News Analysis - Taming the Woolf reform.

When accountants first became aware of Lord Woolf’s reforms to the civil justice system, there was more than a little anxiety. Doomsayers focused on the new rules concerning early disclosure of documents and predicted firms fighting negligence claims could be left exposed and vulnerable. Woolf’s reforms have now been in action for a year, and have met with rave reviews from some quarters. But there are still those who believe it is early days and traps are still waiting around the corner. As one litigation expert said: ‘There may still be time bombs out there waiting for us.’ Explosive words, and there are plenty of accountants ready to warn of impending dangers. But the Woolf reforms mean real changes to the role of the expert accountant, which could bring accountants into direct competition with lawyers. The reforms came into force last April with a great fanfare of worthy aspirations about how they would improve procedures in the civil courts. They brought a raft of changes, both complex and far-reaching, but with high ideals. The consensus was the old system was ponderous and expensive. Woolf was handed the task of reforming it. He wanted to make litigation quicker, cheaper and cut the number of cases coming to court. His reforms had unexpected results for expert accountants, of which one of the most major is to change their role in financial claims – a change that could give them new roles as ‘mediators’ in civil disputes. Woolf wanted to avoid some cases coming to court at all. The reasons were obvious. Cases can go on for months, sometimes years. They clog up the courts and cost unthinkable amounts of money. To this end, Woolf’s changes included a provision for earlier disclosure of evidence and a measure to encourage both plaintiffs and defendants to settle out of court. In other words, they encourage conflicting parties into mediation rather than court. Once in mediation it might seem that the job of the lawyers is over. What claimants still need, however, is an expert who can carry out the valuation and tot up the figures – a role almost tailor-made for the expert accountant. PwC is even sending its senior staff on mediation courses now. One Big Five firm expert said: ‘Lawyers were quicker to pick up on the development of mediation, but it is accountants who have the crucial business experience. The expert accountant has a lot to offer.’ The result is a ‘slow drift’ towards head-to-head competition for mediation work. The good news of an emerging market is however tempered with concerns that some of the changes might be storing up potential miscarriages of justice. With judges now able to impose deadlines for submission, experts are under increasing pressure to produce high quality reports on complex issues in ever-tightening time frames. Jerry Lagerberg, a forensic partner at PwC, said: ‘Some things really need time and effort because of their complexity, and yet we have unrealistic deadlines.’ Another expert said: ‘The fact is this could mean that justice isn’t done because the reports are not as good as they would be if there was more time.’ And there may be a double sting in the tail for experts. Accountants can become involved in preparing for case management conference where both parties discuss issues with the judge. At this stage the judge may raise extra questions of his own or decide to award costs. It means the experts have to anticipate every question. But to do that they need time and charge more for doing it. Either way they come up against the restrictions of the new rules. The experts are acutely aware of these new pressures. However, there is support for the changes. Surveys show many involved in the civil justice system are happy and have a developing appreciation for the reforms. The old strategy of stalling for time has been lost. Mediation instead of litigation has become the watchword. Aggressive uncompromising lawyers and their tough expert witnesses from the accountancy profession are out of favour, and a new interest is being shown in ‘commercial solutions’. The question is whether the ability to get justice has been lost as early disclosure, the pressure for out of court settlement and increasingly tight deadlines mounts. As Harry Anderson, head of litigation at City law firm, Herbert Smith, points out: ‘Just because a woman can produce a baby in nine months, doesn’t mean nine women can produce a baby in one month.’ WOOLF REFORMS – KEY ASPECTS – The court has a duty to actively manage cases including encouraging parties to co-operate and use alternative dispute resolution. – Judges can set timetables, costs and impose sanctions. – Case management conferences are used at which the judge may make key decisions. – Pre-action disclosure may be ordered. This increases the emphasis on the expert’s overriding duty to the court. – Claimants can now make offers and ‘pay-as-you-go’ litigation introduced.