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Does Justice Have to be so Expensive? Does Justice Have to be so Expensive?

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Mar 11

Does Justice Have to be so Expensive?

Written by Jonathan Mortimer
Consultant Partner

DDI: 01423 726608
M: 07850 993952
E: jonathan.mortimer@raworths.co.uk

There are few businesses that avoid becoming involved in a legal action at some stage during the lifetime of their trading activity. Their experience of lawyers and justice is often reserved and very rarely ecstatic. Perhaps this is understandable. Traditional litigation goes against everything else the business works towards. Unlike a well structured business plan, there is rarely a certain goal to work towards in a defined period of time and rarely a clear budget.

The most obvious concern for business is the effect on the bottom line. Recent high profile cases only have the potential to instil further fear into possible users of the Court system as to the potential cost. But is recourse to the legal system merely reserved for the very wealthy individual or company?

It must be stressed that many of the headline catching cases are, of course, exceptional. They frequently involve matters of general public importance and the resources invested in the outcome are correspondingly substantial. The proceedings may also be subject to frequent appeals not only after the initial judgement but also in the preparation of the case for trial which will add to the cost and the delay.

The reality for many businesses is that changes in the justice system mean that litigation is, at least in theory, more accessible and potentially less costly. Four examples include:-

  1. As a result of the reforms pioneered by Lord Woolf the overriding objective of the Court is to deal with cases fairly and quickly, saving expense and keeping costs in proportion to the case. There is now a different attitude by the Court and the lawyers. By way of example, telephone hearings are now possible with a saving in time for lawyers travelling to Courts frequently some distance away from their office and also the regular appointment of a single expert to avoid the costs of an expert on each side.
  2. An emphasis on mediation. This is an alternative route for both lawyers and businesses to resolve disputes without recourse to litigation. It works by bringing together two opposing parties to meet an independent third party (the mediator) whose role it is to assist the parties in reaching an out of Court settlement. Mediation is potentially quicker, reduces legal costs, is flexible and most importantly has the capacity to maintain commercial relations. The Courts are now frequently prepared to put a case on hold, while the parties consider mediation as an option.
  3. Litigation insurance products are widely available. Such policies can be uniquely purchased after a dispute has arisen. Depending upon the policy taken out, the insurance will usually protect a party to the litigation against the risk of having to pay the opponents costs in the event of losing the case. Some policies will include your own costs as well. The Court can order the loser to pay the premium on any insurance taken out by the winner. In such circumstances, use of insurance is very attractive, particularly as some insurers require the premium to be paid at the end of the case. For small enterprises who face loosing everything if unsuccessful, these products may be just what is needed.
  4. Contingency fees. Rules have now been substantially relaxed to enable litigants to reach more imaginative agreements with their lawyers as to costs. In particular, to be paid by results. We have now moved away from the fear that contingency fees are deeply corrupting or have something of the night about them. However, the extent to which businesses with meritorious claims will want to loose a certain degree of control over their case and share the success with their lawyers remains somewhat uncertain.

In all the circumstances, we are moving towards a more approachable and user friendly civil justice system. Although disputes are never welcome, businesses should not necessarily fear the potential costs of a dispute or indeed sell themselves short by reaching a settlement to the exclusion of both lawyers and the Court as continuing to fight their corner may bring added financial benefit.

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