Last week Lord Justice Jackson unveiled a large scale shake-up of civil litigation costs. After a year-long review into the rocketing costs of bringing legal action in England and Wales, he has made radical proposals that include accident victims paying “success fees” to lawyers out of any compensation they are awarded. The sweeping changes mostly affect the area of personal injury compensation, where, he says, “there is too much money swilling around”.

The Jackson review was set up in late 2008 by the then Master of the Rolls, Lord Clarke, because the senior judiciary were concerned about the escalating costs of civil justice. The report – the first ever fundamental review, specifically focused upon civil costs – sets out a package of interlocking reforms, designed to reduce litigation costs and promote access to justice. The reforms would also assist in allowing for some claims to be resolved earlier with greater use of mediation. He proposes that success fees and after-the-event (ATE) insurance premiums should no longer be paid by the losing party in civil court cases. Winning parties in personal injury cases would benefit from a 10% uplift in their damages award to compensate for such a move. Solicitors’ success fees would be capped at 25% of their clients’ damages award. Lawyers would not be allowed to pay referral fees for personal injury cases. Claims management companies and other intermediaries would see their income reduced if his proposals are implemented. He also proposes fixed costs in fast track litigation and the establishment of a Costs Council.

Speaking at the launch of his report, Lord Justice Jackson said that his measures will not lead to a decrease in fee income for lawyers working on civil cases. Solicitors and barristers will continue to earn a reasonable living, he said, adding that the focus in personal injury cases had shifted away from the compensation of claimants onto the remuneration of lawyers and intermediaries. “Under the current regime, personal injury solicitors are not competing on quality of service or charges to the client, but on who can pay the largest referral fee – so the beneficiaries of the regime are the referrers, like the claims management companies.” He wants solicitors to compete on the basis of offering clients the lowest success fees, rather than relying on payouts from the losing party.

Probably the headline grabbing recommendations, welcomed by the media, relate to libel cases. Libel trials should be heard by judges sitting without juries, and the cost of libel litigation should be substantially reduced. He also proposes an increase in libel damages of 10 per cent. Referring to libel claims, he said: “The main vindication is vindication by the judgment of the court or the statement in court after settlement. I see no reason why such claimants should not be prepared to pay a substantial proportion of the damages to their lawyers as success fees”. He also said that claimants in libel cases have to be protected against the risk of paying out huge costs because usually the claimant in such cases is of modest means and the defendant a well-resourced media organisation. But, he said, the present system and the way it seeks to protect claimants “is the most bizarre and expensive system that it is possible to devise.”

Law Society President, Robert Heslett, said: “We are very pleased that Lord Jackson has accepted the Law Society’s recommendation that the small claims personal injury limit remains as it is. We regard that as a litmus test of Lord Jackson’s commitment to enhancing access to justice through his review”.  Welcoming the report, Lord Judge, the lord chief justice, said the “the costs of civil litigation are disproportionate and excessive…The measures will ensure that civil justice will be more efficient and fairer”.

The final report covers 45 subject areas and runs to 557 pages, with recommendations across the whole spectrum of civil litigation. It is available from The Stationary Office, who advise that the Final Report contains extensive cross-references to the Preliminary Report and the one cannot be read without the other.

The Crown Prosecution Service has this week launched a 12 week public consultation on important changes to the Code for Crown Prosecutors, which is the document that sets out the principles which prosecutors must follow when they decide whether or not to prosecute an individual. The test set out in the Code is applied in every case and it requires prosecutors to consider whether there is sufficient evidence to charge an individual with a criminal offence and whether a prosecution is needed in the public interest.

In announcing the consultation, Keir Starmer QC, Director of Public Prosecutions, said “Following the announcement of the merger between the CPS and the Revenue and Customs Prosecutions Office (RCPO) earlier this year, I have considered further what changes to the Code for Crown Prosecutors should be made in order to ensure that all prosecutors in the new public prosecution service, along with police officers, are making fair and consistent decisions”. The main changes are:

• Prosecutors will have a discretion to determine whether, where there is sufficient evidence and it is in the public interest to prosecute, a prosecution is a proportionate response to the specific offending.
• Prosecutors will have a discretion to stop a prosecution in the public interest, in exceptional circumstances, before all of the evidence is available.
• A fuller section explaining the Threshold Test.
• A fuller section explaining the use of out-of-court disposals for both adults and youths.
• A fuller explanation of how the public interest is assessed.
• Further public interest factors are identified both tending in favour and against prosecution.

