National bar leaders rally in defence of legal aid

first_imgMore than 50 bar leaders from around the world have issued a communiqué in support of access to justice, urging governments to fulfil their duty to provide adequate legal aid funding. They gathered today at the Law Society in London at the opening of the legal year, to voice concerns about cutbacks in funding legal services. The bar leaders agreed to renew their commitment to the fundamental principle that no one should be unable to enforce or defend a right through lack of funds enabling them to get representation. They called on governments to provide adequate funding to ensure access to justice for all, regardless of social or ethnic background, gender or the nature of their cause. The bar leaders agreed to encourage lawyers to continue to undertake fairly remunerated publicly funded work, as well as pro bono work, and committed themselves to work with governments and state agencies to explore ways to improve access to justice. Robert Heslett, Law Society president, and Desmond Browne QC, Bar Council chairman, jointly chaired the seminar, which provided a forum for discussing ways of maintaining and improving access to justice. In the year that marks the 60th anniversary of the Legal Aid and Assistance Act 1949, which established the legal aid system in England and Wales, the communiqué recognised the contribution it has made to the welfare of citizens across many jurisdictions. It emphasised that the mounting pressure on legal aid budgets must not be allowed to affect access to justice. Browne said: ‘It is tragic that, on the 60th anniversary of the establishment of the legal aid system in England and Wales, the legal aid budget is being squeezed with so little thought for the grave consequences for the socially vulnerable. ‘I am pleased to support the communiqué, which clearly elaborates the need for governments around the world to prioritise an aspect of welfare which is just as important as health or social insurance.’ Heslett added: ‘Access to justice, and effective legal aid systems, are hallmarks of societies governed by the rule of law. They are part of a mature society which values its citizens, and are just as important as healthcare and pension provisions. ‘The erosion of access to justice in England and Wales, to which this government is contributing, will have a huge impact on those who most need the support which specialist lawyers can supply. We must continue the process begun today to halt the slide toward a society where a two-tier legal system is the norm.’last_img read more

