LSLA | LSLA response

Civil Court Fees, Consultation Paper CP5/07 (the "Consultation Paper") - Response by the London Solicitors Litigation Association ("LSLA")

The LSLA

The LSLA was formed in 1952 and currently represents the interest of a wide range of civil litigators in London. It has some 800 members throughout London among all the major litigation practices, ranging from the sole practitioner to major international firms.

Members of the LSLA Committee sit on the Civil Justice Council, the Civil Rule Committee, The Law Society Civil Litigation Committee, the Commercial Court Users Committee and the Supreme Court Costs Group, to name but a few. As a consequence, the LSLA has become the first port of call for consultation on issues affecting civil and commercial litigation in London, and it has on many occasions been at the forefront of the process of change. Representatives from the City of London Law Society and the City of Westminster and Holborn Law Society also sit on the LSLA Committee.

General Observations

The LSLA is surprised that the DCA proposes further reforms to the fees charged for the use of the Civil Justice system.

A number of the reforms envisaged have already been the subject of consultation, the responses to which have surely made clear the wide spread opposition to the further imposition of fees. There is no point in consulting if the DCA proposes to introduce reforms whatever the responses. In this context the LSLA notes with grave concern the intention to pilot daily hearing fees in 2008. There is no suggestion that this piloting scheme will be deterred by a negative consultation.

In its previous responses to consultations (copies attached) the LSLA has challenged the Government's starting point that the Civil Justice system should be funded entirely by the users. This approach differs markedly in principle from the Government's approach to education and health. A state funded Civil Justice system is the mark of a civilised society.

The timing of these proposals is also inexplicable. Despite wide-spread opposition to the introduction of trial fees in previous consultations, the Government appears determined to introduce them, just at a time when it is acknowledged in the Consultation Paper that there has been an over-recovery by the State in the Civil Justice area and when the Government has explicitly recognised the importance of a high-quality court system in attracting overseas litigants, by supporting a new Commercial Court.

Only recently the Financial Times on 12 June 2007 reported the results of a Mastercard survey exploring the reasons why London is the number one financial centre in the world. The reputation of its Civil Justice system was one of the principal factors. Against this background, there can be no justification for the Government introducing a proposal to impose trial fees, with the expressed intention of providing stronger "incentives" for users to consider mediation or other ways of settlement before trial. Financial pressure on litigants to settle without a hearing is inconsistent with the fundamental principle of access to justice and risks sending potential litigants elsewhere.

The position of the Government is also economically flawed. The combination of the deterrent effect on potential litigants and the insistence on full cost recovery (or even over-recovery as is currently the case) means that fewer and fewer parties will end up paying more and more.

The Consultation Paper says dismissively that there is no evidence that larger fees would reduce the attractiveness of English Law and our courts. This is exactly the kind of point which was made previously in opposition to the Commercial Court, it being asserted from time to time that there was no evidence that litigants were being deterred from using the Commercial Court.

The proposals are also at odds with the conclusions of HMCS in September 2006 in favour of the UK Commercial Court.

"If the choices of the global business community are to continue to be made in favour of the UK, UK Commercial Law, and UK dispute resolution (court, arbitration or mediation) the Commercial Court (and Chancery Division) that apply and develop UK Commercial Law, have to continue to be the most attractive in the world. It is sound policy to "promote the UK as a global centre of excellence in legal services and as the preferred venue for the resolution of international disputes"."

The LSLA considers that the introduction of trial fees is wholly inconsistent with the policy of promoting the Commercial Court as the preferred venue for the resolution of international disputes. By the time evidence of harm emerges irretrievable damage would have been done to the reputation of the Civil Justice system.

Nor can it be suggested that the introduction of fees would still leave the Commercial Court on the same footing as competitive Courts. We are not aware of any major dispute resolution centre which charges fees to support the building of the system of law and jurisprudence in an important area of economic activity. It must be remembered that one of the functions of the Commercial Court is to provide up to date legal analysis and precedent of important commercial and mercantile transactions that represent the life blood of the City. Anything that discourages the use of the Court is therefore likely to lead to it producing fewer relevant decisions and thus render it increasingly "out of date".

It follows that our answers to the various questions posed in the Consultation Paper are subject to a starting point that these reforms are unnecessary, ill-timed and risk damaging the attractiveness of our Civil Justice system.

