This week we began looking at civil litigation. This will form a part of your assessment for the Tort unit.
There are a number of ways that civil litigation can be funded. Don’t get paid, don’t eat.
Private funding. A client can pay his legal costs privately, usually based upon an agreed hourly rate. Regular payments are required on account.
Conditional fee agreements (CFA’s). These are increasingly significant, especially in personal injury cases, as most don’t have public funding. CFAs are a private method of funding, but they do interrelate with public funding to some extent, as CLS funding is unlikely to be available where the case can be properly dealt with under a CFA.
CFAs are not the same as US-style contingency fees, which provide that where a client loses a case he pays his solicitor no fee, but where the client wins the case he pays his solicitor a percentage of the damages recovered. The fee is therefore directly related to the damages recovered, not to the work carried out. US-style contingency fees are not allowed in the UK because the conflict they might cause between the solicitor’s interests and those of his client would constitute a breach of the solicitor’s duty to avoid such conflicts of interest.
Although US-style contingency fees are prohibited, statutory “conditional fee” agreements were introduced in 1995 under s58 Courts and Legal Services Act 1990 (CLSA 1990). They are permitted for all types of civil non-family proceedings, e.g. tort and contract cases, but are not allowed in criminal cases.
The most common type of CFA includes a “success fee” and the basic idea of such agreements is that the client will not have to pay anything to the firm acting for him (except disbursements in some cases) if the case is lost, but if successful the firm will be entitled to charge the client at the lawyer’s usual rate plus a percentage mark up on this rate known as the “success fee”.
In many cases the client will take out an insurance policy (often referred to as “after the event insurance”) to cover the client for the potential liability of paying the opponent’s costs and his own disbursements if he were to lose the case. It is for this reason that CFAs are often referred to as “no win no fee agreements”.
The success fee will be a percentage of the costs otherwise chargeable to the client and should be related to the risks involved in the litigation. For cases involving personal injuries the percentage increase generally cannot exceed 100 per cent, but under Part 45 CPR there are specific provisions further limiting the percentage increase in certain road traffic and employers’ liability cases. The Court of Appeal gave guidance on the recovery of success fees and insurance premiums in CalIery v Gray [2001].
The client must be given information regarding the CFA and this is governed by the Law Society’s Solicitors’ Costs Information and Client Care Code 1999. Broadly, this requires a solicitor representing a client under a CFA to explain:
Ø the circumstances in which the client may be liable for his own costs and those of the opponent;
Ø the client’s right to assessment of costs wherever the solicitor intends to seek payment of any or all of the costs from the client; and
Ø any interest a solicitor may have in recommending a particular policy or funding.
The rules were relaxed in November 2005 but the mandatory requirements under s58 CLSA 1990 remain; these basically state that a CFA must:
Ø be in writing
Ø not relate to criminal or family proceedings and
Ø if the CFA has a success fee, the percentage must be specified.
Since April 2000 success fees and insurance premiums are (in principle) recoverable from the losing party. The relevant rule and associated Practice Direction deal with several aspects of the costs. They include rules about the assessment of success fees and insurance premiums. There are provisions about notifying other parties of the existence of the CFA (e.g. when issuing a claim or filing a defence) which require the filing and service on all parties of notice of the CFA on prescribed Form 251.
Insurance. Some clients may have the benefit of insurance either in the form of a specific legal expenses policy or possibly as part of their motor or home insurance policies. For example, a motor insurance policy may cover the insured’s costs in claiming damages for injuries suffered in a motor accident, as well as motor repair costs. These may be referred to as “before the event” insurance policies. In these cases the legal costs incurred on behalf of the client will be met by the insurer, subject to the policy’s terms and conditions. Sometimes these policies restrict the choice of lawyer to one who is approved by the insurance company.
Sponsorship. Some clients may find that their legal costs will be met by a sponsoring organisation, such as a trade union. This may be more likely in employment-related disputes and claims relating to accidents at work. Often a sponsoring organisation would expect the client to instruct a solicitor from an approved panel.
Pro bono. As part of the legal profession’s commitment to the community, some may provide advice free of charge, especially in areas where no other method of funding would be available.