Read more →

What to watch in invoice finance

first_imgInvoice finance has grown enormously in the last decade after the banks had finally understood that they could not easily obtain a fixed charge over book debts. Rather than rely solely on a floating charge, banks realised that the safest way of financing the cashflow of a business is under a factoring or invoice discounting agreement. The increasing involvement of the banks has led to greater competition and reduced cost, which in turn has led to a shift towards discounting rather than factoring and a reduction in stigma attached to this form of asset-based finance. Due to the legal basis for this type of product, invoice financiers are particularly susceptible to fraud. Factors and discounters both rely on an assignment of the client’s debt, evidenced by an invoice sent to the factor or a notification sent to the discounter. To seek to reduce the risk to the financier’s interest in the proceeds of the debt, factoring and discounting agreements provide that all proceeds of debts paid by a debtor to the client are held on trust pending payment by the client to his factor, or payment by the client into a trust account maintained for the benefit of his discounter. Nonetheless, invoice financiers are frequently victims of various types of fraud perpetrated by their clients. These include the issue of ‘fresh air’ invoices to a factor that are not genuine and do not evidence true debts. The client may also dishonestly fail to give notice of assignment to the debtor so that he can demand payment and keep the proceeds for his own use. In the case of discounting, no notice of the assignment is given to the client, so discounters are also at particular risk from the client who diverts debtor payments for his own use rather than pay them into a trust account maintained for the discounter as agreed with the discounter. Once the financier discovers the fraud, it will have a number of avenues for recovery and it will require urgent action by its legal team. The financier will obviously seek to reduce its exposure by realising the bona fide book debts, but it will also enforce claims against a solvent client under the finance agreement, and possibly for fraud or breach of trust. The individuals implicated in the fraud will also be liable for deceit, conspiracy, and procuring breach of contract and, if they have received or dealt with trust monies, they may also be liable in knowing receipt and dishonest assistance. Of course recoveries will also be sought through any directors’ or corporate guarantees. However, the weak link in all of these causes of action is that they are personal and only give rise to a money judgment. It goes without saying that a judgment needs to be enforced, pending which the financier is at risk of the insolvency of the judgment debtor, whereupon he must prove as an unsecured creditor along with other creditors and subject to any secured creditors. So, although the lawyer will often be under huge pressure to ‘do something’, taking the easy option of chasing personal remedies will not necessarily be the best route for the client. The truth is that recoveries can often be enhanced by prompt and efficient action by a legal team who recognise the importance of the financier’s various proprietary claims. In the first place, and most obviously, of cardinal importance is the invoice financier’s proprietary interest in the debts. It is crucial that these are collected as quickly as possible before the quality of the ledger deteriorates over time. Secondly, assigned to the financier together with the debt are various ‘ancillary rights’, many of which are proprietary and which give rise to additional and relatively unexplored potential routes of recovery or sources of information. Of the greatest practical importance are those rights relating to information. All factoring agreements contain a provision that the factor will also own all books, computer data, records and documents on or by which the debt is recorded or evidenced. It is a great mistake not to seek these documents as soon as possible when initiating recovery claims in fraud, as they are often critical to identify and to enforce the right to payment of the debt. Sometimes the right to these documents even has to be enforced against administrators or liquidators who are reluctant to deliver up the relevant documents and records to the financier. Of course, even if a client is unable to deliver up such documents, his inability helps identify the extent to which the ledger is or may be fictitious. Thirdly, it should not be forgotten that the proceeds of any debts are held on trust by any recipient other than a bona fide purchaser for value without notice. Notice of the financier’s interest as beneficiary should therefore be given promptly to any person or bank it is considered may have received the traceable proceeds or product of the proceeds of the debts in the hands of anyone. Recipients may include co-conspirators, relatives or banks. Giving notice that the monies were diverted in breach of trust in favour of the financier will ensure that recipient will be liable for if he subsequently wrongfully misapplies the money. Again, all these beneficial rights should be protected by a proprietary injunction. It is because factors tend always to have proprietary remedies available that care should be taken to ensure that their full benefit is obtained. This is rare, because often the dialogue between the financier and his solicitor only involves a standard freezing order followed by a costly money judgment. Experience suggests that such orders are not always as effective as one might hope, particularly when the wrongdoer becomes insolvent. Accordingly, where possible, the relief claimed against the wrongdoer should include a proprietary as well as a freezing injunction, to protect not only the wrongdoer’s own assets but also those that can properly claimed to be owned by the financier. This reduces the risk of embarrassing and expensive failure to recover through the insolvency of the defendant.Simon Millsis a barrister who specialises in banking and finance law, insolvency and asset recovery at Five Paper chambers.last_img read more

Read more →

Law Society to launch legal challenge on legal aid

first_imgThe Law Society is set to launch a judicial review of the government’s move to drastically reduce the legal costs that defendants can reclaim if they are acquitted of a criminal offence. A regulation introduced by the Ministry of Justice at the end of October removed the power of the courts to refund ‘reasonable’ legal costs, and instead capped costs at legal aid rates. The Society said that this rate is ‘far short’ of the actual defence costs and will ‘hit hardest’ working taxpayers who are ineligible for legal aid. It said that ordinary people cleared of criminal charges might be forced to defend themselves or face financial ruin, and that miscarriages of justice could result. An early day motion opposing the government’s change has been tabled by Conservative shadow spokesman on legal affairs Henry Bellingham and has been signed by 27 MPs. Law Society president Robert Heslett said that the Society has lobbied on the issue and he has written to all members of the Justice Select Committee urging them to oppose the change. The Society’s action is being backed by the Police Federation of England and Wales. Chancery Lane has called on the government to reverse the change and said it will apply for judicial review on 15 December if no satisfactory response is received. Heslett said that the Society has been left with ‘little option’ but to take legal action. ‘Sometimes it is necessary to stand up against the tide which is eroding access to justice,’ he said. ‘Many people are not eligible for legal aid but are not on big incomes… Capping the repayment of costs in this way is not fair. ‘We consider that the government has used powers granted to it by parliament for an improper purpose and that is the basis of our challenge. Sadly, in our view, the government has been steadily eroding access to justice for years.’ Law Society chief executive Desmond Hudson said: ‘I am aware of a recent complex case where a client was cleared of grievous bodily harm charges. The lawyers successfully recovered most of the preparation costs from central funds. However, applying the new rates and scales which came into effect on 30 October, less than 17% in preparation costs would have been recovered, leaving the innocent client with around 80% of the costs.’ Stephen Smith, deputy general secretary of the Police Federation of England and Wales, said: ‘The result of the proposed change will put the federation under severe financial strain or place police officers in a position where the direct cost to them is prohibitive to fighting a charge that they categorically deny. To that end, the new regulations are unfair and a backward step to equal access to representation and justice.’ London firm Kingsley Napley has been instructed by the Law Society. If the administrative court grants the Society permission to proceed with judicial review, the matter will come for final hearing around April 2010. Prior to the government regulation, acquitted individuals paying privately for their representation could recover their costs of defence from central funds. A Ministry of Justice spokesperson says: ‘While the Government accepts that acquitted defendants should continue to have access to Central Funds, it is essential that we also target our resources effectively, secure value for money for the taxpayer and control areas of overspend in our budget. ‘We believe that the rates we pay for criminal cases under legal aid are both fair and sustainable and should be available on the open market. ‘We believe that lawyers are able to provide a reasonable service at legal aid rates, but if a defendant wants to have, for example, a senior partner’s undivided attention, he may be prepared to pay more for a “premium service”, but would have to understand that he would not recover all of these costs.’last_img read more

