The recent collapse of the Fraud trial (R v Crawley http://www.judiciary.gov.uk/Resources/JCO/Documents/Judgments/r-v-crawley-others.pdf ) shows how damaged and fractured our legal system is in my view. But its not just the Criminal Justice System that’s suffered at the hands of our Lord Chancellor and his merry band, the Civil Justice System is suffering equally bad.The Shadow Justice Minister Sadiq Khan makes a very good point in his post here http://sadiqkhan.tumblr.com/post/84417625145/sadiq-khan-mp-labours-shadow-justice-secretary
Equality at arms is an important part of our adversarial system, each party should be on an equal playing field in litigation. The case of Morris & Steel v United Kingdom (The McLibel case) shows how important it is to be on a level playing field, and of course the injustice that arises when the field is tilted.
When i started back in 2007 fighting against the injustice which arose in the banking sector, many of the people i helped could not get legal aid, but equally because of the nature of being “in debt” they could not afford to spend £££££s on legal representation. In each case however because of the Conditional Fee Agreement as it was then, i was able to assist, i was able to balance the playing field, i was able to secure Counsel on a Conditional Fee basis. This meant that where the little guy won, his legal fees were paid by the banks,credit card providers, and debt purchasers, all of whom are multi million pound institutions who could easily afford to pay without batting an eyelid.
The fact that the CFA success fee was recoverable from the banks, and the fact that the After the Event insurance was recoverable meant that the little guy could play on the same level field as the multi million pound bank. If the Claim was lost, then the ATE policy covered the costs of the Defendant / Consumer and if the Claim was won the consumer s costs were paid by the banks. A balanced field in my view.
Enter Sir Rupert Jackson, and his wide reaching reforms to Civil Litigation. Sir Rupert felt that the current system was unfair, i mean of course, its unfair that a consumer when being oppressed by a bank or debt purchaser, being treated unfairly, being charged default fees which are so exorbitant and unfair that they should be challenged under the UTCCR 1999, being harassed so severely by the banks call center that a Judge of the High Court describes such conduct as “torture” , So Sir Rupert decided the system needed to be balanced it seems.
You see, all the above circumstances had occurred in cases which i had been involved in, and under the old rules the consumer was able to fight their case. yet under these awful reforms, the consumers would now be fighting on their own, or worst still, they would not be able to get access to justice at all, especially in cases where there was no actual damages paid out to cover their successfee and ATE insurance.
Lets use Keith Harrison v Link Financial Limited as a working example. In 2009 i issued Mr Harrison claim, there was a rake of pre-action correspondence with the Defendant, the Defendant was threatening all kinds of nasty things against Mr H, and therefore to protect his position and to ensure that he was not harassed any further by telephone. Mr Harrison was funded by a CFA, there was never any real damages being sought in the case, there was no damages claim, it was based upon two main parts, firstly the failure of the original creditor to comply with the duties under the Consumer Credit Act and secondly the conduct of the original creditor and the Defendant in harassing the Claimant by unreasonable telephone contact which as i said earlier the Judge described as Torture!!!!!
Now, Mr Harrison won his case, he never received a penny in damages, yes his debt was written off, but that was the remedy the Judge felt was correct. I agree with that approach. So therefore Mr Harrisons costs were picked up by Link Financial, and they paid his successfee.
In my view, Mr Harrisons case would not see Justice today. Mr H tried every funding option available, he could not get legal aid, and in today’s climate, he would not get legal aid period, thank our Lord Chancellor for that one, so what if Mr H came to me today and wanted access to justice?
Well i would still be able to offer him a CFA, and ATE insurance but the problem is that Mr Harrisons success fee would have been around £20k for the High Court case. Now on the Jackson reforms the view was that the successfee would be paid out of the damages, however what if there is no damages? Just like the Harrison v Link case, what then? there was no guarantee that the case would succeed, so no one could say it was nailed on and therefore the risk was worth the reward of a low successfee, but in any event even a 5% successfee would not have been affordable for Mr H, so the effect would be if i wanted to help with such a case today, id have to take all the risk and get no reward because the client simply wouldnt be able to pay anything and given that legal aid isnt available the options for the consumer are very limited.
But what about cases where there are damages paid? well the problem is lets say the consumer is claiming £20k damages for landbanking? and lets say they take their case to a solicitors for no win no fee? and lets say the costs of the case are likely to be £10k to £15k to trial taking into account that there are likely to be a number of witnesses and also large volumes of evidence. So the case is funded by a CFA with a 50% success fee, so the succ fee is around £7.5k if won at trial. So we go to trial, but what about if the claim is lost? the clients already lost £20k on the plots of land, so cannot afford anything more? and such a case involves quite complicated points of law too so not arguable by the client on their own, so we go to the ATE provider, and they quote £18k as a premium for cover in the event the case is won.
So, thanks to these reforms, the client goes to court, wins, gets £20k damages, a small amount of interest and then the lawyer pops up and says congratulations you have won your case, now heres the bill.
So you get £20k, then you pay us £7.5k for taking the risk as you cant recover the succ fee anymore, and then we have the disbursements, so your counsel was on a CFA, his brief fee was £10k so thats 40% successfee, and therefore you pay counsel an extra £4k success fee, so that leaves you with £9.5k damages but then of course heres your bill for your ATE insurances which you needed to have, which is £18k, and which is payable now you’ve won. So youre not only £20k out of pocket for the fraud that was committed by the land bankers, you won your case, and your now not only £20k out of pocket, youve now got a legal bill which means youve got to pay out another £8.5k in ATE insurance.
It seems that Justice is no longer available unless your rich. I don’t think it will be long before someone loses their home to a bank, where the bank has been in breach of consumer protection legislation but because the consumer cannot find a lawyer that has the necessary experience and cannot get legal aid, and the lawyers who could help are out of their price range their home will be lost. I can see another Morris & Steel v United Kingdom on the horizon if our system keeps being eroded by these ill thought out reforms.
After all, wasnt the reforms to the CFAs and ATE insurances supposed to target the so called “Ambulance chasing”? if so, then the government has made a monumental error and tarred everything with the same brush in my view.
Fortunately we are still able to help people with Consumer Credit Claims, and can nearly always find a way to help, but how much longer this will be the case is uncertain. I dont see why the government needed to interfere with the system in the first place, if it isnt broke dont fix it!!!