Hugely increased court fees took effect this week. Euphemistically called “enhanced court fees”, they will see rises of up to 600 per cent across the civil courts.
Justice minister Lord Faulks put the argument in the House of Lords that the 5 per cent levy on all money claims over £10,000 rests on the premise that it will save £120 million for the government. That sum will support court services in England and Wales as a matter of financial necessity. Cost-efficiency, he says, is no longer enough; it is time for “those who use the courts” to contribute to the courts.
He also claims, however, that the higher fees will make little to no impact on demand for legal services, nor will the levy damage access to justice.
Yet Faulks’ views seem to reflect his disconnect from the reality of the legal system, and in business in general — a disconnect that becomes of greater concern, with his problematic assertion that litigation is “very much an optional activity”.
The queue of litigants who would disagree with this bizarre notion would stretch out of the High Court and along the Strand many times over. The impact on ordinary people could be enormous.
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The changes are in this sense more similar to those unrolled for employment tribunal application fees, which have been noted as having caused a 79 per cent reduction in applications.
If a similar result occurred in the civil courts, it would be hugely damaging to access to justice and our legal heritage, to the UK’s status as the dispute capital of the world, and to a justice system that has already undergone serious transformations in the past few years.
Such a reduction in cases brought in the courts would also have a significant effect on the revenue that Faulks seeks to bring in by increasing the fees.
Faulks also mentioned the process of recoverability from the other side and also suggested that solicitors may feel able to “provide assistance with upfront costs” . The lack of reference here to the various forms of funding that exist is also of concern.
The Jackson reforms to reduce the costs of civil justice effectively rubber-stamped litigation funding as a means of providing access to justice. Litigation finance is not a cure-all mechanism for the fee rises. It could, however, result in increased activity among cases involving lower damages claims.
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Third-party litigation funding has become almost universally familiar to private practice lawyers as a tool to help their clients to finance the rising costs of litigation.
As shown by the results of Burford Capital’s inaugural UK litigation and arbitration funding barometer launched earlier this week, 90 per cent of private practice lawyers and 58 per cent of corporate clients claim to be aware of litigation finance.
Faulks’s mistake is in not raising litigation funding, while seemingly putting the burden of costs on to law firms.
Our survey showed 65 per cent of private practice lawyers said that their clients used litigation finance in 2014 because they couldn’t otherwise afford to pursue claims, with a further 14 per cent needing funding to prevent cash-flows bleeding out through their legal case and therefore preserving resources for other areas of their business.
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Understanding the legal landscape and how it has metamorphosed in the wake of Lord Jackson’s reforms should be integral, and include comprehending the value of litigation finance.
Faulks’ disquieting exclusion of litigation finance only accentuates an apparent unawareness of the current issues already facing lawyers and their clients.
The Jackson report actually stated that “the current level of court fees is too high” . It seems that Faulks and other ministers — as well as the House of Lords — have lost sight of what it is they are seeking to achieve.
Nick Rowles-Davies is managing director of Burford Capital UK and author of Third Party Litigation Funding
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