Litigation slump sees judiciary rewriting the record books

There is a general consensus within the legal profession that there has been a downturn in commercial litigation, the judiciary claimed otherwise last week, but now it is not so sure.

The Commercial and Admiralty Courts’ annual report, released last week (10 May), trumpets the fact that the courts used 1,043 days for trials in 2005-06, which includes preparation for hearings and judgment writing time. The judiciary office says that this was “a record for the last five-year period”.

But a little digging around – ie reading last year’s annual report – shows that this is not really the case, as in 2004-05 judges used 1,115 days for trials, 72 days more than the subsequent 12-month period.

Mr Justice Steel, the judge in charge of the Commercial Court, does confess that the fanfare was an “error”.

“The suggestion that the number of days used for trials was a record for the five-year period is an error. It was a phrase that got copied in from the previous report by mistake,” explains Steel J.

The judge, however, defends the court’s current volume of work, saying: “The figure of 1,043 days was indeed slightly less than the previous year, but nonetheless is substantially greater than the earlier years.”

With 72 extra days to play with, it perhaps makes sense, as The Lawyer revealed (7 May), that Steel J wrote to all heads of chambers and firms’ litigation partners to remind them that Commercial Court judges can be used as arbitrators.

Sir Hugh Laddie, a former High Court judge and now a consultant at Rouse & Co, sees the promotion of judicial arbitration as simply making sure that judges have something to do.

“If there’s less to do then the courts need to find a way of filling up judges’ time, and I suppose arbitration is one way of doing it,” says Laddie.
Steel J, however, is an avid fan of arbitration, which is why he says he is pushing for it.

He also says the courts’ promotion of judicial arbitration is not about a lack of work, as “it actually will not be possible to absorb a lot of arbitrations due to the volume of business going through the courts having increased by around 30 per cent”.

This figure, however, is based on claim forms issued for 2006’s calendar year, as opposed to the statistics in the annual report, which covers the period August 2005 to July 2006.

When looking at the numbers in the annual report, claims have increased by 3 per cent on the previous year, up by 32 claims to 1,005; but in a five-year period the claims issued have dropped by 17 per cent, down by 208.
Steel J justifies his use of 30 instead of 3 per cent by saying that “the principal statistics in the report are of some antiquity”.

He explains: “I was anxious to see how matters stood more recently given the suggestion in some quarters that the volume of business had declined.”
But Laddie points out that claim forms are not necessarily the best indicator of how busy the court is.

“Issuing a claim form is cheap, so parties can use them to show their intentions till the cows come home,” explains Laddie. “It’s the number of trials that’s the true indicator, and these are clearly down simply because litigating is too expensive and is still a rich man’s arena.”

With around 70 per cent of claims being settled before the necessity to litigate, the actual number of trial dates set down has, as the report puts it, “reduced somewhat: from 277 in 2005 to 246 in 2006”. In other words by more than 10 per cent. In fact, it is the same percentage decline as for the whole of the five-year period.

Again, not all cases that have trial dates set actually make it to the courtroom. By the end of July 2006 the Commercial Court heard 75 trials compared with 97 the previous year – almost a quarter fewer.

Although the judiciary on paper are not too sure whether last year was the courts’ best yet, Steel J says: “The striking feature of the statistics is their consistency over the last five years, with slight fluctuations.”

A slight fluctuation or a downwards trend? You decide.