Legal Update - Woolf pack

A ?contribution to the debate? was how Labour, then in opposition, described Lord Woolf?s radical approach to reducing the costs and delay of civil proceedings. Such a low-key response left real doubts as to whether any of the proposals would be implemented after the party came to power.A ?contribution to the debate? was how Labour, then in opposition, described Lord Woolf?s radical approach to reducing the costs and delay of civil proceedings. Such a low-key response left real doubts as to whether any of the proposals would be implemented after the party came to power.

But the mists have cleared. The publication in September of Sir Peter Middleton?s report on the reforms and an important speech by the Lord Chancellor, Lord Irvine of Lairg, on 18 October both demonstrate the government?s commitment to change. In some ways, Sir Peter?s report goes far beyond Lord Woolf?s suggestions. There are three areas that will particularly affect accountants regularly involved in litigation: judicial case management, conditional fees and experts.

Greater role for judges

The accountancy profession largely supported the proposal that judges exercise a greater degree of management over cases, particularly large and complex civil litigation.

Lord Woolf said judges should impose on the parties involved a more rigid timetable for disposing of each case and he encouraged ^ning anyone failing to keep to it. He also suggested judges keep track of the current and future costs of each case, as it proceeds, to ensure the conduct of the action is proportionate to the overall claim.

The Lord Chancellor endorsed Lord Woolf?s case management proposals, and the government will implement them by April 1999. He also announced his intention to permit ?the maximum possible extension? of conditional fee agreements to allow their use in all civil proceedings (other than family cases) by April 1998.

Lawyers can agree with their clients a percentage (limited to 100%) on top of their normal fees as a bonus if they win; if the case fails, they usually get nothing or a reduced fee. It is in US-style contingency fees, en- dorsed by Sir Peter, that the successful lawyer charges a proportion of the amount recovered. The Lord Chancellor omitted any mention of this option and it remains to be seen whether contingency fees are still on the government?s agenda.

Insolvency practitioners and their lawyers have only made limited use of conditional fees since 1995. Some accountants, banks and creditors are not aware of these agreements or of the range of options they offer. But the proposed extension, coupled with the publicity on the Lord Chancellor?s proposals, make it likely that they will be used more frequently in future.

The Lord Chancellor has also proposed major changes to legal aid which would effectively scrap it for most civil claims for money or damages. So the huge volume of litigation traditionally funded by legal aid would only proceed if a lawyer believed the case had suf^cient merits to be taken up on a conditional fee basis. Any accountant who routinely acts as an expert for legally aided clients will ^nd their workload and income seriously reduced.

On a more positive note, the clampdown could reduce the number of nuisance claims brought against accountants. Like other so-called ?deep pockets?, they face a small but steady stream of civil claims funded by legal aid which sometimes have little merit.

For accountants, the most controversial aspects of Lord Woolf?s proposals were two of his recommendations on experts. As a general rule, he said, where the issues relate to a largely established area of knowledge on which the court does not need to hear separate opinions, the opposing parties should appoint a single expert. If the parties can?t agree, the court should choose one for them. And if one or both sides want to appoint separate experts, they should justify this to the court. Lord Woolf also recommended mandatory disclosure of all instructions given to experts, including orally and regardless of legal privilege.

Amendments after criticism

In the face of strong criticism of the proposals, the Lord Chancellor published a report in July 1997 which listed two signi^cant amendments. The ^rst introduced a more general rule. This would give the court ?discretion? to appoint a single expert where the issues relate to an established area of knowledge on which it need not hear separate opinions.

Second, the proposal on instructions was watered down to give the court ?discretion? to require disclosure ?to the extent necessary?in particular cases?. Although welcome, this amendment still leaves the parties (and their experts) in the unsatisfactory position of not knowing in advance what they will have to disclose.

In his speech, the Lord Chancellor made no reference to expert issues but Sir Peter?s report seems to accept this watering down of the original Woolf proposals. He refers merely to parties being ?encouraged? to appoint a single expert and the court having the ?power? to do so. Also, Sir Peter simply endorses the need for ?greater openness? about instructions.

It remains to be seen what powers will be enshrined in the legislation but the government is, it seems, listening to the concerns of both the legal and accountancy professions.

Cary Kochberg is a partner at Lovell White Durrant