Chapter 03: Early Action PDF

Early Action 41 CHAPTER 3 Early Action 3.1 Writing to the client 42 3.2 Interviewing witnesses 42 3.3 Preserving documents...

Early Action 41 CHAPTER 3 Early Action 3.1 Writing to the client 42 3.2 Interviewing witnesses 42 3.3 Preserving documents 44 3.4 Obtaining expert evidence 45 3.5 Site visits 47 3.6 Instructing counsel 47 3.7 Pre-action protocols 48 3.8 Pre-action correspondence 50 3.9 Pre-action disclosure 54 3.10 Settlement 54 3.11 Researching the law 56 3.12 Cost–benefit analysis 56 3.13 Summary of pre-action steps 57 3.14 Summary of Practice Direction on Pre-Action Conduct and Protocols 58 LEARNING OUTCOMES After reading this chapter you will have learned: how to take a proof of evidence from a witness the role of experts at this stage when it may be appropriate to instruct a barrister how to comply with pre-action protocols what to include in a letter before claim how to conduct without prejudice negotiations why it may be necessary to research the law. As we saw at 1.4 and 2.5, case analysis is the key to representing a client effectively. So when you take the initial statement, otherwise known as a proof of evidence, from the client (or indeed any other witness), you should make a careful note of the main points and ask questions to obtain further information in order to develop that analysis. The key to obtaining a full and accurate set of instructions from the client is to probe but not prompt. Bear in mind that the statement should be in the client’s own words. Let the client tell their story, and try to ensure that it develops logically and chronologically. Some clients will fail to do this, and you should make a note of any gaps and fill these in by questioning. If any part is ambiguous, get it clarified. You must end up with a clear picture of what the client’s case is all about. You can then advise as to its strengths and weaknesses, and consider what further evidence needs to be obtained. You will not be in a position to negotiate effectively with the other side, or present your client’s case in an ADR process or to a court, if you do not understand that case properly. After the first interview with a potential claimant (or defendant), there are a number of practical preliminary steps the solicitor can take to advance the client’s claim (or defence). The main requirements are to confirm the client’s instructions and your advice in writing, and 42 Civil Litigation to obtain relevant evidence. The solicitor will also have to bear in mind at all times the pre- action protocols under the CPR 1998. Where no specific approved protocol applies to the claim, the solicitor must still comply with the ‘spirit’ of the protocols and the Practice Direction on Pre-action Conduct and Protocols which provides general guidance on the conduct of the case at this stage: see further 3.7 below. 3.1 WRITING TO THE CLIENT You should set out your advice to the client in writing as soon as possible after the interview. By now you should have identified the cause of action, undertaken any necessary legal research and assessed the available evidence. If a proof of evidence has been taken from the client, this should be sent to the client for approval and signature. If there are any ‘gaps’ in the case – factual issues in respect of which there is no evidence or weak evidence – you must explain this to the client and outline the options. The initial letter of advice to the client should include the following: (a) clearly identify the client’s objectives in relation to the work to be done for the client; (b) give the client a clear explanation of the issues involved and the options available to the client; and (c) list the steps that are to be taken next. Often, details of funding and costs are included in the initial letter of advice or a separate letter. The solicitor should give the client the best information possible about the likely overall cost of the matter. This should include: (a) advising the client of the basis and terms of the firm’s charges; (b) advising the client of likely payments to third parties (eg court fees, barristers’ fees, experts’ fees); (c) setting out how the client has agreed to pay; and (d) advising the client of their potential liability for another party’s costs. Further, a solicitor should have discussed with the client whether the potential outcomes of any legal case would justify the expense or risk involved, including, if relevant, the risk of having to pay an opponent’s costs. It is best practice to record this advice in writing and subsequently as the case develops. Lastly, the letter should explain the next steps that are to be taken by the solicitor, and remind the client of any matters they have agreed to undertake. 3.2 INTERVIEWING WITNESSES 3.2.1 Proof of evidence The solicitor should arrange to take a proof of evidence from any witnesses as soon as possible, while matters are still fresh in their minds. There is no ‘property’ in a witness, and the solicitor may request an interview with anyone who may have information about the case. However, there is nothing that can be done if a witness absolutely refuses to give a statement. A witness may do this, for example, because they do not wish to say anything against their employer, or simply because they do not wish to get involved. 