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Luke Harrison recently attended the Westminster Legal Policy Forum: Next steps for civil justice reform – court modernisation, civil litigation and fixed recoverable costs.
At the event he took the opportunity to observe that there is a lacuna in the funding of smaller value claims and asked whether there could be a limited duty of care for lawyers assisting with these claims via unbundling. This is something that we often do and is a valuable means of providing access to justice to individuals, SMEs and entrepreneurs who perhaps cannot afford a full retainer services but value legal advice on the strategic bricks of the litigation process rather than going it alone as litigants in person.

At the event Luke raised the following question with the panel.

“Much was said in both of Sir Rupert’s reports about the importance of third part funding. I think there is a bit of a lacuna though in third party funding in this lower value claims sphere and also in claims where the issues are not issues of monetary value, because it just simply makes commercial third party funding unviable. One of the solutions I think Sir Rupert has advocated is more unbundling of legal services in lower value claims. And I just wonder what the panel’s views are on what can perhaps be done to clarify what the scope of solicitors’ duty is in cases where legal services are unbundled. I do know Sir Rupert’s recent decision in Graham Taylor and Hugh James Solicitors which was a welcoming decision in terms of limiting the scope, but I think many practitioners are nervous about the prospect of hoping that if they give some advice and get sued that they get Sir Rupert in a Court of Appeal. So some clarity in advance for practitioners I think would encourage a lot more practitioners to unbundle the way they provide their services.”

The panel provided some useful insight with their answers:

Rt Hon the Lord Justice Jackson: “I agree with Luke’s first point that third party funding although a valuable contribution to making litigation accessible, does not work for every type of case. Unless you have a group action, it doesn’t work for low value claims and of course it doesn’t work for non-monetary claims. I have always recommended that we need to have as many different forms of funding as possible, provided that those forms of funding do not drive up litigation costs. So yes, third party funding has a role but it does not assist with the particular cases which Luke identified. Secondly, unbundling. I entirely agree with what Luke Harrison has said about unbundling. I have actually dealt with two cases which bear on that in the last year or two. One was mentioned by the questioner, the other was a case called Minkin and Landsberg a year or so ago. It’s not for me to comment on judicial decisions which I have given, although it’s not inappropriate for me to identify what the cases are. But the point which our questioner makes about unbundling is important. If you give a solicitor a limited task to do and limited costs for doing it, you cannot then blame the solicitor for not doing something else which is completely different. You can’t have your cake and eat it. If we’re going to have a fixed costs regime then we must limit the work which those costs cover. That is an important point which I hope I have developed in my recent report and which fits with the points which the questioner was making.” You can read more on Lord Justice Jackson’s comments here on the Law Society Gazette website.

Professor Rachael Mulheron: “The lacuna if you like as you described it in low value claims, has always been there with third party funding, I mean it is a widely acknowledged problem. One does hear that various funders are trying to develop models for those sorts of claims up to a million particularly, but even up to 3 million, but it’s a model that they say is quite difficult to finance. So yes, you’re completely right and I think it is a problem that has been around for quite some time.

The second point is that we do make reference in the BTE report to the panoply of access to justice avenues that are available that will be need to be sort of developed if we can and although BTE of course has its limits too and the report will very clearly set those out, but it is at least worth thinking about as to whether a BTE policy may in fact provide some recourse somewhere third party funding for a low value claim would not. So that panoply of access to justice is something that perhaps we just need to think a little more widely about, yes. But your points are completely correct, yes.”

Lord Briggs: Former civil reformer: “I just want to add to what Rupert Jackson said about unbundling. I have with equal enthusiasm advocated unbundling and direct access from the bar as the best way of ensuring proper best use of professional services in the context of the more litigant in person friendly environment of the Online Court. Indeed, I regard those two… developments of those two concepts as absolutely vital. I think the speaker’s concerns about the nervousness which that creates are perfectly understandable, but it’s the job of all of us working collaboratively, the Courts, the professions, and those engaged in reform, to see that those concerns are sufficiently met so that unbundling and direct access continue as far as possible and as quickly as possible.”

Unbundling is the way forward where clients simply cannot afford full representation to trial. Lawyers should, however, carefully define the scope of duty and work they will carry out in their retainer. It is clear from two recent authorities, Minkin v Landsberg [2015] EWCA Civ 1152 and Graham Thomas v Hugh James Ford Simey Solicitors [2017] EWCA Civ 1303 that the Court of Appeal, particularly when Jackson LJ is sitting, is likely to give short shrift to professional negligence claims where the services have been unbundled and the Claimant argues for a wide scope of duty. The Court of Appeal appreciates the need for lawyers to unbundle their services and seems to accept that this results in a limited scope of duty. The same logic also appears to have been applied to other professionals and the Technology and Construction Court has accepted that the level of the fee paid can be used to draw inferences as to the nature of the duty of care of the professional (in this case a quantity surveyor) (1) Governor of the Bank of Ireland (2) Bank of Ireland (UK) Plc v Watt Group Plc [2017] EWHC 1667 (TCC).

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