According to ‘The Times’, the consultation will fuel the debate on the numbers of cases escaping prosecution in the courts, which they estimate to be half the 1.4 million offenders dealt with by the justice system each year. A Crown Prosecution Service spokesman is reported as accepting that some offenders could be let off under the guidelines. ‘The Times’ also reports that the proposals were immediately condemned by the Magistrates’ Association, which said that it was yet another instance of the blurring of the respective duties of courts and prosecutors. John Howson, deputy chairman of the Magistrates’ Association, is reported as saying that the new discretion for prosecutors seemed to be “part of the complete muddle in the way we treat offenders and over the boundaries between where the prosecutors and the courts lie”, adding that “if someone has offended, they should be brought before the courts, where we have a range of penalties from an absolute discharge to custody. The job of prosecutors is to find the evidence, not to assess the weight of it”.

The consultation period ends on 11 January 2010 and a summary of the responses received will be published. The full text of the consultation can be found at:-

http://www.cps.gov.uk/consultations/rccp2_consultation.pdf

Lord Hunt of Wirral was commissioned by the Law Society in October 2008 to advise on what was needed to establish best modern practice in the regulation of solicitors. His terms of reference were:

‘In light of current and forthcoming changes in the Legal Services market, the differing needs of different types of client, current regulatory debates and the need to promote equality and diversity, to consider the appropriate regulatory rules, monitoring and enforcement regime to ensure high standards of integrity and professionalism for solicitors and their firms in all sectors, and to make recommendations.’

This week the Law Society published his report. In his ‘Welcome’ to the report, Lord Hunt acknowledged that the legal sector is undergoing a radical transformation. Alternative Business Structures will have to be assimilated into the legal regulatory system, the ever changing demands of clients will need to be satisfied, and English and Welsh law must maintain the high international reputation which provides so many business benefits for the UK. “For these, and many other reasons, it is critically important that the regulatory system is constantly revaluated to ensure it is fit to meet both new challenges, and long standing regulatory needs”.

Lord Hunt makes 88 specific recommendations, and there are four main themes in the report. He stresses that all firms must be regulated to the same standard, by a knowledgeable and credible regulator and in accordance with the well-established BRE principles of better regulation. But this does not mean that every firm should be treated in the same way. He advocates a system which he describes as Authorised Internal Regulation (AIR). AIR will be available to all firms, not just those concentrating on corporate work, who demonstrate their willingness and ability to set up internal governance standards that are robust enough to secure compliance. Secondly he recommends the extension of the regulatory net to include will writing, claims management companies and all of probate, as these are complex matters with potentially far reaching consequences.

Lord Hunt recommends that legal professionalism should be translated into regulatory principles. He says it is essential to base any regulatory system in a strong and transparent theoretical framework, ensuring that it has the necessary resilience and flexibility to adapt to the changing world in which it operates. His view is that legal professionalism, rooted firmly in the concept of the rule of law, provides a sound base for the regulator to build on. The fourth theme concerns the regulation of Alternative Business Structures (ABS). He does not oppose the 2011 launch date, as proposed by the Legal Services Board, but stresses the importance of getting it right. It is crucial that appropriate public and consumer safeguards are put in place. Regulators must be clear about the information they require, the scrutiny they intend to undertake, and how they will deal with regulatory breaches. He recommends that ABS should be subject to the same regulatory requirements that govern other law firms.

Bob Heslett, President of the Law Society, welcomed the report and said “Lord Hunt has set out an imaginative and thought provoking blueprint which I am confident will be invaluable to the SRA [Solicitors Regulatory Authority] as it charts its way forward for the future. We look forward to working closely with the SRA as it develops its approach.”
The full text of Lord Hunt’s report can be found at:

http://www.legalregulationreview.com/files/Legal%20Regulation%20Report%20FINAL.pdf

The Law Society claimed a partial victory when, after lobbying hard for a proper pilot and full evaluation of the proposals, the LSC promised that decisions on any roll out will not be taken until full pilots have been evaluated, which will not be before 2013. “This decision is a testament to the strength of the arguments put forward in the responses of the Law Society and all the other organisations who responded to the consultation” said Paul Marsh, Law Society President. He expressed pleasure that the LSC has adopted many of the suggestions in relation to the pilot model that were made in the economic report by LECG which was commissioned by the Law Society and welcomed the acknowledgement of the need for solicitors to be able to follow their clients out of area.