3.2.2 Professional conduct It is permissible for a solicitor to interview and take a proof of evidence (statement) from a prospective witness where that witness has already been interviewed by another party. However, there is a risk that the solicitor will be exposed to the allegation that they have improperly tampered with evidence. This can be overcome by offering to conduct the interview in the presence of a representative of the other party.  Early Action 43 There is no objection to a client, through their solicitors, paying reasonable expenses to a witness and reasonable compensation for loss of time attending court. 3.2.3 The reluctant witness At the eventual trial of the case, a person can be compelled to attend as a witness, but the solicitor will be reluctant to advise their client to call someone as a witness if they have not obtained a full statement from the witness beforehand, because, of course, the solicitor will have no guarantee that the witness is going to say anything relevant or favourable in the witness-box. Therefore, it is most important to persuade potential witnesses to give a statement if at all possible. If the witness refuses, the solicitor could use a witness summary (see 12.5). 3.2.4 Taking a proof of evidence The solicitor will normally write to the witnesses initially and arrange a convenient time for an interview to take place. This may be at the solicitor’s office, or the solicitor may have to go out to the witness’s home or place of work. 3.2.4.1 Personal details Start an interview by taking down the basics, ie the witness’s full name, address, date of birth, telephone contact numbers, e-mail address, etc. If you are not interviewing the client, make a note of any relationship the witness has with the client, eg relative or employee. 3.2.4.2 Open and closed questions Obtaining facts from a witness can be a difficult task. Let the witness tell their own story by using open questions. This should give you a fair idea of what the witness can say. Then fill in any gaps in the detail by using closed questions. Clarify points that are unclear and ensure that you have the entire story. Pose probing questions but do not prompt a witness. Do not put words in the witness’s mouth. Moreover, remember that it is the witness’s words that you want to record and have in the proof of evidence, not your own version. Make suitable notes, or record the interview with the witness’s consent. 3.2.4.3 Documents Make sure that you obtain any relevant documents. You may have to think laterally about what relevant documents a witness can provide. Probe, as the witness may not volunteer a document (eg, ask if there was any written contract; pre-contract and/or post-contract correspondence; letters of complaint; in-house reports and memos; faxes; e-mails; documents held on a computer or laptop; documents in storage, etc). 3.2.4.4 ‘Picture painting’ Think of an interview as a ‘picture painting’ task. Ask yourself during the interview: do you understand what is being portrayed; can you picture in your mind what the witness is describing? It is best to take down the details in chronological order. Is the story clear? If it is not comprehensible to you then how are you going to communicate it effectively to the other side, or to an arbitrator or an ADR representative, or ultimately to a judge at trial? A site visit may also help, where appropriate. You can then observe the scene of any incident and will not have to imagine it. Equally, photographs and/or site plans may assist in some cases. 3.2.4.5 Structure So that you can adapt a proof of evidence later for any court proceedings, it is best set out in numbered paragraphs. Each paragraph should deal with only one topic. 3.2.4.6 Credibility ‘Picture painting’ and the credibility of a witness are intrinsically linked. If a witness has already made a written statement, perhaps to the factory manager after an accident, make 44 Civil Litigation sure that you look out for any inconsistencies when you now interview that person. For example, in their statement to the manager the witness said that the injured person had ‘put their hand on top of the machine’. Now, perhaps months later, the witness tells you that the injured person’s hand was ‘inside the machine’. If you fail to sort out this inconsistency, no doubt your opponent will use it to discredit the witness at trial. Pursue any other lines of enquiry opened up by the interview. So if a witness tells you, ‘I was advised by Mr Quinn who inspected my vehicle immediately after the incident that...’, do not rely on this witness repeating what Mr Quinn said. You should take a proof of evidence from Mr Quinn. When interviewing witnesses, the solicitor should be wary of people who try too hard to be helpful, and they should try to ensure that the witness’s story will stand up to cross- examination. It is better that any weakness in the case is identified at this stage rather than later on when a great deal of time and money has been spent on the case. The proof of evidence should be as comprehensive as possible, including background information which may not be directly relevant to the claim but which may assist in understanding the case. A formal statement (known as a witness statement) containing only the evidence that the witness will give at the