Debt Pre-Action Protocol – 1st October 2017

Civil justice in England and Wales is well known for having prescribed overtures to the litigation procedure. These are termed “Pre Action Protocols” (PAPs). The word “protocol” suggests a rigidity which falls slightly short of the Civil Procedure Rules themselves, and terminology does indeed imitate reality. Sanctions for not following a protocol have not been as draconian, or as rigidly enforced, as the rules themselves, but the courts do expect compliance where possible.

For years now, there have been formal PAPs for numerous differing areas of legal dispute, such as clinical negligence, housing disrepair, construction, injury and industrial disease. Until now, however, there has not been a PAP for debt.

The first PAP for debt work comes into effect from the 1st October 2017. From that point on, the courts will expect you to have followed the protocol in any “business” dispute over a debt.

The qualification above is due to the fact that not all business disputes are covered.

Application
The debt PAP applies to the following disputes only:

• Business to consumer

• Business to Sole Trader

It does not apply to business to business debt (other than above), nor does it apply to consumer to business disputes. It is easy to see that the intention here, in addition to introducing a formalisation of the pre-litigation process, with a view to reducing the pressure on the courts, is to retain an equality of arms between the parties.

Letter Before Action
There are several elements which must be included in your Letter of Claim to the debtor before proceedings are started. The Letter of Claim should contain the date and your return address, together with the following information:

a. The amount of the debt;

b. The amount of interest/charges and whether they are continuing; If not included in the letter, an up-to-date statement of account for the debt together with interest and any other charges must be sent separately,

c. Written contract/or other agreement in writing – you must offer to send a copy of any documents in which the terms of the agreement were reached on request;

d. No written contract – you must include a brief account of where, when and with whom any oral agreement was made, what was agreed, and if possible the words spoken. If the debt has been assigned, you should provide details of the original debt and creditor, when it was assigned and to whom;

e. If an offer has already been made by the debtor, why their offer is not acceptable;

f. Details of how the debt can be paid, including options for payment;

Letter Before Action – Enclosures
With the letter before action, you MUST send the following:

a) Information Sheet

b) Reply Form

c) Financial Statement form

These are provided as specimens at the end of the protocol. I have included them as separate documents to be downloaded above. The Complete Response Pack, as one document, can be downloaded here.

Service of Letter Before Action
The Letter of Claim MUST be sent by post, but can also be sent by email or fax if you have other contact details. It MUST however be sent by post.

No Reply
The debtor has 30 days to reply. If the debtor does not reply to the Letter of Claim within 30 days of the date of the letter, the creditor may start court proceedings, although, NOTE WORDING – “If debtor doesn’t reply“, NOTif a reply is not received“. It’s therefore advisable to wait until a few days after the 30 day period expires, in case the debtor’s reply is posted late.

Reply from Debtor
The debtor is required by the PAP to:

a. Use the Reply Form for their response;

b. Request copies of any documents they wish to see;

c. Enclose copies of any documents they consider relevant;

If the debtor replies, the creditor should not start court proceedings less than 30 days from receipt of the completed Reply Form, or 30 days from the creditor providing any documents requested by the debtor, whichever is the later.

The creditor should be prepared to allow the debtor more time if there is evidence that the debtor is actively engaged in the PAP process, or seeking debt advice, or seeking time to pay.

If the creditor does not agree to a debtor’s proposal for repayment of the debt, they should give the debtor reasons in writing.

A partially completed Reply Form should be taken by the creditor as an attempt by the debtor to engage. The creditor should attempt to contact the debtor to discuss the Reply Form and obtain any further information needed to understand the debtor’s position.

Early disclosure of documents and information is encouraged, and the protocol requires the parties to provide full disclosure, sufficient to enable them to understand each other’s position. Any documents requested should be provided within 30 days of request.

Note
Unfortunately, the completed Protocol provides no option for a reply not using the Reply Form. The answer to this anomaly, I believe, can be found in the court’s approach to compliance with other Pre Action Protocols, and that approach requires compliance with “the spirit” of the protocol. S2 of the PAP covers the aims of the protocol, which are to encourage engagement and promote early settlement, thereby avoiding litigation. Therefore if the defendant replies by means other than the Reply Form, the court will probably expect the creditor to give them the benefit of the doubt, and continue trying to service the aims of the protocol.

If the parties cannot reach agreement, they are required to consider Alternative Dispute Resolution (ADR – Mediation), although this is no more than a mirror of the compulsory requirement encompassed in the Allocation of cases to the Small Claims Track.

Compliance
If a matter proceeds to litigation, the court will expect the parties to have complied with this Protocol. The court will take into account non-compliance when giving directions for the management of proceedings. The court will consider whether all parties have complied in substance with the terms of the Protocol, although it is unlikely to be concerned with minor or technical infringements, especially when the matter is urgent.

For further information about the court’s approach to compliance, see the Practice Direction – Pre-Action Conduct and Protocols (paragraphs 13 to 16).

Since the 2013 changes to Court procedure, encompassed in the Legal Aid, Sentencing and Punishment of Offenders Act (2012), the Courts have been much more harsh on, and much less tolerant of, non-compliance with the rules. This extension of the Pre-Action Protocol regime to debt claims, means that, where you may not before have been penalised for failing to follow accepted procedure (albeit informal), you will now.

