The Government’s proposals for modernising Access to Justice: December 1998

Introduction

On 3 December 1998, the Government published a White Paper entitled "Modernising Justice" and a draft Access to Justice Bill. These represent the substantive proposals for an integrated radical agenda to modernise legal services within the country. The Lord Chancellor proposes to "strengthen the social fabric, and promote a fairer, more decent, and more inclusive society". The Government’s twin aims are to bring about a significant increase in access to justice, and to obtain the best value for taxpayers’ money spent on legal services and the courts. There is emphasis on providing effective solutions that are proportionate for the issues at stake, and to encouraging citizens to make responsible choices about whether a case is worth pursuing; whether to proceed by negotiation, court action or in some other way; and how far to take a relatively minor issue.

Government Funding of Civil Litigation

The Government will create a new Legal Services Commission which will oversee the functioning of separate services relating to civil justice and criminal defence. These two functions are to be separated under a Community Legal Service ("CLS") and a Criminal Defence Service ("CDS") respectively, each with its own budget, capped by the Lord Chancellor. Most publicly-funded criminal defence services will be provided by lawyers in private practice under contracts, but the CDS will take on salaried defenders. The CLS fund will be distributed according to national and local priorities established through Regional Legal Services Committees which have already been established. The current Civil Legal Aid System and Board will be abolished. The CLS will be empowered to fund a wider range of outlets for legal information and advice, including Citizens Advice Bureaux and Advice Centres. Services will continue to be available through lawyers in private practice, but only through contracts or conditional grants for specified services in specified categories of cases under controlled budgets with standards of service and monitoring of outcomes. It is intended that contracts will fix the price that will be paid for work and the number of cases to be done. Fixed case loads are intended to remove the incentive to take every possible case, regardless of merits.

The funding assessment which will replace the existing legal aid merits test may be more or less strict, depending on the priority of the category of case. For example, child custody cases will be given automatic representation. In other cases, the prospects of success, and the ratio of potential benefit to likely cost, will be quantified and explicitly linked, making the assessment more transparent than the current merits test. The funding assessment will consider three key questions:

-Would another type of service be a better of way of dealing with the case? For example, would mediation be more appropriate than litigation?

-Could the applicant fund the case in some other way? For example, is the case suitable for a conditional fee? The Bill provides that proceedings for negligence for alleged property damage or personal injury, other than proceedings for clinical negligence, may not be funded under the CLS. There is no exclusion or reference, however, to strict liability proceedings for a defective product.

-Do the merits of the case itself, in the context of the Government’s priorities and available resources, justify public funding? The general test will be whether a reasonable person is able to fund the case with his or her own money and would be prepared to pursue it. The strictness of this general test would be varied if other factors applied, for example if there were a wider public interest involved. Consideration of priorities and available resources would bar funding of a case which might otherwise pass the merits test. In answering these questions, cases will be assessed against four criteria:

(a)The legal strength of the case and the prospects of a successful outcome;

(b)The importance and potential benefit to the assisted person, and the likely cost;

(c)The wider public interest (those likely to produce real benefits to a significant number other of people, or which raise an important new legal issue; and those challenging the actions, or failure to act, of public bodies, or alleging that public servants have abused their position or power);

(d)The availability of resources and likely demands on this resources.

The Government intends to increase the number of people potentially eligible for advice and assistance under the scheme, to bring it back into line with that for representation in litigation. People brought within the scope of the scheme will as a result pay a contribution. The rules for those who are eligible but can afford to make a financial contribution will be tightened.

The existing rule that the court will not order an unsuccessful litigant on legal aid to pay his opponent’s costs will be retained. The rule is that the court is required to consider the means and conduct of both parties but this rarely leads to an order (the existing test of severe financial hardship is to be relaxed to financial hardship). However, the courts will in future be able to take into account the value of the assisted litigant’s home in considering his means. Costs are currently only recoverable against the legal aid fund where a successful unassisted defendant would otherwise suffer severe financial hardship: this test is to be relaxed to mere financial hardship. Whether there will be any change in practice remains to be seen.