hearing will be prepared at a later stage, and this later statement is the one that will be served on the other parties before the hearing (see 12.2). At this stage, therefore, there is no need to worry unduly if the statement contains matters which will not be admissible in evidence at the trial, although, before proceedings are commenced, the solicitor must ensure that they have, or will have, enough admissible evidence to prove their client’s case at trial. At the end of an interview, summarise for the witness what you have grasped as the key parts of their story to ensure that there are no fundamental misunderstandings. Get the proof of evidence typed up while the interview is fresh in your mind. Further, send it out to the witness for correction and approval as quickly as possible. PRACTICAL POINTS TO CONSIDER WHEN TAKING A PROOF OF EVIDENCE 1. How are you going to record the interview? 2. Start with the basics: full name, address, contact details. 3. Try to get the witness to tell the story in chronological order. 4. Use open questions to let the witness tell the story in their own words. 5. Use closed questions to fill any gaps in the facts. 6. Do not put words in the witness’s mouth. 7. Collect any relevant documents from the witness. 8. At the end, summarise for the witness what you understand them to have said. 3.3 PRESERVING DOCUMENTS The solicitor should ask the client to bring all relevant documents to them as soon as possible. A solicitor is under an obligation, both as a matter of professional conduct and under the CPR 1998, to ensure that the client understands the rules relating to disclosure of documents (see Chapter 11). A client who has little or no experience of the civil litigation process may be unaware, for example, that they are under an obligation during the course of the proceedings to disclose documents to the other side, even if those documents harm the client’s case. Furthermore, if the solicitor reads the documents at an early stage, this should ensure that there is nothing to take them by surprise later on in the proceedings which may throw a different light on the case. In a case involving a contractual dispute, it is obviously imperative that the solicitor should see the contract as soon as possible to be able to advise the client properly. For example, the contract may include a provision imposing a limitation period for claims arising under the contract which may be considerably shorter than the statutory limitation period (see 2.5.2.5).  Early Action 45 The client should also be made aware that the term ‘documents’ includes any method of recording information, such as digital cameras, mobile telephones, memory sticks, laptops, desktop computers, back-up tapes and files, and is not merely limited to written documents. It is advisable to explain the disclosure obligations to the client from the outset and to confirm this in writing. In this initial letter you should explain that the duty extends to documents that the client might previously have had in their physical possession, even if they have now been, say, lost, destroyed or given to someone else. A commercial client should be advised to suspend their document deletion or destruction processes, inform relevant employees and former employees to preserve documents that the client does not have in its possession and notify any third parties who hold documents on their behalf not to delete or destroy documents that may be relevant to an issue in the dispute. 3.4 OBTAINING EXPERT EVIDENCE 3.4.1 Instructing an expert There are numerous instances when a solicitor may need to obtain expert evidence to advance a client’s claim. For example, consulting engineers are regularly requested to report on accidents at the workplace and on road traffic accidents. Similarly, if expert evidence is required on building work, it is likely that the solicitors’ firm already has contacts with suitable architects and surveyors. If counsel is involved at an early stage, they may be able to recommend suitable experts for the case. Alternatively, a suitable expert may be found through The Law Society (which maintains a register of experts), or from the Academy of Expert Witnesses or other similar organisations. Specialist expertise is the vital quality required of an expert witness, but it is not the only quality. The ability to present a convincing report which can be easily understood, and to perform well as a witness, particularly under cross-examination, is equally important. There is no fixed test to qualify as an expert witness – anyone who has special expertise in an area can be considered as an expert. Expertise does not depend on qualifications alone, although frequently the expert will be highly qualified in their field. Expertise may have been acquired through years of practical experience. For example, an experienced carpenter with no formal qualifications could nevertheless be an expert on the proper seasoning of wood, and so assist in deciding whether, say, an oak dining table was of satisfactory quality. The usual method of instructing an expert is by letter, the content of which will vary depending on what is required of the expert. It will be necessary to provide an expert with all the relevant documents and statements from witnesses. It may also be necessary to