It is therefore crucial that, in the event of a dispute, you ensure that you follow the Protocol as closely as you follow Court Orders and the rules themselves, as if you fail to do so, even if you win your case, your victory could be soured by costs or other penalties being imposed on you.

It is difficult for busy small businesses not to view this as just one more minefield they must navigate. You do not however need to do it alone. For more information on how I can help you, please contact me.

Dean

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AFFORDABLE LAW

The Legal Services Board recently published a survey that revealed that 87% of small businesses considered that lawyers were not cost effective in resolving legal issues.

Furthermore, the survey found that only 10% of small businesses had used lawyers in the past year, a reduction of 100% on the year before.

Legal advice is often a “stress purchase”, particularly when obtained in the aftermath of an accident or dispute. A solicitor’s charging structure has traditionally been on the basis of hourly rates, and whilst there is considerable evidence of change to more affordable models, this survey suggests that small businesses still do not see legal advice generally as value for money.

This is why Small Claims Assistance offers legal assistance and advice at low fixed fees, which are proportionate to the amount in dispute.

Since I started Small Claims Assistance, I have seen numerous small businesses who have tried to handle complex litigation by themselves, and have, at best, delayed the resolution of their case, and, at worst, lost a winnable case because they did not understand the technicalities of the law. In between are a host of litigants who cost themselves money by making mistakes, some of which later have to apply to the court to rectify, and some of which cannot be rectified.

In the face of a legal “taxi meter” ticking at an hourly rate, it appears that many small businesses prefer to throw the dice, even when opposed by lawyers paid for by their opponent.

Such risks however are unnecessary with legal advice offered at low and proportionate fixed fees, whether that be £50 for drafting a Claim Form and detailed Particulars of Claim, or £25 for a brief advice. I am happy to assist with all types of money claims, whether pursued or defended, and regardless of whether they have just commenced, or are close to trial.

Litigating in person, with all the risks that entails to your business, in order to avoid substantial further unrecoverable legal costs, is understandable. Taking the same risks when your cost exposure is a small fraction of your loss, is not.

At Small Claims Assistance, you are represented by myself, a fully qualified and insured lawyer, with partner level experience at paralegal prices.

If you need affordable legal help resolving a contractual claim, call 07947 226637, or email me on enquiries@smallclaimsassistance.co.uk.

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Justice Without Lawyers

Justice without lawyers. How does that work then? Probably about as well as a healthcare system without home grown nurses.

It is widely considered that one of the main drivers of the enormous NHS trust deficits is Government cuts to training places. All very well in theory, but at 1 o’clock in the morning when a busy trauma department is filling up with patients and needs staff, what are they supposed to do? Turn patients away? Of course not. Their only alternative is to turn to agency staff, a much more expensive option, but often the only option. Worse still, it’s not like the government couldn’t have seen this coming.

Returning to the law, the Government have been reducing the general public’s access to legal services for going on three years now, and one of their wheezes for this year, has been virtualisation of the courts and court process. In other words, move the litigation process online, reduce the staffing bill, and close the courts.

So, having created an advice vacuum with their policies of the last 2-3 years the Government is talking about Online Dispute Resolution (ODR) as if it is a panacea to cure the very vacuum they have created, and yet it obviously cannot possibly be any such thing. What it will actually do is replace the system we have now; people using physical court buildings and staff to process and adjudicate their disputes, with a virtual place and process. It will not, and cannot, replace legal advice. To suggest otherwise, is analogous to suggesting that if you close down hospitals and take doctors out of the equation, you can replace them with a self-diagnosis and prescription website. Utter, utter, tripe.

I left partnership in a firm to set up my own practice 6 months ago, which is aimed at assisting small businesses and consumers with contractual disputes at low fixed fees, and which was prompted by another government policy, their doubling of the small claims limit 30 months ago to £10,000. The carnage I have seen, and helped people through, in the last 6 months has to be seen to be believed:

– all caused by the same mindset that has produced this announcement- The justice system therefore needs to adapt to make sure that people can still access it without lawyers by a process designed to work without lawyers (The Right Hon. The Lord Thomas Of Cwmgiedd Lord Chief Justice Of England And Wales, 25th September 2015) – an absence of lawyers. Had the small claims limit not been raised, many of those people could have afforded lawyers, because if successful, they could have recovered the money they were spending on legal fees.

In the last month, I was hired by a client less than a month before her trial, to try to help her. She was involved in an acrimonious contractual dispute with a business lender. It was only at that point that she realised that she was in trouble. She had a very good argument that the case, which was run (badly) by professional lawyers against her, was unfounded. Unfortunately, because she had only a limited understanding of the law, she was blind to a critical development in the case which destroyed entirely her chances of defending the case, only a couple of months after she started. Had she been legally trained, she would have seen it immediately. Even the judge at the final hearing told her that theoretically, she had a good argument, but that she had lost the chance to capitalise upon it. Had she hired a lawyer a year ago, when the dispute first began, she may have avoided a substantial judgement against her which was awarded a week ago.

Her position would have been no different had the court been online.

The Government’s attitude to litigation is that it is very much an optional activity”. I doubt that my client felt that she had much option when she was trying, and failing, to save her business without the help she needed, and could not afford.

