A complex scenario

Never has so much been said or written about the subject of costs. It is admirable to see litigators almost universally accepting that costs need controlling and that they are generally too high. Lord Justice Jackson's interim report identifies that in relation to complex commercial litigation this is not borne out by the evidence. Generally, the costs of heavy litigation are broadly proportionate to the sums and issues at stake. But (rightly) this does not prevent him, or any other responsible participant to the debate, accepting that costs can and should be controlled. In lower-value and consumer claims, it is almost unarguable that they need to be reduced.

It is impossible for any commentary to tackle the issue without it being criticised for overlooking one or more factors. There are many issues and priorities at play. They produce a complex scenario for anyone to navigate. Inevitably, therefore, Jackson LJ and his working party have looked at a wide range of issues including the costs shifting rule, contingency fee agreements, and amendments to the conditional fee regime, to name but a few. These arguably have little to do with controlling costs and more to do with the separate issue of shifting and re-allocating risk.

The real cause of high cost is human behaviour, the economic cost of services that support that behaviour, and the procedural environment in which those two factors operate.

In that context it is perhaps surprising that there has been little debate about the increasingly high cost of recruiting, training and retaining lawyers to service the litigation needs of clients. Over the last 15 or so years, the major City firms have had to match the exponential growth in salaries offered by investment banks and other financial institutions. Otherwise, the profession would have suffered a talent drain. The result has inevitably been to drive up the cost of supplying legal services.

One would not expect Jackson LJ to begin to be in a position to deal with such macro-economic issues. However, they do, in my view, provide an essential backdrop to the debate about where else to look for solutions to the behavioural and procedural cultures in which litigation cost has grown. This will not be the first article suggesting (in necessarily brief terms) that the adversarial nature of litigation is in large part responsible for the perceived high costs.

But, if we wish to retain the adversarial system '“ and it would be unwise to consider that our litigation market would survive in its present form if we sought to change it radically or quickly '“ then we need to recognise that London probably has, at least in costs terms, many of the features that makes it the worst of all worlds from the point of view of clients and others who wish to control costs: highly specialised litigators capable of identifying every angle and point to be taken in a case, coupled with what remains largely a split profession so far as servicing the needs of major commercial cases are concerned, to name but two such features.

If we add to that mix a litigation culture where the court has traditionally depended heavily on the parties to identify the issues, evidence and arguments, often pulling them together for the first time only for a trial judge coming to the case new, then it is hardly surprising that the result is a cocktail generating disproportionate effort and cost.

Tackling the procedural code

Against that background, it is perhaps welcome that we have finally in Jackson LJ's report gleaned that there is an emerging majority school of thought that the solution needs to start with the procedural code. This was the approach of the Commercial Court Long Trials Working Party, which sought to re-address Commercial Court practice and procedure with a view to reducing cost; albeit from a perspective which was critically more limited than the remit of Jackson LJ's work: the Commercial Court did not consider changes that would have required primary legislation (such as amendments to the costs shifting and recoverability rules) or changes to be made by the Civil Procedure Rule Committee. This limitation was also a blessing and it meant that the results of the Long Trials Working Party could be trialled and implemented much more quickly than could conceivably be possible if Jackson LJ's review is to tackle the wider ranging issues addressed in detail in the interim report.

But to say that we should 'concentrate on procedure' is ultimately an unhelpfully vague comment. No amount of procedural form or codification can sensibly or ultimately govern judicial management of cases. On the contrary: the Commercial Court in particular has re-emphasised the importance of judicial case management. We need to give 'case management' its broadest interpretation. It must cover two critical features of case and cost management.

First, it must have as its principal object the early identification of the key issues in the case to provide a lodestar around which work and proportionate cost would be directed. In this way, cases can be built with justification from the early identified core, rather than as often is the case with heavy and complex litigation where the core is whittled out of the universe of issues late in the litigation and long after the mischief of costs has been given a wide playing field of issues in which to operate.

Controlling unreasonable behaviour

The second and no less important feature of judicial case management is the need to control adversarial behaviour. In any of the higher courts it is possible to see features of human behaviour on the part of clients and advisers which generates high costs. For example:

1. There is a perhaps not unreasonable assumption on the part of many parties that, provided they find all the facts, materials and issues and present them to the most fair-minded, independent and best-trained judges that the world can offer, justice will necessarily follow. There appears to be no space in this thinking about the consequences for justice of overloading a court and the parties with material and issues.

2. There is also an often expressed view by litigators on both sides of a claim that all the opposite numbers are behaving badly and/or generating unnecessary cost without, it seems, anything like sufficient judicial interest or opportunity to deal with such concerns if they have substance to them.

It is not as if the need for more case management to deal with these issues is a revelation of any sort. Lord Woolf more than hinted at the problem by identifying case management as the centre of his reforms. His aim was clearly that case control should move away from the largely unregulated behaviour of parties and their lawyers, to the court. Unfortunately, the importance of this was never fully understood. No one sought to identify what 'court' would mean for the purposes of a particular case; i.e. did it mean anyone who happened to be around to deal with an issue in a case or a docketed judge?

In part, Lord Woolf was himself responsible for this oversight. He gave great emphasis to the much lauded and publicised duty of parties to cooperate with each other. While there has been real progress in this respect, 'cooperation' is still often given lip service (sometimes even tactically or mischievously). Equally, often the topic is used in mutual and irrelevant correspondence analysing opposing behaviour, rather than by way of a mechanism for a quantum leap in collaborative practice.

In the context of other pressures, mere exultations to parties to cooperate can appear rather puny. Among other matters, many clients are increasingly faced with enormous pressures in bringing or defending 'bet the house' claims. Added to that, it is apparent that their professional advisers often feel, without necessarily admitting, the pressure of operating in what is probably the most competitive patch of legal activity in the world. It is hardly surprising, therefore, that almost any debate on costs proceeds with contributions from practitioners to the effect that what is needed is greater control of unreasonable conduct and behaviour by fellow practitioners.

The role of judges

Any attempt to address and resolve such concerns by procedural codes alone would be naive. The solution is obvious: but is not in any of the multitude of procedural and other regulatory changes that have been proposed to the costs system. Rather, it is in giving, and emphasising the importance of, the opportunity to judges to grasp the complex cases early on and 'manage' them in the way that businesses that ultimately use the court would expect to see projects managed within their own operations. This includes much more time and training to help judges address costs issues and to review the behaviour of parties.

Clearly, this requires more use of concepts of docketing and of greater and more effective access for the parties and their advisers to the court to address and resolve issues as they arise. In this way, we would also make the most of the most valuable work, winning features of our system of commercial dispute resolution; in particular, the quality and independence of the judiciary and the flexibility that our business courts can offer when dealing with complex disputes.

One suspects that Lord Justice Jackson would see this as an ideal approach in all areas of civil litigation. But few will seriously question the frank acknowledgement in his report that such an approach might not be achievable and is arguably not necessary in the context of lower-value claims. In that context, the procedural code can have a much greater and more effective role to play in regulating and resolving litigation.

But, attempting such an approach in the context of complex commercial litigation would be hugely damaging to the many factors that make England, and London in particular, an attractive forum for resolving such business disputes. For those cases, therefore, there is much to be said in the great debate on costs, but we should ultimately focus our thinking on the role of the judges and how we can get them more closely involved in the conduct and process of litigation.