Lord Justice Rupert Jackson was appointed by the Master of the Rolls to conduct a year-long review into legal costs. Leigh Day & Co welcomes the opportunity that this review offers to voice an opinion of behalf of the individuals who are often forgotten in a legal process that seems to focus on the interests of corporate defendants.
The Cost of Justice
Leigh Day & Co are specialist Claimant litigation solicitors. Most of our work is in the personal injury, judicial review, healthcare, product liability and environment fields. We have the country’s largest clinical negligence and human rights teams. We are one of a tiny number of firms of specialist litigation solicitors prepared to take the risk of running large group actions for Claimants and have pioneered claims in Britain against multi-national corporations and the British Government for wrongs committed abroad. The firm’s ethos is to ensure that the ordinary person has legal representation comparable to that available to state bodies, insurers and multi nationals.
We believe we have valuable specialist knowledge to offer based on our experience and would welcome the opportunity to participate actively in the Review in any way which might be of assistance. We have set out here some initial views which we would wish to expand upon during the course of the Review.
Our primary concern is to ensure that it is appreciated that in order to deliver justice it is of fundamental importance to seek to maintain a balance of power between individual (as opposed to corporate) Claimants - who are by definition economically disadvantaged - and corporate Defendants in terms of the skills, knowledge and resources available through legal representation.
A key aspect of this is recognising that the fundamental difference between corporate or government Claimants or Defendants and individual or group Claimants is that individuals and groups can only fund proper, specialist legal representation through costs recovery and costs shifting.
1. The test in terms of proportionality should be the importance of the litigation to the litigants, not the financial value of the case. This is highlighted by non-compensatory judicial review, human rights and discrimination cases and low value personal injury claims.
2. The power to curtail litigation costs lies mainly with Defendants. The way to address proportionality is to increase incentives on Defendants to settle both issues (i.e. liability) and claims at the earliest opportunity. There is a real risk that reducing or capping the costs recoverable by Claimants will have the opposite effect. Large corporate Defendants have the resources and economic muscle to drag litigation out and to seek to grind down Claimants so that they are forced to settle.
3. We can supply the Review with a number of examples of cases across the spectrum where Defendants have continued defending claims, when liability should have been admitted and prompt steps taken to seek resolution, in the hope that by leaving issues live they can extract a more favourable outcome and/or discourage solicitors from taking on similar cases in future because of concerns about costs. This is a key issue in preserving access to justice.
4. Early disclosure of documentary and witness evidence (rather than limiting disclosure) might “front load” costs but has the overall effect of reducing costs by promoting early settlement.
5. If costs capping becomes widespread, there is a danger that Defendants will be tempted to under-estimate costs, in order to restrict the ability of Claimants to fund adequate and equal representation. Once a cap has been set, in reality it will be impractical to re-visit it and the nature of litigation is that only Defendants know whether or not a case will ultimately be settled. They have the power to narrow issues and admit liability whereas the only power Claimants have is to press ahead to Trial.
6. Costs capping is a crystal ball gazing exercise which duplicates the process of detailed assessment but without the advantage of knowing what actually happened. If costs have been incurred unnecessarily they will be disallowed at Detailed Assessment.
7. Costs capping ultimately seeks to prevent unnecessary costs. The same outcome can be achieved by increasing incentives to settle.
8. In terms of public law, cost-capping has emerged in the field of Protective Costs Orders following the judgment of the Court of Appeal in Corner House-v-SSTI [2005] EWCA Civ 192, in which we acted for the Claimant. The variation of the cost-capping guidance derived from the Musa King case was introduced without legal argument on the issue and has proven problematic and contentious since. It merits specific attention in the Review.
9. There is a need to recognise that because of the imbalance of power in the fields in which we act, capping Defendants’ costs may be necessary to facilitate access to justice whereas capping Claimants’ costs is likely to restrict it.
10. The massive issue for group claims is that they are so expensive to run. We believe that our Group Litigation Order system is as good as any in the world, in terms of being able to bring about swift and efficient outcomes for groups of Claimants. However, despite the best efforts of the Courts to manage the group process, the reality remains that the costs in the claims are always going to be very high. Usually the issues involved are very complex and the outcome of very great significance to both Defendants and Claimants. The costs of investigating and pursuing the claims will, therefore run into millions. How many millions will depend on the size of the group, the nature of the claims, etc. It is difficult to generalise but from our experience, to run a significant group claim (eg a large drug or environmental case) from start to trial, will usually involve the two sides in costs of over £10m each.