Read more →

Planet error

first_imgNow for the latest, and possibly last, instalment in what we can only term the Obiter dicta series of amusing dictation errors. Annest Jones, litigation solicitor at City Legal, tells us of some errors typed by secretaries which we think are all rather more engaging than what was originally intended. There is a ‘trolleyable’ rather than triable issue; the groovy-sounding ‘soul director’ of a company; and a ‘divorce partition’ (rather than petition), which Obiter reckons could catch on in many feuding households. Jones says her favourite – which will no doubt be familiar to many a reader – is the presentation of a ‘sworn Arthur David’. Solicitor Fiona Hendry recalls being given a very young typist early on in her career as a claimant personal injury lawyer. She was horrified when a letter of instruction sent to her medical expert asked for a ‘medical extermination of the client’ instead of an examination. No doubt the client is ever grateful that the error was spotted. Conveyancer Sue Morton at Everyman Legal recalls a set of estate agent’s particulars for a Cotswold stone cottage featuring an inglenook fireplace with a ‘breast sunner beam’, instead of a bressumer beam. Perhaps the typist was thinking of her next appointment at the solarium. Finally, Jonathan Eastwood relates that, while reading a draft affidavit, he was once surprised to see himself described as a ‘solicitor of the Supreme Court of Jupiter’. Out of this world. Click here for more dictation bloopers.last_img read more

