QOCS – Uncertainty, Unfairness andSatellite litigation

Martin Coyne

Managing Partner Ralli Solicitors LLP

The Present System v QOCS• White Paper – will only apply to PI• Costs shifting – Loser Pays - D or C • One Way Costs Shifting – D always

pays• “Qualified” One Way Costs shifting – D

generally pays unless exceptions apply then C pays.

• QOCS encourages claims repudiation• QOCS Access to Justice reduced • Government income reduced

QOCS Exceptions– When C Pays Costs• If C’s case is fraudulent • If C’s case is frivolous• If C’s case is unreasonable • On financial means grounds –

where C is very wealthy• If D is uninsured – how can C

know this?• Speculative claims – losing C

pays minimum payment towards D’s costs

Effects of Current QOCS proposals

• Rules require full costs advice to C – scare Claimant’s with no ATE

• AJAG Consumer Survey – 77% would not claim if risk of paying costs

• Without proper ATE cover 25% drop in legitimate cases (206,000)

• MINELAS – C to reveal income, liabilities and assets – D will enquire

QOCS needs ATE • ATE companies said non recoverability

of additional liabilities will kill ATE business

• Pernicious exceptions will encourage ATE to live on?

• RTA Portal cases – no ATE?• Non portal RTA – need ATE• EL / PL – less predictable – need ATE• Lower policy volume = higher premiums

paid by C• ATE policy may neutralise D’s costs

threats to C – but maybe not

Alternatives - Solicitor Indemnity• Sibthorpe & Morris v London Borough of

Southwark [2011] ECWA Civ 25 • Code requires best cost advice to C• Indemnity to be disclosed N251• C needs to know Sols bank will meet

cheque – full disclosure of Sol’s private borrowing to C

• SI will not work in tricky volume matters• A non – starter except for the odd case?

Satellite Litigation – The Good Old Days• Fraud – satellite litigation• Frivolous = satellite litigation• Unreasonable = satellite litigation• Wealthy C definition? = satellite litigation• Interlocutory Orders exceptions apply? = satellite

litigation• Part 36 = satellite litigation• Proportionality= satellite litigation increases costs• D uninsured = satellite litigation• ATE policy will probably not negate SL• LI and D sols think they are untouchable• Pre issue conduct enquiries from D to soften up C• Subjective tests before the courts• Tsunami of interlocutory applications

Practical Considerations• QOCS create asymmetric positions for C & D• ATE is needed with QOCS by C for certainty• CMC’s / sols require ATE commissions NB will ATE

cover be needed in RTA Stage 3 portals?• Deferred ATE disbursement paid by client from

compensation• ATE premium to be self insured in abandoned and

lost cases• ATE Co’s will sieve unmeritorious/ fraudulent cases • ATE Co’s need to means test C –wealthy• ATE policies to be re-written• C’s disbursements to be covered• Will “Shameless” clients need ATE? yes• BTE checks still needed – uneconomic / regulation?

Practical Considerations• QOCS - predicted fraud increase?• If no ATE – psychological intimidation of C by D to

withdraw or under settle at every stage• If no ATE – no staged case review• ATE premiums not subject to 25% cap • Clients may pay out over 25% of compensation in

costs• Barristers will do CFA’s with zero success fees for

volume• MINELAS could be means tested by D or ATE

provider – soften up C• Sign up agents needed to secure cheque payment

authorities at outset. • No ATE massive reduction in actionable cases• Minimum contribution to D’s costs – how much?

What Must We Do ?• Join AJAG to influence reform for

future Claimant’s• Contribute financially to AJAG c/o

Ralli Solicitors LLP• Effective lobbying buys more time• Lobby and meet your MP – all of

your staff• Provide anecdotal evidence of

potential injustice• Read the recent AJAG response to

the White Paper www.ajag.co.uk

Now is the Time to Act• Contact tom.lavelle@ajag.co.uk –

join AJAG• Email martin.coyne@ralli.co.uk with

AJAG contributions and pledges• Contribute financially to AJAG c/o

Ralli Solicitors LLP - money held in clients account.

• 1 year at least of future lobbying MP’s and the MoJ

• Make a difference

Please Do it Now !!