And yet the government persists in pursuing policies time and again which withdraw legal help from all but those with the money to afford it. Even GPs have reported an increasing number of consultations with patients who have unresolved legal needs, which are adversely affecting their life, their mood and therefore their health.

Perhaps perversely, this all reminds me of a brilliant scene in Blackadder 4:

Blackadder – Would this brilliant plan involve us climbing over the top of the trenches and walking very slowly towards the enemy?”
Darling – How did you know that, Blackadder? It’s classified information.
Blackadder – It’s the same plan that we used last time, sir. And the seventeen times before that.
Melchett – E-e-exactly! And that’s what is so brilliant about it. It will catch them off-guard. Doing exactly what we have done eighteen times before will be the last thing they’ll expect us to do this time”.

And there is the problem. They keep repeating the same behaviour, expecting different results:

This is particularly so when the Government have already admitted that they pushed many of these changes through without any, or any effective, consultation.

Most of their reforms so far have had the cumulative effect of removing access to legal representation, advice and assistance. Taking lawyers away from people has caused this – saying that they will have to get used to it is not going to fix the problem, and is only going to make it worse.

At the start of this year, 87% of lawyers thought that legal representation was no longer a right. The LCJ appears to have just given that view his blessing!

This is the clearest confirmation yet that the Government does not WANT people to have legal representation. In fact, it mirrors their stance on Judicial Review, where restricting the scope of JR would reduce the likelihood of challenge to Government policy.

For the last six years, the Government has been behaving like a cowardly schoolyard bully, trying to ensure that the fight is unfair, and is rigged in their favour.

ODR cannot replace the need for legal representation, and neither can any “virtual” court system the Government intends to introduce. Representation, advice and legal assistance will still be needed, whatever system the Government puts online, because, just as in medicine, people need the help of experts in their field. They cannot solve complex legal problems by navigating a few decision trees online, and furthermore, regardless of the views of the LCJ, unrepresented litigants taking action against a large business (who will very likely still be legally represented), or vice versa, will still be at a disadvantage to the represented party, as in my client’s case.

As the Guardian says in their article above What the figures do not convey is the sheer human misery of being unable to get legal advice”.

In May, I wrote an article entitled “The Sick Society”, in which I made a number of predictions as to the likely path of society if this Government’s judicial policy does not change. None of those predictions have changed, but there is a growing wealth of evidence that they are already happening. They are:

• with fewer controls on employers, combined with an ever more competitive marketplace, there is likely to be a steady increase in the number of unemployed and underemployed people (zero hours contracts and those on unpaid apprenticeships and internships notwithstanding);
• an increase in the number of innocent defendants choosing to plead guilty in order to avoid punitive court fees if their case is lost;
• an uphill struggle for small businesses and injured people, who will find it increasingly harder to achieve redress against defendants with greater means;
• a long term deterioration in familial relations, due to all of the above, and also due to there being no effective method available for spouses and parents who cannot afford legal advice and assistance to resolve their issues;
• a concomitant impact on the social and emotional development of children, the nature of which can only be guessed at, but which is obviously not going to improve;
• with all of the above we are also likely to see an increase in mental health issues with a resultant increasing burden on the NHS. In fact, this has already been found to be the case, even in children.

Parliament’s own report into the impact of these changes, the “Impact of changes to civil legal aid under Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012” states:

“80. Witnesses observed that demand for [legal] services was going up, partly as a result of the legal aid reforms but also because of other reasons such as changes in the benefits system and immigration rules, pressure on housing and rising use of zero hours contracts.[138]”

This isn’t just my opinion. It is happening.

Now.

Justice is, and always has been, at the core of our society. So instead of saying that people will have to get used to life without lawyers, the Government should be finding a way to restore contact between the general public and the legal services they once had, but have, under the last two Governments, lost.

It is truly a sad reflection of our leadership, that all of this is happening in the year in which falls the 800th anniversary of the signing of the Magna Carta, but this fundamental affront to our proud legal heritage also highlights the clear agenda of the incumbents; that justice should no longer be defined as “Just behaviour or treatment: a concern for justice, peace, and genuine respect for people” [Oxford Online Dictionary], but as a commodity to be bought only by those with sufficient means to afford it.

Everyone else will have to DIY.

Meanwhile, I have to get back to work. My hot water boiler has packed up, and I’m sure that with a £5 toolkit and a modicum of common sense, I can replace it and have the taps running hot by tea time…

If you have enjoyed this article, please feel free to share.

Thanks for reading.

Dean

Happy 800th Anniversary Magna Carta – where has justice gone?

On 15th June 2015, we celebrate the 800th anniversary of Magna Carta. The website, which has been set up as part of the celebration of this great event, emphasises the importance of this innovative document, which established for the first time the accountability of the state and the rights of the common man. The above web page heralds as its title “To no one deny or delay right or justice”. A noble proclamation, and ye (well, we) can all find countless pages devoted to the Magna Carta celebrations on the web.

So, why ye (sorry, you) may ask, is there a Vote for Justice Rally on the 23rd April, less than 2 months before the 800th anniversary of arguably the most important event in English justice, ever?

The short answer is that the last two years have seen the most significant and sustained assault on justice in England and Wales for decades.

