August 8, 2022

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The Legal System

Are we destroying our civil law ecosystem? | Feature

12 min read


The definition of habitat conservation is ‘management practice that seeks to conserve, protect and restore habitats to prevent species from extinction, fragmentation or reduction’.

I came across that definition recently and it struck me how similar it is to the conservation of the rule of law, and particularly my field of civil law, which is bracing itself for change. I see the civil law system as the habitat and litigators as a genus of several species trying to thrive within that habitat. My concern is the impact proposed reforms by Sir Geoffrey Vos (pictured above) and his team are going to have on that habitat, which is something I care about. 

How we got here

To understand the current position, you first need to look back at some of the key incidents over the last decade. In recent years there has been a frustrating period of neglect and we have experienced several extreme events over many years.

A non-exhaustive list might be:

  • the centralisation of court processes and changes to the way cases are handled;
  • the huge reduction in experienced court staff, who have been replaced by inexperienced staff who do not enjoy the same variety of work their predecessors did (meaning attrition has also increased);
  • the doubling of the small claims track limit;
  • the introduction of fixed fees in many areas (with more to come);
  • the reduction of recoverable costs when costs are assessed;
  • the neglect of guideline hourly rates;
  • abolishing the recoverability of success fees; and, of course
  • the exorbitant hike in court issue fees in 2013 – a £10,000 issue fee (the highest fee for a civil claim) compared with the £1,300 fee pre-2013, paid for merely stamping a piece of paper and punching a bit of data into a computer. This still looks massively out of kilter nearly 10 years on. I am always reminded of this when there is a sudden intake of breath from a client when you advise them of this fee for any claim worth more than £200k. Not many things in life cost so much for so little. Find me a client who has not flinched at paying that just to start a process.

What should the first step be for our civil justice conservation project?   

There is a need to carry out much-needed conservation work but what exactly should that be? And are the decision-makers who are in charge of this going to make the right decisions for our habitat? Personally, my initial focus would always be on the court system itself, which seemingly cannot handle the small number of cases (see below for the stats) which go beyond the allocation stage in proceedings.

The earth has been scorched in this area in recent years with nothing given the opportunity to grow. This is despite it being a huge area of the overall habitat. If given the right amount of light and oxygen it needs to thrive, who knows what good could come of it.

If I were to describe the management of our civil system in one word it would be ‘chaos’. I apologise if that offends anyone but on a weekly basis we hear a civil litigation horror story where the court did something you would not expect. If you go on Twitter right now you will find a litigator who has had a problem with the court for one reason or another. Only once the underlying problems are fixed can you confidently begin to look at the other areas. Any ecosystem is a delicate jigsaw and this piece cannot be ignored any longer.  

Which litigators could suffer and why?

It is worth pointing out the different species in the genus of litigators. Among our habitat of 27,000 litigators there are all kinds of species who each play important roles in the functioning of our civil ecosystem.

To name only a few, we have general practitioners who litigate for only some of their time, but also do other things as part of a high street practice.

In contrast, we have many who do nothing other than litigate in the county courts dealing with ‘lower’-value cases that mean so much to clients. I often say that £10k to a self-employed plumber can mean the difference between boom and bust. It means so much more to them than the large corporates arguing over a few million pounds. And yet, it is the large corporates who always gets to sit in first class. Their litigation journeys never seem to be disturbed, at least not to the same extent.

I also often say that 92% of our profession is made up of one- or two-partner firms so the lower-value stuff is very important to both client and lawyer. Most litigators happily sit in second class, but these reforms really will affect their journeys and may even derail them. Before long they will be in a handcar trying to propel themselves down the track, with them at one end and their client at the other.  

Plus, this work remains vital to junior staff who cut their teeth on lower-value work. Are these reforms forgetting that every expert started out as a beginner who needed experience to progress? How will juniors progress without it?   

At the other end of the genus we have teams of lawyers working in their busy beehives dealing with high-value litigation in the higher courts, where steps such as the disclosure stage in proceedings run into millions of documents and tens of thousands of pounds at a time.

As a diverse profession we have our own spread of diverse species, each positively contributing to the hustle and bustle of our special civil justice habitat. Tamper with it without understanding the impact and there is a high likelihood it will be damaged.  

