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There are differences between substantive litigation and costs litigation which are critical to explaining why parties might be resistant to alternative dispute resolution (ADR) in costs matters. The primary difference is that in the costs litigation the liability for substantive costs has already been determined and the paying party is already feeling the pain of footing the bill. Any additional step in the detailed assessment proceedings is perceived (not without cause) as merely adding to the costs.

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REUTERS | Kim Hong-Ji

Contingency fees provoke very different responses from lawyers, ranging from the view that they are the work of the devil, to them being the ultimate tool providing access to justice.

As usual, the truth lies somewhere in between, but the direction of travel of recent senior court decisions is definitely to endorse contingency fees, which are the ultimate form of proportionality.

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In my prior blogs I examined “implied probability of loss” as a way of analysing the risk and price of transactions in the litigation funding market.

Let’s take for example (and with all the usual caveats about being reductive) a funder that determines that a case has, say, a 2/3 chance of winning and generating for both the claimant and the funder lots of money, and a 1/3 chance of losing with an attendant destruction of the funder’s entire investment.  When pricing this case that funder must charge, on a win, $1.5 for every $1 invested just to break even. This is because the funder has a 1 in 3 chance of losing 100% and a 2/3 chance of winning 150%, which yields, on average, 100% (that is, a mere return of the funder’s investment).

This analysis requires a few assumptions, including that:

  • The funder has a diversified book of investments of this sort and all of those are single-case investments (portfolios and other funkier deals complicate the picture).
  • The funder’s operating costs are zero.

Now I want to quantify the impact of operating costs by looking at two hypothetical funders with different cost structures.

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REUTERS | David Mdzinarishvili

In Global Energy Horizons Corporation v Gray [2021] EWCA Civ 123, the Court of Appeal demonstrated the circumstances in which an appellate court will overturn costs decisions made by judges below. Disputes over who is substantially the winner at the end of litigation are not uncommon and judges regularly exercise their discretion, under CPR 44, to arrive at costs orders which reflect the true outcome of the claim.

This case illustrates the important difference between that discretion and the incorrect application of legal principle, and shows that, in the case of the latter, the appellate court will be quick to intervene.

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“Data is like garbage; you’d better know what you are going to do with it before you collect it.”

This quote is, alas, not a creative warning from a FTSE 100 Data Protection Officer about the risk of collecting data under the General Data Protection Regulation (GDPR). No, the quote is from Mark Twain, who died more than 100 years before GDPR. Even so, it bears an uncanny resemblance to today’s modern data landscape.

Except data is no longer garbage. Consumer data is now corporate gold. And you’d better know what’s going to happen to you if that gold is compromised, lost or negligently handed over to criminal parties.

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REUTERS | Yuriko Nakao

Further to my Part 1 blog on this topic, I now ask: what is there to gain from legislation in this area? What broader experience is there of apology legislation where it has been enacted? While time and space do not permit a global trawl to evaluate the effect of such legislation in all the countries in which it has been enacted, I can provide some examples.

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REUTERS | Dinuka Liyanawatte

Made an offer to your opponent under CPR 36.5? What happens next?

If the offer is accepted under CPR 36.11 within the “relevant period” as defined in CPR 36.3(g) (usually within 21 days unless fewer than that number are left before the trial is due to start), the case is compromised in the terms of the offer and the costs of the action belong to you, to be assessed on the standard basis if not agreed: see CPR 36.13(1).

However, what if the offer is rejected? The show will go on until trial, when the judge will decide who has won and who has lost, and will make an award of costs to reflect that outcome.

Suppose, next, that the opponent has a change of heart and wants to accept the offer at a point after the relevant period has expired. Herein lies a difficulty known as the “interest trap”. Whilst a Part 36 offer is treated as being inclusive of interest where it offers to pay or accept a sum of money, there is no automatic entitlement to any interest which has accrued since the date of the offer if it is accepted outside the “relevant period”. Expressed in a costs of action context, if the party entitled to costs offers to accept £100,000 inclusive of interest in settlement of their bill, but this is not accepted until six months after the expiry of the relevant period, the party paying costs will have saved half a year’s interest at 8%, since that is the rate payable on costs from the date of the costs order under the Judgments Act 1837.

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REUTERS | Jim Young

The COVID-19 pandemic has affected the ability to effect service outside the jurisdiction, such that parties may need to consider applying for alternative service.

Although the Civil Procedure Rules (CPR) do not contain an express provision for alternative service outside the jurisdiction, the UK Supreme Court in Abela v Baadarani held that such an order can be made where there is a “good reason” to make it. However, Lord Clarke expressly exempted from his analysis cases under the Hague Service Convention or a bilateral treaty. The reasoning behind this exemption derives from the principle of international comity, which requires English courts to take into account and give weight to separate arrangements made between sovereign states (Salomon v Commissioners of Customs and Excise, at paragraph 143). There is nothing to suggest that the principle of international comity does not apply when courts are interpreting the CPR. As a result, the courts’ approach to such cases has been different and – rather inconveniently – has seemingly led to the creation of two different lines of authority.

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Cycles in the sand?

In Best v Luton and Dunstable Hospital NHS Foundation Trust, a clinical negligence case, the defendant accepted the claimant’s Part 36 offer of £475,000 to settle the costs.

Costs of assessment were to be determined a month later, on 10 November 2020. That hearing went ahead virtually, before Master Leonard. At the conclusion of the assessment, the parties agreed that the resulting figure was £58,119.80. It is important to note that the assessment had not taken the whole of the allocated court time.

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