Prinz Nagalingam, Senior Solicitor Advocate, summaries some of the difficulties faced a year after the Jackson Reforms.
The Law Society has produced recent comment in the Gazette that, in no uncertain terms, expresses the views of the profession as to the first year of the Jackson Reforms.
Difficulties have been experienced from start to finish, with clients struggling to understand and cope with the sheer volume of documentary explanation required, and an inconsistent Judicial response which, on occasions, has lead to some member firms wondering how much genuine interest there is in the budgeting process from the Courts.
With the will of the Courts clarified by the Mitchell decision there is a definite climate of fear which firms such as Thompsons consider has contributed to less cross-party agreement.
Certainly there appears to be far greater suspicion of opponents with fear as to what points may be taken, and of course the significantly reduced capacity to vary directions, even if by consent.
There is of course no excuse for non-compliance but in a climate of considerable change and driven by stricter deadlines there is not only an increased risk of slippages, but the double whammy of the draconian sanctions that now follow. This is something that professional indemnity insurers have to recognise and no doubt many firms will be looking at their renewal terms with some interest over the coming 12 months. The expectation is that all firms will be faced with rising insurance costs.
We are unaware of any statistics at this early stage but we consider there is little doubt that the coming years will also reflect a slow down in issued claims, at least for a period. ‘Front-loading’ of costs is often seen as a cause for criticism. However, Claimant firms in particular have at least two legitimate reasons to adopt such an approach under the current regime.
Firstly there is the ability to provide certainty to their clients. Pre-issue costs are not subject to budgeting and there is therefore an element of comfort to clients in knowing that, subject to future assessment, what has been incurred is at least recoverable. Once issued, any future costs will be subject to the views of a particular Court or particular Judge. Here inconsistency has prevailed thus far and clients are then faced with the prospect of a limiting budget to take the matter forward, or having to use any compensation received to contribute to costs. There are clear benefits to keeping matters out of the Court for as long as possible where it could be argued that to do otherwise would not be in the best interests of the client.
There is of course the issue of where a Defendant issues as clear a denial of liability as possible and invites the issue of proceedings. However, this still feeds into the second reason one might delay the issue of proceedings – being the consequences of failure to comply.
Under the current regime, once proceedings are issued a very strict clock begins ticking and it is hard to see how any Claimant could be criticized for ensuring their case is ready before proceedings are issued, so as to remove any risk of being unable to promptly comply with a direction, and indeed to be able to provide an accurate/realistic budget.
That of course is not a benefit for Defendants who have to react generally, and will therefore be constrained by the same time limits but effectively with less time to comply with directions.
The budgeting process and associated costs have been a difficulty too. Going back to the ‘climate of fear’ referred to above it is incumbent upon parties to produced their budgets very early. However, it is then taking many months to get to the stage of allocation, by which time the budget will generally need updating.
At this stage, the inconsistency or will of the Courts is then taking hold.
Some expect to see Costs Experts at every CMC alongside instructed Solicitors or Counsel. Others have started to direct they only wish to see one advocate per party. Some have elected (sensibly in our view) to give directions for amended budgets only once case management directions have been decided so that the budget can actually reflect the likely direction of the case. Such directions have typically included provision for a document akin to Points of Dispute being served, provision for the parties to conduct a Joint Meeting, produce a Joint Statement, and proceed to a Costs Case Management Hearing (CCMH) to deal with costs budgets in isolation where budgets have not been agreed. Even here there is inconsistency with regards to related costs, with some Courts insisting on attendance in person and others content to deal by way of telephone.
Given the inevitable way in which the profession develops and reacts to changes we are left with a situation as thus:
A Claimant may have their case legitimately worked on for close to 3 years then issued for limitation purposes. Budgets are filed but upon allocation an Order is made for amended budgets, Points of Dispute, Joint Meeting, Joint Statement and a CCMH. There could be several months between issue and allocation, and at least 2 months more between allocation and a CCMH. One is left wondering how beneficial the budgeting process is by the time the budget is ‘approved’ in such a scenario – when contrasted with the original purpose of the reforms.
The system is here and it not going away. However the sooner there is consistency in terms of costs management (as well as case management), the sooner parties on both sides may be able to deliver the much heralded proportionality that the reforms were meant to deliver.