Sometimes, it really *is* the fault of the lawyers…

Justice secretary Ken Clarke has announced that there are to be changes to the rules on ‘no win no fee’ arrangements between lawyers and their clients. In case you’re not aware, these are the arrangements that allow “lawyers” (for which, by and large, read the call centres of companies whose revenue comes from the referral of potential claimants to solicitors) to advertise their services as offered at no cost to the prospective client. These arrangements, properly known as “conditional fee agreements”, mean that should a claimant be unsuccessful in his or her claim, they are not required to pay anything to their lawyers for the services rendered. In return, lawyers receive a nice bonus should the case be won.

Shamelessly, Clarke appeared on the Today Programme (@r4today) this week, decrying the fleecing of the NHS and poor innocent insurance companies who have had to pay multi-millions on an annual basis to crafty lawyers. ‘This is not how it was supposed to work’, he shouts, ‘and we’re all paying’. But let’s be clear, it’s not just the lawyers that benefit from these arrangements. There are the Mercedes dealers, the country clubs, the Rolex retailers. And those corporate palaces in the centre of England’s fair cities don’t just build themselves, you know. Honestly, Clarke is supposed to be a business specialist. Isn’t he aware of the multiplier effect? We’re keeping these people in business. And if it wasn’t for no win no fee, daytime TV would be deprived of the majority of its revenue. And what would Trisha do then?

You’d think, given the explosion in litigation over the last decade, that the no win no fee agreements were invented by a Conservative government. Actually they were, but they only really took off in the late 90s when the Labour government decided to do away with Legal Aid for most forms of litigation. By way of compromise for those complaining that access to justice would be denied for those most in the need, who are usually those who are least able to afford a lawyer to advise and represent them, the administration decided that “success fees” earned by lawyers would be recoverable from the losing party. In addition, because of the principle in English Courts that the loser pays the winners legal costs, it was also proposed that insurance premiums charged for covering the risk that a case might be lost should also be recoverable.

Quite possibly, back when these reforms were first contemplated, not even the most optimistic lawyer could have expected the litigation revolution that was to follow. This was because of the innovations that followed.

First, “claims farmers” were allowed to enter the market with glossy TV advertising. Anybody contacting one of these companies claiming to have what looked like a dead cert case was then sold on to the highest bidding firm of solicitors with all the grace of a sheepskin clad football agent approaching the gates of Old Trafford with his arm around the latest wunderkind. This was the reality of access to justice in the post-Thatcher age.

Second, and I still sometimes have to pinch myself about this, the legal expenses insurers came up with a tremendous wheeze. The premiums that clients had been expected to pay for the insurance cover that would eliminate their risk altogether were themselves insured. And the payment terms were that the premium would be paid at the end of the case. If the case is lost, the insurance policy pays the premium. If the case is won, the losing party pays the premium. And then the same companies would provide finance to pay the fees of barristers and expert witnesses and insure those costs too. Lost cases are rare, but you can imagine that the hit an insurer takes when such a case arises is such that the premiums charged are massive. And the losing party, or, more usually, the losing party’s insurer, foots the bill. Oh those poor insurance companies, being fleeced by, er, those other insurance companies.

Given the availability of “legally trained experts” (honestly, this is what one of the present crop of claims farmers purports to offer in its current TV campaign), able to assist anyone with the semblance of a claim with no risk whatsoever AND the guarantee that all damages awarded will be safeguarded for the claimant (this being de rigeur after the scandal of the miners required to pay the referral fees to their claims farmers out of their damages), who can possibly be surprised that the litigation culture spread through England and Wales like swine ‘flu?

So, was this access to justice? Well, not if you were wanting to pursue a commercial litigation or intellectual property claim, where costs remained high but because of the greater number of variables, very few lawyers were brave enough to offer no win no fee agreements. I tried twice and both times had my fingers burned by clients that, how shall I put it, strategically withheld information that, when uncovered at the crucial time, utterly undermined their cases. I never did it again.

And not for the Defendants. Not any Defendants. Not that conditional fee agreements are forbidden for Defendants. It’s just that, if you were to represent a Defendant, how would you go about describing just what constitutes success? Litigation is not a black and white issue but is pursued in shades of grey. And not for two of the key areas of justice for private individuals: family, where legal aid remains, and criminal proceedings, where that legal aid is universal, regardless of means. And in employment matters, lawyers have always been allowed to act in return for a share of the winnings, something that is strictly forbidden in normal court proceedings.