Read more →

MPs’ expenses abuse case raises issues fundamental to the rule of law

first_imgThree former MPs and a peer will ask the Court of Appeal next week to rule that the Crown court has no jurisdiction to try them on charges of false accounting. Elliott Morley, David Chaytor, Jim Devine and Lord Hanningfield deny supplying false information in support of their expenses claims. In particular, they deny acting dishonestly. On June 11, Mr Justice Saunders decided that the conduct alleged against the four defendants was not covered by parliamentary privilege and that their trial could go ahead. That ruling was made during the course of a preparatory hearing, held under the Criminal Procedure and Investigations Act 1996. To avoid prejudicing any trial that may follow, only the barest details of such hearings may normally be published. In this case, however, the judge granted an application by news organisations for permission to report his ruling and comment on it. At the hearing, Andrew Caldecott QC represented every interested journalist in the country – except me. I represented myself and, of course, my readers. In the event, the judgment did not attract very much press interest. This may be because Saunders was thought by commentators to have come up with the right result. It may be because secret hearings are more interesting to reporters than public judgments. But the issues raised by the case are fundamental to the rule of law. They are also of great importance to other MPs and peers – not least because Hanningford asserts, as the judge put it, ‘that whatever he has done was wholly consistent with the usages and customs of the House of Lords as can be shown, he says, from the conduct of other peers’. Saunders began his judgment by explaining a fundamental point: parliamentary privilege is not something that an individual can claim – or waive. It is the privilege of parliament, not of a current or former member. If the defendants had not raised it, the judge would have done so himself. Even though the privilege belonged to parliament, he continued, it covered the activities of an MP or peer while carrying out parliamentary functions. The best known of these was freedom of speech, enshrined in article 9 of the Bill of Rights 1688. But this was only part of a much broader privilege to be found in common law. That derived from the doctrine of separation of powers and was referred to by the judge as parliament’s ‘exclusive jurisdiction’. ‘How far parliamentary privilege extends to matters ancillary to the main work of parliament is at the centre of [the defendants’] argument,’ Saunders said. If privilege were broadly construed, it might cover the submission of a claim form. But the judge favoured a narrow construction, including only the core activities of parliament. It had been accepted by the prosecution that the expenses scheme itself was covered by privilege. That meant, for example, that it could not be judicially reviewed by the High Court. Prosecutors also accepted that the administration of the scheme by officials was privileged. But that was as far as they – and the judge – were willing to go. ‘While I accept that the processing of the forms is part of the workings of parliament,’ Saunders said, ‘I see no reason to extend that privilege to cover the submission of the form.’ Claiming allowances was not part of a member’s duty. But the defendants had a second argument, based on the right to free speech in article 9. ‘The argument is that in order to exercise freedom of speech in parliament, it is necessary to be able to attend; and therefore expenses are ancillary to the exercise of freedom of speech and are included within the definition of proceedings in parliament within article 9.’ There is no doubt that freedom of speech extends beyond the actual words spoken by an MP or peer in the chamber: speaking notes would also be protected. But it seems a bit of a leap to say that, because you need a bus ticket as well as a draft before you can make a speech in parliament, your used bus tickets are as privileged as your old speaking notes. Ah – said Nigel Pleming QC, defending Chaytor – but what if parliament had required each MP to claim his expenses by making a formal speech, followed by a vote authorising payment? If that mechanism was privileged, Pleming argued, then submitting a claim form would also be covered. But Saunders wasn’t falling for that old forensic trick: ‘If the system for payment of expenses were the one that Mr Pleming invented, then a claim made in oral submissions to parliament might indeed be covered, but it isn’t the system.’ The judge could see ‘no logical, practical or moral justification for a claim for expenses being covered by privilege’; he could see see no legal justification for it either. Saunders delivered a pretty robust sort of judgment, avoiding lengthy citations and omitting cases decided any earlier than the 20th century. ‘This judgment is not intended to be a legal dissertation,’ he said modestly. We can expect something rather more sophisticated from the appeal court. But the real opportunity to recast the common law on parliamentary privilege for the first time in centuries will come when the case reaches the Supreme Court, as I suspect it will. Indeed this is the one case that justifies the creation of that court. If it had come before the House of Lords, we would have seen the limits of parliamentary privilege set by those who were in a position to enjoy them.last_img read more

Read more →

Society launches campaign to fight legal aid cuts

first_imgThe Law Society has called on law firms to lobby MPs over the impact of the government’s proposed legal aid overhaul, in the first stage in its campaign to fight the cuts. Chancery Lane has warned that the plans outlined in last week’s consultation to reduce the funding and scope of legal aid will have a devastating impact on access to justice, leaving only the ‘poorest of the poor’ eligible for public funding. The Society has published a briefing pack to help firms educate local MPs and media on the effect of changes that would see nearly 550,000 cases denied eligibility and 10% across-the-board cuts to lawyers’ fees. As well as arranging meetings with constituency MPs, the pack advises practitioners to seek the support of their local authorities and councillors. At a national level, the Law Society will be running an active campaign to lobby parliament and the government to reconsider many of the proposals set out in the Green Papers. Richard Miller, the Law Society’s head of legal aid policy, said: ‘The only way to get an effective national lobbying campaign is to have the grass roots work going on as well. ‘Solicitors lobbying their MPs and local media is an essential first step in seeking to persuade the government to take a different path,’ he added. Visit the Law Society website for the briefing pack and further information.last_img read more

Read more →

Government seeks views on equal pay audit plans

first_imgThe Department for Business, Innovation and Skills (BIS) is seeking employment lawyers’ views on proposals that would see employers who fail to comply with equal pay laws required to conduct a pay audit of their company. The BIS consultation, published this week, noted that the gender pay gap still exists despite the equal pay legal framework having been in force since 1975, and said there is ‘continuing evidence of non-compliance’. It said government wanted to address this through improving flexibility at work, encouraging greater transparency and ensuring effective enforcement of equal pay law. As part of this enforcement, the government seeks lawyers’ views on making employers carry out a pay audit. It says that by focusing on employers who have failed to comply with the law, it will ‘not add burdens for good employers who have taken steps to ensure they do not discriminate against women’. The BIS consultation also seeks views on parental leave suited to the modern workplace, employers and working couples. It proposes maintaining the current 18 weeks’ maternity leave, to be taken in one continuous block around the birth of the child, but dividing the remaining 34 weeks into leave available to either parent. The consultation also proposes extending the right to request flexible working to all employees, not just parents or carers. It seeks lawyers’ views on compliance with various European rulings around absence, sickness, and maternal and parental leave. The consultation closes on 8 August.last_img read more

