Access to Justice

This book addresses a remarkable experiment in the funding of money damage claims — largely personal injury claims — which began in 2000 and which the government effectively abolished in 2013.¹ The model — conditional fees with recoverable additional elements (recoverable CFAs) — adopted by the incoming New Labour administration was unique and, for reasons that will become obvious, it has remained so. This book is based on a review of published material, the author’s own view as a ‘participant’ in the process and anonymised semi-structured interviews with other participants, from government, claimant and defendant lawyers and litigation insurers. The book covers the development, subsequent amendment and effective abolition of the model. It examines the process of policy development, the motivation and objectives of the policy makers and the reactions of the parties attempting to grapple with the new system. It asks whether a development process incorporating a range of models addressing the evidence base, and including insights from behavioural psychology, counterfactuals and simulations, might have produced a better result: a workable policy based on the core of government objectives or, possibly, an entirely different model.

The issue of funding — that is, financial support — for individual citizens¹ of England and Wales² bringing civil claims to vindicate their rights³ needs to be addressed in stages:

This chapter deals with the issue of how individual citizens might enforce their rights to compensation (as opposed, for example, to administrative redress or human rights). It does not address any particular jurisprudential model which generates these rights, but, instead, looks to effective enforcement of them.

In typically pragmatic fashion, the UK created its own spatchcock system of legal aid. Developments elsewhere had a stronger theoretical base. In the period after the Second World War the most influential thinker on access to justice was the late Mauro Cappelletti. This Italian scholar¹ developed positions based on the Continental European tradition and his own juxtaposition of the rule of law against fascism.

In the great reform agenda of the post-war Labour Government, legal aid and access to justice had a central role, with a reasonable claim to be one of the major delivery mechanisms of the welfare state — not as important as health, education or welfare benefits, but it had its place. The question of the right to a fair trial was exported to Europe through the work of British civil servants in developing the 1953 Convention for the Protection of Human Rights and Fundamental Freedom (later repatriated by Labour in the Human Rights Act 1998). While the Judicare system meant that both criminal and civil legal aid was delivered by the private sector, this is not fatal to the pretensions of access to justice to a place in the core delivery of the social welfare system. The crown jewel of the NHS — the general practitioner service — was similarly delivered by doctors in a contractual relationship with the state, running a private business, normally in premises they owned (and could sell at a profit) and receiving ‘cost rent’ to cover their mortgage payments.¹

The introduction of conditional fees as a replacement for legal aid funding in money damage claims had a tortuous history — very few measures have had quite so many consultation papers and associated documents as the new government created policy, apparently on the hoof. Part of the policy problem was that John Major’s Conservative government was quite well advanced in making changes consequent on Lord Woolf’s Access to Justice Inquiry into civil justice.¹ This was not contentious between the political parties. In the Consultation Paper of August 1977, Access to Justice: Civil Procedure Rules about Costs, new rules on costs were advanced. Out of 75 pages there is one page devoted to non-recoverable conditional fees. This is all about the client challenging the base costs and the success fee (uplift). This was a rare event, as the maximum uplift was limited to 100% under S58(2) Legal Services Act 1990 and, in turn, to 25% of damages.²

It is clear from the analysis above of the consultation papers, including the Middleton Report (and reference back to the policy of Lord Mackay), that there was a seamless policy approach between one administration and the next that legal aid for money claims needed to be curtailed. Encouraging CFA funding would have a part in this, with, no doubt, exhortation to increase the take up of BTE insurance. While Lord Irvine as Shadow Lord Chancellor was less sanguine about the level of success fees and more concerned about clients’ interests than lawyers’ rewards,¹ the approach was essentially shared by both parties and the Civil Service.

The relationship between client and attorney operating on an hourly fees basis classically exhibits the principal agent problem or dilemma.

The client, as principal in the case, must motivate the attorney, who is the agent, to pursue the client’s interests. Hourly fees may not do this, as it is difficult for the client to know how diligently the attorney is working. The attorney may, for example, conduct the case to maximise the hourly fees. This is a case of moral hazard stemming from the hidden nature of the attorney’s action. A classic solution to the principal’s problem in cases where the agent’s actions are hidden but the output may be observed, is to make the agent’s rewards contingent on the level of output. By this reasoning, contingent fees may be seen as a useful device for ensuring that [attorneys] deliver services efficiently.¹

In order to understand what motivated the insurance industry in its response to recoverability, the author carried out a survey of the weekly trade journal Post Magazine and Insurance Week (established in 1840) from 1999 to 2002.² This review of the leading trade journal spanned the period from the start of the Woolf reforms to the announcement and introduction of recoverability and the developing conflict leading to the Callery decision. The journal consists of editorial comments as well as contributions from leading insurance professionals. The journal reported views from a range of interests, mostly liability insurers, in particular those offering motor cover, but both legal expense and after the event insurers (whose interests might well differ unless they were subsidiaries of the same insurance group) and the views of the Association of British Insurers (ABI), a very powerful trade and lobbying organisation. This desk research was triangulated with interviews from participants on both sides of the dispute.

The issue of rights is central to jurisprudence. This chapter does not address itself to those philosophical issues but to the apparently more practical issue of how rights might be vindicated effectively and efficiently. The ordinary citizen has a range of potential legal needs, including transactional ones, such as conveyancing, wills and probate, and contentious issues, which may include family disputes; crime; disputes with authorities and recovery of compensation for personal injury; housing issues; consumer matters and defamation. While the non-contentious matters have been largely commoditised and have become affordable by most people, legal services in disputes remain highly expensive and, indeed, beyond the range of most ordinary people’s budgets.¹

The following section addresses a number of potential approaches to testing policy. They are not intended to be an exclusive list, but are research instruments which have particular resonance with this area of policy or, for reasons which are explained, have been excluded from consideration. They are a controlled pilot, possibly incorporating large data sets; evaluative studies; isomorphism; a counterfactual; laboratory experiments; a simulation or a combination of different approaches.

In 2008 the Master of the Rolls asked Lord Justice Jackson of the Court of Appeal to conduct a comprehensive review of litigation costs. The announcement was a surprise to most observers. The excesses of the ‘Cost War’ appeared to be largely forgotten by this stage, and in road traffic cases and other areas of personal injury costs were limited and success fees capped.

The author is far too committed to the success of cost reform to express Schadenfreude at any emerging difficulties, but might the situation now be clearer if the outcome had been dictated by a combination of an effective policy driver and a comprehensive research base? This volume does not suggest that in the area of civil justice reform we need research that suggests more research; rather, we need research that is tailored to improve outcomes and offer better choices to policy makers and better outcomes. It accepts that this is likely to be in the context of a set outline policy drive, not a tabula rasa, but the understandable urge to ‘sort out’ our civil justice problems, and particularly costs, should not predicate speed at all costs.