11. Key issues for the group Claimants’ lawyers are whether and how they can take on the risk and the extent to which they can obtain protection for the Claimants by way of ATE cover or third party funding.
12. We consider that it will be important for the Review to recognise and address the lack of availability of ATE insurance in judicial review.
13. To date few cases have actually been taken through the system by lawyers prepared to take these risks. When we (together with Irwin Mitchell) took on the tobacco industry in the late 1990s on behalf of lung cancer sufferers, we estimated the case had cost our firm £2.5m by the time we dropped it following an adverse limitation ruling. The only reason we had been able to take the case on was that we had done well in other group claims. Following that defeat it took a considerable period before we were able to take such risks again.
14. Contingent fee arrangements offer less scope for conflicts of interest than conditional fee arrangements. However, it is our view that the experience of over 10 years of conditional fee arrangements is that conflicts of interest do not pose the problem some expected primarily because solicitors and barristers have been very conservative in approaching the cases they are prepared to take on.
15. Whilst we are not opposed to the notion of utilising contingent rather than conditional fee arrangements, the three issues that need to be resolved first are how to ensure that contingent fees do not erode proper compensation; how to quantify and provide for the costs of winning Defendants and how to deal with cases where no damages are awarded such as public law cases.
16. The Review provides an opportunity to consider in depth the particular complexities of costs shifting in public law – where specific arrangements in the form of Protective Costs Orders have been made to enable access to the Courts. Of specific importance is the way in which these arrangements need to be adapted to give effect to the UK’s obligations under the Aarhus Convention to ensure that access to the courts in environmental matters is available without prohibitive cost.
17. Whilst we condemn frivolous or speculative litigation, we regard it as a fundamental part of our role in society to seek to provide access to justice for those with meritorious but, on the face of it, difficult claims. The more that downward pressure is applied on costs recovery for winning Claimants, the more the profession will be forced only to seek to take on sure-fire winners.
18. It is important not to lose sight of the fact that an integral part of the philosophy behind CFAs is that they are designed to spread the risk across a number of cases.
19. There is a tendency for insurers and others to portray conditional fee arrangements as providing unacceptable levels of windfall costs for lawyers. In fact, issues relating to excessive costs in CFAs have generally been seen in the defamation field. It is crucial that the defamation tail does not wag the civil litigation dog.
20. The portrayal of the effect of conditional fee arrangements in one of our specialist areas, clinical negligence, is, we believe, informative. When CFAs were first introduced the Medical Defence Organisations and National Health Service Litigation Authority welcomed them on the basis that they would be able to recover costs from losing Claimants. They now blame higher costs payouts on CFAs. The obvious inference, which is never drawn, is that if they were reaching early settlements in cases that should not be defended and only fighting those they are likely to be able successfully to defend at Trial, their costs bills would be dropping rather than escalating.
21. The requirement for Defendants to pay costs based on hourly rates should be maintained. It operates as a disincentive to Defendants to prolong litigation. Any move to fixed costs merely encourages Defendants to drag matters out, knowing that Claimant lawyers will be unable to recover the extra hours. This is already happening in fast-track personal injury cases.
22. It is important to remember that Claimants rely totally on their lawyers to advise and run their litigation. On the other hand, corporate and Government Defendants have access to extensive networks of “hidden” resources. In addition to outside lawyers they have in-house lawyers and experts and are therefore able to absorb and effectively hide the true cost to them of defending claims. That can, and often is, used to distort comparisons of Claimants’ and Defendants’ costs bills.
23. Another key factor is that regardless of where the factual knowledge or expertise in a particular situation may lie, Claimants bear the burden of proof. For example, the patient who wakes up from an operation with a serious, unexpected side-effect has to prove his case whilst the team who operated on him who possess extensive expert and factual knowledge are able to sit back and wait for the Claimant to try and piece together what happened. Claimants will not get justice if they do not have access to specialist lawyers able to over-come, at least to some extent, that massive imbalance of power and resources.
24. Legal Aid is not mentioned in the initial consultation paper. Regrettably, Legal Aid has been eroded and removed from specific legal fields over the past 15 years and it seems clear that this pattern will not be reversed.
Martyn Day, Russell Levy, Richard Stein and Daniel Easton on behalf of Leigh Day & Co.
13 February 2009
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