The Vote for Justice Rally is in response to the dramatic reduction of legal aid, primarily in criminal work,  but also in family work. In fact, almost 60% of parents involved in family disputes have been forced to represent themselves in Court since the removal of legal aid. Some even believe that, because of the dearth of legal aid now available for domestic violence, women will die as a result of these changes.

These cuts were just a small part of the draconian legal changes imposed since 2013. The legislation that imposed the bulk of these changes was the Legal Aid, Sentencing and Punishment of Offenders Act (2012). The same act also imposed significant changes on personal injury cases.

Other than legal aid, the main changes are, a ban on solicitors buying personal injury cases, and extensive changes to the legal costs recoverable by claimants on winning their injury cases, the result of which is that injured claimants who win their cases can now no longer keep all of their compensation.

As far as the ban on payments for cases is concerned, speak to any personal injury lawyer and they will tell you that:

a) This didn’t work, and;
b) It was never going to work.

The referral agreements changed to marketing agreements, which were drafted in full compliance with the new rules, and business continued as usual. In fact, the insurers who were paying the claims started sidestepping the ban before the law even changed.

So that was a great use of resources by the MOJ.

Turning to the deductions from a claimant’s compensation, you’ve all seen those TV adverts, right, the ones where sombre lawyer types with sharp suits and Hollywood teeth assure you that they will fight the big bad insurance companies to the death on your behalf? Did you notice when the script switched from you’ll keep “100% of your compensation”, to “all of the compensation you deserve”? In case you’ve ever wondered why, that’s why.

All of these rights have been snatched away from ordinary people like you. In return you have been given the dubious benefit of Qualified One Way Costs Shifting, or QOCS.

In essence this means that if you claim and lose, you don’t have to pay your opponent’s legal costs. The person sued (usually represented by an insurer who will be paying the claim) cannot recover their legal costs if they defeat the claim, with the one exception of you (the claimant) having been “fundamentally dishonest”.

Just as with referral fees, this is not working out quite as anticipated. In view of the fact that insurers cannot now recover their costs if the claim fails, many firms are running more or less every case that comes through the door, regardless of prospects, in the hope that insurers will make early settlement offers rather than fight them.

This of course has not helped the Government in their quest to stamp out unmeritorious claims. Quite the opposite, in fact. And it is having an equally negative effect on claimant/insurer relations. What the Government wanted was for the national claims pool to be reduced and purified. What they have got is a system where a higher proportion of new enquiries than was the case before LASPO, are now presented as claims.

Well, remove the risk, and what did they think would happen?

The result is that the insurance industry has moved from DEFCON 3 to DEFCON 2, and they now see fraud everywhere. Demonstrably genuine claims which, 5 years ago would have been settled on the best terms, are now being fought tooth and nail.

Another great use of our taxes by the MOJ.

To make up for losing 25% of their damages as costs, claimants have also been given a 10% increase in damages (100, minus 25, plus 10 is….nope, maybe it’s just me), but this apparent benefit is, in practice, rarely more than a mirage. Unless a claimant takes a case all the way to trial, cases tend to settle for a negotiated global sum and it seems clear that you, the claimant, are still worse off since LASPO. So as a result of LASPO, injured claimants have suffered a significant reduction in their ability to access legal redress. Even insurers agree that the benefit of this assault on justice has been largely theirs.

But the assault on justice does not stop there.

Staying with injury claims, recoverable legal fees for road traffic accidents have been reduced by 60%. Imagine hiring an accountant and learning that a change in Government policy had reduced their fees by 60%. Granted, not everyone would be that bothered, but would you really expect them to offer the same service as they had before? And would you be that surprised when they told you that they would have to add a 25% surcharge? Inevitably the dramatically reduced fees will reduce the quality of the work done. How can they not?

In fact, they already have, and as a result of the sharp drop in remuneration, evidence of under settling of claims has emerged.

So that worked well.

For public and employers’ liability claims, fixed costs have been applied across the board up to a claim value of £25,000. The costs scales are in fact quite reasonable, but are only workable if insurers behave reasonably, and at the consultation for fixed costs, the MOJ was presented with a significant body of evidence of routine unreasonable behaviour by insurers, and ignored it.

With personal injury, it doesn’t even stop there. Claims resulting from accidents at work were made harder for claimants to prove by the Enterprise and Regulatory Reform Act (2013).

Many people do not realise, until they have an accident at work, that the employer holds all of the cards – documents, witnesses, even the equipment and location are theirs. Decades of health and safety legislation designed to neutralise the imbalance between an employee and their employer was rendered impotent by this act, meaning that employment injury claims will now be much harder to prove. Those regulations were designed to protect employees, and to force employers to take better care for their workers.

However, in this enlightened age of zero-hours contracts and fierce competition in the aftermath of the recession, it does not take a brain surgeon (although it clearly takes more than several politicians) to work out the effect that this is likely to have on employers, and on their employees.

Then there is the dramatic increase in both tribunal fees and Court fees. The increase in tribunal fees has led to a 73% drop in tribunal claims, such a significant drop in fact that the Government are now considering lowering the fees.

The inescapable conclusion from this is that unfairly dismissed employees are not taking action because they cannot afford the fees (well, when you’ve just been unfairly sacked, tribunal fears are hardly your first priority).

Then there is the very recent 600% rise in Court fees (about which I have already filled several column inches). Perhaps they think we have forgotten, but this increase followed the rise in Court fees a year earlier levied by the same Government!

