LSLA

London Solicitors Litigation Association

The Ministry Of Justice Consultation Paper (NO. CP13/10): Proposals For Reform Of Civil Litigation Funding And Costs In England and Wales

Introduction

1. The LSLA, COMBAR, ChBA, LCLCBA, and CLLS represent either solicitors or barristers who practise civil litigation, predominantly or exclusively in London. Each organisation has a different constituency of members, some representing practitioners exclusively in the field of commercial litigation, others representing practitioners in other fields of civil litigation, including personal injury, private client and family. More details about each organisation are contained in the attached annex.

2. The one area which is common to at least some of the membership of all the above organisations is that of commercial litigation, particularly where it is complex and of high value. This type of litigation takes place in the High Court, either in the Commercial Court, the Chancery Division or the general Queen’s Bench Division. Accordingly, the responses below are limited to the field of higher value or substantial commercial / business litigation in the High Court (with the exception of insolvency litigation where additional considerations may apply). We make no comment in this joint response to the Proposals on other fields of litigation.

3. Each organisation may provide a separate, individual response to the Proposals; however, the organisations consider that it would be useful for a joint response to be submitted in their common area of commercial litigation.

Section 2.1 – Conditional Fee Agreements and Success Fees

Q1 – Do you agree that CFA success fees should no longer be recoverable from the losing party in any case?

4. Yes, for higher value or substantial commercial / business litigation in the High Court. In this field the litigants can normally afford to pay the legal fees, which are usually charged on the basis of the amount of time spent. The fees are also normally low relative to the amounts in dispute. There are not, therefore, the same considerations as to access to justice and proportionality which may apply in other fields of civil litigation. Whilst there is no objection to parties being able to fund higher value or substantial commercial / business litigation in the High Court through a CFA, there is no reason in principle for the method of funding of one litigant (usually the claimant) to affect the other parties (usually the defendants) if the first litigant is successful and obtains a costs award against the other parties. In our view the losing party should be no better or worse off than if the successful party had funded its litigation in the normal way, namely on the basis of the time spent. We have not seen any evidence to suggest that allowing success fees to be recoverable from the losing party in higher value or substantial commercial / business litigation in the High Court would improve access to justice.

5. We make no comment on other types of litigation, and particularly cases of lower value (including lower value commercial / business cases). In lower value cases of all types, access to justice becomes a more important issue.

Q3 - Do you consider that success fees should remain recoverable from the losing party in cases where damages are not sought, eg. judicial review, housing disrepair (for which the primary remedy is specific performance rather than damages)?

6. No, not for higher value or substantial commercial / business litigation in the High Court. We make no comment on other areas of litigation.

Section 2.2 – After the Event Insurance Premiums

Q11 – Do you agree that ATE insurance premiums should no longer be recoverable from the losing party across all categories of civil litigation?

7. Yes, for higher value or substantial commercial / business litigation in the High Court, for the same reasons as we favour the abolition of the recoverability of CFA success fees. We make no comment on other areas of litigation.

Q14 – Do you consider that ATE insurance premiums relating to disbursements only should remain recoverable in any categories of civil litigation? If so, which?

8. No, not for higher value or substantial commercial / business litigation in the High Court. We make no comment on other areas of litigation.

Section 2.3 – 10% increase in General Damages

Q19 – Do you agree that, in principle, successful claimants should secure an increase in general damages for civil wrongs of 10%?

9. No, not for higher value or substantial commercial / business litigation in the High Court. Lord Justice Jackson’s proposal is intended to apply first and foremost to personal injury cases, upon which no comment is made in this response. However, the Paper refers to “other civil wrongs” without defining what wrongs are being included. In our view, it would be wrong in principle to add 10% to the damages awarded in a commercial case. There is no evidence that doing so would improve access to justice in such cases, and it would be contrary to the compensatory principle for the law of damages.

Section 2.4 - Part 36 Offers

Q21 – Do you agree with the proposal to introduce an additional payment, equivalent to a 10% increase in damages, where a claimant obtains judgment at least as advantageous as his own Part 36 offer?

10. No, not for higher value or substantial commercial / business litigation in the High Court. In these cases no additional incentive is needed for parties to attempt to settle. This is borne out by the fact that the vast majority of higher value or substantial commercial / business cases in the High Court settle before trial, and that Part 36 offers are commonly made by both claimants and defendants.

Q26 – Do you agree that the effect of Carver should be reversed?

11. Yes. The uncertainty introduced by Carver impedes the ability to assess risk and advise clients accordingly.

Section 2.5 - Qualified One Way Costs Shifting

Q28 – Do you agree with the approach set out in the proposed rule for qualified one way costs shifting (QOCS) (paragraph 135-137)? If not, please give reasons.

