Fighting the war on costs

A couple of months into my role as the new president of the London Solicitors Litigation Association is perhaps a good time to reflect on some of the current challenges facing the litigation community.

Litigators seem to be under siege on a number of fronts, and recent developments in the litigation world have not been met with widespread acclaim from practitioners.

Costs are a key area of concern, in particular for those involved in panel work, but, more generally, there is pressure on the overall level of costs, and on hourly rates from clients. The Civil Justice Council has also been looking at guideline hourly rates (which are key to the assessment of costs payable between parties) and investigating profit levels within law firms. Why they should choose to do this is unclear when there is a vibrant free market at work, but we await the Master of the Rolls’ supposedly imminent conclusions with concern. Nobody expects increases, of course, as there is a political agenda at play. But this is another area where the law of unintended consequences may well raise its head. Seemingly well intentioned efforts to control legal costs and improve access to justice could have exactly the opposite effect, and shut out many SMEs from being able to pursue claims, and simply restrict recovery by the successful party, leading to a continuing shift away from the loser pays principle, and the drawing out of cases by defendants with deep pockets.

There are also threats of significant increases in court fees, and the imposition of daily trial fees, which could also add to the overall costs of litigation. What impact might that have on international litigants’ use of and views of our legal system? Unfortunate, one might think, when tax revenues and invisible earnings arising from the huge popularity of our courts with international litigants – who often have a choice as to where to have their disputes
resolved – are at an all-time high.

The increase in costs budgeting exemptions from £2m to £10m will also not be popular. In the aftermath of the Jackson reforms, the post-Mitchell world fills many if not all with dread, and a feeling of ‘there but for the grace of God go I’ spreads across the profession.

But the message from on
high is unrepentant and unapologetic. For many litigators at the coal face (and certainly anyone that has been ‘Mitchelled’), that seems disappointing, albeit perhaps not hugely surprising. The Court of Appeal’s further guidance on relief from sanctions is awaited, and having sought submissions from the Law Society and from the Bar Council, we can but hope that the court takes their strongly expressed concerns into account.

Clearly, the litigation world has changed for good. Whether that is for the good is unclear, but the message thus far seems to be that we can all like it or lump it. We will get used to the changes in time, and it is just tough love, for which we should all be thankful. Do not expect relief from sanctions, however disproportionate those sanctions might be, and although case law thus far has been inconsistent, there has been limited leeway shown in the interpretation of what should be deemed a trivial breach or what might be deemed good reason for that breach. So we await the Court of Appeal’s guidance, and in the interim note a discernible decline in cooperation between parties. This is not surprising when one party can gain such
a disproportionate advantage based on a relatively minor failure to comply by the other. Yet another unintended but very real consequence.

On the bright side, we do
have – anecdotally – plenty of work to do. The not universally popular Lord Chancellor did manage to achieve some level of accord at the Times Law Awards when talking up London as a centre of legal excellence – which of course it is, whether for domestic or international litigation, or arbitration. We have an enviable legal system, capable lawyers and a judiciary of great strength and intellectual rigour. So something to hang on to, and promote as we reach for our tin hats. SJ

 John Bramhall is a partner at DAC Beachcroft and the newly-elected  president of the London Solicitors Litigation Association (LSLA)