The Access to Justice Act 1999 (AJA 1999) sets out the framework for the regime, and is supplemented by various detailed regulations. The Community Legal Service fund (CLS fund) deals with civil matters, and the Criminal Defence Service (CDS) deals with criminal cases. Both are administered by the Legal Services Commission. We shall not be considering the criminal funding in this Unit.
LEGAL SERVICES COMMISSION (LSC)
This oversees the administration of the public funding of legal services and is also responsible for ensuring a coherent strategy between the various service providers to meet the needs of their communities. Its specific responsibilities are:
Ø to develop, in co-operation with local funders and other interested bodies, local, regional and national plans to match the provision of legal services to identified needs and priorities;
Ø to report annually to the Department for Constitutional Affairs on how effectively planning and expenditure have been co-ordinated at local level and the impact of this on the delivery of legal services to meet need;
Ø to manage the CLS fund and the CDS.
The head office is in London and a network of regional offices around the country.
Community Legal Service (CLS)
The LSC has been instrumental in establishing “CLS Partnerships” in each local authority area. These provide a forum for the local authority, the LSC and other service providers to jointly plan and co-ordinate funding of local advice and other legal services, ensuring that delivery of these services matches local needs.
The public funds available for civil and family matters are managed by the LSC through the CLS fund, although the resources are controlled and finite. The intention is that better value for money is obtained by the LSC having:
Ø a planning system to allocate resources in the light of regional and national priorities;
Ø a system of contracting with legal service providers and, in doing so, providing elements of competition and quality standards.
The intention is to ensure that, within each category of case, the available resources go to the individual cases most needing help. The Department for Constitutional Affairs sets an annual budget for the CLS. This is split into two, one for family matters and one for all other civil cases. The LSC has limited flexibility to switch money between the two budgets.
The services funded under the CLS fund range from the provision of legal advice to full representation in court proceedings. All of the services provided in this manner are known as “funded services” and the Department for Constitutional Affairs has set financial eligibility limits for people to receive funded services. These limits, along with other criteria, are applied using a Funding Code, which sets out the criteria for determining whether funded services should be provided in a particular case and, if so, what services it is appropriate to provide. The Funding Code also sets out the procedures for making applications.
Quality Marks. To be awarded the CLS Quality Mark and to be able to display the Quality Mark logo, organisations need to demonstrate that they meet the standard required for the type of service being delivered. The three Quality Mark standards are:
information
general help
specialist help.
The CDS and CLS Quality Marks are designed to be compatible, so approved firms can display both logos if they wish.
Contracting. Only organisations with a contract with the LSC are able to provide advice or representation funded by the LSC. Only specialist firms are funded to carry out work on family cases and other areas of law such as immigration and clinical negligence.
Civil proceedings- CLS funding. One of the functions of the LSC is to provide public funding for legal services, including advice and, where appropriate, legal representation in civil cases. This is carried out through the Community Legal Service (CLS). The funding code sets out the criteria and procedures to decide which cases should be funded as part of the CLS. There are several important preliminary matters.
(1) SOME MATTERS ARE EXCLUDED FROM PUBLIC FUNDING: if a case falls into an excluded category it generally cannot receive public funding. Set out in Sch 2 AJA 1999 they include conveyancing, the making of wills and matters arising out of the carrying on of a business.
Of real importance to us is the exclusion of most personal injury cases from public funding. Sch 2 excludes cases involving allegations of negligently caused death, injury or damage to property (apart from allegations relating to clinical negligence). There are only very limited circumstances where the exclusion will not apply, e.g. where the case has a significant wider public interest or where there is a claim against a public authority on the basis of abuse of power or a significant breach of human rights (e.g. a claim against the police for injuries caused by assault).
(2) LEVELS OF FUNDED SERVICES: the funding code sets out the “levels of service” which can be funded as part of the CLS and sets out the merits tests to be applied for each level of service. It also sets out how to apply for funding, and regulations have set out the actual figures for financial eligibility. There are six levels of service and an application for funding must be for a particular level of service:
legal help *
help at court
approved family help (not in syllabus)
legal representation *, this can be investigative help or full representation
family mediation (not in syllabus)
such other services as are authorised by specific orders or directions (not in syllabus).
* the two most important.