12. No, not for higher value or substantial commercial / business litigation in the High Court. QOCS is clearly aimed primarily at the field of personal injury and clinical negligence. We do not comment on QOCS in relation to those areas. However, we do not consider that it would be desirable or appropriate for QOCS to be introduced in higher value or substantial commercial / business cases in the High Court, or in defamation cases.

13. The principle of two way costs shifting (whereby the losing party pays the winner’s costs) has long applied to civil litigation in England and Wales. In our view, it is a strength of the court system in this country. It assists in obtaining a just outcome to a case, so that the winner is reimbursed for at least some of its costs. It also acts as a deterrent to parties bringing unmeritorious claims or making unmeritorious interlocutory applications. In higher value or substantial commercial / business litigation in the High Court, there is not normally the disparity in position that can arise in personal injury cases where the defendant for practical purposes is nearly always an insurance company; there is also not the same overwhelming majority of cases won by claimants in these commercial cases - unlike in personal injury litigation where claimants almost always succeed.

14. Many international clients come to London by choice to litigate their disputes, and we believe that two way costs shifting is one of the matters that they value and which leads them to come to England. We would therefore be against taking any step which might reduce the attractiveness of London as a venue for dispute resolution of large international commercial disputes.

Q30 – Do you agree that QOCS should be extended beyond personal injury? Please list the category of case to which it should apply, with reasons.

15. No, we do not agree that QOCS should be extended beyond the field of personal injury.

Section 2.8 – Proportionality

Q40 – Do you agree that, if Sir Rupert’s primary recommendations for CFAs are implemented, a new test of proportionality along the lines suggested by Sir Rupert should be introduced?

16. No.

Q41 – If your answer to Q40 is no, please explain why not and what alternatives would you propose to achieve the objective of ensuring that costs are proportionate?

17. It is unfair to penalise a winning party for taking steps which are necessary under the CPR (for example, completing electronic disclosure or preparing detailed witness statements) in order to win the claim, and where that party’s costs are reasonable in amount - even if that means that the costs are disproportionately high, compared to the value of the claim. The way to reduce costs would be to simplify the litigation procedure in lower value cases, and for judges to use their case management powers more extensively.

14 February 2011

ANNEX

LONDON SOLICITORS LITIGATION ASSOCIATION (“LSLA”)

The LSLA was formed in 1952 and represents the interests of a wide range of civil litigators in London. It has some 1,000 members throughout London among all the major litigation practices, ranging from sole practitioners to major international firms. Members of the LSLA Committee sit or have recently sat on the Civil Justice Council, the Civil Procedure Rules Committee, the Law Society Council, the Law Society Civil Litigation Committee, the Commercial Court Users Committee, the Commercial Court Long Trials Working Party, the TCC Users Committee, the Chancery Users Committee and the Supreme Court Costs Group, to name but a few. Representatives from the City of London Law Society and the City of Westminster and Holborn Law Society also sit on the LSLA Committee.

COMMERCIAL BAR ASSOCIATION (“COMBAR”)

COMBAR is a Specialist Bar Association, representing self-employed barristers who practise in the field of international and commercial law. Its members consist of thirty seven sets of chambers mainly in London where barristers practise in this field, together with a number of individual and honorary members. The great majority of leading practitioners at the Commercial Bar of England and Wales are members of COMBAR.

CHANCERY BAR ASSOCIATION (“ChBA”)

The ChBA is one of the longest established bar associations and represents the interests of over 1,000 members handling the full breadth of Chancery work at all levels of seniority, both in London and throughout England and Wales. It is recognised by the Bar Council as a Specialist Bar Association. Membership of the ChBA is restricted to those barristers whose practice consists primarily of Chancery work.

LONDON COMMON LAW AND COMMERCIAL BAR ASSOCIATION (“LCLCBA”)

The LCLCBA was formed in 1966. It represents just over 1300 Barristers who are in practice in the London area and who deal with common law and commercial litigation and advisory work as part (or all) of their practices. It does not represent barristers with other fields of specialist litigation practice, such as those engaged in criminal law. It is currently the largest amongst the Specialist Bar Associations and thus represents the views and experience of a substantial proportion of the bar covering a wide spectrum of civil practice in the greater London area. The LCLCBA’s remit includes education and responding to specific issues raised and papers presented by government and the General Council of the Bar.

CITY OF LONDON LAW SOCIETY (“CLLS”)

The CLLS represents approximately 14,000 City lawyers through individual and corporate membership including some of the largest international law firms in the world. These law firms advise a variety of clients from multinational companies and financial institutions to Government departments, often in relation to complex, multi jurisdictional legal issues.

Response from: 
LSLA
Commercial Bar Association
Chancery Bar Association
London Common Law and Commercial Bar Association
City Of London Law Society