Friday, 5 April 2013

LASPO: an insurrectional crossing of a legal Rubicon

The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) 2012 slunk into formal existence a few days ago. If only the date of its arrival - 1 April - was an April's Fool's joke (granted, of a rather convoluted and unpleasant kind). But LASPO is no joke. It may well be one of the most foolish pieces of legislation ever enacted, but regrettably it is all too serious.

A seismic shift

LASPO's advent as law which is alive and kicking amounts to a seismic shift in the UK litigation landscape. Often enough, legislation arrives, is found to be suspect in its operation, and is later repealed and/or replaced with something sensible. This time round, I am not convinced that we will one day see a reversal of the changes wrought by LASPO. They are simply too profound.

The Act's overarching aim is to save £350 million from the government's legal aid budget. To me, it is informed not just by the desire to save money but by the prejudice which would have us believe that the UK is rife with nothing but meritless personal injury claims. David Cameron himself is on record as castigating what he uncritically believes is a 'blame and claim' mentality, one that has created spiralling litigation borne of specious claims and unscrupulous claimants.

The media perpetuate what those who work at the coalface of personal injury litigation know to be a widespread but unfounded cliché: that ours is a 'compensation culture'. It is not. Ours is a society whose evolved ethical and legal principles make it possible for those who have been wronged to seek redress for the wrongs done to them. There is nothing suspect about this. It should instead be celebrated as a vital facet of what makes our democratic adherence to the rule of law so admirable.

But now, though, with LASPO, claiming redress will become more difficult. And yet more worryingly, its changes cannot but have a negative effect on that which clients should be able to take for granted - the honour and professionalism of their legal advisors.

Contingency fees by another name

A key change brought about by LASPO is in the introduction of Damages-Based Agreements (DBAs). Philosophically, DBAs becoming part of British litigation is the equivalent of crossing the Rubicon. It means that we have adopted the contingency fee model common to the United States. For the first time in contentious matters in the UK, solicitors will be entitled to enter into agreements with clients in which they have a vested interest in the outcome, for under DBAs solicitors can receive up to 25% of the damages obtained.

This is a departure from the previous the regime of Conditional Fee Arrangements (CFAs), introduced by Section 58 of the Courts and Legal Services Act 1990 and the Conditional Fee Agreements Order 1998. Here, solicitors can charge clients the usual charge out rate, plus an uplift (or 'success fee'), if the case is won. Confusingly, LASPO heralds a dual DBA/CFA system - but without recoverability of the success fee in CFAs. On top of this, recoverability of premiums of After the Event Insurance (ATE) is also no longer possible.

Confused? Practitioners are sure to be, as the complexities of DBAs v CFAs are worked out, against the background of their rushed introduction. Lawyers now have a clear personal interest in litigation. The words of Lord Denning, in Re Trepca Mines Ltd (No. 2) (1963) (CA), come to mind, but have arguably been ignored ever since the introduction of CFAs. His Lordship suggested that if legal advisors had a personal interest in the outcome of litigation they might be tempted to "influence the damages, to suppress evidence, or even to suborn witnesses".

Portal changes on the horizon

Worse is on the horizon. LASPO also seeks to reduce the monies recoverable in low value Road Traffic Accident (RTA) cases. Put simply, in RTA claims of up to £10,000 no more than £500 in legal fees will be recoverable. Other changes to the RTA Portal, which introduced fixed costs in the first place, are proposed. The government seeks to extend the Portal vertically, to handle claims up to £25,000. It intends to fix recoverable costs for such claims at £800 - which is a third less than the current recoverable costs on injuries between £1,000 and £10,000. That's not all. The horizontal extension of the Portal is also proposed, so that it will include employers' and public liability (EL/PL) claims up to £25,000. Here the costs recoverable will be £900.

These changes are all in LASPO, subject to a modest stay of execution: they come into being at the end of the month, on 30 April. A core lament is this: how can a solicitor be said to be acting in his or her client's best interests, when the maximum that he or she will recover in costs could be as little as £500? The changes are a charter for a lack of professionalism and an 'accept the first offer that comes along' attitude. It is hard to see how solicitors will be able to conduct cases commercially without such an approach.

I mentioned earlier that LASPO amounts to a crossing of the Rubicon. I've just looked up the term, which, of course, means to pass a point of no return. Its origin lies in Julius Caesar's army's crossing of the river Rubicon in north-eastern Italy in 49 BC. Caesar's crossing of the Rubicon was considered an act of insurrection.

It strikes me that LASPO might just be an act of insurrection against the solicitor's fundamental duty: to put duty before profit, and serve clients before commerce.