Woolf at the courtroom door
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Royal Court clarifies limits of customary law exception in respect of time-barred breach-of-trust claims brought by incoming trustee
26 February 2014
Many lawyers may well find themselves agreeing with TS Eliot this year when he said that April was the cruellest month. On 26 April, Lord Woolf's civil justice reforms take effect, and there is a strong potential that ancillary professional negligence claims against lawyers will skyrocket.
Lord Woolf's intention is to eliminate "the twin evils of delay and excessive cost". But there is still much dissent among lawyers on how effective the new changes will be in practice - especially given that the necessary software for the computerised case management will not be available for at least another year.
The intention is clearly not to generate more litigation, but to accelerate and, where possible, reduce it, with mediation being one of the compulsory practice directions. But the rules could give rise to negligence claims, as professionals rapidly try to assimilate the contents of the brown book and purge all memories of its green and white predecessors.
Chairman of the Professional Negligence Bar Association, Nicholas Davidson QC, says: "While it is appreciated that the object of the reforms is to promote the efficient and timely processing of cases, it is to be hoped that the cure is not worse than the disease."
According to Davidson, every attempt made in the past 30 years to speed up litigation has been unsuccessful, and has ended up producing a large flow of satellite litigation.
History suggests that the Woolf reforms will be no different and that a similar flow of litigation will follow from them.
"All reforms create their own litigation," agrees Simon Hildridge, a partner at Berrymans Lace Mawer.
Hildridge believes that the courtroom culture change will have all sorts of fall-out. He says despite the enormous publicity and training courses on the reforms, many lawyers are still not quite prepared.
Andrew Long, a partner at Pinsent Curtis, believes that for smaller firms with fewer resources, the new regime poses a formidable challenge. "How they will cope I just don't know," he says.
And with just over a month to go, nobody can predict, with any degree of accuracy, exactly what will happen. As Long points out: "We are entering wholly uncharted territory."
But, although this journey is yet to be made, a smaller scale glimpse of its possible contours has been seen before with the introduction of County Court Order 17 Rule 11 - the automatic strike-out provision that was introduced in 1989.
Designed to speed up litigation, Order 17 Rule 11 meant that if a plaintiff did not set down the case for trial within 15 months, then it was automatically struck out. This rule spawned a huge cache of litigation dealing with claims to have the case reinstated, and negligence claims by clients if these were unsuccessful.
Although the Solicitors Indemnity Fund (SIF) does not have separate figures for claims arising from this rule change, it does state in its most recent newsletter that: "About 65 per cent of all claims against the fund arising from litigation in the last three years resulted from missed time limits and delays."
A spokesperson from SIF says the potential for the situation to get even worse after April is obvious. "There are critical dates right through the new rules. Solicitors who ignore them risk tough sanctions, including strike-out."
Hildridge says he hopes that firms have learned from Order 17 that they cannot bury their heads in the sand: "This is one Woolf you cannot keep from your door," he says.
The Court of Appeal was varied in its approach to ruling on reinstatement claims. But, as Andrew Long points out, when Woolf himself sat in the Court of Appeal, he was consistently harsh in his application of the rule. His firm approach may foreshadow the judicial approach under the new regime, suggests Long.
Most solicitors will err on the side of caution as it is generally felt that, in order to get the point across, the courts will be strict in the first stages. Frank Maher, who heads Weightmans' professional indemnity practice in Liverpool, expects them to be "laying down markers".
Roger Parker, head of commercial litigation at Richards Butler, agrees: "All the indications are that the courts will be far less tolerant of delay and inefficiency on the part of lawyers. The judges now have the mechanism to penalise and therefore the occasions on which robust penalties are imposed on parties and the lawyers will increase."
Under the new rules there will be many pitfalls. The timetables will be much tighter, and the frontloading of cases more important. There are, however, certain key areas which will change materially, providing a potential trap for the unwary.
Discovery is one part of the process which will change fundamentally. Under the new regime, the parties will have to exercise judgement as to which documents to discover. Rather than exchanging all documents, which is presently the case, they will only have to exchange those which are harmful or helpful to their case. While bad judgement does not automatically constitute negligence, this is certainly an area which could give rise to such a claim.
Settlement offers can now be made by plaintiffs as well as defendants. If the client is not advised of the possibility of a "payment in", then a negligence claim may be brought.
The rules for pleadings (now "statements of case" and defence) are, as Maher points out, potentially "quite fearsome", and breaches of the rules can be penalised in costs or by having the case struck out.
This is an area where barristers may come in for negligence claims. Jeremy Stuart-Smith QC, at 2 Temple Gardens, points out that the present art of saying as little as possible in pleadings will no longer be allowed. If reasons for denials are not stipulated, barristers risk having the case struck out.
The whole process will be frontloaded, creating a fundamental change. And, as Roger Parker points out, for the less able lawyer this will be very difficult, as new issues usually emerge during a case, but from April they will all have to be identified at the beginning.
Another major change is in interlocutory hearings. If you intend to ask for costs the amount has to be known from the start. If the costs are unknown it may be assumed they are not being applied for, or some other cost penalty may be imposed. If the client has to bear the loss, a negligence claim may arise once again.
Controlling workflow may be more difficult than the rules suggest, and giving cases the depth of investigation which is required, particularly now that statements of case will have to be verified, takes both time and energy. Nicholas Davidson QC says: "It is to be hoped that the judges lay down timetables which err on the side of realism rather than stringency."
It will be about a year before the increase in professional negligence claims against lawyers, if it does show, starts coming to the fore. Eversheds' Manchester partner Paul O'Connor is optimistic that it will level off quite quickly as more people get up to speed.
But if there is a marked increase in claims against lawyers, this may not necessarily be reflected in the workload of professional negligence barristers.
Mediation is the central plank of Lord Woolf's vision, so most of these claims will go by way of mediation, and while this does not exclude barristers, it involves them less.
"Mediation is already quite visible in professional negligence cases, with SIF and the London and Edinburgh insurance company leading the crusade, and this is set to increase after April," says Mark Hick, head of professional indemnity at Wragge & Co.
While the involvement of barristers as counsel in future lawyers' professional negligence may be decreasing, their involvement as defendants may rise. Presently barristers still enjoy immunity in all court proceedings and in any work outside of the courtroom which is "intimately connected" with the conduct of the case on public policy grounds.
However, there are several cases which have questioned the extent of this immunity and one of them, Arthur JS Hall & Co v Simons, is awaiting leave to go to the House of Lords on appeal. The argument that a blanket immunity is in breach of Article 6 of the European Convention on Human Rights is also gaining ground. Ironically professional negligence barristers could soon be earning a crust off their own colleagues.