Who then will be able to evolve when the reforms come in and who will be put on the endangered species list? Or, worse still, become extinct? It is not looking particularly clear. In fact, I have heard nobody speak openly about the possible downside of the reforms. As litigators we are used to advising whether the reward is worth the risk, but on this subject I have read very little of any value.

Will the reforms damage the habitat for our clients?   

We are in the throes of a huge reform programme which will change our habitat forever. The concern is, if mismanaged, it will irreparably damage our unique ecosystem and there will be no going back. We will reach our point of no return and not have even properly discussed all the issues before we do. Surely, we pride ourselves on being better than that. This is not how a profession should be run.  

Vos and his team are currently looking at new ways to handle claims. There have been many ideas mooted, reports written and keynote speeches which have taken place over the last year. The signs seem clear. Trees are going to be felled, new trees are going to be planted, and a lot of the flora and fauna will be shifted around. The question, though, which remains completely unanswered, is will it grow our habitat and properly support us? The problem I have with the narrative is that the management practice that seeks to conserve the civil justice habitat is not currently considering all of its cherished species in the way it should. It certainly seems to be looking to reduce the range of what we are able and best positioned to offer clients.  

As nothing is being said you can be forgiven for thinking that some of our number will not be needed, which I certainly do not agree with. Two litigators I know recently threw in the towel and became corporate lawyers. I find this very frustrating because they were brilliant commercial litigators. They told me that as much as they never really liked drafting contracts as trainees, it now seemed like the only certain way of practising the law without it being meddled with. One explained that they will at least be rid of a judiciary and government that do not grasp the issues at our coalface.  

The proposals for more fixed fees, and a triage/ADR system housed in a new online world, are causing anxiety among good litigators. They are acting as a huge deterrent to trainees when deciding which area they would like to practise. Why pick litigation when something like private client work feels a bit more settled? That kind of a situation seems similar to criminal law, which is on its knees after years of operating at altitude where the air was thin and nothing was given any chance to grow.   

What really strikes me, though, is that the bees in their busy hives are unlikely to be affected, while the solitary bees who live in the hedgerows and lawns, and are just as important in different ways, are going to become extinct if great care is not taken. Those solitary bees may not make glamorous amounts of honey but without them the whole system breaks down. It would also be foolish to be a bee in the busy hive and think that this problem does not affect you. The solitary bees will have to try and enter the hive, and many will be better litigators or even great corporate lawyers, as friends have become recently. Competition for places, across the board, is likely to intensify as these litigators attempt to rehouse themselves. 

Problems that must be addressed before any reforms are introduced

There is a distinct lack of evidence to support the reforms. I have read nothing which is of the sufficient breadth and depth for reforms as important as these. That can easily be rectified. If data is unavailable then a data-capture exercise could take place for at least a year to give us a better understanding.

To continue my apian metaphor, there is a presumption that clients will be able to make their own honey and pollinate the habitat themselves, but this seems to be based on nothing more than someone giving them access to an online courtroom. Access to the process is not access to justice. Access to justice is about being connected to someone who can best protect your interests. They will have nobody to protect their best interests and will be channelled in directions that lead to poorer outcomes. All they will have is a computer system that wants to push them into settling their claim.  

The reforms also pay no regard to the millions of disputes which are settled because of the threat of issuing legal proceedings. Those in charge of reforms do not seem to appreciate that inserting triage/ADR at the wrong point in the process will lead to defendants dragging things out because they have nothing to lose. Many cases that are currently resolved through a few phone calls or emails will now get pushed into these proposed, pre-issue stages. This will be damaging for the economy.

‘Access to the process is not access to justice. Access to justice is about getting access to someone who can best protect your interests’

Defendants who should not be given any discount on what they owe will have the chance to pay less under these ADR proposals. It is wrongly presumed that all defences have some merit. Why should claimants sacrifice profit at an ADR without good reason? Why not secure a default judgment first and then negotiate when you have what you are entitled to? The reforms will slow down the average time from inception of a dispute to its resolution. It may reduce the number of cases that run through to the latter stages of proceedings, but it fails to balance things properly overall. About 1.2 million money claims are issued each year. Only 40,000 reach trial and only 240,000 reach the latter stages. These proposals may help reduce the 240,000, but the advantage gained is likely to be lost as they unsettle the 960,000 claims that are currently resolved very quickly.  

