Saturday, 30 July 2016

Under pressure

Brian May’s blog about his bruising experience in the civil courts showcases one of a number of ways in which access to justice is being eroded by recent and continuing changes to the rules that govern our civil court procedure.

Queen’s legendary lead guitarist, and astrophysicist, recently fell victim to what he understandably describes as the “absurd proportionality rule”. In short, he ended up with a recovery of around 20% of his actual costs of a ‘successful’ action against a noisy neighbour. He describes the detail of it at his blog, The scam of 'proportionate' legal costs and makes some heartfelt observations that resonate loudly with me.

At some time in our lives many of us will become involved in a civil court action. We’re not talking here about criminal offences which are dealt with by magistrates and Crown Courts but claims for money, compensation, injunctions, restitution etc handled by our County and High courts.

We’ve probably all done a spot of DIY around the house and garden. Law is no different in that you’re entitled to run your own case – as a litigant in person – and many more people are being forced to do so at present. But as with anything else you’re more likely to get the best results if you hire an expert, somebody who litigates for a living.

If you do engage a lawyer, you’ll need to pay them for their services and litigation can be expensive. What makes for a happy ending is being able to recover your legal costs, or the majority of them, from your opponent. Loser pays is a basic rule that has been a cornerstone of civil justice in this country for hundreds of years.

Of course that has to be subject to controls. It can’t be an open cheque book for those who can afford it to spend lavish amounts on the priciest solicitors and barristers they can find and use that enhanced threat to their advantage in the litigation. Courts use a process of assessment to ensure if necessary that the costs a winning party may recover at the end of the litigation are reasonable.

“Reasonable” isn’t defined on a whim. Costs judges have to exercise discretion and decide what they think is right in all the circumstances of the case but they must do so in accordance with established principles drawn from earlier cases. They’ll hear argument from both sides – those paying and those receiving – before deciding all the items in issue.

So far so good. 

Good enough, many would say. If for example your legal spend is many times the sum you eventually recover or reasonably thought you would recover, then it’ll take some explaining to persuade a costs judge that your bill is reasonable, surely?

Nevertheless, in 1998 along came Lord Harry Woolf with what was to be the first of many shake-ups of the rules and introduced the new concept of proportionality in response to these concerns. The Lord Chief Justice himself presided over a Court of Appeal that delivered a landmark judgment in 2003. It was in the case of Lownds v The Home Office.

The facts of the case are unimportant in this context. The focus of the judgment was on the successful claimant’s costs which ultimately added up to more than five times the value of the compensation that the defendant was ordered to pay. The court set out the approach to be taken in applying the new rules on proportionality.

In short there was to be a global assessment first. Did the amount claimed appear disproportionate having regard to various features of the case including notably the amount that the claimant had pursued and/or won? If so, the court must then look at the winner’s bill item by item applying a stricter test than normal.

To be allowed, each element of the costs claimed would have to be shown to be both reasonable and necessary. It was a game-changer.

I was involved in a lot of costs litigation last decade, some of it high profile, and largely in the context of personal injury cases funded by conditional fee agreements. For those of us in that arena the most important passage in the Lownds judgment was at paragraph 39:

“In deciding what is necessary the conduct of the other party is highly relevant. The other party by co−operation can reduce costs, by being uncooperative he can increase costs. If he is uncooperative that may render necessary costs which would otherwise be unnecessary and that he should pay the costs for the expense which he has made necessary is perfectly acceptable.

Access to justice would be impeded if lawyers felt they could not afford to do what is necessary to conduct the litigation.”

This was absolutely crucial, as anyone who has ever been involved in litigation against an opponent with deep pockets understands. Without that safeguard a party to litigation who can afford to lose is able to fight a war of attrition against a party that can’t.

Or as Brian May puts it, “It’s likely to make it almost impossible for the man in the street to fight back for justice against the bullies who trample all over him.”

Liability insurers are particularly prone to what I heard described in the Court of Appeal in 2003 as ‘behavioural issues’. As a matter of policy and business ethos, they make life difficult, not just for the claimant in one particular case but to deter others whose lawyers will know that the same risks face them and their clients if they dig in and fight for a fair result in the face of daft offers and spurious arguments.

All’s well that ends well if the claimant lawyer’s assessment is right and ultimately the loser is made to pay for “that which he has made necessary”.

But in 2013, the man seen by many as the nemesis of our civil justice system, Lord Justice Rupert Jackson, was to turn it upside down. The rule change introduced in April that year reversed the process.

Now the costs judge on a contested assessment is required to assess the reasonableness of the items claimed and then consider proportionality. If it looks too much in the circumstances, then the court has to cut the total allowed to a figure that looks and feels right.

So, everyone may spend days in some cases debating and arguing to reach a figure that is reasonable having regard to all the features of the case, including the losing party’s behaviour, and then slash it because – well – it still looks too much.

It’s a licence to insurers and other faceless corporates to print money to fill a war chest.

In an article I wrote for the Solicitors Journal in 2012 I examined how this would destroy Equality of arms – such an important principle of our – any – justice system. It generally takes around three years for the impact of such changes to be seen in the bigger cases that may then reach the spotlights of the superior courts so we’re starting to see the evidence of how momentous and potentially unfair this rule change will prove to be.

It means that the risk of a Pyrrhic victory in any successful case rises sharply especially against a corporate opponent where individuals are rarely held responsible for the sort of arrogant and lawless behaviour one Lord Justice described as ‘an insouciance to their obligations….that leaves one quite breathless” in the case of Brown-Quinn and others v Equity Syndicate Management

Disturbingly this is just one more ingredient in a poisonous concoction that is killing off our justice system. The growing imposition of fixed costs regimes is severely restricting the amounts that deserving litigants may recover from a wrongdoer against whom they have no other (legitimate) recourse. Mediation simply isn't an answer - you can't Speak softly without carrying a big stick.

Still, the greedy insurance companies bay for an increase in the limit below which virtually no costs are recovered by the innocent victims to Five grand.

In consequence, numbers of claims are falling. We’re not talking about fraudulent or frivolous actions but justifiable claims that people can’t afford to run even if they rightly assume that they’ll win. Lawyers who would effectively fund deserving claims with decent prospects can’t afford to do so, because even if they win, they’ll lose.

As litigation shrinks, so does the system. Courts close, law firms go bust, able people get out. The government speeds the process by hiking the fees, closing provincial courts, starving the ones left of resources. It’s the Road to Ruin.

The trouble is that for most people these are just the cries of self-interested lawyers – ‘fat cats’ starting to feel hungry. Actually, there are many of us who are motivated by pride in something that we made our vocation and the desire to champion weaker members of our society. Soon, though, there will be No more heroes.

Justice is an entitlement of everyone in our society. It’s the state’s duty to provide it and make it accessible when it is needed. Right now, it’s under immense pressure.

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