20 YEARS OF THE LAWYER: LITIGATION
5 December 2007
24 January 2014
3 June 2014
10 June 2014
15 October 2013
28 January 2014
The litigation landscape has changed beyond recognition since 1987. We look at the key cases and lawyers involvedThe relationship between the bar and solicitors has changed radically over the past two decades. The two sides of the legal profession have gone through extremes of periods of deep hostility to one currently of relatively peaceful co-existence.
The turbulent relationship started just two years before The Courts and Legal Services Act 1990 allowed solicitors higher rights of audience within the English courts.
In 1988, a then daring young barrister James McKeon,
now of Number 7 Harrington Street Chambers, was quoted in The Lawyer as saying that the bar was seen as too
self-absorbed and satisfied with its lot.
McKeon said: “The result is that while the bar contemplates its own navel with fixed interest, it’s failing to seize upon the opportunities for betterment within an ever-expanding legal market.” Opportunities that the law firms were quick to grab with both hands.
As law firms continued to innovate, some at the bar felt that they were losing talent to solicitors. Lord Gifford QC, the then head of Wellington Street Chambers, was calling for
barristers to question the old way of doing things, especially in relation to unpaid pupillages, which he says were a “moral disgrace” and “a deterrent to the recruitment of good young lawyers”. It would not be until a year after his outburst in 1990, however, that the bar introduced a minimum of £6,000 for pupils.
The then Lord Chancellor Lord Mackay’s green paper into the reform of legal services in 1989 dropped a bomb on the bar.
The Temple was abuzz, with Lord Mackay being reviled as a traitor after his paper recommended the fusion of the profession and extending the rights of audience to solicitors.
There were even rumours flying about that some 20 High Court judges were poised to resign over the issue, which would have provoked a constitutional crisis. Fortunately, the rumblings died away.
The bar, however, would not admit defeat and in that same year the Bar Council hired Saatchi & Saatchi for an ad campaign against the green paper (a campaign very much supported by the then Lord Chief Justice Lord Lane).
But the Courts and Legal Services Act 1990 was passed and in the same year, Richard Slowe, who became the first solicitor-advocate in 1994, set up the first advocacy unit within SJ Berwin. One can simply imagine the outrage an advocacy unit caused at the bar just by simply looking at what has gone before.
The bar’s dismay at allowing solicitors higher rights was so deep rooted that it took five years after the act was given Royal Assent to relax the rules, making it easier for solicitors to join the bar.
Some barristers took matters into their own hands. In 1994 James O’Keefe and Avtar Bhatoa of 6 Gray’s Inn Square left the bar to form a new legal aid partnership with solicitors to specialise in Crown Court advocacy work.
The firm, to be called Jamesons and which no longer appears to be in action, was the first firm specifically set up for solicitor-advocates representing clients in the police station right through to the House of Lords.
O’Keefe told The Lawyer that the “idea was to take referral work from other firms” so eliminating the need for the bar. He and Avtar say they took the decision to leave the bar due to the lack of control over work, lack of direct access and heavy overheads including clerks’ fees.
Judith Naylor, then a partner in Orsborn Naylor Solicitor Advocates, says: “The only advantage of being at the bar is the low overheads, but I’m living proof that you can achieve that and specialise. I organise my own diary. I haven’t got a clerk having some power over me. I am my own boss, and I think you lose that at the bar.”
The fact that neither Jamesons and Orsborne Naylor appear to be in action – or at least in the same form – speaks volumes. Solicitor-advocates never truly threatened the bar – but they did provide a wake-up call.
The issue of clerks holding too much sway at the bar continued to be an issue right up until 1997. Clifford Chance, led by then-head of litigation Chris Perrin (he is now general counsel and executive partner at the firm), became so sick of the “antiquated” bar fee structure that it set up a four-partner team to specifically get a grip on counsel payments.
The bar eventually realised that an adversarial approach was counter-productive. A new generation conceded the point almost immediately – after all, barristers are dependent on solicitors for work. Clerking was to move into the modern age.
So after two decades of turbulence, what now? Simon Davis, the president of the London Solicitors Litigation Association (LSLA) and a Clifford Chance partner says solicitor-advocates have not impinged on the bar.
“The work of the junior Bar has been reduced, but that is the result of the Woolf reforms not by solicitor advocates,” he says. “The plethora of interlocutory applications, which may have seen some encroachment, have largely died out as solicitors seek to agree outstanding issues through case management, which in turn has become so significant that QCs are regularly instructed.”
Davis believes that solicitor-advocates were never intended to pose a threat in commercial litigation, but simply to remove artificial barriers so clients could choose the best legal team for their purposes. “As we move forward the remaining artificial barriers should be removed and again any barristers of quality should have nothing to fear from their removal,” he adds.