Why does the current system not cope? There are more than 200 courts (county and High Court) in England and Wales, and cases can now be heard online. On average each court has 200 money claim trials each year, many of which will be small claim matters. There are 426 district judges, 635 circuit judges, 27 masters, costs judges and insolvency judges. There are also deputy district judges. Should that not be plenty? Why is it not, and why do we think these reforms, which are harder to execute than solving the current court issues, are going to be well executed? How can we trust that our habitat is in safe hands?  

The system will still be swamped with litigants in person who do not know what to do. I predict that the online space will get as clogged as the courts have. Too many cases should, if the system is there to properly support the parties, fall off track. You cannot write an algorithm for every eventuality, and I have already seen from the current systems the number of problems these create.  

A huge amount in revenue, which means a huge amount of VAT, is going to be lost, to no one’s benefit. Some 58% of all money claims go to default judgment. This is a massively successful system. Around 80% are done and dusted before they reach the disclosure stage in proceedings. On average solicitors’ fixed costs to get a default judgment will be at the very least between £50 and £100 plus VAT if they are only charging their client for fixed costs, which for many claims will not be the case. Consequently, as an absolute minimum £32.5m of revenue is going to be taken from the smaller firms who do a great value-for-money job for clients, particularly when it comes to things like debt recovery work.

About £7m in VAT will also be lost with the advent of DIY claims that litigants do not properly understand and end up losing, because unknown unknowns are no good when it comes to litigation. To put that conservative figure into context, revenue of £32.5m would put you well into the top 100 firms in this country by revenue. There are about 10,000 law firms in total and 2,000 are sole practitioners. That should give you an understanding of the scale of what is about to happen to litigators and whom it is likely to affect. 

Custodians for the many, not the few

With nearly 20 years’ experience, I realise that we are custodians of the rule of law. It is important that we carefully discuss how we change our civil ecosystem so it not only survives but also thrives for generations of litigators (and their clients) to come. It is not something we should leave to chance. Key decisions should not be made by a small group of people, who may not have the requisite experience to present a well-rounded rationale.

For example, I doubt any of the team responsible for these proposals has issued hundreds of claims in a single day for a single client, obtained hundreds of default judgments within 14 days and then secured hundreds of charging orders a few weeks after that. These proposals kill off that kind of process, which is damaging to businesses. I, like many others, enjoy the variety of the work I do, and I want to keep helping everyone, not just the large corporates. Moreover, is being a little unpredictable not a key ingredient of who we are? Do litigants really want to be controlled by algorithms when it comes to something as emotionally driven as justice? Will they not just try and veto the computer at the first available opportunity? Is it not just as important to ensure clients still have a full range of options available? 

Should these reforms come with a health warning?

In conclusion, the discussion needs to be quickly opened up and my point of view needs to be challenged so we can find answers to the questions that really matter. They cannot be ignored any longer. I am not interested in whether I am ultimately proved to be right or wrong. However, until I am presented with evidence to rebut my points, I am standing by them.

Where civil justice takes place (online, in a court or in a Travelodge) does not really matter. Who does all the admin work does not really matter either (as long as it is done adequately). What matters is that we ensure that we are not just giving clients access to a process, because access to a process is not access to civil justice. Vos did say these reforms were likely to be ‘highly controversial’ at one point when discussing compulsory mediation. The concept of cutting litigators out at any point is also a key part of that controversy.

Unless one ensures that good-quality litigators are still there to help if litigants want to be helped, then poorer outcomes are going to prevail. This will be particularly true for the 70% of defended actions where parties are currently legally represented. In the same way that cigarettes contain warnings on their packets, perhaps any online system created by these reforms should come with a warning that representing yourself is much more likely to lead to a worse outcome.

 

James Perry is chair of the Law Society’s Civil Litigation Section Advisory Committee and a consultant solicitor. He writes in a personal capacity. 



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