And obviously, if your case is tricky; if you have clearly suffered but the evidence pinning the blame on someone else is suspect; if you have been injured but that has merely aggravated a pre-existing condition, you’re going to find your choice of lawyer radically reduced. That is, if you ever had a choice, because the lawyer that you get to use will probably be dictated by your insurance company or by the claims farmer you called.

Access to justice? Not really.

Does it have to be this way? No. I’m not saying that lawyers don’t do a good job. Of course they do. And anybody thinking that running a law firm is a licence to print money should wake up and smell the freshly ground. Times is tough, folks. In personal injury and most other areas as well. There are loads of conscientious lawyers whose primary aim is to find a way to help their clients to secure their objectives and only then try to make it pay. Dozens, literally.

In the dying days of the last Labour government, then Justice Secretary Jack Straw commissioned a report on the chaos that is the field of legal costs from Lord Justice Jackson. The resulting Jackson Report recommended that success fees and insurance premiums cease to be recoverable from the opponent and that to make the system work, levels of damages be lifted by 25% across the board. So the insurers still pay, but at least the claimants have something at stake and therefore have an incentive to look around for the best deal. And the lawyers that will lose out are only those that have made a living out of litigating over the levels of costs recoverable.

Somehow, I still don’t find this satisfactory. It still doesn’t address the imbalance between claimants and uninsured defendants, nor does do much to enable those engaged in commercial disputes find competent yet affordable representation. For some reason, we have chosen to make it so much more complicated than the way it works in the USA, where a lawyer can take a percentage of his or her client’s damages and businesses know that they have to budget a certain amount for defending litigation, and then keep skilled lawyers on retainer for that very purpose. The USA is where the phrase “ambulance chaser” was invented. It’s also the home of community justice, public law centres and the like. You don’t find many over there complaining about the absence of access to justice. They just get on with it. And if a party does behave really badly, an American court can still order that party to pay the other’s legal costs, but that is very much the exception.

The problem is that we are building not on virgin ground but with the conviction that we must imitate what existed before. And what existed before was an unsustainable legal aid system that protected the legally aided party to the extent that in 99% of cases, the losing legally aided litigant could not be required to pay the winning party’s costs. And yet were the result to be reversed, the losing party would have to repay the Legal Aid Board for the subsidies it had paid to the opponent’s lawyer. Compared with that, the current conditional fee system seems sensible, even though allowing a Claimant to pursue litigation without having to put anything on the table him or herself is to pursue a system that has no real foundation in reality. And in the realm of unreality, the bizarre is merely ordinary. Conclusion: lawyers are afraid of the new system not because there is any real jeopardy to access to justice – at least no more than there is already – but because they don’t want the job of having to explain to their – our – clients that they will have to invest in the process themselves. And what of the claims farmers? Let them find another market to leach on, say I. Something tells me they won’t go hungry.

You Will Be Assimilated

KPMG has launched a funded programme that will support talented school leavers through a degree at Durham University and then into qualification as a baby chartered accountants.  These undergraduates are to divide their time between university and KPMG’s practice.  KPMG says it wants these school leaver schemes to provide the majority of its annual trainee recruitment.  Catrin Griffiths, editor of The Lawyer magazine, argues this week that law firms should be doing the same.  I think she’s bonkers.  Here’s why.

Who the hell knows what they want to do at 18?  All I was interested in was beer, Van Halen (it was 1987, I’m much cooler now, 20 years too late) and Norwich City Football Club.  In fact, when I left university, the only thing I knew for certain was that I didn’t want to be a lawyer.  Indeed, my university career constituted a record of galactic underachievement.  At the end of the first term of the second year, Prof Phil Williams, who was in many ways my mentor, left the university to take up the Chair of Politics at Chicago University.  Before he departed, he told me that he would be looking for my name on the list of those achieving first class honours.  “Right,” thought I, “I can spend the next 18 months living it up, in the process generally avoiding work wherever possible and still come out with a 2(1).”  Which I did, and ended up with a 2(ii).  Cue stock market crash, general global recession and no job.  Welcome to the real world, 1991

Of course, my indecision might also have had something to do with the fact that I came from a family of lawyers.  My father was a partner in a mid-sized law firm and went on to be a barrister.  My maternal grandfather was a High Court judge and was the Chief Justice of The Bahamas (where I was born).  My baby brother became a barrister.  I even married a barrister.  In fact, when I’m presenting, I sometimes introduce myself, being the only solicitor in the family, as – get this – the white sheep of the family.  Oh, I crack myself up.