Since the late 1990s, the creases and wrinkles have been ironed out of the move to solicitor higher rights, but more than two years ago Herbert Smith took a bold step which again put the nose of the bar out of joint – although not for long. The firm set up, in essence, an in-house chambers, staffed by two former barristers Murray Rosen QC and Ian Gatt QC and solicitor-advocates.
The bar initially saw this as a direct threat to its position but as Sonya Leydecker, Herbert Smith’s litigation chief points out, the advocacy unit is used for general commercial litigation or where the advocates themselves have a specialism. Everything else continues to be farmed out.
She says all solicitors are expected to become advocates as the ability to go through higher rights training makes them better all-round solicitors. “There is a greater demand for advocacy skills in the work we do overall,” explains Leydecker. “There’s much more written advocacy and many oral
advocacy opportunities in other contexts – for example,
mediations, tribunal work and international arbitrations.”
In the early 1990s the bar feared obliteration, while solicitor-advocates crowed that they were the future.
Relations between solicitors and barristers have since settled into relatively peaceful co-existence. Predictions of the bar’s demise were, after all, exaggerated.
TWELVE LEGENDARY CASES, 1987-2007OK! v Hello!: Douglas & Ors v Hello! & Ors (2007).
After £8m in legal fees and seven years of litigation, the Lords put a stop to the battle between Hello! and OK! Magazine.
The three to two ruling went in favour of OK!, after the magazine had sued Hello! for publishing pictures of Michael Douglas’s and Catherine Zeta-Jones’s wedding, although it was on a £1m exclusive to the former magazine.
Dissenting, Lord Walker held: “In respectful disagreement with Lord Hoffmann I think it would go some way to creating an unorthodox and exorbitant form of intellectual property.”
Significance: The ruling gave more power to celebrities to control and exploit their own image. “Some would say it’s a blow to the freedom of the press,” says Eversheds partner Nick Valner.
BCCI: Litigations arising from the $20bn-plus financial scandal of Bank of Credit and Commerce International (2006)
BCCI’s collapse in 1991 and Deloitte suing the Bank of England for misfeasance in 1993 led to one of the most costly cases in English history, not helped by Essex Court Chambers head Gordon Pollock QC, for Deloitte, presenting a 79-day opening statement contributing to the £110m in legal costs.
Fifteen years after the suit was launched, Mr Justice Tomlinson ruled that the case was littered with “myriad hopeless inconsistencies and implausibilities”.
Significance: LG head of dispute resolution Andrew Dobson says BCCI was a classic example of how cases can spin out of control: “There were many attempts made to cut down the loadings, but the House of Lords turned it down and
wanted every point to be explained.”
Equitable Life’s £2.6bn negligence claim against its former auditors Ernst & Young (2005)
Equitable claimed its auditors failed to inform the company of massive financial woes after signing off its accounts. This was after the House of Lords held that the insurer had to pay guaranteed annuities to its policyholders.
The six-year battle, which culminated in a £70m bill, came to a dramatic conclusion when Equitable dropped part of its claim, reducing the total amount to £705m. The trial then took just three days to settle.
Significance: Having been finalised within a month of the BCCI scandal, it was becoming clear that litigation needed a fresh approach. Coupled with BCCI, Equitable led to the launch of the supercase committee to look into how to handle similar claims in the future. Waiting in the wings were the Woolf reforms, aimed at speeding up the litigation process.
John Doe orders (Bloomsbury v Newsgroup Newspapers) (2003)
Schillings made legal history by securing author JK Rowling a court order against someone whose name and whereabouts remain a mystery. It was the first John Doe order.
The John Doe was offering to sell chapters of Harry Potter and the Order of the Phoenix to national newspapers before its UK release. If successful, it would have cost Harry Potter publisher Bloomsbury millions of pounds.
John Doe orders have since come in handy for celebrities such as Britney Spears, as well as pharmaceutical giants GlaxoSmithKline, whose shareholders were threatened by animal activists.
Significance: The defendant may not be known, but this case’s ruling meant anyone, known or otherwise, is bound by the order.
The collapse of Barings Bank settlement (2001)
KPMG, Barings’ main creditors, settled for a reported £65m with the bank’s auditors PricewaterhouseCoopers and Deloitte & Touche, just days into the battle at the high court.
KPMG claimed the accountancy firms failed to spot rogue futures trades, made by Nick Leeson, which brought Barings down in 1994 with losses of more than £800m.
Significance: “This is seen by some as one of the first real tests of the Woolf reforms,” says Antony Dutton, head of disputes resolution at Norton Rose. “If the case had gone the whole hog it would have probably been as expensive as BCCI and Equitable, as well as being the longest case in the history of the UK court.”
McDonald’s Restaurants v Morris & Steel (1999)
The McLibel two, Greenpeace activists David Morris and Helen Steel, were originally sued by McDonald’s in 1990 for libel after distributing leaflets claiming that the
fast-food chain sold unhealthy food, was cruel to animals and mistreated its staff. The pair lost the court case but McDonald’s lost the PR battle.
