Facing the Prospect Of A Legal Dispute?

Nick Parker, a dispute resolution partner at Berry Smith Lawyers, considers the issues that can arise with customers, suppliers and competitors, as well as the possibility of shareholder or partnership disputes.

Many businesses face the prospect of a legal dispute from time to time. Issues can arise with customers, suppliers and competitors, as well as the possibility of shareholder or partnership disputes.

Resolving a dispute through the court system is not necessarily straightforward, and can be expensive. There is often concern that the court process takes too long and can be too costly for many disputes.

In the last two years there have been several major developments in a coordinated programme of review that is likely to lead to significant change in the civil justice system in the near future.

First, the Report on the Structure of the Civil Courts by Lord Justice Briggs made a series of recommendations.

These included the planned introduction of Online Dispute Resolution (ODR) to build on the success of online dispute systems that currently operate outside the court system. Software developed by eBay for example resolves many thousands of disputes each year in the virtual world without the need of a party to physically attend a hearing. In the future ODR will be intended to provide a streamlined and straightforward way to deal with lower value cases.

Another theme in the Briggs Report is continued encouragement of the development of Alternative Dispute Resolution (ADR). ADR, usually mediation, is now firmly embedded as a popular and effective method of resolving civil disputes.

Briggs also proposed more specialist courts. The six recently opened Business and Property Courts in leading regional centres (including Cardiff) are aimed to provide specialist courts for business disputes outside London.

How will these structural reforms be paid for? The second development is the government’s Reform Programme for the court service, which included a policy to close down a number of local courts and invest £700m, largely from the sale of the Court estate, in extensive IT systems to modernise the way in which the Courts work internally, and also have an impact on litigants taking their cases to court.

The final major development has been the recent report by Lord Justice Jackson on costs in civil disputes. This report significantly extends the concept of fixed costs to litigation, to make the costs more proportionate to the sums in dispute.

Traditionally, a successful party is reimbursed the majority of its legal costs from an opponent in an exercise carried out at the end of the case. Jackson believes that in the future access to justice will be improved by applying more control to the recoverability of litigation costs at an earlier stage.

Civil disputes are managed by the Courts on different ‘tracks’, dependent on the value of the dispute and complexity. In future:

The Small Claims Track will deal with cases of up to £10,000 in value, providing a straightforward process. The successful party will only recover a very limited amount of fixed costs from their opponent.

The Fast Track will deal with cases of between £10,000 to £25,000 in value. This track would introduce a fixed recoverable costs system for the first time, permitting successful parties to recover only specified fixed amounts from their opponent, no matter what they have spent themselves on legal representation.

A new Intermediate Track will be created for cases of £25,000 to £100,000 in value. Recoverable costs will be on a fixed staged basis (so that the successful party will only recover costs to a fixed ceiling to the stage reached).

Beyond that, cases will be dealt with on the Multi-Track, with the current recoverability of costs from an opponent continuing, but on a budgeted approach to costs that have to be agreed between the parties or approved by a judge at an early stage of the proceedings.  

The report also proposes a voluntary pilot scheme for business and property claims that envisages costs bring capped at specified levels for stages of the case, with an overall maximum amount that can be awarded.

A further concern when considering access to justice for parties in seeking legal redress is that the present level of court fees for issuing a claim is too high, and that can be a disincentive to bring proceedings. It remains to be seen whether the recent decision that the increase on Employment Tribunal fees was unlawful and should be withdrawn will have any impact on court fees.

In the future, parties to disputes will continue to need to work closely with their lawyers to ensure that litigation is conducted cost-effectively and efficiently.

Please contact us if you would like more information about the issues raised in this article on 029 2034 5511 or dispute@berrysmith.com

Nick Parker, Partner and Head of Dispute Resolution at Berry Smith LLP, Mediator, and a member of Law Society’s Civil Justice Committee.  

029 2034 5511