We will consider each in outline.
LEGAL HELP
Provides initial advice and assistance for a client with a legal problem (similar to old Green Form scheme). The client must be an individual. A solicitor, under this level of service, can work up to a maximum prescribed limit. The solicitor may authorise an “extension” to this limit, up to a maximum prescribed figure.
The advice sought must relate to a matter of English law – but not p.i. Provided the client is eligible, this level of service covers work such as general advice, writing letters, negotiations and obtaining a barrister’s opinion.
The LSC has given guidance about the use of legal help for various categories of cases. In relation to debt cases, the guidance gives examples of typical work carried out under this level of service. Such examples include taking instructions, advising about remedies, advising about settlement, writing a letter seeking repayment, and assisting with making an application for legal representation, where relevant.
The scheme is both MEANS and MERITS tested. The solicitor assesses eligibility on a financial basis. In addition, there must be “sufficient benefit” to the client to justify provision of the service (e.g. there must be a real legal issue requiring advice), and it must be reasonable to provide funding in the context of possible alternative sources of funding (e.g. legal help should not be provided where the client has insurance to cover the help).
The financial test is carried out by the solicitor in the office using a set of up-to-date eligibility figures, changed yearly on 1st April. If the client is married, or living with a partner as husband and wife (or as civil partners), the partner’s capital and income must be included, unless they live apart or there is a conflict of interest between them (e.g. it is a divorce case).
Capital is first assessed, and includes savings, cash, investments, money in the bank and any items of substantial value, such as jewellery. It does not include:
Ø the value of the client’s house (although any value in excess of £100,000, after allowing a maximum of £100,000 for any mortgage debt, must be included);
Ø furniture, clothing and tools of trade;
Ø the value of items in dispute (e.g. if the parties are in dispute about a painting, its value would not be included).
The income test must also be satisfied. If the client is receiving income support or income-based jobseeker’s allowance, the client is automatically eligible on income, but capital must still be assessed.
If the client is in gainful employment, the solicitor takes the income(s) from the past month and makes certain allowable deductions for income tax, national insurance, partner and dependants. The figure after deductions is called “disposable income”. If this falls below a certain figure (which varies from year to year), the client qualifies on income.
In practice the financial test is carried out by the solicitor in the office using an up-to-date “keycard” describing the financial limits for eligibility.
There is no contribution system – it is either free or it isn’t. If the client qualifies for legal help, the solicitor fills in a legal help and help at court form and the client signs it.
The solicitor will be paid for the work by the LSC, under the contract terms. Legal help in civil cases can only be provided by firms holding a contract from the LSC.
HELP AT COURT
Covers help and advocacy at a particular hearing without the solicitor formally acting in the proceedings. This level of service is limited in scope, and essentially covers proceedings in which the client is a defendant, but where legal representation would be refused because of a lack of a defence. It is not intended to apply where a client has a defence, in which case the client should apply for legal representation. It is a quick and informal way of assisting clients who need someone to speak for them at court.
The LSC gives examples of cases where it might apply - for instance, in the case of a client defending mortgage possession proceedings where the right to possession is not disputed, but where the client wants to seek a suspended possession order. The solicitor must ensure that the client satisfies the eligibility tests (which are the same as for legal help) and that the client signs the legal help and help at court form.
LEGAL REPRESENTATION
Some types of legal representation have their own special rules, e.g. representation before mental health tribunals. Here there is no means test. We aren’t looking at these odd cases.
What follows is the normal procedure that apply to most applications for legal representation.
In general, legal representation can either be:
Ø INVESTIGATIVE HELP, where the prospects of success are not yet clear and a case needs further investigation, or
Ø FULL REPRESENTATION, which resembles most closely the old full civil legal aid.
Publicly funded representation can only be provided by contracted firms. In most cases, applications for legal representation must be sent to the LSC regional office, where they are determined. The client must satisfy the means test and the merits criteria relevant to the type of case.
Standard application forms are used, differing dependent on the category of case. The application form is accompanied by means forms. At the LSC an assessment officer assess the client’s means to see whether they qualify. Both partners incomes apply, unless the conflict is between them or they are separated. If on benefits they will qualify.