Questions 1 to 10 - fee remission

The LSLA does not have great experience of dealing with cases involving fee remission, but as a matter of principle is in favour of financially disadvantaged litigants receiving some form of fee remission, subject always to proper safeguards being in place with a view to avoiding promotion of claims by vexatious litigants. In this context the LSLA is concerned that the level of fees proposed may in any event exceed the amount to be remitted.

Question 11 - re-balancing the fee structure

Although the stated objective appears to be to match fees with costs, the actual proposals are inconsistent with this principle. For example, the higher the amount claimed, the higher the issue fee for a claim form, even though the amount of work involved is the same. By contrast, the fees for issuing application notices are to be reduced, whereas those take up more time than other kinds of work, such as the issue of a claim form. We also disagree strongly with the proposal of introducing hearing fees in civil cases in the County Courts and High Court.

Question 12 - alignment of High Court and County Court fees

The LSLA would be concerned if the intent here is to increase fees across the board.

Question 13 - allocation fees as a disincentive to attempt mediation

The LSLA does not consider that payment of an allocation fee will necessarily deter those parties who wish to attempt mediation.

Question 14 - refund of hearing fees

The introduction of hearing fees brings with it a complicated set of machinery for refunds. The operation of the system in itself is likely to waste court time and generate expense. It is also an unsubtle way of seeking to compel the parties to settle their dispute without a trial. Generally the notion of making the system so expensive that parties settle is one which is undesirable. If, however, there are to be hearing fees, they certainly should be refunded if the hearing does not take place and the timings do not appear unreasonable.

Question 15 - charging additional hearing fees for longer trials

The LSLA disagrees vigorously with this proposal. It is a repetition of the proposal made in CP10/04 for hourly trial fees, which was vigorously opposed by a wide range of consultants. The proposals have a strong "political" air about them with the words "Corporations and other wealthy litigants arguing over huge sums of money" having a pejorative tone.

The proposals are wholly inconsistent with principles set out within the Consultation Paper. Paragraph 3, for example, regards it as unfair if one category of litigant "is systematically subsidising the costs of a distinctly different category" and yet that is precisely what is being proposed in relation to substantial cases.

They also inconsistent with the notion that fees should match costs, it being proposed to impose higher fees in specialist jurisdictions even where the costs of the work are not higher than in other jurisdictions.

Most important of all, as previously mentioned, while recognising that these courts deal with much international business, the Government appears quite ready to take the risk that these litigants will be deterred from using English Law and therefore our courts.

The use by foreign parties of English Law in their contracts is driven not just by the reputation of that doctrine, but by the reputation of our Civil Justice system. In this context the LSLA quotes the words of the HMCS in its September 2006 paper in favour of the Commercial Court:

"Net exports of law firms totalled £1.5 billion in 2003, over three times more than in 1990. All these exports are put at risk if English Law ceases to be the law of choice for the global business community. It will cease to be the law of choice if the global business community loses confidence in the Commercial Court as its forum of choice should a dispute arise and if the Commercial Court and the Chancery Division lose the opportunity to continue to develop English commercial law by deciding current business cases. If they do not choose English Law then the UK not only loses the business of resolving a dispute if one arises, but English legal services as a whole become irrelevant to commercial transactions."

As said at the beginning of this response, there is no justification for this Government to take the risk of damaging the attractiveness of our Civil Justice system by introducing these kind of trial fees.

In this context the LSLA notes with grave concern the intention to pilot daily hearing fees in 2008. There is no suggestion that this piloting scheme will be deterred by a negative consultation.

Question 16 - subsidy of hearing fees in lower-value small claim

Again, the logic of the Consultation Paper is contradictory. On the one hand it seeks to match fees with costs. On the other it seeks to charge more for the issue fees in larger cases and to charge greater trial fees for such cases, it seeks to charge lower fees for smaller value cases, irrespective of cost. The LSLA again questions why there is any need for change.

Question 17 - lower issue fees for using e-systems

This seems reasonable but depends strongly upon the courts concerned having e-systems available.

Question 18 - assessment fees set by reference to bands value

The LSLA agrees there should be a fee system set on bands of value.

Question 19 - miscellaneous charges

Many of the charges in this section seem too high and again do not appear to match fees to costs.

Conclusion

Overall the LSLA is disappointed that so much time, money and effort has been devoted towards making the Civil Justice system self funding. This overlooks the public and commercial service that the Commercial Court in particular offers, and thus the huge contribution that it makes to the economy as a whole. It involves putting forward inherently contradictory proposals and promoting reforms which risk seriously damaging the attractiveness of our Civil Justice system. The LSLA urges the Government to think again.

25 June 2007

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