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Civil justice reforms: Jackson/LASPO update

Our monthly round up of progress with the Jackson and associated civil justice reforms including updates this month on the latest cases in costs budgeting, a look at the future of claims volumes and the judiciary review on the unimplemented Jackson recommendations. 

Costs budgeting – latest cases

Mitchell v News Group Newspapers Ltd (2013) - this month we discuss the “Plebgate” costs management case, in which the costs budget of former cabinet minister Andrew Mitchell MP for suing The Sun for libel was restricted to just the court fee as a result of failures to comply with the new CPR. Mr Justice MacDuff has now made the order to leapfrog the appeal against the Master’s decision to the Court of Appeal. The appeal will be the first testof the senior judiciary’s support for the much harder line on non-compliance with the CPR and granting relief from sanctions.

Rayyan Al Iraq Co Ltd v Trans Victory Marine Inc (2013) – meanwhile, there is a further recent example of the High Court tempering its approach to relief from sanctions following Mr Justice Walker granting relief in a case of human error in the unreported July case of Wyche v Careforce Group Plc. In Rayyan, the High Court has ruled in a shipping case that the new rule on relief should not be applied so strictly that a refusal would be disproportionate and give the defendants an unjustified windfall. Mr Justice Andrew Smith found that an oversight that led to the claimant’s solicitors serving particulars of claim two days after the expiry of the 28-day period allowed by the CPR was in all the circumstances the clearest case for allowing an extension of time. Having missed the deadline, the claimant asked the defendant to agree to the necessary extension of time and applied to the court when that was refused. The judge found that had the claimant applied for an extension before the 28-day period expired, it would almost certainly have been dealt with on paper and granted.

These cases continue to add to the uncertainty over how vigorously the new CPR will be enforced. We will be monitoring closely any further decisions, in particular any Court of Appeal guidance in Mitchell.

Claims volumes: a look into the future

Simon Denyer takes a look at where we now stand in relation to current and likely future claims volumes, as well as the increasing pace of change in the business models of claimants' solicitors which will in turn affect future volumes.

Claims notifications

You will recall that the Portal Company statistics for new claims submitted to the Portal are issued a month in arrears. May's figure for new CNFs submitted to the £1-10K RTA portal were the lowest for nearly two years at just over 54,000, a hangover from the exceptionally high numbers of the previous months caused in turn by the keenness of claimants' solicitors to submit claims earlier to avoid the on-going changes. June's figure for new CNFs was slightly higher at around 58,500, though the number was still the lowest monthly figure for 18 months apart from May's number. The corresponding figure for July (which is still awaited) is likely to show a further increase back towards what used to be regarded as usual levels, aided by the fact that in July, there was of course extra reason for claimants' solicitors to lodge £1-10K RTA claims into the portal before 31 July to avoid fixed recoverable costs as should those claims later drop out of the portal they will attract costs on the old costs system including hourly rate costs in litigation rather than the new fixed recoverable costs.

Expanded portal

The expanded portal opened of course on 31 July for RTA claims up to £25,000 and for EL and PL claims between £1,000 and £25,000.

Whilst currently the portal company prepare monthly new CNF statistics for claims entering the RTA portal, from August onwards we expect they will make available separate statistics for RTA claims on the one hand, and for EL/PL claims on the other. It ought to be in early October that the first statistics will be available showing how the expanded portal has affected the number of new CNFs both for RTA, and for EL/PL. It will be a few months after then that statistically significant trends will become known.

Up until now, few claims are entering the expanded portal outside the previously eligible RTA £1-10K claims which have of course been portalised for some time now. Because the number of CNFs to the expanded portal are currently so low, defendants and insurers are currently still noticing the odd new portal claim as something of a novelty.

This is hardly surprising where the new categories of claim entering the portal for the first time are only doing so where both the accident has happened after 30 July, and there has been enough time afterwards for the claim to be submitted. It will probably be a few months yet before the number of new notifications to the expanded portal picks up.