arrange for an inspection of any relevant machinery or site. The solicitor may need to take urgent steps to ensure that material to be inspected is preserved, or, where this is not possible, to obtain the best alternative evidence, such as photographs or a video. It is not only when acting for the prospective claimant that the solicitor will be obtaining expert evidence. The potential defendant is also entitled to have expert evidence available. Proper facilities for inspection and observation should be granted for this. 3.4.2 Payment of expert’s fees Where the client is to pay the expert’s fees (eg, if they are not covered by insurance or public funding), the solicitor should obtain an estimate of the likely fees and then clear this with the client. In such cases, the solicitor will prefer to obtain money on account to cover the expert’s fees. Where this is not done, the solicitor takes a risk, since they are responsible to the expert for payment of their charges. Can an expert be instructed on a conditional or contingency fee basis? The answer should be no – see para 88 of the Guidance for the Instruction of Experts in Civil Claims (Appendix 46 Civil Litigation A(21)). The authors take the view that payment by a conditional or contingency fee is incompatible with an expert’s duty of independence and impartiality. It should be noted that the use of expert evidence during proceedings requires permission from the court (see 3.4.5). Therefore, the client should be told that whilst the report is necessary to evaluate the strength of the claim, the fee paid to the expert may not be recoverable from the opponent even if the client is successful in litigation. 3.4.3 Experts’ reports When the expert’s report is received, the solicitor should check it carefully. Mistakes can be made, even by an expert. The solicitor should send a copy to the client, so that they may also check it and inform the solicitor of any errors. Whoever the expert is, never be afraid to return to them for clarification of the report. If the solicitor does not understand it, there is a good chance that no one else will, and that will defeat the object of obtaining the report. 3.4.4 Opinion A significant advantage which the expert has over the ordinary witness (see 12.8) is that the expert can give opinion evidence. For example, a surveyor may form the view that an earlier surveyor had been negligent in not observing certain defects in the structure of a building. This is a matter of opinion, but nevertheless the expert is permitted to state it. Section 3(1) of the Civil Evidence Act 1972 provides that where a person is called as a witness in any civil proceedings, his opinion on any relevant matter on which he is qualified to give expert evidence shall be admissible in evidence. CASE STUDY Would an expert help in this case? Mr and Mrs Simpson allege that Mr Templar was negligent, as he was driving too fast and so lost control of his vehicle. But they are assuming that. Are there other explanations? Tyre tracks on the drive, etc may be useful evidence, and so photographs should be taken to preserve that evidence. Consideration should be given to appointing an accident reconstruction expert, who can examine the scene and give his opinion as to the speed at which and path along which Mr Templar’s car travelled, and what caused him to crash into Mr and Mrs Simpson’s house. 3.4.5 Restrictions on the use of expert evidence The CPR 1998 have introduced very significant restrictions on the use of expert evidence. Although a party to proceedings is free to obtain as much expert evidence as they wish, the extent to which such evidence may be used in court is strictly controlled. By r 35.1 of the CPR 1998, expert evidence is restricted to that which is reasonably required to resolve the proceedings. The court can therefore limit the number of expert witnesses who can give evidence, or order that a single joint expert be appointed, or restrict expert evidence to a written report rather than oral evidence in court. A solicitor advising a client on whether to obtain expert evidence should always bear in mind that the costs of doing so will usually be recoverable from the opponent (assuming the case is won) only if the court gives permission for the expert evidence to be used. As a general rule, if the area of expertise is settled, such that any two or more experts are likely to give the same opinion, a single joint expert is appropriate. Where a range of views is likely then normally it serves the overriding objective for the court to allow each party to have its own expert so that the court has such a range of views. The use of expert evidence in proceedings is considered further in Chapter 12.  Early Action 47 3.5 SITE VISITS Site visits may be needed for the purpose of taking photographs or making plans. Plans and photographs are unlikely to be disputed if they are accurate; but in the event of a dispute, the person who prepared the plan or took the photographs may have to give evidence, so they should be prepared by someone other than the solicitor who will be acting as an advocate at the hearing. If a formal plan is required (eg, in a boundary dispute) then this should normally be prepared by a surveyor. In some cases, a visit to the site of the incident, such as in a factory accident case, may be useful. On other occasions, it might help to visit the client’s place of business to gain a better understanding of the nature of that business. If the inspection will be expensive, the solicitor should obtain prior authorisation from the client. 