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12 June 2014
Don't read this column if your clients are prepared to pay what you think is fair on an hourly basis. You will be wasting your time. However, if you are a member of the large number of litigators struggling to respond to market pressures, then read on.
Competition in the market for bulk casework has become increasingly competitive, with pressure on both defendant and claimant lawyer costs. There has also been economic pressure for earlier settlement. Some insurers are putting rehabilitation first and trying to proactively assist claimants to get better, which is better for the patient and better for the insurer's bottom line.
IT is also forcing change. Clients, particularly corporate clients, are increasingly communicating with their supply chain electronically, wanting services provided at their convenience and not at the convenience of the supplier. Legal suppliers will not be immune.
The Lord Chancellor's Department's approach to IT is contained in two documents on its website, "E-Business Strategy" and "Civil Justice 2000". The programme calls for a move to an all-pervasive electronic environment, from filing to enforcement. The courts are a service business and cost pressures will increasingly move them from personnel-intensive counter systems (with the inevitable queues), to call centres, and then to the internet. Problems have to be solved, not least the security of email, but if the banks can do it, then so can the courts. The courts will also increasingly electronically interface with their own suppliers. They are moving to e-procurement for renewables. Once you have the kit for business to business, why not use it for business to consumer?
The Woolf reforms turn the traditional English approach to litigation on its head. Exchange of information on which to base sensible and defensible settlements is forward-loaded into the system by the preaction protocols and the new practice directions. The point of maximum profitability for a lawyer resolving a dispute may be much earlier, often before the case has been issued; after that, the amount of recoverable costs may decline. Benchmarked or fixed costs will exacerbate this trend. It makes little or no sense to keep a case ticking over unprofitably if it could be settled.
One of the most interesting developments in promoting settlement is online settlement using a secure internet site and email. Payments in, and offers to settle, are still relatively crude instruments that force parties to disclose their offers. They may introduce a disincentive to settle by influencing the defendant to pitch too low and the claimant to pitch too high.
In contrast, online settlement offers some key advantages:
Offers (bids and counter bids) are made by email to a secure website, which compares the bids and notifies that a legally binding settlement has been reached only if the bids match or come within agreed limits when the difference is split;
All bids are blind. The amount of any bid is never revealed to the other party. Parties will tend to bid and counter bid realistically, and settlement is more likely;
Re-bids can be made simply and frequently at any time, day or night. The website compares and deals with bids automatically;
If a single bidding system is used, re-bids can be lower as well as higher. If information comes in that reduces the value of the claim, this can be instantly reflected in a lower bid. As the previous higher bid did not come to the attention of the claimant, no credibility is lost;
Any settlement is automatically notified to the parties. No notification means no settlement. So if letters had crossed in the post and messages were left unanswered, would the case have settled or not?
If both sides have the information they need to bid, it will often be in the economic interests of both claimant and defendant lawyers to settle early and simply.
John Peysner is a professor of civil justice at Nottingham Law School