The Government generally intends to re-focus available resources through CLS so as to prioritise social welfare cases, other cases of fundamental importance to the people affected (such as major issues in children’s lives and protecting people from violence), and cases involving a wider public interest. To this end, the Government has been implementing a policy that many cases previously brought on legal aid will in future be "privatised" by extension to all cases other than family cases of conditional fee arrangements (CFAs) which were first introduced in July 1995.

The Government intends to retain the "loser pays the costs" rule. In order to protect a plaintiff in a CFA case from liability for the opponent’s costs if he loses, insurers have been encouraged to develop policies to cover this risk. Both before-event and after-event insurance policies are to be further encouraged, in order to facilitate the growth of CFAs. Similarly, the Bill provides for insurance premiums and a solicitor’s success fee under a CFA to be recoverable from an opponent. This may put pressure on a defendant to settle an unmeritorious claim sooner or for a higher amount than would otherwise be appropriate, so as to limit the amount of costs which would be payable. The intended balancing factor is that successful defendants will in future be able to recover costs from unsuccessful plaintiffs in CFA cases, which was not possible where the plaintiff was legally aided.

It is currently considered that CFAs may be inappropriate for multi-party actions or actions with significant costs. Standard costs insurance policies have so far excluded multiple claims or claims involving pharmaceuticals or tobacco. These exclusions may, however, be removed over time. Nevertheless, for the present it is proposed that the Government will continue a fund to be administered by the CLS for claims involving costs of over £100,000 (which would be likely to include all multi-party claims). Details of exactly how this fund will operate have yet to be announced, but it may be cash-limited. It is not certain whether a merits test or any other criteria would be applied to the fund. Legal representation of plaintiffs under the fund will, however, be limited to a small number of expert firms who specialise in multi-party plaintiff representation, principally firms who will pre-qualify for inclusion in a panel. It is therefore likely that multi-party product liability claims against pharmaceuticals or other industries will continue with Government funding for plaintiffs.

Litigation procedure

The Government is to continue with the programme of reform which has been developing over several years since the review of civil litigation procedure by Lord Woolf in 1995-6. As part of a rolling programme from 26 April 1999, a simplified, integrated court structure will be created, with new and much simplified Rules of Civil Procedure. Pre-action protocols will require more exchange of information and fuller investigation of claims in the pre-litigation stage. People will be expected to be in a better position to make a realistic assessment of the merits of a case far earlier than now. They will be encouraged to settle disputes without recourse to litigation. Judges will be expected to apply the protocols strictly once cases come before them, and impose sanctions on those breaching them. Disputed claims will be assigned by a judge to a system of three tracks:

-a small claims procedure for claims worth less than £5,000 (£1,000 for personal injury cases and housing disrepair cases);

-a fast track for claims between the relevant small claims limit and £15,000. The Government estimates that 80-90% of cases above the small claims limit will be suitable for the fast track. Cases will be subject to a fixed timetable, which will usually require a hearing within 30 weeks of allocation to the fast track. The court will monitor the progress of each case proactively. Lawyers will be required to give firm estimates of the likely cost of cases. A sliding scale of fixed costs will apply to advocacy at trial, up to a maximum figure of £750. The Government will consult about further possible controls, including continuing research on fixing or making more predictable the costs of preparatory stages;

-a multi-track for cases worth over £15,000 or lower value claims of unusual complexity. This track will offer a higher level of judicial intervention, tailored to the specific features of each dispute. The legal work conducted by both sides will be directed and controlled by a judge, who will monitor costs incurred and to be incurred, with the aim of ensuring that they are proportionate to the value and complexity of the claim. The objectives are to reduce cost, delay and complexities, subject to the principle of proportionality.

Implications

These changes constitute fundamental reform of many aspects of litigation. Manufacturers and insurers will need to ensure that they understand the principles and details of the new system. They will need to have systems in place to respond quickly and openly to letters which initiate disputes, so as to comply with the principle of openness in pre-action protocols. This will mean that management time must be made available for the speedy collection of evidence from individuals and documents. The speed with which disputes will be handled, both in the pre-litigation and litigation phases, may be very much quicker than has traditionally been the case.

Christopher Hodges

December 1998