It might have been thought that EL disease claims would have been quicker off the mark into the expanded portal, as of course all that is needed there is for the claim to be notified, as the claim must be lodged into the portal if the notification date is after 30 July. While it could have been the case that EL disease claims were being promptly notified in early August in the sense that they were eligible for the portal, in fact over the preceding weeks it is clear that the aim of claimants' solicitors acting in current EL disease claims was to avoid the portal wherever possible, and to notify them by means of an ordinary letter of claim before 30 July. While disease claims are of course exempted from FRCs outside the portal at present, those claimants' solicitors were presumably keen to avoid the portal process and the FRCs that would apply inside the portal, preferring instead to stick with the former processes and costs regime which with they were familiar.

Claimant changes

The pace of change on the claimant's side is hotting up. The expected new landscape of a move to larger commoditised entities is moving ahead quickly in places.

A survey by Company Watch of 2600 firms has reported nearly 900 current claimant law firms have a 25% chance or more of failing. Nearly 500 have a zero or negative net worth. Whilst sole practitioners were excluded from the survey, of the smaller firms included, nearly half were at a risk of failing.

The Midlands firm Challinors of whose work personal injury claims made up a significant proportion is a case in point as it has gone into administration. SGI Legal, an ABS, has acquired their personal injury caseload, but taken on none of its partners, perhaps an indication as to the lower level of lawyers expected to be used on the claimant side. SGL says that it intends to make more acquisitions in the period ahead.

Quindell, another ABS who took over firms such as Silverbeck Rymer and Pinto Potts last year, has reported an increase in revenue of 78% in the first six months of this year, now up to £163 million.

In an interesting example of how the commoditised RTA claims process is now likely to extend into EL and PL claims, Minster Law, which was taken over by BGL Group in May, has announced its intention to move into EL and PL claims. It says that it sees its experience of managing RTA portal claims as capable of being transferred easily to EL and PL claims now that they will be entering the portal where the accident occurs after 30 July.

Similarly Winn Solicitors which was recently bought by two private equity businesses, JZ International and Souter Investments, now intends to expand beyond its core road traffic practice.

Perhaps the biggest deal announced recently was the intention of Slater & Gordon to acquire Fentons, a deal that is expected to be completed in October. Fentons are hardly a small outfit, in fact a 37 partner firm with bases in London and Manchester. Fentons' justification was that they saw the Government reforms putting pressure on firms even of their size, so that they needed an upwards merger. At the same time, Slater and Gordon have completed their purchase of Taylor Vinters, and the purchase of Goodmans Law is expected to be completed about now. It has though deferred its proposed acquisition of Simpson Millar until early 2014 for unspecified reasons. And in breaking news at the end of last week, The Lawyer reported that Pannone partners have voted in favour of a proposed sell-off of the firm’s consumer business to Slater & Gordon.

The pace of change seems to be getting quicker. Slater & Gordon are quoted as saying that there is now a greater rate of consolidation amongst claimant outfits than had been expected, and it is hard to say that they are wrong.

What impact will this all have on future claims levels? If the pace of change is going to be quicker, and claimant work is moving across to these expanded outfits with more efficient processes sooner, then if anything claims numbers are likely to move back more quickly towards levels which were encountered before the hiatus that began this spring as the reforms had effect. The latest developments show that there continue to be well resourced outfits whose business plans involving making money out of claimant injury cases even after the current changes have had effect who are moving quickly where they see opportunities. If their plans are to be achieved, they will need to maximise claims volumes. Insurers would be well advised to be ready.

Unimplemented Jackson recommendations: judiciary review

In an interview with Litigation Futures (23.9.13), Mr Justice Ramsey, the judge in charge of implementation of the Jackson reforms, has indicated that the judiciary is undertaking a review of those recommendations which have not yet been implemented and that this may lead to some “tidying up” of the CPR or even legislation to introduce further changes. He highlighted issues such as aligning the bill of costs with the budgeting form Precedent H, and introducing pre-issue costs management as issues to be considered.

The website reports that Ramsey J said that generally “the reforms are being accepted and dealt with as one would have wanted… The importance of costs budgeting and the need for compliance has particularly come to the fore, and parties are now fully engaged in preparing and discussing their costs budgets”.

Ramsey J pointed out that mistakes and inconsistencies in the rules are always going to happen in a complex set of rules like these and that sorting them out is “the business of the rule committee”.

For further information please contact Simon Denyer, Strategic Legal Development Partner on 0161 604 1551 or at simon.denyer@dwf.co.uk

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.