Are we to expect another fee rise? How far does this go? Should claimants expect to have to set up monthly standing orders to the MOJ? Will we have to sign over our houses to the Government if we wish to make a claim in future? I look forward to the next announcement with great anticipation.

Throw in the Government’s determination to stifle access to judicial review, and the unmistakeable conclusion is that they are pursuing a sustained and ferocious attack on the ability of the common man to access justice. This is not just my view either. Most lawyers now believe that wealth is central to having unfettered access to legal assistance and redress.

For the remainder of us who cannot afford to pay for legal help, the only options in such cases are to find someone who can provide justice on a shoestring, or of course to DIY. Many people, unable to pay for a lawyer to help them, are doing it themselves, and are getting it wrong. Good cases are being thrown away because ordinary citizens are unrepresented, and some are even pitting themselves against trained lawyers in court.

This outcome is not especially surprising when you hear that the Ministry of Justice has admitted that “they did not have the time to research the potential impact of cuts to civil legal aid”. Their candour is welcome, although not unexpected when you look at the impact assessments from the consultations, for example the consultation into reform of the whiplash claim process and costs.

The phrases “It has not been possible to quantify the costs associated with this proposal”, and “It has not been possible to quantify the benefits associated with this proposal”, are repeated 6 times. In fact there is no evidence in the impact assessment that they have found it possible to quantify anything.

And yet despite this, they pressed on with changes which have led to solicitors’ firms closing down, claimants losing a significant proportion of their compensation, and the creation of an advice vacuum for those on low, or no, income.

That’s an impact, isn’t it?

In a nutshell, the Government’s approach seems to be that “we don’t know what the outcome will be, but we’re going to do it anyway”. Life on the edge – how exciting!

As I write this, the internet is littered with reports of the Andrew Marr interview with George Osborne, in which George Osborne, who, having presided fiscally over a very difficult five years for the NHS, has, a month before the election, just promised to find £8 billion for the NHS if the Conservatives are re-elected.

In the aftermath of a five year brutal attrition of public services, the question “where does the money come from” inevitably springs to mind. George Osborne avoided answering that question 18 times. Of course, wherever the money may or may not come from, I’m sure that, as some people have alleged, the promise has nothing to do with the letter from 100 doctors to Mr Cameron 5 days earlier.

Is this just another example of “suck it and see” politics, which seems to have characterised this Government? The embarrassing reconsideration of Employment Tribunal fees referred to above certainly seems to fit that theory, as does the miraculously impact-free impact assessment (not much of a ring to that…) for the Whiplash Consultation, and the MOJ’s comments concerning the lack of consultation, during the Civil Legal Aid consultation (or that…).

So why this extraordinary attack on justice? Is it really just because cuts needed to be made from the public purse?

No.

There is no benefit to the public purse from reducing legal costs in personal injury work. The Government stated at the time that, as far as injury claim costs were concerned, they were seeking to reduce the burden on consumers by helping insurers to reduce car premiums. So how does that fit with making injured consumers and small businesses pay a 600% increase in court fees?

It doesn’t.

So what is the justification behind this onslaught? As far as injury claims are concerned, evidence has emerged of deals between the insurance industry and the Government.

Whether there were deals or not, and what the Government may or may not have got out of them, will remain a mystery. However, the haphazard and rapid manner in which these changes have been implemented suggests a lack of understanding of the subject matter. In fact, following the withdrawal of legal aid for family matters, the courts are now so inundated with unrepresented parties (“litigants in person”) that the Government is now having to spend more time and resources on dealing with that problem.

Another plan that didn’t quite come out as intended.

Chris Grayling, the first non-lawyer Lord Chancellor ever in this country, has been repeatedly criticised for having no understanding of his role, and there has been considerable discussion over whether the position of Lord Chancellor should be held by a lawyer. Mr Grayling’s own view is that he considers being a non-lawyer an advantage, as “it enables you to take a dispassionate view”, in which you do not “favour the bar or…the solicitors’ firms”. Well you would never have guessed the last bit.

So in conclusion, one has to acknowledge the considerable irony that, in the year the Magna Carta celebrates its 800th anniversary, a year in which the legal system of this country should be hailed as having evolved into an unparalleled paragon of justice, it has in fact atrophied into a shell-shocked combat zone, in which the expenditure of far too much energy is necessary just for legal firms to survive, and many haven’t.

Injured clients no longer recover all of their compensation; impecunious parents and spouses struggling to negotiate a difficult separation, are forced to plead their own case in court; victims of domestic violence are left with no alternative other than to stay and hope things change; and criminal lawyers are forced to stage protests in a brave but probably futile final effort to save their industry from being decimated.

So much for the accountability of the state and the rights of the common man.

On the 15th of June, are the Conservatives really going to be celebrating the 800th anniversary of the signing of the Magna Carta?

Or will they be privately rejoicing having confined it to the shredder?

Who knows?

However, there is one final point of relevance to the Magna Carta which I have not yet addressed. This becomes immediately apparent if you refer to clause 45 which states:

“(45) We will appoint as justices, constables, sheriffs, or other officials, only men that know the law of the realm and are minded to keep it well.”

My money is on the shredder.