But there the welcome ends. Their main concerns are still that access to justice will be reduced and that there is a great risk of disrupting the existing supplier base. Firms are likely to feel pressured to make unsustainably low bids in order to win a contract and quality will not be taken into account as part of the bid process. The Law Society expressed disappointment that, despite an overwhelmingly negative response to BVT, the LSC has decided to proceed with pilot schemes in Manchester and Bristol. In a recent exchange of correspondence with the LSC, Des Hudson, Chief Executive of the Law Society, called for some protection for firms in the pilot areas. As bidding for contracts in the pilot areas will be open to all the firms in the whole country, this has the potential completely to destabilise and cause permanent damage to the existing supplier base, particularly as economic analysis has confirmed that the market is extremely fragile and that many firms currently operate at marginal profits. He also drew attention to the “complete lack of detail” of how the scheme will operate. “Please explain what, if any, training or advice you intend to provide.” Paul Marsh warned of the potentially destructive impact on firms in the pilot areas that will be forced to exit the market if they did not secure a contract. “For some lawyers in this position, the result will be personal bankruptcy,” said Marsh. “It is not acceptable that people should be bankrupted by the operation of a pilot scheme.”

Other views reported in the ‘Law Society Gazette’ included those of leading criminal law solicitor Andrew Keogh, who predicted the demise of BVT. “The pilots won’t happen. It’s a monumental shift by the LSC, kicking everything into the long grass.” Franklin Sinclair, senior partner at Manchester firm Tuckers, said practitioners would be looking at ways to challenge the decision to proceed, but if the pilots went ahead, it would be a “disaster for clients…I can foresee firms making unsustainable suicide bids and the price ending up so low that providing a service of any quality will not be possible.” Ian Kelcey, chairman of the Law Society’s criminal law committee, warned “each firm [in the pilot] will have to consider what decision it makes in relation to BVT. But they should be under no misapprehension that, if the price drops, the standards required by the SRA will not decrease.”

The full text of Des Hudson’s letter to the LSC is at:- http://www.lawsociety.org.uk/new/documents/2009/deshudson_lsc050809.pdf

and the LSC’s response is at:- http://www.lawsociety.org.uk/new/documents/2009/lscresponsebvt140809.pdf

Criminal firms have seen the introduction of fixed fee schemes for police work and a standard fee system in magistrates courts following a review of legal services by Lord Carter three years ago. Now the consultations on proposals for competitive tendering by criminal defence work firms have come to an end, with solicitors’ firms across the country voicing strong opposition to the proposed system.

The Law Society, the Bar Council and the Criminal Bar Association are all gravely concerned about BVT as currently proposed by the LSC, involving a limited scheme which would cover lower crime work in police stations and the Magistrates’ Courts. This would probably be extended should it prove successful. BVT involves competitive tendering based on price for criminal defence work, as solicitors’ firms will bid for blocks of work, with the lowest bidder getting the work. Strong concerns are expressed that criminal legal aid firms could be drastically reduced, meaning the number of firms available to clients will diminish, as the already financially vulnerable supplier base is put at risk. “The widespread use of BVT is likely to… deny clients access to many competent and dedicated solicitors who want to serve them. The bidding processes proposed are opaque and not suited to the commissioning of professional services, where the freedom of the individual is put at risk”, said Paul Marsh, Law Society President.

In their response to the proposals, the Law Society said that they will have a hugely detrimental impact on the quality of representation in police stations, and thereby damage the criminal justice system as a whole. Of equal concern is the failure to conduct a full and proper impact assessment, taking account of the potential disproportionate impact on women and BME practitioners. Desmond Browne QC, the Chairman of the Bar, said that “we cannot afford to sacrifice the present robust system for a scheme which lacks all economic justification, and which will have a disproportionate impact on BME practitioners. The LSC’s failure properly to assess the impact on BME practitioners is potentially discriminatory and may be unlawful; it has a statutory duty to avoid discrimination and promote equality of opportunity, and it has comprehensively failed to comply with this requirement”.

Speaking at a conference organised by the Legal Action Group to celebrate 60 years of legal aid, justice department minister Lord Bach said that BVT is “not a simple cost cutting exercise. It’s aimed at securing a sustainable, effective and efficient supplier base”. In an interview with the ‘Guardian’ he acknowledged that his policies are deeply unpopular among many former colleagues, adding that “I have to do what I can to ensure the legal aid is spent in the best possible way, and that’s what I’m trying to do.”