3.6 INSTRUCTING COUNSEL 3.6.1 Use of counsel It is not necessary to instruct a barrister (also known as counsel) in every case. As a highly trained lawyer, the solicitor should have confidence in their own knowledge and ability. The solicitor will be capable of forming an assessment of both the chance of success and the level of damages. Too frequent use of counsel may result in the costs being disallowed on an assessment of costs at the end of a case. Assessment of costs is discussed in more detail in Chapter 14. Nevertheless, judicious use of counsel is sensible. If the issues are difficult, it is wise to instruct counsel to advise on liability. Similarly, counsel’s opinion on quantum may be needed at an early stage if the case is not straightforward. For example, if it appears that some element of the client’s claim might arguably be too remote, it might be appropriate to check with counsel. Even in these cases, however, the solicitor should have formulated their own view, and counsel should be assisting with this. The solicitor should not be abrogating responsibility. 3.6.2 Method Instructing counsel requires the preparation of a formal document (called ‘Instructions to counsel’). It will bear the heading of the claim (or proposed claim) and should contain a list of the enclosures being forwarded to counsel. The enclosures will obviously vary with the case but will typically include copies of the client’s statement, any other proofs of evidence, any existing statements of case, any experts’ reports, and any relevant correspondence. It is not necessary to send counsel the whole file; some judgement should be exercised in deciding which papers counsel needs to have available. The body of the instructions to counsel will identify the client and set out briefly both sides of the case. Counsel can refer to the enclosures for detail, but the instructions should contain sufficient information to enable the barrister to identify the major issues. The solicitor should indicate their own view of the case and draw counsel’s attention to those areas on which particular advice is required. The instructions will end with a formal request to counsel to carry out the required task. The instructions must carry a back sheet endorsed with the title of the claim, what the instructions are (eg, ‘Instructions to counsel to advise on quantum’), counsel’s name and chambers, and the solicitor’s firm’s name, address and reference. Sometimes, counsel may not be able to proceed without a conference (the name given to a meeting with counsel) with the solicitor and the client. This could occur, for example, because the facts of the case are too detailed and complicated to be able to cover all the aspects in the 48 Civil Litigation instructions. Alternatively, it may be that counsel’s advice will, to some extent, depend on their assessment of the client as a potential witness, and this will have to be done face to face. If a conference is needed, counsel is still instructed in the usual way, but arrangements are then made with counsel’s clerk for the solicitor and the client to visit counsel in chambers (the name given to a barrister’s office) to discuss the case. Counsel will not normally expect to provide a written opinion after the conference, so the solicitor must take comprehensive notes at the conference. If a written opinion is required, this should be made clear in the instructions, but the costs of both will not be recoverable from the other side unless the court thinks it was reasonable to seek a written opinion. Traditionally, instructions to counsel are prepared using the third person (‘Counsel is instructed to …’, and ‘Instructing Solicitors seek Counsel’s advice on …’). Many firms now adopt a more modern approach, setting out the instructions as if writing a letter. Each firm can decide which approach it prefers. Nevertheless, the instructions should still be in a formal document, accompanied by a covering letter to counsel’s clerk. 3.6.3 Professional conduct How far can a solicitor rely on counsel’s advice? In Locke v Camberwell Health Authority 2 Med LR 249, the Court of Appeal set out the following principles: (a) In general a solicitor is entitled to rely upon the advice of counsel properly instructed. (b) For a solicitor, without special experience in a particular field, to rely on counsel’s advice is to make normal and proper use of the Bar. (c) However, the solicitor must not do so blindly but must exercise their independent judgement. If they think that counsel’s advice is obviously or glaringly wrong, they are under a duty to reject it. Where a solicitor relies on the advice of counsel and subsequently both are sued by the client in negligence, the solicitor is likely to seek an indemnity or a contribution from counsel (see, for example, Percy v Merriman White EWHC 22 (Ch) and 8.1). 