Going to law is expensive, favouring those with deep pockets. If you are of modest means, you are at a serious disadvantage.
What can be done about it? Lord Justice Jackson’s extensive recommendations on civil litgation costs, published last week, have been a talking point across the legal profession. Opinions remain divided with lawyers working with middle-sized businesses, in particular, expressing their reservations about how their clients would be affected.
Jackson’s intentions are clear — to improve access to justice. But that means introducing systemic change to produce a tightly regulated market that makes radical changes by, for example, imposing a cap on the scale of success fees and stopping after the event (ATE) insurance premiums and success fees being recoverable from unsuccessful opponents.
Andrew Parker, of Beachcroft, is enthusiastic about the proposals but emphasises that they have to be seen in the round. “To achieve the change required, they must be introduced in full,” he says. “Some measures could be introduced quite quickly, others will require legislation. This means they will be phased in over time. There could be a problem if the Government introduces them only in part or does not get around to introducing them all.”
Jonathan Sacher, head of litigation at BLP, agrees that Jackson’s aims are laudable but underlines the practical problems. “They are highly complex and require a vast amount of tinkering with the system. Bringing them altogether might be difficult.”
Advertisement
One of the biggest areas of contention surrounds Jackson’s views on claims management and insurers and other intermediaries selling on referrals to lawyers in personal injury cases.
Jackson wants to ban this practice outright. Not surprisingly, his proposal has been attacked by organisations such as Contact Law, one of the largest providers of client introductions in the UK. “Calls to ban referral fees for personal injury cases are misjudged, considering the many benefits referrals bring to consumers and law firms,” says James Vintin, of Contact Law. “With the legal market facing the huge challenges of the Legal Services Act, referrals are more important than ever in linking consumers to relevant legal practices. The issue of referral fees is a bit of a red herring.”
However, John Spencer, chairman of the Motor Accident Solicitors Society, endorses the proposals, saying that they are well researched and evidence based. “Many introducers make their decision [on to whom to refer the case] primarily, if not exclusively, on ground of price not service excellence. In this sense they provide a disservice — not service — to the consumer.” The amount of money available for genuine legal advice also is reduced significantly.
By contrast, he says, there should be more reliance on schemes such as the Law Society’s Personal Injury panel. “This operates a real competency test that is not price driven,” he says. “Its selection process is exacting.”
In another areas of important change, Sacher worries that the reforms might push the UK on a “dangerous slide” towards a North American model of contingency fees. “I work in both the US and the UK, and I don’t think that we have anything to learn from the Americans,” he says. “In the US, cases tend to be taken on a much more speculative basis in the knowledge that they will end up in front of a jury.”
Advertisement
The implication is that rather than access to justice, the motive in many American cases is access to a lottery-style payout from a sympathetic group of peers. We could be in danger of importing a heightened sense of litigiousness driven purely by the profit motive, a world away from what Jackson has in mind when he talks about access to justice.
Certainly, he faces criticism that while he knows about the law, he can be naive about how the money side works. For example, his endorsement of before the event (BTE) insurance is misplaced, says Michael Frisby, of Stevens & Bolton. “BTE insurance usually means that lawyers are involved on a limited scale,” he says. “I don’t think that the kind of products that Jackson favours are actually available.”
Meanwhile, Derek Patterson, managing director of IM Litigation, a third-party funder, believes that the kind of constraints that Jackson wants to impose on contingency fee arrangements will drive investors towards the US. “We are in competition with the US for investors . . . Jackson’s proposals are in danger of destroying the investor case for this country. The result is that some cases just would not attract finance.”
But would the markets adapt? Andy Lyon, head of professional negligence at TLT, is confident that solicitors will adapt and carry on — whatever the changes. “We’re prepared to be innovative and competitive,” he says. “We’ll come up with alternative ways of funding cases, no matter what.”