The Law Society’s response to the Legal Services Commission’s consultation on best value tendering for CDS contracts 2010 can be found at:-
http://www.lawsociety.org.uk/secure/file/180185/e:/teamsite-deployed/documents/templatedata/Internet%20Documents/Government%20proposals/Documents/bvt_response180609.pdf

The Virtual Court is a new initiative aiming to speed up first hearings and improve the service given to victims and witnesses. It enables a defendant, who is charged in a police custody suite, to appear in a magistrates’ court for a first hearing whilst still physically located in the Police Station. It is claimed that this reduces the time from charge to first hearing from days to just a few hours in most instances. A Virtual Court combines video conferencing technology, an on-line ‘virtual’ collaboration space allowing case files to be shared electronically, and secure links to join up the agencies involved.

Last week, Charing Cross Police Station was linked with Camberwell Green Magistrates’ Court in a virtual court hearing, with a 14 further stations taking part in the scheme over the coming months. Already one defendant has been jailed for drink driving, just hours after his arrest. Currently defendants held at Charing Cross have the right to refuse to take part in the trial, but that right would be removed by legislation before Parliament. Justice Secretary Jack Straw has backed the pilot scheme, claiming virtual courts have the potential to “transform how the justice system deals with crimes. Although at an early stage, this pilot helps the courts, police, prosecutors, defence lawyers and the judiciary work better together to deliver quicker and more effective justice without any loss of quality. The faster we get justice done, the more we improve public confidence in the criminal justice system as whole,” said Straw.

But the Law Society has expressed grave concerns. They claim that Virtual Courts could see thousands of defendants losing their right to appear in court. Richard Miller, Law Society Legal Aid Manager, said that “There are major practical considerations about virtual courts that have not yet been satisfactorily addressed”, instancing worsening delays increasing the number of ineffective hearings and solicitors not being able to gather the information necessary for a bail application in the time available. They question how defendants will get confidential advice and how their lawyers will get access to the relevant paperwork for second hearings. And they also have “grave concerns over the safety of its members – under this scheme defendants will be sat in a small room right next to their solicitor”. Jack Straw addressed this point particularly when he said “I never had any experience of a defendant threatening me. There are a lot of police officers and custody officers in the custody suite”.

The Office of Criminal Justice Reform (OCJR) is set to outline the future for the virtual courts pilot scheme next week following this trial. They will seek to “explain the scheme’s ability to lower costs and improve efficiency as part of the government’s drive to use technology more effectively in justice delivery”.

On the 2nd April a joint statement was issued by the Law Society, Legal Services Commission and Ministry of Justice regarding the agreement they reached on the unified contract. This follows the recent Court of Appeal judgement about the civil legal aid contract.

The MOJ and the LSC have accepted “and will not challenge the decision of the Court of Appeal in favour of The Law Society’s (TLS) arguments that clause 13.1 of the Unified Contract is incompatible with the Public Contracts Regulations 2006 (the Regulations).”

There was an element of humble-pie eating in their admission that they “regret that the implications of those Regulations were not recognised earlier and acknowledge that TLS was justified in commencing those proceedings. MOJ and LSC further acknowledge and accept that the Court of Appeal judgment means that the only power of amendment which now remains in the civil Unified Contract is the power in clause 13.2.”

The Law Society was more triumphalist, claiming that it had “secured significant benefits for the civil legal aid system”, and that the agreement would “give many legal aid firms a much needed period of stability and certainty in which to plan their futures.” Des Hudson, Law Society chief executive, said “our talks with the LSC and the Ministry of Justice have not only helped ensure legal aid will receive vital financial support, they have also shown that we can work together in an effort to establish a more balanced system that is workable and accessible. However, we still have serious concerns about the future of legal aid and welcome the LSC’s commitment to a more open approach of better engagement with legal aid practitioners and the Society.”

Unified Contract Agreement – the details

The Law Society’s press release highlighted the following points of the agreement:-

• Best value tendering (BVT) in criminal legal aid will be delayed by six months to a date not before July 2009.
• an increase of 2% on all legal help fixed fees and underlying hourly rates from 01/07/08.
• care level 2 fee increases from £347 to £405.
• a 5% increase in CLR (controlled legal representation) fees and rates for mental health.
• a 5% increase in CLR fees and rates for immigration.
• a delay in implementing private law family litigators’ graduated fees.
• a closed list of all CLACS and CLANS (Community Legal Advice Centres and Networks) planned for the period ending April 2010.
• the LSC will, with effect from today, not seek to recoup historic unrecouped payments on account over six years old and where the amount outstanding is less than £20,000 – restrictions apply (see the full deed of settlement).
• a new process on standard monthly payments, designed to prevent changes happening so often, so unpredictably and with such large variations.
• LSC’s commitment to publish a route map setting out the outline of its proposals for the next five years, including a commitment that there will be no price competitive tendering for civil or family work before 2013.
• Reviews of the contract compliance audit process and the operation of peer review and other quality assurance mechanisms.