There are upper limits, and clients may be assessed to be within the limits for free representation, or they may have to pay a contribution out of income or capital. Contributions from income are paid on an ongoing basis, whereas contributions from capital are paid at the outset.
The LSC will also administer a merits test according to the Funding Code (the Code).
Examples of standard criteria for all applications under the code:
Ø applications in respect of excluded services (e.g. most personal injury negligence cases) will be refused
Ø the client must be an individual
Ø if the service can only be supplied under contract, the application will be refused if the supplier does not have a contract.
You have to ask why one would apply if the criteria couldn’t be met?
Standard criteria for legal representation:
Ø the application may be refused if alternative funding is available (e.g. through insurance)
Ø an application may be refused if there are alternatives to litigation which should be tried (e.g. a complaints scheme)
Ø an application may be refused if another level of service seems more appropriate (e.g. legal help)
Ø an application will be refused if it appears unreasonable to fund representation
Ø an application will be refused if the case has been or is likely to be allocated to the small claims track (value is under £5,000)
Special criteria for investigative help:
Ø investigative help may be refused if the work should be carried out privately with a view to a conditional fee agreement
Ø investigative help will only be granted where the prospects of success are uncertain, and substantial investigative work is needed
Ø if the claim is for damages, and has no wider public interest, investigative help will be refused unless the damages are likely to exceed £5,000
Ø investigative help will only be granted where there are reasonable grounds for believing that, once the investigative work has been carried out, the claim will warrant full representation.
Special criteria for full representation:
Ø full representation will be refused if the case appears suitable for a conditional fee agreement (CFA). In such a case, the LSC will send the client information about CFAs and local firms undertaking such work
Ø full representation will be refused where the prospects of success are unclear, borderline (in most cases) or poor
Ø if the claim is a quantifiable claim for damages, and does not have wider public interest, it must satisfy prescribed cost-benefit ratios (e.g. if prospects of success are rated “good” (60%-80%), likely damages must exceed likely costs by a ratio of 2:1)
Ø if the claim is unquantifiable, full representation will usually be refused unless the likely benefits justify the likely costs, such that a reasonable private paying client would be prepared to litigate.
If the client qualifies, a CLS FUNDING CERTIFICATE is issued. If a contribution has to be paid, an offer of funding is first made and, once accepted, a certificate issued. The client must tell the LSC if his finances change. Any funding certificate may be limited in terms of the work that can be carried out, or the amount of costs that can be incurred under it. Limitations must be carefully noted.
Where money or property is recovered or preserved, this may go towards meeting the costs- the statutory charge.
Legal representation can be granted on an emergency basis if necessary. Contracted firms can grant emergency funding without reference to the LSC if so authorised, but such a grant must be reported to the LSC. In any event, an emergency certificate will be issued, which will be subject to a stated time limit.
THE STATUTORY CHARGE
Under AJA 1999, the LSC is required to recover its expenses from any money recovered or preserved by a funded person (there are limited and defined exemptions). If a funded person wins his case, the other side usually pays the costs. The successful party will not be liable for costs and may have some or all of any contribution restored to him. If the losing party does not pay all the costs for some reason, the funded person will be liable to reimburse the costs of his funding to the LSC out of the sum he has recovered from the losing party. This is called the statutory charge and it gives the LSC a prior right to be paid. If land is recovered, the LSC will have a charge on the land. This charge is registered as a mortgage, and the land cannot be sold in the future without the money owed to the LSC being repaid out of the proceeds.
As a result, funding by the LSC should be seen as a LOAN and NOT A GIFT. Also, remember that, if a funded person loses the case, there is nothing to prevent the court from making him pay the opponent’s costs. The court can, however, award only such costs as it is reasonable for the funded person to pay. It is obviously important that clients are warned about the existence and effects of the statutory charge from the outset. The advice should be recorded in writing.
OVERVIEW OF THE CIVIL LITIGATION PROCESS
We are concerned with the County Court and the High Court.
Civil law deals with the relationship between individuals, criminal law regulates the relationship between the state and the individual. The aims of the system are different, compensation v punishment.
There are many different branches of civil law we concern ourselves only with tort and contract.