Thanks for reading. If you have enjoyed this article, please share.

Court Fee Rise – Early April Fool!

As my blog so far has not been what you might called “light hearted”, I couldn’t resist an opportunity to inject a little levity into it.

And this letter from Chris Grayling, Lord Chancellor has provided that opportunity.

For any not familiar with the recent 600% Court Fee rises, I have already written about the hypocrisy demonstrated by the Government in implementing these rises, and I have also written about Justice Minister Lord Faulks’ comments that “litigation is an optional activity“, which of course is great news for those who face losing their business, or life in a wheelchair.

It seems however that the Lord Chancellor, having instigated the highest Court Fee rise in British History (maybe even in world history), by a long way, has now decided, for some reason which is not clear (until you remember that there is an election in a month’s time), to offer the olive branch of a possible review of his monumental Court Fee rises.

So, raise fees by up to 600% seven weeks after they first announce the idea. Then offer a month later to keep them under review.

Okay…

The obvious question that arises from this is, does he now believe the decision to implement the fee rises was wrong?

Everyone knows that the Court Fee rises of 600% don’t pose any risk to access to justice – Justice Minister Shailesh Vara said so. As the minister also said, this is a “sensible measure”. Of course it is!

So why the need to keep them under review?

Maybe the MOJ is not quite as sure of their facts as they initially seemed to be. Let’s look at the letter. 

It says that the scheme has only been in place for a short period of time so far, and it’s not possible to judge whether there will be any impact. Technically true. However, if the Government suddenly decided to increase the cost of iPads by 600%, and announced “we’ve decided to increase the price of an iPad from £400 to £2400;  there’s no evidence of any impact yet, but we will keep matters under review in case guidance needs to be tightened in “exceptional circumstances”, the public would be pleased, right? It’s a “sensible measure”. And obviously no rational person would jump to the completely irrational conclusion, without solid evidence, that iPads were now wildly overpriced, and wouldn’t touch Apple with a barge pole. People would continue buying them at the 600% inflated price, until the Government had gathered sufficient evidence of an impact. Right? Of course they would.

And for those societal “exceptions” who could not afford to find £2,400 for their iPad (or £10,000 for the Court Fee that may save their business or their livelihood), they have the comfort of knowing that the fee rise may be reviewed in “exceptional circumstances”. Are those the same exceptional circumstances as are now applied to Legal Aid applications (1500 applications; 69 successful)? If so, I won’t be holding my breath for the review.

He also says in the letter, that there are arrangements in place to help people bring “these sorts of claims”, which he states are CFAs (no-win, no-fee contracts) and ATE insurance.

Firstly, what “sorts of claims”? Do the increased Court Fees apply to only one type of claim? Please clarify Mr Grayling, as I must have missed that part of the press release.

Secondly, he is saying that solicitors or After the Event insurers (ATE) should stump up the hugely increased Court fees. Well, true, that is what normally happens. But two years after the Government dramatically cut solicitors’ fees, and also introduced Costs Budgeting for larger claims (a process which is proving to achieve nothing more than to generate massive amounts of extra work for claimants, and to provide defendants with a pre-trial opportunity to reduce the claimant’s costs – effectively, a “practice shot”), they now propose asking solicitors to carry up to 600% more in Court Fee disbursements for two to three years!

Really? How much more can the Claimant solicitor business model take?

He also says that “many of your concerns are addressed by the current fee remission scheme”. So if I’m following that correctly, a scheme which allows some claimants who claim benefits remission from Court Fees, will help people cope with a 600% rise in Court Fees. So how will that scheme help seriously injured claimants who are not on benefits? And how will such a scheme help small businesses who have already suffered a significant financial loss?

It is tempting, as has so often been the case over the last couple of years, to think that he is so appallingly misguided in his policies because he is not a lawyer, and has no idea of the effect of such changes at the coal face.

Or maybe his boss has simply told him that there’s an election coming, and to knock out a few lines to keep the punters happy?

Or maybe the letter is just an early April Fool. One way or another, the answer will present itself tomorrow.

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McKenzie Friend, or Foe

The Government is being asked by MPs to consider regulating McKenzie Friends . It is important to ensure that all those participating in legal action, whether clients or Litigants in Person (LIPs) are protected, but is the best way to do that to enforce regulation? The call for regulation suggests that McKenzie Friends are being treated in the same way as lawyers, but the role is not a legal one.

The McKenzie Friends Guidance July 2010 states:

The Right to Reasonable Assistance
2) Litigants have the right to have reasonable assistance from a layperson, sometimes called a McKenzie Friend (MF). Litigants assisted by MFs remain litigants-in-person. MFs have no independent right to provide assistance. They have no right to act as advocates or to carry out the conduct of litigation”.

So if McKenzie Friends are not lawyers, what are they?

“McKenzie Friend” is a title given to people, usually not legally qualified, who provide assistance to those in Court, or in Court proceedings. In essence, a “lay” representative.

The term is not a qualification. It is a role, which has been thrown into sharp focus since the Government’s recent legal changes (mainly the Legal Aid, Sentencing and Punishment of Offenders Act (2012) but also the doubling of the Small Claims Limit to £10,000 in April 2013) destroyed access to justice for millions of people, chiefly in family law cases, but also in civil litigation.

