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Professional conduct questions and answers
S...
SPOT ISSUE, STATE APPLICABLE LAW AND CONCLUDE BY ADVISING CLIENT
Pre-action steps: Case analysis, ADR and funding
The overriding objective:
Rule 1.1: deal with cases justly and at proportionate cost.
The court must seek to give effect to the OO when exercising power given to it by Rules
(r1.2).
Solicitors and their clients have a positive duty to help the court to further the OO (r 1.3)
Understand and be able to explain alternative methods of dispute resolution.
Is there an ADR clause in the contract?
Alternatives to litigation = arbitration (3rd party reaches a decision which is binding upon the
parties in dispute). May be quicker than litigation, less formal and occur in private, solutions
reached may be more practical than those a court has a power to order, decisions are
binding on the parties. But certain remedies such as injunctions not available.
ADR:
Non-determinative ADR = 3rd party suggest a solution to the parties but not impose one.
Determinative ADR = 3rd party can impose decision.
Court cannot order than parties use ADR – CA confirmed in Halsey v Milton Keynes
General NHS Trust. But, there may be cost consequences of unreasonably refusing to
consider or use ADR.
Types of ADR –
, - mediation and conciliation: 3rd party selected as mediator and discuss the case with each
party on a without prejudice basis.
- ‘Med-arb’: the parties agree to submit their dispute to mediation and if this does not
work they will refer the matter to arbitration.
- ‘Mini-trial’ or ‘structured settlement procedure’ – parties appoint a neutral who will sit
as chair of a tribunal composed of the chair and a senior representative of each of the
parties. They hear or read the cases and negotiate with each other with the help of an
independent arbitrator to reach a compromise.
- Expert appraisal: the parties can refer all or part of their dispute to an expert in the field
for their opinion. Opinion is not binding.
- Expert determination: they agree to accept the expert’s decision and if one fails to do so
they can sue for breach of contract. The decision, however, cannot be enforced as a
court order.
- Final offer arbitration: each party makes an offer on terms to settle, neither can afford to
make an unrealistic offer as the neutral will choose the opponent’s offer.
- Early neutral evaluation: parties instruct neutral to make preliminary assessment of the
facts at early stage in dispute, submit written case summaries and supporting
documents, the evaluator then makes a recommendation and try to negotiate a
settlement.
Advantages of ADR: CPR 1998 rule 1.4(2)(e) – the court may further the overriding objective
of dealing with cases justly by encouraging the parties to use ADR if the court considers that
appropriate and facilitating the use of such procedure. Practice Statement (Alternative
Dispute Resolution) (No 2) (1996) – Waller J said ADR helps to save litigants the ever -
mounting costs of bringing their actions to trial, saves the delay of litigation, enables them to
achieve settlement of their disputes whilst preserving existing relationships, provides them
with a wider range of settlement solutions than those offered by litigation, is likely to make a
substantial contribution to the more efficient use of judicial resources. Parties can add an
ADR clause in their agreement in case of any dispute. – Link to Q/client’s circumstances.
Disadvantages of ADR: it does not bind the parties to the procedure, parties can withdraw at
any stage, the awards are not easily enforceable like court orders (unless they enter into
contract then if one party does not carry this out can be liable for breach of contract), the
speed of ADR may mean that all the facts are not able to be disclosed, ADR is not
appropriate for all cases, eg where they need an injunction or issues where no dispute and
where a client needs a ruling on a point of law.
Parties, under the Practice Direction and Pre-action Protocol, have a duty to attempt to
settle the proceedings and to consider a form of ADR. - Pre-action protocol PD para 8.
Understand and be able to evaluate funding options in a dispute resolution matter.
The solicitor should give the client the best information possible about the likely costs of the
matter and keep the client regularly updated on costs (Paragraph 8.7 SRA codes). Includes
advising the client on different types of funding available. How the solicitor’s fees are
calculated, eg who is going to do the work and the hourly charging rates. Client should be
advised of any foreseeable disbursements such as court fees, barrister fees and experts’
fees.
Solicitor should warn client if they are unsuccessful, they will have to pay their own and
other parties costs – rule 44.2(2)(a) CPR 1998.
Warn client of risks of litigation, eg costs – going bankrupt if can’t pay.
Fixed fees: If a solicitor specifies a fixed fee for a service, he will be “obliged to complete the
work, to the ordinary standard of care, even if it has become unremunerative” – Inventors
Friend Ltd v Leathes Prior (a firm).
, Contingency fee arrangement – client only pays fee if they are successful, 2 types –
conditional fee agreement and damages-based agreement.