The purpose of the law of tort is to compensate for wrongdoing done by one person to another; it is distinguished from other branches of civil law by the fact that the parties concerned may not have any prior relationship with each other. For instance, X, a pedestrian, is struck by driver Y, and is injured as a result. The law imposes a duty on persons not to put others at risk by negligent behaviour. Accordingly, in a large number of the above situations, a person or organisation will take out insurance which may pay out in the event of personal injury or loss being caused to another party. It is very often the existence of such insurance which will determine whether or not a personal injury action is started.
A person with a civil right to sue may, choose not to do so. There are a number of reasons for this, including the fact that the proposed defendant has no cash!
Tort differs from contract because in contract the obligation arises from a prior agreement between the parties. The parties to a contract have chosen to be in a relationship with each other and (in theory – at least) have chosen the terms of their agreement. The law obliges them to keep those terms and it provides remedies if they do not, but it does not impose a duty to make the contract in the first place. This text concentrates on contract actions relating to recovery of debt.
IMPORTANT DEFINITIONS
As with every other area of law and practice, the civil litigation process involves technical terminology. Some of the most common terminology:
(1) Action - the legal process where a claimant sues a defendant. Any other form of proceeding is known as a matter (the most common matters over which the County Court has some jurisdiction are family (formerly referred to as matrimonial) matters).
(2) Affidavit - a written statement made by a person (called a “deponent”) to support applications, often used as evidence in court proceedings. The person who makes the affidavit must swear or affirm before an independent solicitor (i.e. not someone connected with the representation of the party who prepared the affidavit) that its contents are true. Under the Civil Procedure Rules 1998 (CPR), the use of affidavits has diminished, and are now only used where the rules state a requirement. Witness statements verified by a statement of truth are now used instead.
(3) Application without notice - sometimes an application is made to a court without notice of that application being given to the other party in the action. It may be necessary to apply without notice if there is a need for urgency or secrecy (e.g. when applying for an injunction).
(4) Chambers - the offices occupied by a group of barristers.
(5) Claimant - the person or body who brings an action, that is, sues.
(6) Commencement of an action - used when a person or organisation decides to start proceedings against another; they are said to commence an action.
(7) Counsel - a barrister/barristers
(8) Damages - a sum of money awarded by a court as compensation for a tort or a breach of contract. For personal injury actions the damages may be (i) general damages, e.g. pain and suffering or loss of amenity, and are decided by the trial judge or (ii) special damages, e.g. out-of-pocket expenses, loss of earnings.
(9) Defendant - the person or body against whom an action is brought.
(10) Directions - a formal point in the litigation process with a very specific meaning. The process by which each party to the action is given a timetable by the court to prepare the case for trial.
(11) Disbursements - payments made by or on behalf of a party, including expenses such as payment of expert witness reports, police accident report book and the like.
(12) Injunction - a remedy in the form of a court order either prohibiting a party from doing a certain act (a prohibitory injunction) or ordering him to carry out a certain act (a mandatory injunction). All injunctions are equitable remedies given at the discretion of the court. They are frequently applied for without notice to the other side. If an injunction is applied for pending the outcome of the main hearing of the case, this is known as an “interim injunction” and examples would be the freezing injunction and the search order.
(13) Interim application - an application made to the court during the course of an action after issue of the proceedings but before trial. Examples would be an application for an interim payment or an application for an injunction.
(14) Originating process - a document issued and sealed by a court which commences proceedings in that court. There are a variety of forms; which one is chosen affects the subsequent steps to be taken in those proceedings in order to get those proceedings to trial.
In the High Court and the County Court the most common type of originating process is the claim form (Form N1).
(15) Specified sum - a sum which it is possible to calculate precisely. For example, a debt claim for the recovery of money will be a specified claim because a precise calculation can be made as to how much is owed. Contrast this with an unspecified sum below.
(16) Statement of case - the documents in which each party to the action gives his side of the story including the statement of the cause of action by the claimant (particulars of claim) or the defence to the cause of action given by the defendant.
(17) Unspecified sum - a sum which it is not possible to quantify at the outset. For example, the damages claimed in a personal injury- action will be unspecified at the time of commencement because the actual amount which a claimant may receive for pain and suffering is assessed by the trial judge.
We will begin with a look at the civil court structure next week.