Of course, everyone knows somebody that is the exception to the rule.  My wife watched an episode of Crown Court when she was 10 and from that moment she only ever wanted to be a barrister.  In fact, sometimes I think she’s only really happy when destroying witnesses in cross-examination or waxing lyrical to a jury.  She’s now one of the pre-eminent practitioners in her field in the region and was appointed two years ago as a Recorder.  To you non-lawyers, that’s a part-time Crown Court judge, not a beginner’s woodwind instrument, which would, of course, be ridiculous.

But as a rule of thumb, when an A-level studying work experience person (a “WEP”, as we like to call them) tells me that they want to be a solicitor more than anything else in the world, I give them the bent eye.  “Really?” I quip.  “When I was your age, I still wanted to be an astronaut”.  In fact, I never wanted to be an astronaut.  I’m terrified of heights.

I have found, in delivering seminars and such like at universities across the north of England, that by and large, trying to do anything useful with undergraduates is a waste of time and valuable one-liners.  The lecture hall is divided between dozing largely British undergraduates playing hangman on their iBerrys, and attentive largely Asian students sat across the front rows respectfully tapping every word I utter into their laptops.  Neither group interjects with anything useful.  The odd snore or snigger from the back is especially unhelpful.  I’m not sure whether either group comes out of the session particularly advantaged.

But would I want to change their attitudes?  No.  Because life is about a gradual dawning of opportunity and motivation.  And when you’re 18, you need to give that process time.  Being forced, whether by ambitious parents, short sighted careers advisers or pressure from an international financial megalith into a lifetime vocational commitment is a short cut to a mid-life crisis.

When making choices about recruitment, I will take the candidate with real world diverse experience over the tunnel vision squint of the person that went straight from school to university to work.   Subsidising school leavers through university, post-graduate qualification and training may work for KPMG, but accountancy is about numbers.  Law is about people.

Bad News, Good News

Since the arrival of the coalition 9 or so months ago, I have been getting increasingly fed up with the tone of much of the media towards the changes that are being forced through.  When I write “media”, I mean, by and large, the Newcastle Journal and it’s online publication, www.nebusiness.co.uk.

Now, I must confess, as a some time columnist and blogger for the Journal, generally I am a supporter of it as a publication.  Indeed, at my insistence, BHP’s Darlington office is still a subscriber to the paper, Monday to Friday.  It’s fantastic to have a strong regional paper that has a focus that is utterly divorced from London.  But the anti-coalition propaganda in the news pages, which is rarely coupled with an equivalent balancing view, has really been getting on my wick recently.  I know that the north east is very reliant on public spending, and that wasn’t helped by the policies of the last government and some of the activities of ONE Northeast.  But you kinda have to get to a point eventually where you say, ‘let’s just get on with it’, don’t you?

I’ll give you one example.  A couple of weeks ago, there was a 2 page spread in the Journal about Vince Cable ordering the sell off of half a dozen or so patches of real estate, mostly in and around Tyneside.  It’s funny how these policies seemed to be ordered by Vince Cable.  Sometimes I wonder how he has the time.  Perhaps because he’s spent most of his life working in the private sector.  Anyway, the article listed sites like what was Westgate House, the Tyne Tower, a business park or two, and so on.  They were described as “the jewels in the crown”, which I thought was a funny way to describe relatively plain patches of land in a region that includes Durham Cathedral, the Sage, Hadrian’s Wall and all sorts of other wonderful places.

At the foot of the article, there was a box that listed these jewels and the buyers that were being lined up, most of whom were other public sector organisations (for example, Gateshead Council, which was apparently going to be acquiring the Tyne Tower).  So actually, these sites weren’t about to be sold off to the highest bidder, but were to remain in public ownership.

