An article in the Lawyer of 3 January is headed Top firms gear up for action as litigation tsunami hits UK . Perhaps the most interesting point made in it concerns the cost of arbitration with the corollary that the court seems still to be the most attractive option, at least for bigger cases.
As its headline makes clear, the article largely concerns a list of very big cases due for hearing in 2011. What about more “ordinary” commercial litigation, the kind with hundreds of thousands or tens of thousands of pounds at stake rather than millions? The article’s premises – that companies have “exhausted more amenable avenues” for resolving disputes, that they must fight because they cannot afford to settle, and that they are “turning their backs on the arbitration process” almost certainly apply further down the scale. The government has promised a fresh drive to encourage mediation, but the target is primarily the smaller matters. Good legal advice appropriate to the dispute is expensive whatever the forum. No-one is knocking the idea that mediation is the right approach for many cases, but the focus should be on improving the court processes, not on driving litigants elsewhere.
Many companies seem to prefer to litigate – or would do if the costs were reduced or at least made more predictable. Lord Justice Jackson drew attention to the importance of certainty, not just as to the outcome but also as to the costs implications. The lawyers who will win business – by beating their rivals but also by encouraging companies to use the courts – are those who are best able to predict costs and keep within their estimates.
I will come back to estimates and certainty in a moment, but there is a bear-trap in that last sentence. To some, the idea of “encouraging companies to use the courts” is inherently wrong. Surely, they say, we should be encouraging the opposite, even forcing disputants to find other remedies. This is one of those wet ideas advanced by soi-disant liberals, premised on the assumption that “we” know what is best for you (which is why this apparent liberalism is nothing of the sort). There is a fine line between encouraging parties to find common ground, at least as to part of their dispute, and forcing them to settle or to push off to some other forum. Some parties just need to have that fight, and the state has a duty to provide an efficient place for them to have it in, particularly as the state now makes them pay through the nose for the privilege.
That only works, of course, if lawyers provide a service that people and companies want at a price they are prepared to pay. It is said (although I have seen no statistics to back this) that there is wider take-up of alternative fee arrangements, particularly fixed fees, in the UK than in the US. Before lawyers can fix fees viz-a-viz their clients, they must achieve certainty as best they can as to the costs which will be incurred. Electronic disclosure, as Lord Justice Jackson again noted, represents an extremely high proportion of the litigation expense. As Richard Susskind said in his start-of-year predictions, 2011 will be the year when lawyers recognise the benefits of outsourcing – passing on part of the job to third parties with the skills, the technology and the security systems designed for precisely this purpose. A further, and often overlooked, benefit is the ability to reach agreements with providers which bring some certainty as to the costs.
Hand in hand with this, we must see better use made of the courts’ powers to manage cases actively and to contain costs. The technology allows us to make disclosure decisions with a degree of accuracy which far surpasses that of the human eye and which, properly used and managed, will enable parties to agree (or the court to order) a much narrower range of disclosure than has been the case. The Birmingham costs management trial seems to have been successful in making actual costs line up with predictions. This conjunction of technology and management (and you need both) is the biggest single way in which the costs of litigation can be contained and predicted, for mid-range litigation as well as for the very big cases.