Caroline Field predicts some of the litigation challenges for the year ahead  – This article first appeared in New Law Journal – January 2014.

If you have a taste for the uncertain, this is the year for you. You’re going to be faced with new challenges. Keep on your toes. Opponents may seek to take advantage. When addressing budgeting issues, two heads may be better than one. Consider bringing in a neutral third party to bang heads together. It may help to avoid an unexpected bill.

Most litigation lawyers say they don’t need a crystal ball to foresee the ongoing effects of the Jackson Reforms. With the recent poll carried out by the London Solicitors Litigation Association (LSLA) and NLJ predicting that there will be no improvement in access to justice (an express aim of the reforms) and an adverse affect on costs, the outlook for 2014 may seem gloomy. Is it all bad?

Court of Appeal guidance creates havoc

Jackson sought to address “the damage delay and non-compliance was inflicting on the civil justice system”. Some practitioners hoped for stricter application of the civil procedure rules. Instead 2013 saw inconsistency between courts and individual judges.

The Court of Appeal’s decision in Mitchell v News Group Newspaper [2013] EWCA Civ 1537 sought to address how to approach applications under the amended CPR 3.9.

Mr Mitchell’s recoverable costs were limited to court fees after his solicitors filed their cost budget late and a heavy handed judgment by the court rejected the appeal of the Master’s refusal to grant relief from sanction.

The outcome has not stifled the claim. That will not always be the case. In earlier cases, we saw a careful balancing exercise between the need for procedural strictness and achieving a proportionate response to ensure justice is served.

Zero tolerance will not eradicate default. A major concern is that the judgment will discourage co-operation between the parties, prompt more interim applications and we could see an increase in negligence actions against solicitors, which would leave no one better off.

Creative use of new disclosure & evidence rules

Junior litigators can be forgiven their collective sigh of relief at the prospect of a departure from standard disclosure. Reining in a practice which is a major cause of escalating costs (but is rarely the reason a case is won or lost) is an opportunity to be grasped.

Front-loading of work (and costs) is inevitable to enable parties to establish the key issues and the nature and extent of evidence (oral and documentary) available before case management directions are ordered. Relying on parties to reach consensus on issues-focused evidence and disclosure is optimistic. A more robust judicial intervention may result in 2014 from Lord Justice Briggs’ proposals for full docketing as part of the Chancery Modernisation Review.

More cases caught by the cost budgeting regime & more costs

The headache brought on by mention of disclosure may be replaced by a migraine induced by the requirement to prepare cost budgets to assist the court to exercise more control over parties’ costs. Anecdotally, firms have been spending huge sums trying to get it right only to find that judges are then disapplying the rules.

The number of exceptions may decline in 2014 but as long as judges can opt in or out and there is little guidance on how discretion should be exercised, there is no certainty for clients.

Judicial robustness in assessing proportionality

Those who naively thought their big ticket litigation was immune from the new proportionality rules are in for a shock. In Vitol Bahrain EC v Nasdec General Trading LLC  [2013] EWHC 3359 (Comm),  [2013] All ER (D) 14 (Nov) the court described the parties’ (who together spent over £400,000 on an anti-suit injunction application in the context of a US $119m claim) statements of costs as “eye-watering” and reduced the defendant’s costs from £165,421.80 to £75,000.

Satellite litigation relating to the new cost management rules is already rising. Careful preparation of budgets (including detailed assumptions), filed on time and clear advice to clients about the difference between recoverability and what the client pays will be essential. Specialist costs lawyers will increasingly be approached for advice much earlier.

More failed mediations as parties are pushed into mediation

For some time parties would have been foolish to refuse mediation without good reason. In PGF II SA v OMFS Company 1 Limited [2013] EWCA Civ 1288, in which the Court of Appeal refused a successful defendant its costs because it had failed to respond to an offer of mediation, we saw that silence was not golden. What the court will accept as a good reason is unclear. A seemingly unbridgeable gap between parties’ “bottom lines” is unlikely to be good enough. The recent commitment from several of the UK’s biggest companies to the 21st Century Corporate ADR pledge (which signals signatories’ promise to commit resources to resolving disputes by ADR) also suggests this is the way the wind is blowing.

Time will tell whether these predictions are accurate. For the more promising aspects of the reforms to succeed, the profession must embrace the changes. Junior litigators have a big part to play in challenging the more “traditional” ways of approaching litigation.

Caroline Field, president of the Junior LSLA & senior associate at City law firm, Fox Lawyers (cfield@foxlawyers.com; www.foxlawyers.com)

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