The case ended up in the European Court of Human Rights (ECHR) for the UK breaching the right to a fair trial. The pair argued that legal aid was not provided and it was against their freedom of expression. The UK had to pay out £57,000 in compensation.
Significance: The UK’s first major test in the ECHR following the introduction of the Human Rights Act.
Aitken takes on The Guardian: (Right Hon Aitken MP v Preston & Ors 1997)
The libel action between The Guardian and former Conservative MP Jonathan Aitken was the first time an MP was shown to be fallible in the UK court, says Russell Jones & Walker defamation partner Jeremy Clarke-Williams.
Aitken’s downfall began after he sued The Guardian and
Granada Television for libel in 1995. Journalists accused him of breaching ministerial rules by allowing an Arab businessman to pay £800 for his two-night stay at the Paris Ritz.
Aitken ended up being jailed for perjury and perverting the course of justice.
Significance: Clarke-Williams says Aitken’s case, together with Jeffrey Archer’s legal battle with the Daily Mirror, played to the media’s advantage. “In 1980 it was much more a claimant-friendly regime; there were libel cases with high costs involved. Now there has been a cap introduced on libel damages of £300,000. The days of the £800,000 or £1m claim are over.”
Benzodiazepine, the first consumer group litigation order: Nur v John Wyeth & Brother Ltd (1996)
The so-called happy pills actually brought misery for 400,000 people who became dependent on the anti-depressants throughout the 1970s and 1980s. More than 17,000 people joined the group litigation, and 13,500 were granted legal aid. After six years and £35m spent in legal aid the case collapsed.
Significance: Russell Jones & Walker chief executive Neil Kinsella says it underlined the case for withdrawing legal aid and stoked the fire that led to the Woolf reforms.
Today there is still much debate around the funding of group litigation, with lawyers calling for a shake up of the system and class actions now coming to the forefront as the choice for high-volume consumer litigation.
Underwriters sued for claims in relation to asbestos cases in the US (1993-1995). In 1993 Lloyd’s of London became flooded with millions of pounds of asbestos exposure claims arising from the US. The sheer volume of claims threatened the financial stability of the world’s largest insurance market. It was the largest grouping of litigation cases ever brought.
Significance: Lovells commercial litigation partner Graham Huntley says: “It was much more of an issue for the insurance industry. In the legal sector what it did was bring lawyers into people’s minds. The legal sector was more in the public eye than ever before.”
Three-part threshold for duty of care owed to others: Caparo v Dickman (1990)
This landmark case limited the scope of responsibility for auditors. The House of Lords established that while it is foreseeable that investors may use published accounts to make investment decisions, the accountants who produced such accounts would not be liable for losses as a result of the accounts being wrong. This is because there is not sufficient proximity between the accountants and, effectively, anyone at all who may rely upon them.
Significance: Clyde & Co managing partner Michael Payton says the case “gave a fairly restrictive view on to whom auditors were responsible and for what”.
Haiti v Duvalier (1990)
The former Haiti dictator Jean-Claude ‘Baby Doc’ Duvalier fled the country in 1986. Duvalier had plundered the country’s assets to fund his lavish lifestyle, prompting the country’s peasants to revolt. When he fled to Cannes he took a chunk of the country’s assets with him.
The limited scope of the proceedings against him in France meant UK law was enacted to restrict Duvalier’s access to funds. He had used a firm of English solicitors as his agents to conceal the stolen assets and the court ordered the firm to give information about the funds, granting worldwide relief.
Significance: Head of international arbitration for SJ Berwin Tim Taylor says the case led to the creation of the Mareva injunction: “Haiti vs Duvalier was the first case that granted a worldwide freezing of assets. It was the start of a great export from London.”
Litigation arising from the Zeebrugge disaster in 1987 and the Hillsborough football disaster in 1989
A string of national disasters in the late 1980s threw personal injury law into the spotlight. Leading personal injury lawyers believe today’s rights for victims had their roots in catastrophic incidents such as the Zeebrugge ferry disaster and the Hillsborough catastrophe.
When the Herald of Free Enterprise ferry sank in 1987 more than 180 people died. The inquest into the incident led to a public inquiry and for the first time the stage had been set for corporate manslaughter prosecutions.
Two years later the Hillsborough disaster expanded the
boundaries of accident victims’ rights even further, when a total of 96 fans were crushed to death in the Hillsborough football stadium.
Zeebrugge significance: Russell Jones & Walker chief executive Neil Kinsella says: “Following that case there was a possibility for prosecution on manslaughter. Interestingly there haven’t been major cases since then.”
Hillsborough significance: Alcock v Chief Constable of South Yorkshire (1989) was one of the most significant cases to come out of Hillsborough, according to Allen & Overy’s litigation head Andrew Parker. “When the Alcock case went to the House of Lords it was a defining moment. The key moment was that the law would continue to restrict the scope of people who can bring claims as a result of a disaster. That hasn’t been changed.”