Read more →

Legal expenses insurers win a point

first_imgIt is one up to the legal expenses insurers this week in the ongoing ding-dong over the extent of the insured person’s right to choose a lawyer. The European Court of Justice delivered its judgment in the Stark case, which the insurers won. The International Association of Legal Protection Insurance (RIAD) welcomed the decision, which they said ‘clearly shows that the insured’s interests, consumer protection and cost management measures of insurers can be attuned’. I wrote about this case when it was first referred to the Court last year. The facts are that Mr Stark, who had legal expenses insurance cover, lived in Landeck, Austria, some 600km from Vienna. On 24 March 2006, he, together with four others, brought an action before the Labour and Social Security Court in Vienna against his former employer. In order to ensure their representation before that court, Mr Stark and the other applicants freely instructed – not unreasonably – a lawyer with chambers in Landeck. His insurance policy had a ‘local lawyer clause’. Such clauses allow insurers to restrict the insured person’s freedom of choice to lawyers that are based in the district of the competent court in first instance – in this case, Vienna. So, Mr Stark should have gone to a lawyer 600km from his home, to save on reimbursement costs. That is because in Austrian civil procedure the court fixes the amount of the costs of legal representation on the basis of the federal law on lawyers’ tariffs. That law provides for higher tariffs if lawyers represent their clients outside the place where they are based. So Mr Stark’s lawyer from Landeck could charge a higher fee – in fact, the double flat rate rather than the single flat rate – to represent his client in Vienna, and the legal expenses insurer (it was D.A.S.) did not want to pay. They said that they would be limiting their cover to the costs normally invoiced by a lawyer established in Vienna. It turned out that the difference in fee was an amount of €3,000 – a not gigantic sum of money in absolute terms, but maybe it was so to Mr Stark. As a result, the Innsbruck court of first instance questioned whether ‘local lawyer clauses’ in legal expenses insurance policies are permitted. They come about through article 158k of the Austrian Code of Insurance Contracts which, freely translated, states: ‘2) The insurance contract may provide for a clause according to which the insured shall solely choose persons authorised to represent clients on a professional basis that are based in the city of the court or administrative body that is competent for the proceeding in first instance.’ The point arises for decision because article 4 of the directive on legal expenses insurance (87/344) states that ‘any contract of legal expenses insurance shall expressly recognise that: (a) where recourse is had to a lawyer or other person appropriately qualified according to national law in order to defend, represent or serve the interests of the insured person in any inquiry or proceedings, that insured person shall be free to choose such lawyer or other person’. The European Court of Justice was therefore asked whether the Austrian law is in compliance with article 4 of the directive. The Court held that it was in compliance. In particular, they said: ‘… freedom of choice, within the terms of Article 4(1) of Directive 87/344, does not mean that Member States are obliged to require insurers, in all circumstances, to cover in full the costs incurred in connection with the defence of an insured person, irrespective of the place where the person professionally entitled to represent that person is established in relation to the court or administrative authority with jurisdiction to deal with a dispute, on condition that that freedom is not rendered meaningless. ‘That would be the case if the restriction imposed on the payment of those costs were to render de facto impossible a reasonable choice of representative by the insured person. ‘In any event, it is for the national courts, if an action is brought before them in this regard, to determine whether or not there is any such restriction’. They went on to say: ‘Mr Stark was able to choose his lawyer without opposition on the part of his insurer. Furthermore, Mr Stark would be deemed to bear only the costs relating to the distance between the chambers of his lawyer and the place of the court having jurisdiction, which, subject to the assessment to be carried out in this respect by the referring court, does not appear, as a general rule, to be such as to hinder the freedom to choose his lawyer.’ In other words, provided the shortfall does not hinder the freedom to choose a lawyer – is €3,000 a hindrance? – legal expense insurers can impose such conditions. I predict the ding-dong will continue.last_img read more