Since the above changes, most of those who used to use solicitors to run their cases, can no longer afford to do so. In family cases, without legal aid, many families cannot afford to pay lawyers. In Small Claims debt cases of up to £10,000, because legal costs are not recoverable, many people and small and medium sized enterprises (SMEs) can no longer afford to pay solicitors to run their cases as they won’t recover their legal costs even if they win. This one change has had the effect of stifling the Government’s intended jump start for small businesses. I have lost track of the number of times I have read online posts by small business owners who say that they risk going under because of one debt of several thousand pounds.

Little preparation was made for the aftermath of the cuts which led to these changes in the law. In fact the civil service have admitted in evidence that the cuts were rushed through without proper assessment of the impact.

So there is currently an advice vacuum in the legal world. Thousands of people require representation, but cannot afford to pay a solicitor to help them. The fact is that McKenzie Friends can fill this gap, because they are mostly self-employed, with none of the regulatory baggage which solicitors have, which enables them to keep their fees low. They are, for the most part, not lawyers, but if they can provide safe and effective assistance to someone who is out of their depth in Court at an average of £50 an hour, when solicitors normally charge over £150 per hour, their value is proven.

But what does all this have to do with regulation, and why should they be formally regulated? Is formal regulation just a knee-jerk reaction to the emergence of this new role to fill the legal advice void, or is it a necessary precaution to protect vulnerable litigants in person?

The Society for Professional McKenzie Friends was formed in response to calls from the Legal Services Consumer Panel for tighter control over those who act as professional McKenzie Friends.

Its requirements for membership are that all members must:

i) Have professional indemnity insurance (PII);
ii) Have a qualification at A-level or above in law, or at least three years’ experience as a McKenzie Friend;
iii) Register with the information commissioner.

So the Society has already taken steps to ensure minimum standards for its members.

I am not a member and have never practiced as a McKenzie Friend, but as a sole-practicing qualified lawyer, I see the damage done to society by the withdrawal of access to justice from people and small businesses, and I welcome any safe and inexpensive solution to help people resolve their legal issues. They are not lawyers and cannot replace lawyers, and the legal industry should not be afraid of their emergence.

Protection of clients is however critical, and there is a fine line between balancing quality control, and allowing this low cost lay assistance to thrive. The Government has decided that formal regulation of McKenzie Friends is unnecessary, although they plan to continue monitoring the situation.

So are there any steps which could be taken to help protect consumers, without clogging up the arteries with regulatory baggage. Until evidence emerges of problems being caused by this burgeoning industry, surely the logical approach would be to build on what is already there. In other words, use the developing structure to regulate itself.

For example, for professional (fee charging) McKenzie Friends, make membership of the SPMF compulsory. This would bring the advantages of compulsory professional indemnity insurance, a minimum standard of legal education/experience, and compulsory compliance with the Judiciary’s McKenzie Friend Code of Conduct.

The Government has wrecked access to justice, and yet the legal services industry has found a way to provide the help that people desperately need at low cost. Similar solutions are springing up in other jurisdictions in which access to justice has been similarly affected, namely New York and Ontario, Canada. If the NHS was suddenly privatised (watch this space…) and millions of people found themselves unable to afford a doctor, would it really be either prudent or fair to deny people access to cheap and readily accessible first aid? If first aiders were viewed as medical staff, a classification which I doubt you would find anywhere, and were regulated like doctors and nurses, that could easily be the inevitable result.

So instead of assuming that McKenzie Friends are, and practice as, quasi-lawyers, let this newly flourishing tier of lay assistance grow unfettered by the layers of regulation that have contributed to the increase in the cost of legal services over the last 10-20 years.

Let it breathe.

An Undesirable View

A quick footnote to my last ODR post. I found this discussion thread on LinkedIn

I have written two blog articles on this, and thought I would accept the invitation to comment, and add my views. I duly did so.

My post comprised words along the following lines: “This could be a viable solution, but ODR requires two parties to engage, and the latest Government figures show that defences are down 18% and default judgements are up 25%. The number of defences have also dropped for the 5th year running. This needs to be borne in mind before pressing ahead with a mediation based alternative to litigation”

I received an automated message stating that my post was awaiting approval. So far, so good.

The next day, no post published! Instead, the post below was there, where I expected mine to be:

Untitled

So, my post was not approved, and this appeared instead. In the aftermath of my freshly scorned viewpoint, I was left feeling like a schoolboy being sent to stand in the corner.

Not being accustomed to taking the words “detention, Talbot” for an answer, I resubmitted the post politely pointing out that my original didn’t seem to have made it through the shredder. That was two days ago.

I think that my comments were reasonably benign, polite, and inoffensive, so I am still wondering why, in this enlightened democratic age, my opinion was not acceptable for publishing on a thread which invited readers to give their opinions.

Taking into account all the circumstances, logic would dictate that, for reasons unknown to me, my adversarial viewpoint is not an appropriate response to the question “Is online dispute resolution the way forward for low-value claims?” It is tempting to think that, had I submitted words to the effect of “Great idea…” and added a few congratulatory compliments to the advisory group, I would have had the pleasure of seeing my words in print.

Being a public spirited kind of chap however, I prefer to think that my post just got lost or mislaid.

Twice.

Well, I know it’s a stretch, but it can’t really be the case that discussion groups publish only approving views.

