A portal for SME claims â€“ what's that all about?
By Tony Guise
Tony Guise considers the possibility of a Portal for SME debt claims
The pace of change for civil justice in England and Wales is accelerating toward a 2022 packed to bursting with actual change.
This is the third in my series looking at the building blocks of next year’s changes. Before considering the third foundation stone, the proposed SME debt claims portal (or ‘Claims R Us’), let us briefly pause to reflect on recent developments.
Reform of the Pre-Action Protocols
On15 November 2021, the Civil Justice Council (CJC) launched its consultation on the reform of the pre-action protocols (PAPs). When implemented, this will irrevocably shift the action from trial to pre-action. The consultation is open until 10 am on Christmas Eve – and I urge everyone to contribute their views via the CJC’s easy to use online form. The consultation is available here:
I will be covering this consultation and its implications early in future issues.
The Digital Funnel
The House of Commons’ Public Bill Committee has been undertaking a line-by-line scrutiny of the Judicial Review and Courts Bill. Part of that Bill creates the legislative basis for the implementation of the Online Procedure Rules (the ‘Digital Funnel’). On 16 November 2021 the Committee considered clauses 18-31 of the Bill which enable the Digital Funnel to come into being. These clauses escaped the Committee’s grasp, save for amendments to make tougher provision for important measures to help users who are digitally disconnected.
ODR for SMEs
My third building block of next year’s reforms is the development of portals or platforms for the management of the pre-action phase of disputes. These portals/platforms are intended to avoid disputes and encourage greater compliance with pre-action protocols by working online. SME debt claims was chosen to explore these issues.
In early 2020, LawTechUK was asked to develop a feasibility study for a platform relevant to the needs of SMEs. LawTechUK is a Government agency, which describes their mission (on its information site) thus:
“There is an opportunity and responsibility to reshape, redefine and reinvent legal services, to meet and exceed the evolving demands of business and society in our digital world. LawtechUK is committed to supporting the transformation of the legal sector through technology.”
Such is the pace of emerging proposals for the reform of civil justice, it seems a long time ago that LawTechUK published their “Feasibility study for an online dispute resolution platform for SMEs” (‘the study’). In fact, this was only published in August 2021: https://lawtechuk.io/explore/sme-odr.
LawTechUK contracted a consortium of collaborators to prepare the study, including Resolve Disputes Online, Dr Mimi Zou, and Jur, which is a blockchain enabled arbitration scheme.
The study comprises three themes:
- User needs, legal and policy feasibility;
- Solution design;
- Business case – i.e. how it can be funded and supported.
If there is one feature that shines through each of the three components of the study it is an emphasis on the practical – and that is refreshing.
I believe that, if the future does not mirror these proposals,then it will bear a close resemblance.
What are the highlights and concerns from the study?
The problem – and the solution?
Late or non-payment of debts due to SMEs are a persistent and significant problem.
The study found there may be demand for a platform which invites SMEs to resolve debt disputes out of court. The great attraction for SMEs, it is argued, of using the Platform is the rapid enforcement of adjudication awards, modelled on the scheme operating in the commercial construction sector since 1996. In this respect, the study adopts the proposal we made to LawTechUK during the tender for the contract to develop the study.
The platform would enable a tiered dispute resolution process operating in the pre-action phase –
beginning with ad hoc negotiation, followed by mediation, ending with adjudication.
HMCTS is in the process of a major digitalisation reform programme that includes the Online Civil Money Claims (OCMC) service. According to HMCTS (May 2021), more than 190,000 claims have been issued via OCMC since it started in September 2018. The average time to settle a case using the online process is 5.2 weeks, compared to 13.7 weeks using the paper service. I learned recently that HMCTS plan to connect OCMC to the digitised enforcement service via an API in 2022-2023.
(A)DR is provided at present by an opt-out telephone mediation service provided by HMCTS at no cost to the user – the Small Claims Mediation Service (SCMS). The scheme has settled 55.6 per cent of all cases. Unsurprisingly, it is planned to make the mediation element compulsory in 2022.
Whether the rapid enforcement of adjudication awards proves to be more appealing than the established success and future enhancement of the OCMC and its SCMS remains to be seen – if the study’s platform ever sees the light of day. The civil justice reforms are wide ranging, especially in the pre-action phase. The study’s ideas may well be subsumed by a different approach, as it acknowledges.
Nevertheless, the work provides an invaluable foundation for future development. These reports are worth reading for those interested in learning more about the possible future direction of civil justice in England & Wales, and associated business opportunities for lawyers and LegalTech entrepreneurs alike.
Tony Guise is the director of DisputesEfiling.com. He is also past president of the London Solicitors Litigation Association: disputesefiling.com; LinkedIn: @TonyGuise; Twitter: @CloudArbitrator