Read more →

Magic touch

first_imgA Harry Potter book autographed by Emma Watson (who played Hermione Granger) tops a glittering list of prizes in the London Legal Support Trust’s Halloween Auction. Watson has also thrown in an autographed DVD set and a signed photo. Other prizes are a bottle of whisky signed by the attorney general and the prime minister and – top of Obiter’s bid-list – a tour of the Royal Courts of Justice in the company of Lord Justice Rix, followed by lunch. Bidding closes at midnight on 31 October at the trust Halloween Ball (some tickets still available). Bids by email must be received by noon that day. All bids remain confidential. To bid for any item email bob@llst.org.uk or natalia@llst.org.uk.last_img read more

Read more →

LSC wins appeal in landmark case on legal aid payments

first_imgThe appeal court has overturned a High Court judgment that delays by the Legal Services Commission in seeking to recover payments on account amounted to an abuse of process. The LSC had sought to recoup an alleged overpayment of £109,064 made to barrister Aisha Henthorn relating to cases undertaken between 1987 and 2000 under a civil legal aid certificate. There was no allegation or suggestion of impropriety by Henthorn, who is now in her seventies and voluntarily disbarred herself in 2001 due to ill health. On appeal, the LSC reduced its claims to £80,470 in respect of cases carried out between June 1992 and September 1998. In a test case on limitation, the principal issue concerned when time started to run under the Limitation Act 1980 in relation to the LSC’s claims, and whether the agency had left it too late to pursue them. In March, the High Court held that the time runs from the date that the work is actually completed, which meant that the LSC’s claims were time-barred because they related to work completed more than six years before the proceedings were commenced. Criticising the ‘culture of delay’ at the LSC, Judge Thornton ruled that the ‘stale nature’ of the claims had ‘severely disadvantaged’ Henthorn’s ability to defend them – some of which related to work done over 20 years ago – and amounted to an abuse of process. Following an appeal by the LSC, in which the Law Society and Bar Council intervened, the Court of Appeal today overturned that ruling. Giving judgment, Master of the Rolls Lord Neuberger, sitting with Lord Justice Lewison and Sir Stephen Sedley, held that time starts running not from the date that the case is completed, but once the costs have been assessed by a costs judge. It was argued on behalf of Henthorn, supported by the Law Society and Bar Council, that this could leave solicitors and barristers not knowing how much they were entitled to for a very long time; and that lawyers would, therefore, have to retain their papers and other records for an indefinite period. However, Neuberger saw no problem with this, given that it was the solicitor’s duty to ensure that a costs assessment was carried out. Neuberger also overturned the previous ruling that the LSC’s claims amounted to an abuse of process, because the passage of time meant Henthorn could not properly defend the claims as she had wound up her practice and disposed of her papers. He said: ‘In my view there is nothing in this point. Where a claim is based on a statutory right subject to a limitation period, which has not yet expired, it seems to me that it would require wholly exceptional facts before an abuse argument based on delay could have any chance of success.’ An LSC spokesman said: ‘The LSC is pleased the Court of Appeal’s judgment in LSC v Aisha Henthorn has clarified the limitation period for recovering unrecouped payments on account, recognising our providers’ responsibilities for assessment of costs.’ He added: ‘The issue of claims where there has been no assessment remains outstanding, but we urge all providers to ensure final claims for costs are made promptly and in accordance with our contract.’ Law Society chief executive Desmond Hudson said: ‘We are disappointed with the judgment. We hope Mrs Henthorn appeals and if she does we would seek to intervene again.’ Hudson said the outcome does not affect the separate maladministration complaint made by the Society in 2008 to the Parliamentary Ombudsman in relation to late claims made by the LSC for the recoupment of payments on account. In light of the Henthorn judgment, the Society will be issuing new guidance to solicitors on record-keeping in legal aid cases. Nicholas Bacon QC, who led for the Bar Council on this issue, commented: ‘Whilst the judgment is disappointing, it has nevertheless provided some much needed legal clarity as to when time starts to run with regard to the Limitation Act in relation to civil legal aid payment on account cases. It also offers the potential for remedies that a barrister may have against a solicitor who fails to meet their obligations.’ Read the the full judgment.last_img read more

Read more →