Can it?

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ONLINE DISPUTE RESOLUTION – ONE TO TANGO?

Last month, the Civil Justice Council’s Online Dispute Resolution Advisory Group produced a report recommending a trial of Online Dispute Resolution, which they believe could help extend access to justice to those who have been disenfranchised by the Government’s numerous changes to the English legal system.

Online Dispute Resolution (ODR) is an internet-based court service, which the CJC Advisory Group say is designed to bring parties together and assist them in resolving their disputes with a minimum of fuss and expenditure.

Their vision sees the dispute resolution process divided into three categories:

Tier One – Online Evaluation. To help users with a grievance to classify and categorize their problem, to be aware of their rights and obligations, and to understand the options and remedies available to them.

Tier Two – Online Facilitation. Online “facilitators” will help parties through mediation and negotiation, with the help of some automated negotiation.

Tier Three – Online Judges who will decide suitable cases online.

As you may have guessed, I have various issues with this, many of which I have already aired.

Whilst this report was written by an Advisory Group to the CJC, it was commissioned by the Government in an effort to resolve the problem caused by the rising number of unrepresented people at court, the problem being that unrepresented people take longer to get through cases and generally have lower prospects of a negotiated settlement because many do not understand the law.

The irony of all this, is that the huge increase in the numbers of unrepresented people, (“Litigants in Person”, or LIPs) has been caused by the Government.

The changes introduced in the Legal Aid Sentencing and Punishment of Offenders Act (2012) have resulted in a dramatic increase in the number of unrepresented people, primarily because their legal lifeline was cut off by the near complete withdrawal of Legal Aid for family work, forcing almost 60% of parents to represent themselves in Court.

The number of LIPs in Court has been increased further by the doubling of the Small Claims Limit from £5,000 to £10,000 from April 2013. In a nutshell, this means that, whereas before that date, for debts of between £5,000 and £10,000 you could afford to hire a lawyer because you could recover their fees if you won, you no longer can. This is all further compounded by the fact that, because of the lack of legal representation, many cases are resulting in the wrong decision. Even the Master of the Rolls believes that without lawyers to help people, this is inevitable.

So, to summarise where we are so far, the Government, having created an advice desert, is now trying to fix it.

But will ODR fix it? The answer to that question is here.

Earlier this month, the Government produced a report on the 2014 Civil Justice Statistics. To quote from that document, “In October to December 2014, courts dealt with 379,000 claims and 196,000 judgements were made (1% and 15% higher respectively than same quarter last year). In contrast, the number of defences stood at 46,000, down 18% on the same quarter the previous year and the fifth consecutive year on year decrease (when compared to the same quarter the previous year). There were 829,000 judgements in 2014, up 25% on 2013. The increase is due to the combination of an increase in claims and a decrease in claims being defended, leading to more default judgements occurring”.

If we just pause for a moment there….

  • Judgements up 25% in 2014 on the previous year.
  • Defences down 18%.
  • The fifth year on year decrease in the number of defences filed.

So, how does ODR, a system designed to “help users with a grievance to classify and categorize their problem” and to “help parties through mediation and negotiation, with the help of some automated negotiation”, solve a problem where only one party comes to the table?

It takes two to tango. It takes two to mediate. It takes two to negotiate. It takes two to reach a settlement.

It takes only one, however, to litigate.

And the problem (which will have been obvious to everyone who has ever done debt recovery work by the time they finished reading the title of this article), is that it is common in debt recovery to be ignored by a defendant. And in this significant proportion of cases, how does mediation help? How does automated negotiation help? For that matter, how do Online Facilitators help?

When you take away all the window dressing of this shiny new toy, and place it firmly in the context of the English dispute resolution system as it is today, all you are in fact left with, is a very expensive computer game and no one to play it with.

Tier one is already there. By an amazing coincidence, we already have people who “help users with a grievance to classify and categorize their problem, to be aware of their rights and obligations, and to understand the options and remedies available to them”. They are called lawyers. Or they were before the Government wanted to take them away and replace them with computer decision trees.

Tier two is already there. By an even greater coincidence, we already have “facilitators who will help parties through mediation and negotiation”. They are called lawyers. And since the Government’s changes began two years ago over a thousand legal practices have closed down.

And now the Government wants to solve a problem of their own making of a shortage of legal representation, by taking more work away from lawyers and automating it.

And (here’s the rub…), they want to introduce a system which requires both parties to be at the table to work properly, into a legal framework where for much of the time there is only one party at the table.

Many have criticised the Government of being out of touch (including myself), and many would say that this is yet another example of that (including myself).

In July 2013 the Government massively increased employment tribunal fees directly resulting in a drop in tribunal applications of around 80%. This is yet another flagrant example of people losing their access to legal redress.

And, as if that is not bad enough, last year the Government announced that because of the huge drop in tribunal applications, they were considering lowering the fees.

20 years ago, I was Father Ted’s number one fan. This Government’s ham-fisted efforts at reforming the law of this land cannot help reminding me of Father Ted beating that dent out of his car – with each blow creating more carnage. Perhaps this should not be surprising when you consider that our Lord Chancellor is the first non-lawyer in that role.

I can only hope that their efforts on ODR are more carefully considered than the implementation of the changes over the last two years.

BGJvD4x

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