The courts are introducing innovative methods of dispute resolution to meet the growing demand from clients
The civil courts in England and Wales are experiencing unprecedented change. Lord Justice Briggs’ wholesale review of their structure1 coincided with a five-year programme to ‘deliver – through the use of modern technology, an improved estate and modernisation of current working practices – a more effective, efficient and high performing courts and tribunals administration’2. This follows Lord Justice Jackson’s sweeping reforms3, which elevated the importance of costs management and proportionality.
There is a major drive towards the courts offering more varied, flexible and cost-effective dispute resolution. Commercial clients are demanding, and the courts are delivering, a wide range of innovative options, even where the stakes are at their highest.
Walker Morris head of commercial dispute resolution, Gwendoline Davies, highlights some of the key developments.
Shorter and Flexible Trials Schemes
The courts now offer the Shorter and Flexible Trials Schemes, following feedback that businesses often prefer a less exhaustive option than the traditional ‘no stone unturned’ approach. They aim to achieve shorter and earlier trials for business-related litigation, at reasonable and proportionate cost.
In the Shorter Trials Scheme, key elements of the litigation process are shortened or dispensed with, the trial is limited to four days and judgment is given within six weeks. In the Flexible Trials Scheme, the parties tailor trial procedure to suit the claim.
National Bank of Abu Dhabi PJSC v BP Oil International Ltd4 was the first trial under the Shorter Trials Scheme. Although the claim was worth over $68m, judgment was given within just nine months of commencement and after a trial of one day.
As with so many commercial disputes, this case covered the correct interpretation of some relatively brief contractual documentation. The parties agreed it was suitable for the Shorter Trials Scheme, witness evidence was dispensed with and disclosure was very limited.
The court praised the parties’ approach. It is estimated that costs incurred by each amounted to some £350,000, which in the context of such high-value litigation was proportionate and probably significantly cheaper than a case fought under traditional rules.
The schemes, which are running as pilots until the end of September 2018, will not be appropriate for all commercial disputes, particularly those that are factually contentious and/or document-heavy. However, this case demonstrates that the need to follow full trial procedure does not necessarily correlate with a claim’s value.
Lord Justice Jackson: reforms survive retirement
In July 2017, Jackson LJ published his supplemental report on fixed recoverable costs (FRC)5, which, despite his recent retirement, looks set to shake things up again.
His view was that, to create a clear and predictable cost structure to inform a party’s pre-emptive assessment of whether a legal case is worth pursuing and therefore promoting access to justice, legal costs should be controlled in advance, either via FRC or the costs-budgeting process imposed as part of his 2013 reforms.
FRC – where costs at a fixed level only can be recovered from a losing party by a winning party – have applied to some types of case for many years (for example, small claims). The supplemental report is significant because it proposes extending the regime to a much wider range, including certain commercial claims up to a value of £100,000 (and, for some cases on a voluntary basis, up to £250,000). The government is considering the proposals, but they are likely to be implemented6.
The number of cases potentially caught is huge. The key for commercial clients and their lawyers will be to get the balance right, so that the appropriate amount of work is done by lawyers with the relevant expertise, ensuring that cases are managed as effectively and efficiently as possible.
Another of Jackson LJ’s reforms has just gone ‘live’ – mandatory use of an electronic bill of costs for detailed assessment.
The underlying aim is much broader and ambitious – to harmonise the procedures and systems used for costs budgeting at the outset of a case, costs management during the life of a case, summary costs assessment following a hearing, and the billing process and detailed costs assessment at the end. The idea is to introduce a standardised approach, improve transparency, reduce costs and make use of available technology – all of which ultimately can only benefit clients (and firms alike).
The electronic bill requires time to be entered by ‘phase’, ‘task’ and ‘activity’, with the phases mirroring those used in the costs budget. For firms with compatible electronic time-recording systems, moving to use of the new bill should be straightforward and result in clarity and savings for clients. Walker Morris’s time-recording system and practices have anticipated and been compatible with the new bill for some time. We are pleased to be experiencing a smooth transition to date.
Disclosure: sea change on the horizon
Following changes to the disclosure rules in 2013, Jackson LJ was keen to ensure that the traditional approach to voluminous standard disclosure would no longer be seen by judges and practitioners as the default. Immediately prior to his retirement he lamented that disclosure reforms had not really taken hold, and the time and costs involved were still too high.
We often face the conflicting pressures of the huge proliferation of data, and increased impetus for proportionality and efficiency (including downward pressure on litigation costs). Driven by the need to resolve this conflict, and assisted by technological advances, disclosure/e-disclosure rules and practice are almost certain to change – imminently and significantly.
The Disclosure Working Group published wide-ranging proposals for a new regime7. Its view is that ‘a wholesale cultural change is required and this can only be achieved by the widespread promulgation of a completely new rule and guidelines on disclosure’.
The proposed new rules steer the parties, and the court, towards a more restrained approach than has traditionally been common practice. (This is actually consistent with existing rules and case law8, which acknowledge that the current ‘reasonable search’ rules do not require that no stone be left unturned. While that may mean that a relevant document, even a ‘smoking gun’, is not found, that is justified by proportionality considerations.) There is a proposed requirement for the parties to discuss and seek to agree on the use of technology-assisted review (TAR) software and techniques, with a view to reducing the burden and costs of the disclosure exercise.
The proposed rules aside, there is no escaping the fact that TAR is here. Its uses within the profession are increasingly widely reported and competition is growing from various sources. Lawyers need to get on board, or risk being left behind. Walker Morris’s view is that earlier, more strategic engagement with disclosure and technology can result in efficiencies, which can in turn increase the number of successfully resolved cases. That can improve client relationships and lawyers’ commercial reputations, thereby driving income generation overall. The role that legal advisers play in this key aspect of the litigation process is changing but remains crucial, and is likely to become increasingly collaborative and strategic.
And finally…
It has not been possible to discuss the new Business and Property Courts structure, proposed reforms to alternative dispute resolution, the Financial List and many other developments. That is simply a reflection of the ever-changing civil litigation landscape.
Whatever the subject or stakes of your commercial dispute and whether it is UK centred or involves cross-border issues, the courts in England and Wales today offer a variety of flexible and cost-conscious options to help parties successfully navigate the most appropriate course.
Gwendoline Davies, partner, Walker Morris
2. www.judiciary.gov.uk/wp-content/uploads/2014/03/joint-letter-to-judges-and-staff-hmcts-reform.pdf
3. Review of Civil Litigation Costs: Final Report, December 2009
4. [2016] EWHC 2892 (Comm)
5. Review of Civil Litigation Costs: Supplemental Report, Fixed Recoverable Costs, July 2017
6. The government is on record as supporting the extension of FRC for as many civil litigation cases as possible. See, for example, the ‘Transforming Our Justice System’ vision statement issued jointly in September 2016 by the Lord Chancellor, the Lord Chief Justice, and the Senior President of Tribunals
7. Disclosure: Proposed Pilot Scheme for the Business and Property Courts, 2 November 2017
8. See Civil Procedure Rules 31.6 and 31.7, and Shah v HSBC Private Bank (UK) Ltd [2011], Nichia Corporation v Argos Ltd [2007] and Digicel (St Lucia) Ltd v Cable & Wireless Plc [2008]