But even if they were to be sold off to the highest bidder: what would be wrong with that?  A very dear friend of mine who is a big noise at one of the region’s most prominent ‘grey sector’ organisations (the grey sector being organisations that are notionally private sector but rely for most if not all of their income on public funding) said to me a couple of months ago that we really must try to prevent the government from selling off ONE Northeast’s property portfolio because we can’t let the region lose these valuable assets.  Why?  What’s going to happen if we do?

Had we not knocked Westgate House down, perhaps it would have sailed off down the Tyne and eventually rocked up on the Norwegian shore.  Some American investor might perhaps have uprooted the Tyne Tower and carted it off to Texas, leaving a gaping hole in the ground and perhaps exposing the earth’s mantle beneath (just imagine the health and safety implications).  Coming from East Anglia, this is a subject that is close to my heart.  On the Today Programme this very morning, there was a piece about the evaporation of peat from the fens (well, not evaporation as such, it just dries and blows into the Wash).  Then there are the beaches of Norfolk and Suffolk that drift inevitably towards the Thames estuary.  In the North East though, money is tight and land is in short supply, hence the furore.

But friends, have I just started to notice a change in the editorial tone at The Journal?  On Monday, the lead in the business pages was the appointment of Paul Walker as chairman of the North East LEP.  Today, there’s another piece about Ray Mallon and Steve Gibson proposing an enterprise zone or two for Teesside.  Now THAT is what I call a public/private partnership.  Perhaps, just perhaps, as things start to develop, we can start to comment on what’s going to happen, not perpetually hark back to an era that’s been lost.  That would be so much more constructive.

What I do blame the current administration for is the limbo that we’ve all been left in since September.  Ever since party conference season, the Cuts have been the default lead news item, occasionally being displaced by the liberation of Egypt or the cocaine habit of a soap opera star.  This ill-planned approach left us with a 6 week hole in the autumn until George Osborne unveiled his plans at the end of October, during which time the economy ground to a halt.  Genius.  And then we found that actually he didn’t really have concrete plans yet.  We are going to have to wait for the detail.  Fabulous.  So in the 6 months since, we’ve been bombarded with neverending whinging about how this programme is too valuable to lose to the Cuts, or that institution will have to close because of the Cuts.

Despite the valiant words of Ed Miliband, this is not a party politics matter.  I may be a free market supporter, but I am not a Tory.  In fact, I only voted Tory for the first time in my life last time because I was so desperate to see anyone but Labour win Darlington.  Although I have to say in the last few months, our Jenny has started to grow on me (don’t tell Mr Wharton that).  And not so much like a fungus, either.  If it wasn’t Vince that was ordering the sell off, someone else would have had to.  And before we forget, just what was ONE Northeast doing acquiring all that land in the first place?  And having acquired Westgate House and knocked it down, much to the delight of Kevin McLeod, did they actually have any plans for the site?  Because it still looks like piles of rubble to me, and we’re now, what, four years or so on from its demolition?  As ever, I don’t mean to criticse.  I only enquire and comment…

Information Commissioner to Break Cookie Addiction (official)

Interesting interview with Information Commissioner Christopher Graham on @R4Today about the new ePrivacy laws coming in later this year that will require explicit consent for gathering data to be used for contextual online advertising or similar purposes.  Chiefly, this relates to cookies and although cookies used to gather data for shopping baskets will be fine, other cookie-ism will require permission, the theory being that websites will collect potentially “sensitive personal data” (as defined by the Data Protection Act) automatically and without the explicit permission required for this kind of activity.

Unfortunately for the Information Commissioner, his role has been somewhat undermined by comments by government minister Ed Vaizey who said that the ICO would not be prosecuting businesses in the short term while they try to work out just what the heck they’re supposed to be doing with their online activities in order to comply with the new law.

Stand by for a barrage of alarmist articles from lawyers hoping to win instructions to advise on compliance issues.  Despite all the jumping up and down, the fact is that businesses very rarely get prosecuted for failing to comply with data protection laws and those that do are usually guilty of the most egregious failings known to humanity.  Similarly, I can’t remember ever hearing of anyone being prosecuted for failing to comply with the requirements of the e-Commerce Directive (which includes having to list  your business’s street address on your website, together with the identities of any trade or professional associations you might be a member of).  So honestly, don’t panic.  Keep an eye on http://www.ico.gov.uk and look out for examples of good practice.