Conditional fee agreement: s58(2)(a) Courts and Legal Services Act 1990. Solicitor receives
no payment or less than normal payment if case is lost, or receives normal or higher than
normal payment if case is successful. Can be entered into in any civil litigation matter except
family proceedings, must be in writing, must state percentage by which the amount of the
fee that would be payable if not a CFA is to be increased. If successful, cannot claim the
success fee that you need to pay to your solicitors from your client. Solicitor should perform
a risk assessment to see whether CFA is worth entering into. Solicitor should not breach SRA
codes by taking an inappropriate success fee.
After the event insurance – provides cover for the other sides’ costs and the client’s own
disbursements in the event of losing the case. Can have a ‘staged’ premium whereby
additional instalments are paid if the case continues beyond certain defined stages. If
solicitor fails to discuss possibility of insurance with client they may be negligent and in
breach of professional conduct.
Damages-based agreement: s58AA(3)(a) CLSA 1990. Damages-based Agreement Regulations
2013 (SI 2013/609). The recipient pays solicitor if they obtain a financial benefit in connected
with the matter in relation to which the service is provided and the amount of payment is
determined by reference to the amount of the financial benefit obtained. Solicitor fee is
agreed percentage of damages. DBA must not provide for a payment above an amount
which, including VAT, is equal to 50% of the sums ultimately recovered by the client.
Before the event insurance – such insurance is commonly purchased as part of household or
motor insurance policies.
3rd party funding – part of trade union or professional organisation: union or organisation
may be responsible for funding.
Public funding – solicitor must see from outset if client eligible. Legal aid (claims in
negligence for personal injury, death or damages to property excluded, also matters arising
from carrying on a business excluded). Where party eligible for public funding, they may be
required to make a contribution towards the costs. Publicly-funded client who recovers
money as a result of proceedings may have to repay some or all of legal costs to LAA (the
statutory charge).
Understand the requirements and effect of the Practice Direction – Pre-Action Conduct and
Protocols and the Professional Negligence Pre-action Protocol.
Appendix A(19) -p365.
The aims of the pre-action conduct and protocols are – (a) to initiate and increase pre-action
contact between the parties, (b) to encourage better and earlier exchange of information, (c)
to encourage better pre-action investigation by both sides, (d) to put parties in a position
where they may be able to settle cases fairly and early without litigation, (e) to enable
proceedings to run to the court’s timetable and efficiently, if litigation become necessary.
Practice Direction and Protocols = notification to D of claim as soon as possible, the form of
the letter before claim, disclosure of documents, the instruction of experts.
Paragraph 3(a)-(f): PD court expects parties to exchanged sufficient info to understand each
other’s position, make decisions about how to proceed, try to settle without proceedings,
consider ADR, support the efficient management of the proceedings and reduce the costs
resolving the dispute.
Paragraph 8 PD states that the parties should consider whether some form of ADR
procedure would enable them to settle their dispute without commencing proceedings.
Sanctions for non-compliance eg pay all or some of their opponents costs, to pay interest on
damages.
, Letter before claim – should contain all information required by the protocol. Para 6 – C
writing to D with details of claim, D responding within 14 days, parties disclosing key
documents.
The court must give permission before expert evidence can be relied upon (CPR 35.4(1)).
Para 4: Only reasonable and proportionate steps should be taken by the parties to identify,
narrow and resolve the legal, factual and/or expert issues.
Para 5: Costs incurred should be proportionate. Where disproportionate costs are incurred,
these will not be recoverable.
The court will expect parties to have complied with the Practice Direction and provide
evidence for doing so: para 11.
Non-compliance: Para 15: court may order proceedings be stayed and compel parties to
comply and/or apply sanctions. Para 16: costs.
Professional negligence pre-action protocol (appendix A(20)) = this protocol is designed to
apply when a claimant wishes to claim against a professional (NOT including construction
professionals or healthcare professionals) as a result of the professional’s negligence or
breach of contract or breach of fiduciary duty. Preliminary notice should be acknowledged
within 21 days. Professional has 3 months from date of letter of acknowledgment to
investigate and respond to letter of claim.
Breach of contract
Contract exists: oral/written. What contract was for, dates, details. Evidence have, evidence
to obtain.
Implied/express terms. Evidence/to obtain.
Breach: how where the terms breached. Examples, evidence, evidence to obtain.
Causing loss: how the breach caused loss, evidence have, evidence need.
Amount of loss and damage: what, costing [price]. Evidence.
Remoteness: the loss was within the reasonable contemplation of both parties at the time
the contract was made and that the loss was a probable consequence of the breach. Eg sale
of items must coincide with event.
Mitigation: client needs to prove they mitigated costs. Evidence.
If for negligence, use Appendix D(1), p.445. – duty of care, breach of duty, causation, damage and
loss, mitigation.
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