The litigation landscape in England and Wales continues to evolve.
At the time of writing, the Government has just published its position paper on the United Kingdom's future relationship with the European Court of Justice post-Brexit. However, an enduring theme continues to be combatting the rising cost of litigation, and discouraging spurious and speculative litigation, whilst retaining access to justice.
The Civil Procedure Rules, with their focus on case management and proportionality, were intended to address these issues when they were introduced in 1999, with a further “reboot” attempted by the LASPO Act in 2012 (which, notably, abolished recovery of CFA uplifts). Lord Justice Jackson, the architect of LASPO, has since continued his focus on developing a fixed recoverable costs regime for cases under £100,000 with a report issued in July 2017. This report also proposed piloting a new "capped costs" regime for business and property cases up to £250,000.
At the same time, the use of litigation funding is now firmly entrenched. No longer the preserve of those without the means to bring claims, growing numbers of companies are using funding to improve cash flow, and also taking advantage of the flexibility afforded by portfolio funding. There is now a developing body of case law concerning access to information about a party’s funding and on the courts' scrutiny of funders (see for example the Competition Appeal Tribunal's judgment in the Mastercard action). Litigation funding has the clear potential to reshape the litigation landscape for some time to come.
Against this backdrop, what does the litigation landscape currently look like? The Ministry of Justice recently published its annual Civil Justice Statistics covering the period from January to December 2016. The statistics paint an interesting picture (with the caveat that the Chancery Division’s new case management system means that these figures have to be treated with some caution).
The total number of claims and originating proceedings issued at the Royal Courts of Justice in London in 2016 was 22,475, an overall drop of 15% from the previous year. This follows a general downward trend over the last seven years since a peak in 2009. Most notable was the sharp drop in contract claims in the Chancery division (901 to 333). Insolvency claims have also fallen, though less dramatically. An inevitable contributory factor will be the increase in the county court's jurisdiction in 2014 to hear claims with a value of less than £100,000, significantly up from the previous limit of only £25,000, as well as the increase in its equity jurisdiction from £30,000 to £350,000. Coupled with this is the move towards parties increasingly seeking to resolve disputes at an earlier stage, often by way of pro-active ADR. The cost of issuing claims also went up markedly in 2015; a claimant is now required to pay 5% of the claim value for claims having a value from £10,000 to £200,000 and a maximum fee of £10,000 to issue claims of over £200,000.
Well over half of the claims were brought in the Companies and Bankruptcy courts (13,519). Claims in the Technology and Construction Court (TCC) decreased from 417 in 2015 to 352 in 2016, marking a general downward trend and the first time that there have been fewer than 400 claims since 2009. Intellectual property claims (712) continue on a gentle downward trend since a high in 2013, but numbers have remained steady in the last two years. Claims relating to arbitration have returned to more normal levels in 2016, after a "glitch" in 2015 where the number of arbitration claims reported was only 41, compared to 226 in 2014 and 221 in 2016.
We are seeing a contrasting picture for claims numbers against professionals in the Queen's Bench compared to the Chancery Division, as claims numbers went up materially in the former division (from 215 to 245) and significantly down in the latter (from 195 to 41). It is likely that claims normally heard in the Chancery Division of the High Court were transferred to the County Court, given the increase in 2014 in its equity jurisdiction from £30,000 to £350,000. The overall reduced professional negligence claims numbers is probably a reflection of the tapering off of the effects of the 2008 economic crisis. However, although claims numbers are generally lower, the amount claimed in individual claims is rising. In our experience, claimants are also issuing regulatory proceedings (often in tandem with litigated claims). This is an area on which the MOJ does not report, but it will be interesting to see whether and how the increasing impact of regulatory proceedings on professional firms will impact the volume and nature of work dealt with by the courts.
Will this downward trend continue, and how will Brexit affect claims numbers and arbitration trends? Other countries are already seeing commercial advantage in luring more international arbitration away from London. But litigation tends to increase when the economy slows, so perhaps the UK will retain its share of a larger overall pie.
James Roberts, Clyde & Co LLP