack of consistency by the judiciary in case management and budget orders.
‘The important lesson to be learned is that, if a rule or an order specifies a date for compliance, then failing to comply is likely to lead to significant expense and a professional negligence claim.’