Time for a Dispute? Times are A’Changin’

Like many industries, the legal sector is constantly evolving. Every now and again, something more significant comes along to force a real change; one such event is happening now. Oli Worth investigates

Lord Justice Jackson, in his January 2010 report, advocated the reform of the UK’s litigation system, in particular with a view to making the courts more accessible and cost effective. Ultimately, as lawyers, we’re here to facilitate and assist other economic activities – whether that be through regulating relationships, assisting with projects or resolving disputes (or at least attempting to!). So it’s entirely right that we should do all we can to bring down the cost of doing that, which has a consequent knock-on effect for the economy at large: legal fees are a business cost, reducing those fosters economic growth.

The reforms stemming from Jackson’s report largely came into force in April 2013. But will businesses see any real changes?

Costs – transparent and controlled

First, and likely to be the largest practical impact (at least initially), will be costs budgeting. Lawyers are now required to be much more up front about their costs with clients, the oppositionand the court alike – giving businesses more certainty. The courts will also be more proactive in controlling parties’ costs, requiring a costs budget at the outset of most cases which can then only be varied in exceptional cases. Gone – in theory – will be the days of multi-million pound costs for claims that are worth a fraction of that, with a renewed emphasis on proportionality. That should give businesses more confidence in protecting and enforcing their rights.

Breaking the rules – prepare to be punished

A second impact will be a greater willingness from courts to punish parties for non-compliance with its rules and directions. Anyone who has been involved in litigation will be familiar with the following scenario: a deadline comes, a deadline goes, and nothing has happened. The courts have acknowledged that for too long they have been willing to indulge this behaviour in the interests of achieving a “just” result: but no longer. Delaying tactics, which can make litigation drag on for years (keeping parties from resolving disputes in the meantime, with potentially dire financial consequences), will be clamped down on, with the courts given greater flexibility to imposes sanctions including, in some cases, strike out of a case.

Funding litigation – new options

Litigation funding options have also been shaken up. Traditional “no win no fee” agreements, where the opposition pays a substantial uplift on costs if they lose, are now much less attractive for a lot of cases as a result of rule changes.

But, partly in their place, come “Damages Based Agreements” (DBAs). In return for a share of the ultimate damages award, lawyers can agree to work on a ‘no win no fee’ basis: a system common in other countries but, until now, largely outlawed in the UK. DBAs offer businesses another potential funding mechanism for pursuing claims, with the added benefit of the lawyer having a further, financial incentive to achieve the best return for their client.

What does it all mean?

These are but three of a range of reforms that are being made. Others include a move away from the presumption of “standard disclosure” (the process whereby all documents that are potentially relevant to a case, whether advantageous or disadvantageous to a case, are disclosed to the other side; at enormous cost), introducing a damages uplift where settlement offers have been unreasonably refused, and the greater use of IT to improve efficiently.

This is a potentially seismic change for the legal industry (at least to the extent the rules are properly enforced – which it is hoped they will be). And business more generally should benefit from reduced costs, increased certainty, and a greater confidence to engage the legal system. Which, ultimately, is good news for us all.

Oli Worth is a solicitor with Greenwoods Solicitors LLP specialising in intellectual property dispute resolution, with a special interest in web-based and social media law.

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