Litigation – a right or an unaffordable luxury?

This week (Monday 30^th January) Peers will discuss part 2 of the Legal Aid Sentencing and Punishment of Offenders Bill in the House of Lords.  Included within part 2 are proposals that will prohibit the recoverability of ATE premiums.

This proposal will, I believe, make it even more difficult for SMEs, and private individuals, to litigate against better resourced opponents.  Not only will this act as a significant deterrent to justified claims but it will also have an adverse impact on Treasury revenues.

When introducing the Bill in the House of Commons last year, the Lord Chancellor stated that “there is too much litigation”. This is as absurd as the Home Secretary saying “there is too much policing”.  The commercial and social wellbeing of a nation requires that the citizen can enforce the law for himself. The Government also claims that there is a lack of balance in the court system. I say that what is balanced or not will depend upon the circumstances of any particular case and the means of the parties. 

However, whilst largely based upon a completely false view of the litigation landscape, the Government’s position is not wholly without merit.  It is the case that ATE insurance premiums increase the overall cost of litigation.  It is also the case that a well-funded party can nevertheless buy ATE insurance and thus impose even greater pressure on his opponent who may already be weaker. It is however not the case that abolishing recoverable ATE premiums will restore balance as the government claims, neither is it true that there is a compensation culture exploited by irresponsible and dishonest claimants.

History has shown that it is not easy to cut the cost of English civil litigation.  Many have tried and failed.  What is necessary is for us all to have the means to cope with the costs. What I suggest is that the balance should be achieved by the people employed for the purpose, namely the judiciary, not by legislative changes of omnibus, and therefore necessarily unfair application.

I believe the answer is to permit ATE insurance with recoverable premiums where it is necessary to do so to avoid hardship.

Judges are already starting to look hard at the costs of litigation at the beginning of a case - with cost estimates for the overall case now being commonly supplied at an early stage of the proceedings.  It would therefore be relatively simple for the judge to look at the means of the parties and to authorise ATE insurance with recoverable premiums to redress the balance where appropriate. 

The opportunity might also be taken for judges to exercise their powers to cap costs at the outset to what they consider to be reasonable amounts.  This would be a balancing exercise at the beginning of the case, avoiding the trials of financial strength which are a common feature of modern English litigation.

The goal towards greater effectiveness and efficiency of the legal aid system is laudable, but a legal system that does not help those in need to get access to justice is a system which will, ultimately, be less efficient and cost more.

In a civilised society, access to justice is the right of the citizen.  It does not deserve to be coloured by political invective about “compensationitis”. I hope that the Government thinks again, amends the Bill before it is too late, and retains the provision of ATE insurance for those who need it.

Robert Morfee is partner at Clarke Willmott,