Implementation issues

Front-loading of costs

11.27 A central criticism of pre-action protocols in the UK is that, by requiring more work to be done up front, the protocols have front-loaded cost for litigants and, in some cases, increased the total cost of litigation.^[33] For example, one comprehensive cross-section and time-series data study concluded that ‘it seems overall case costs have increased substantially over pre-2000 costs for cases of comparable value’, with the reforms introduced pursuant to Lord Woolf’s report being a plausible explanation.^[34]

11.28 Professor Michael Zander suggests, in relation to the Woolf reforms, that cases subjected to pre-action protocols can be divided into three categories:

• cases that prior to the introduction of pre-action protocols would have gone to trial, and still go to trial;

• cases that, prior to the introduction of pre-action protocols, would have gone to trial, but are settled as a result of work done in the protocol period; and

• cases that would have settled anyway and compliance with pre-action protocols have only added to the cost.^[35]

11.29 While Zander notes that the data is unclear, he suggests that if the majority of cases lie in the third category (where extra work is required which brings little or no benefit) instead of the second category (where there are obvious cost savings), then the Woolf reforms have not met the objective of reducing litigation costs.^[36] This accords with some views that pre-action protocols in the UK ‘provided quicker, although not necessarily cheaper, justice and sensible, effective case handling’.^[37]

11.30 While studies that have examined the impact of the Woolf reforms have found positive changes in the culture of litigation marked by greater cooperation and increases in settlement,^[38] the problems of cost were still intractable.^[39]

11.31 In a 2009 review of the costs of civil litigation in the UK, Lord Justice Jackson was of the opinion that general pre-action protocols lead to substantial delay and additional costs, and recommended that the general protocol be repealed, because ‘one size does not fit all’.^[40] In addition, in relation to specific pre-action protocols, it was noted that:

there is a clear majority view amongst commercial litigators and counsel, shared by Commercial Court judges, that pre-action protocols are unwelcome in commercial litigation. They generate additional costs and delay to no useful purpose at all.^[41]

11.32 These sentiments were also evident in a 2004 report by the Hong Kong Chief Justice’s Working Party on Civil Justice Reform, which cautioned that:

Pre-action protocols should only be adopted where such front-loading is considered justifiable in that the benefits of early settlement resulting from the protocol are likely to outweigh the disadvantages from such front-loading.^[42]

11.33 A number of Australian legal professional bodies have also expressed similar concern about the front-loading of costs. For example, the Law Society of New South Wales is of the opinion that:

what constitutes ‘cost effective’ [pre-action protocols] will vary greatly depending on the nature of the disputes and the parties involved. However, mandatory pre-action protocols will effectively increase the cost of litigation by adding another layer of costs to the litigation process … Pre-action protocols are also inappropriate for low value claims because of the increased cost involved, and in many cases are completely unnecessary.^[43]

11.34 Others argue that the front-loading of costs is justified where the protocols reduce the total cost of litigation.^[44] For example, in cases where compliance with pre-action protocols successfully narrows the issues in dispute, there may be cost savings associated with a more expedited, less complex and shorter trial.^[45] As Lord Woolf foreshadowed in his report:

[t]here are practitioners who fear that the use of pre-action protocols will lead to unnecessary front-loading of costs. While the protocols will certainly bring work forward by comparison with the usual present practice, this is to be welcomed. The work has to be done to enable cases to be resolved, and bringing the work forward will enable some cases to settle earlier.^[46]

11.35 Thus, while pre-action protocols may have the effect of front-loading costs,

it does so in a controlled manner while increasing the possibility of settlement … [This] is preferable to the failure to fully pursue settlement, and ultimately incur significant costs during the course of litigation, where they can escalate in an unrestrained way.^[47]

Information exchange and narrowing the issues in dispute

11.36 As noted above, where settlement is not achieved as a result of compliance with pre-action protocols, a secondary aim of the protocols is to facilitate relevant information exchange and narrow the issues in dispute. Pre-action protocols can impose requirements for information exchange that range from a simple letter of demand to requiring a detailed narrative and legal analysis, coupled with the provision of documents and information essential to the claim.

11.37 There may be concerns that pre-action protocols governing information exchange cannot operate with sufficient flexibility to take account of the principle of proportionality. In cases where the issues are less complex and the number of relevant documents is small and easily identified, allocating resources to the disclosure of such documents may not be unduly burdensome. In larger, more complex cases, the extent of the obligations imposed on the parties by pre-action protocols might not take into consideration both the nature of the dispute and the usefulness of detailed information exchange, having regard to the front-loading of costs. A measure of flexibility may be necessary to ensure access to justice for all litigants.^[48]

Compliance, enforcement and satellite litigation

11.38 Pre-action protocols have also been criticised for creating a battleground for satellite litigation,^[49] arising from disputes as to whether a party has complied with the relevant protocol. It appears important, therefore, that courts play an active role in the enforcement of pre-action protocols, and for sanctions to be clear and effective.

11.39 Indeed, non-compliance with the protocols and the lack of proper enforcement of sanctions are among the chief criticisms of reforms introduced following Lord Woolf’s report.^[50] For example, it has been noted that while some courts are willing to strictly enforce compliance with the pre-action protocols, this is by no means universal.^[51] As Gerber and Mailman note in relation to the Technology and Construction Court in England:

There have been instances reported where courts have asked parties at case management conferences whether they have complied with the requirements of the relevant protocols, and the parties have responded ‘yes’ even when they have not. The courts in these cases did not look behind this, or seek details in compliance.^[52]

11.40 John Peysner and Mary Seneviratne have identified that some practitioners in the UK, post-Woolf reforms, ‘thought that the overriding objective gave too much discretion to the courts’,^[53] resulting in a lack of guidance and inconsistent interpretation of the rules. Views were also expressed that the certainty of the old system resulted in cost savings.^[54] This may be a symptom of insufficient training of the judiciary and the legal profession on compliance with any proposed pre-action protocols, and the relative lack of case law in the area.

11.41 Further, sanctions in the form of costs orders may have substantial adverse effects on self-represented litigants, who would require legal advice in the pre-litigation process.^[55] There may be concerns that pre-litigation requirements would place further burdens on community legal centres and other such organisations that already feel resource pressures. The prospect of an adverse costs order might also pressure some litigants into abandoning a claim, thus denying them access to justice.^[56]