There is now plenty of material on costs budgeting, much of it can be found in links on this blog. However I have not found any guidance for litigators on how the requirement for “proportional” costs will affect their work and practices. In short there is, so far as I can tell, no guidance at all on how litigators can, and undoubtedly must, change to adapt to the fact that “disproportionate” costs are not going to be recovered.* Having not found any post or article where this crucial issue is addressed I thought I would start off the debate here. Primarily by looking at the practical things that have to be done. This is in the first post in a series addressing, directly, the issue of “proportionate” litigation and the practical issues that litigators will have to address to stay in practice.
WHY WORRY ABOUT PROPORTIONALITY? OR, RATHER, DO YOU WANT TO BE A DINOSAUR?
This is an issue that will affect every single litigator. In every type of case, big or small. If you incur disproportionate costs before the CCMC then your costs afterwards are going to be drastically reduced. Further you are soon going to go out of business, or have highly disgruntled clients.
- If you are working on a CFA basis then you will be doing work you are never going to be paid for. There is, no longer, a recoverable additional liability to soften the blow.
- If you have private clients then you will soon have very, very unhappy private clients. For instance in the recent (and already infamous) case of Seagrove -v- Sullivan the applicant would have spent £800,000 to recover £500,000. If the cost judge decided that anything above £500,000 in costs was a reasonable and proportional amount and confined her costs to this figure she would have recovered £200,000. If, however, the judge felt that £300,000 was a reasonable figure [and that is a lot of money after all] she would have been litigating for nothing. This is not a recipe for client satisfaction. (The only “upside” for litigators (if that is what it is) will be the growth of litigation with clients suing their former lawyers.)
SO HAVE THINGS GOT TO CHANGE?
Change is going to be slow, and probably painful. But change there is going to be. Those litigators that, ultimately, survive will have to adapt. There is probably no element of choice about this. There will be (and there are) plenty of “change deniers” who want to carry on practising as they always have. Good luck to them. They can stop reading now and return to their quill pens and foolscap paper “foolscap” may be a good word to use”.
RECOGNISING THE INNATE CONTRADICTION IN THE LITIGATION PROCESS
The first step we have to take is to recognise the major contradiction in the procedural process.
- All civil procedure is about, essentially, is preparing for trial.
- However most (sensible and sane) parties are anxious to avoid a trial.
- The procedures developed by the court to prepare for trial are, therefore, used by most parties as a device to persuade the other side to “go away” or settle.
This can be seen in, for instance, the Excalibur litigation. The aggressive attitude and procedures adopted by the claimants in that action most probably had nothing to do with preparing the case for trial but were aimed at making the defendants’ life so difficult so as to make them more willing to settle.
“I have been spared sight of much of the 5,000 pages of inter solicitor correspondence. It is apparent to me, however, from what I have seen that some of the correspondence from Clifford Chance has been voluminous and interminable, in some circumstances highly aggressive and in others unacceptable in content. These have included ill-founded allegations of criminal conduct in the form of insider dealing, misleading the market and misleading the public about the relationship between Gulf and Texas. Whilst interminable and heavy-handed correspondence is becoming a perverse feature in some commercial litigation, it is not in any way to be accepted as a norm and parties whose solicitors engage in it should not be surprised if, in a case such as this, they end up paying the costs on an indemnity scale.”
IT IS (PARTLY) THE COURTS FAULT?
- The courts, until relatively recently, had a large part to play in the blame for this. The initial Mitchell decision on procedure gave major incentives to parties to play a procedural game. The courts were no longer concerned with the merits and the rules were, most certainly, not the handmaidens of justice. (To be fair this was rectified, in clear and strong terms, by certain passages in the Denton judgment).
SO THE LITIGATION PROCEDURE SHOULD BE ABOUT PREPARING FOR TRIAL AND NOTHING ELSE
Given the extensive nature of the pre-action protocols the court is entitled to assume that, once proceedings are issued, the parties are going to trial. The parties should really be preparing for trial. The rules should not be used as an end in themselves but as a mechanism to ensure a fair trial (and now that includes a fair trial at a proportionate costs). Over the course of this series I will look at possible methods for litigators to do litigate in a proportionate way.
* I apologise if anyone has written on this before and I have missed it. I will be pleased to include links to any articles on proportionate litigation in future posts in this series. Remember this is not a series about costs budgeting but about “proportional” litigation.