For full details and relevant links see:-

http://www.legalservices.gov.uk/civil/unified_contract.asp
http://www.lawsociety.org.uk/newsandevents/pressreleases/view=newsarticle.law?NEWSID=394906

I reckon that the busiest groups of civil servants currently are those monitoring Government sponsored consultation processes. Under the present Government there are literally hundreds of consultations launched every year. The official line is that consultation is about making government more open and policies more effective by listening to and taking on board views of the public and interested groups, and has become an integral part of the policy-making process.

And here comes another, launched by the Ministry of Justice, which department alone has over 80 consultation exercises in progress at the moment. It concerns proposals to reform the way costs from central funds are awarded in the defence of privately funded defendants acquitted in criminal cases in England and Wales. This is in the context that the Government is committed to the principle that state funding in the form of legal aid should be available to individual defendants who cannot afford to pay for their own representation. “But it also believes that those who can afford to pay towards the cost of their defence should do so. For these reasons, means testing was reintroduced in the magistrates’ court in 2006 and we are currently consulting on a pilot of means testing in the crown court.” Changes are not proposed to the current arrangements for private prosecutor, witness, medical expert or interpreter costs, which are also paid from central funds.

What is being proposed is that, in future, any individual who does not apply for legal aid in defending their case would no longer be able to receive back their legal costs from central funds. This would be a reversal of the practice that those found innocent of charges brought by the state are compensated for the costs they have incurred in defending themselves. Under the Prosecution of Offences Act 1985, if an individual pays for their defence privately they can usually reclaim reasonable costs and expenses from central funds if they are acquitted. An interesting, if debatable, analogy with private education is offered in support. “Just as an individual who chooses to put their child through private education does not reclaim this cost from the education system, nor should public funding recompense those that choose to pay privately for a lawyer when a publicly funded alternative is available.”

According to ‘The Times’, the proposals have prompted outrage. Frances Gibb reports that, amongst others, motoring groups and lawyers have criticised them as a fundamental breach of principle. She quotes Edmund King, president of the AA, as saying that the proposal is “against the common law and against the common man”; and Ian Kelcey, head of the Law Society’s criminal law committee, as condemning the proposal as a “disgrace.”

The consultation will close on 29 January 2009. Full details are available at
http://www.justice.gov.uk/docs/award-costs-central-funds.pdf

If you want to see the full range and extent of current consultation exercises, navigate your way round
http://www.direct.gov.uk/en/Governmentcitizensandrights/UKgovernment/PublicConsultations/DG_4003113

The Legal Services Commission (LSC), after lengthy discussions with the Law Society, has agreed a number of changes to its legal aid proposals. The Law Society is holding free events to update civil and criminal legal aid practitioners and:-

• To explain the terms of the settlement secured by the Law Society from the LSC/MoJ.
• To inform legal aid practitioners how these changes affect them and to help them understand the business implications of the new structures.
• To hear from practitioners their view of the future of their legal aid work and to explore how the Society can support them as they prepare for that.
• The way forward on achieving a sustainable future: what the Society is continuing to do to tackle ongoing concerns about the legal aid system.
• Information on help and support available from the Society.

The timing of all the events is 17:30 – 19:30, with registration and refreshments at 17:00. A speaker at every event is Richard Miller, now Legal Aid manager for the Law Society, formerly head of the Legal Aid Practitioners Group (LAPG). He is accompanied by any combination of Andrew Holroyd, president; Paul Marsh, vice president; Bob Heslett, deputy vice president; and Des Hudson, chief executive, depending on the location.

Some events have already been held, but those still outstanding are:-

Bristol – 29 April – Armada House, Conference Centre, Telephone Avenue, Bristol.

London – 30 April – Law Society Common Room, 113 Chancery Lane, London.

Llandudno – 6 May – North Wales Theatre & Conference Centre, The Promenade, Llandudno.

Nottingham – 7 May – Castle Suite, Rutland Square Hotel, St James Street, Nottingham.

Cambridge – 8 May – Homerton College, Hills Road, Cambridge.

Wakefield – 12 May – Cedar Court Hotel, Denby Dale Road, Wakefield.

Manchester – 13 May – Park Suite, Ramada Manchester Piccadilly, Piccadilly Plaza, Manchester.

Newcastle – 15 May – Conference Room Central Square, 4th Street, Newcastle-upon-Tyne.

To book a place you are advised to e-mail: regionalsupport@lawsociety.org.uk quoting ref: ZZZ/CELS and the location. Places are limited and will be allocated on a first come, first served basis.