Opportunities & threats in the post-Jackson environment

Ian Gascoigne & Hena Ninan discuss the outlook for commercial claims in 2014 in their latest article for New Law Journal.

What follows Mitchell?

Primarily prompted by a desire to reduce the cost of litigation, the Jackson Reforms altered other parts of the Civil Procedure Rules (CPR). More robust case management powers, driven by a revision to the overriding objective requiring cases to be dealt with “justly and at proportionate cost”, coupled with a new test of proportionality aimed at applications for relief from sanctions under CPR 3.9, were added to stringent cost budgeting requirements.

Lord Justice Jackson recognised that allowing litigants too much latitude in case preparation can result in significant wasted costs and an inefficient system. The Court of Appeal picked up this theme in Mitchell. It sent the clear message that non-trivial failures to comply with court timetables will no longer be accepted. Cases following Mitchell demonstrate the force is with those judges wishing rigorously to apply the Jackson approach.

We predict the trend set by Mitchell will continue in 2014. Courts will be intent on preserving the efficacy and integrity of the process, sometimes at the expense of parties’ individual interests. Case-managing judges will have greater confidence in reviewing budgets with limited prospects of either successfully appealing or re-working the budget at the detailed assessment stage. Whether or not cost budgeting requirements are extended to those cases currently exempted, we foresee a bleak outlook for litigants who find themselves unable to meet orders and timetables.

Mediation—mandatory in the future?

Mediation is one of the big winners from the Jackson changes. Its increased use will continue. The Jackson review stated that “ADR (particularly mediation) has a vital role to play in reducing the costs of civil disputes, by fomenting the early settlement of cases”, but Jackson LJ concluded that ADR was under-used. His “serious campaign” to educate lawyers and the judiciary on the benefits of mediation led to the production of a handbook. More potently, in PGF II SA the Court of Appeal extended the principles established in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 4 All ER 920. The court held, as a general rule, that a failure to respond at all to an invitation to engage in ADR is itself unreasonable, regardless of whether there was a good reason for the refusal. This is an obvious indicator that the courts are serious about promoting mediation.

(to read the full article, please click here to visit New Law Journal)

Funding—out with CFAs & in with DBAs?

Permitting damages based agreements (“DBAs”) in commercial cases was intended to provide the freedom for alternative fee deals, enabling lawyers to share the client’s risk. However, the DBA regulations have not yet achieved lift-off. In fact, they have been as ineffective as a wet firework. Unless and until the DBA Regulations are clarified, it is unlikely that dispute lawyers will embrace them in commercial claims of any substance. Significant issues need to be addressed, including whether hybrid arrangements are permitted (which divides legal opinion) and how the contingency percentage should be determined. It is unclear if and when change will occur or even whether there is a rule-maker’s appetite for this. Our bet is 50/50 on clarification, with no money put on the timing.

CFAs entered into after 1 April 2013 are much less attractive to claimants as success fees and ATE premiums cannot be recovered from a losing opponent. However, in an environment where there is a lack of clarity around the DBAs and clients are putting lawyers under fee pressure, we consider that CFAs will be around for little while longer.

Ian Gascoigne is a partner & Hena Ninan is a senior associate at Eversheds LLP. The full article was first published by New Law Journal on 12 February 2014.