Comment: Review prompts litigation shake-up

By Tim Edward
Published on 09/07/2012 00:00

The Taylor Review’s consultation period is now closed. Its recommendations are expected in the spring. A key question is: what impact is the final report likely to have from a legislative and a market perspective?

The 70 submissions show a consistency of response to many of the questions posed. The state of the public purse, limited private funding for dispute resolution and the high cost of litigation are factors forcing a drop in active litigation, raising the thorny issues of access to justice for the public, and 
falling work volumes for the legal profession that may worsen when the Legal Aid, Sentencing and Punishment of Offenders Act changes come into force in England.

The consultation paper sets out a number of options for addressing these issues. These include improved assessment and recoverability of costs, predictability of costs, costs-shifting, summary assessment and provisional costs orders.

More radical options are also set out, such as referral fees, extension of “before the event” and “after the event” insurance (BTE and ATE), speculative fee agreements, contingency fees (damages-based agreements; DBAs) and third party funding of litigation. A significant number of respondents would welcome a more realistic and efficient means of fixing and assessing judicial expenses. There is agreement on the need to have control over the level of costs and outlays that can be incurred and recovered in litigation, but that the current level of recovery is inadequate.

While there is cautious enthusiasm for the idea of summary assessment of expenses, respondents favour the current rule of successful litigants recovering expenses to any idea of “costs shifting”. Significantly, there is almost universal opposition to the idea of introducing referral fees into the Scottish system.

There is widespread support for more promotion of BTE insurance, with a real belief that such cover can be used to plug the gap that may result from diminishing legal aid budgets. However, with most policies limited to £50,000, such insurance may not be sufficient to cover all expenses in litigation of any substance.

Perhaps most important of all is the support for the introduction of DBAs. While there is recognition that these are open to abuse, most claimants will accept some reduction in the damages they receive at the end of claim, in return for protection against adverse expenses awards.

There is recognition that 
if and when DBAs are introduced in England and Wales legal work will head southwards if they are not introduced in Scotland.

• Tim Edward is a partner and head of the commercial dispute resolution team with Maclay Murray & Spens LLP.