Group actions finally face up to the winds of change

The past few months have seen a variety of often contradictory proposals about changing group actions to make them more cost effective. The main suggestions come from the Lord Chancellor's Green Paper, Legal Aid – Targeting Need, Lord Woolf's proposals, and the report by the working party of the Law Society examining group actions.

Lord Mackay produced his Green Paper in May 1995, suggesting a thorough review of the legal aid system. The proposals fall into five categories.

Block contracts

The paper suggests that legally aided work will primarily be dealt with by firms who have block contracts. However, for larger and more expensive cases, particularly group actions, the ability to take on these actions will not be within the scope of these contracts. These cases would be handled by firms which have either successfully bid to take on a particular case through a tendering process which includes price as part of the tender, or have been allocated the case by the Legal Aid Board, having shown themselves competent and economic, and as a result being on a specialist panel.

Panels

Firms would gain entry to the panels based on three criteria: quality, experience and price. The allocation system would presumably be based on issues such as area of expertise and the scale of the case compared with a firm's staffing levels.

Cash limits

The Green Paper suggests a central budget held by the Legal Aid Board, which would finance group actions. However, cash limits may cause the budget to become exhausted early on in each year, with some cases having to wait until the following year before being funded. It is not clear if this will clash with issues of statutory limitation.

Appeals

Also unclear is whether appeals to the area committee will be allowed if legal aid to pursue a group action is refused. If no appeal is allowed it would have a big impact, not least because the record of refusing legal aid is so high it could result in a regular stream of cases going on to judicial review.

Counsel

Solicitors will make a fixed price bid that will not only include their own profit costs but those of counsel and other disbursements. In many multi-party actions most of the costs are for the lawyers, so having to take the experts' costs on-board is not of great significance. Taking counsel's fees on-board is another matter. Despite all the changes to the legal aid system over the past five years, counsel have come out of it with fees largely untouched for civil actions. The Green Paper shies away from the Lord Chancellor taking this on directly but puts greater control for this matter into the hands of solicitors.

In September 1995 the Law Society published a working party report by the civil litigation committee, Group Actions Made Easier. It recognised that if changes were not made to the present system group actions would not survive.

The proposals are based on the need to reduce costs by measures which do not involve changes to primary legislation. The report proposes case management by the court, a register of claimants (so avoiding the need for cases to be individually pleaded), a small number of lawyers involved with each case, and reducing the cost of litigation in lead cases by streamlining them.

Lord Woolf is now looking at group actions. At a recent meeting with the multi-party group from Apil, he said he was interested in the idea of a tribunal investigating group cases to streamline the system and cut down costs. He also suggested that his talks with the US judiciary made him concerned that unfettered group actions could lead to important UK companies being bankrupted.

There is strong opposition to the tribunal idea from lawyers of both plaintiffs and defendants. In part this is because the inquisitorial approach is likely to mean plaintiffs lose control of the way the case is put. The idea of bankruptcies occurring seems unlikely given UK settlements where companies have paid out negligible amounts in compensation.

The need for change in the running of group actions has been obvious for many years. The reluctance of the courts to come to terms with them has led to UK taxpayers forking out large sums on unnecessary multi-party action costs.

The Law Society report, together with Lord Woolf's interim proposals and the Green Paper are all indications that the system can be adapted to enable group actions to run in a coherent, efficient and relatively inexpensive manner.

It is to be hoped Lord Woolf, in considering group actions, will accept that these are the way forward and will abandon any move toward tribunals.