Concerns have been raised about the implications of a root and branch review of litigation costs, with leading litigators calling for further examination of the litigation model.
In November the Master of the Rolls Sir Anthony Clarke appointed Lord Justice Rupert Jackson to conduct a year-long review into legal costs (TheLawyer.com, 10 November 2008). Hourly rates, court costs and the future of the costs-shifting rules will all be scrutinised.
The review will investigate all levels of litigation, from low-value fast-track to highly lucrative mega-cases, and will consider the costs incurred in all specialist courts.
Specifically, Jackson LJ has written to practitioners asking whether costs are proportionate, what impact fees have on the behaviour of lawyers and which particular areas of the litigation process are notorious for racking up costs.
The review was launched as part of the Ministry of Justice’s wider attempts to bring rising civil litigation costs ;under ;control. However, leading litigators have warned that a broader review is needed if legal fees are to be reined in.
“It’s widely considered that the Woolf reforms were generally not a success,” Edwin Coe litigation partner David Greene told The Lawyer. “The reforms increased costs through front-loading fees, and because ;of ;that ;and
the use of conditional fee agreements, fees have gone up substantially over the last few years. I don’t disagree there. But if it needs to be addressed, it needs to be looked at as a whole and not just looked at in terms of costs.”
Another source said: “It’s long been the perception of judges that fees are incredibly large. Jackson is right to recognise that judges only see costs orders when something has gone wrong and fees have been pushed upwards.
I’d say the litigation system isn’t completely broken. The real issue here is that people want a Rolls-Royce litigation service at a Smart car price, and that’s just unreal.”
Nevertheless, the review is to be welcomed, said Freshfields Bruckhaus Derringer dispute resolution head Chris Pugh, who added: “It’s good for the courts to understand why costs are at the level they are. Clients will want the courts to look at this closely. Courts should understand better how large costs are incurred and, if they’re excessive, how they can be reduced.
Excessive costs make London’s courts unattractive.”
Mayer Brown litigation partner Matthew Lawson agreed, warning that the UK is at risk of pricing itself out of the international market. Despite this, he added: “In our experience, litigation services ;are ;in ;great demand.”
The introduction of cost-capping fees could be problematic, Greene warned, questioning how much control the judiciary should take over case management.
“The courts can’t impose a cap on fees and still require the same levels of disclosure,” he said. “It would be too simplistic to say that capping fees would solve the problems.”
Indeed, one source said it could create greater problems if costs judges were involved from the outset of court battles in an effort to force lawyers to scale down their fees.
“That would just mean too ;many ;people ;are involved and everybody has to be paid,” the source said. “Who’ll be paying for that? It certainly gives a lot
more work to the costs draughtsman.
“You can’t review the costs without reviewing the model.”
Lawson concluded: “It’s about striking a balance between the existing costs model for large cases and using the existing rules to manage costs while ensuring transparency. Any review is welcome, but the mistake would be to do reform for reform’s sake.”