3.7 PRE-ACTION PROTOCOLS Pre-action protocols are an important aspect of the CPR 1998. There are approved protocols for debt claims, personal injury, clinical disputes, construction and engineering, judicial review, media and communications, disease and illness, package travel claims, possession claims by social landlords, possession claims for mortgage or house purchase plan arrears, housing condition cases (England); housing disrepair cases (Wales), low value personal injury claims in road traffic accidents, personal injury claims below the small claims limit in road traffic accidents, dilapidations (commercial property), low value employers’ and public liability personal injury claims, and professional negligence claims. The details of these protocols, save the last, are outside the scope of this book. It is vital to check to see whether any approved protocol applies to a client’s case. Note, however, that there is also a Practice Direction on Pre-action Conduct and Protocols, which contains general guidance that should be followed in all cases unless any part of an approved protocol otherwise applies. A copy of the Practice Direction on Pre-action Conduct and Protocols (‘the Practice Direction’) is set out at Appendix A(19), and a copy of the Professional Negligence Protocol may be found at Appendix A(20). 3.7.1 Aims The aims of the Practice Direction and approved pre-action protocols are: (a) to initiate and increase pre-action contact between the parties; (b) to encourage better and earlier exchange of information;  Early Action 49 (c) to encourage better pre-action investigation by both sides; (d) to put the 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 does become necessary. 3.7.2 Steps The Practice Direction and protocols deal with matters such as notification to the defendant of a possible claim as soon as possible, the form of the letter before claim, disclosure of documents and the instruction of experts, where relevant. Paragraph 3 of the Practice Direction makes it clear that, before commencing proceedings, the court will expect the parties to have exchanged sufficient information in order to: (a) understand each other’s position; (b) make decisions about how to proceed; (c) try to settle the issues without proceedings; (d) consider a form of Alternative Dispute Resolution (ADR) to assist with settlement; (e) support the efficient management of those proceedings; and (f ) reduce the costs of resolving the dispute. Compliance with the Practice Direction or a relevant protocol should help the parties involved make an informed decision on the merits of the case and lead to a greater number of settlements without the need for court proceedings. In particular, the parties must give serious consideration to ADR. For example, para 8 of the Practice Direction states that the parties should consider whether some form of ADR procedure would enable them to settle their dispute without commencing proceedings. If proceedings occur, both the claimant and defendant will normally be required by the court to provide evidence that alternative means of resolving the dispute were considered. The courts take the view that litigation should be a last resort, and that claims should not be issued prematurely when a settlement is still actively being explored. Parties are warned that if this provision is not followed then the court must have regard to such conduct when determining costs (see 14.3.2.4). 3.7.3 Sanctions for non-compliance If proceedings are issued, the court will expect the parties to have complied with both the Practice Direction and the substance of any approved protocol that applies to their dispute. Where non-compliance has led to proceedings that might otherwise not have been commenced, or has led to unnecessary costs being incurred, the court may impose sanctions. These can include an order: (a) that the party at fault pay some or all of their opponent’s costs (perhaps on the penalty, indemnity basis – see 14.3.3); (b) depriving a claimant who is at fault of some or all of the interest they may subsequently be awarded on any damages they recover; or (c) requiring a defendant who is at fault to pay interest on some or all of any damages that are subsequently awarded to the claimant at a rate of up to 10% pa above base rate. In exercising these powers, the court should aim to place the innocent party in no worse a position than they would have been in had the Practice Direction or approved protocol been complied with (see Straker v Tudor Rose (a firm) EWCA Civ 368). As to sanctions, see 9.3. On the other side of the coin, if proceedings occur, the party awarded their costs should usually be able to recover their pre-action costs (see 14.3.2), including those costs reasonably incurred in complying with the Practice Direction or approved pre-action protocol (see Callery v Gray EWCA Civ 1246). 50 Civil Litigation In Cundall Johnson and Partners LLP v Whipps Cross University Hospital NHS Trust EWHC 2178, the court held that the claimant’s failure to comply with the Pre-action Protocol for Construction and Engineering meant that the proceedings should be stayed in order to facilitate such compliance. Why? Because there was a real possibility of settlement if the parties went through the Protocol processes. It was therefore in their best interests. It might well save both parties from incurring unnecessary litigation costs and lead to an earlier resolution of the dispute between the parties. Also, it was unfair on the defendant to proceed immediately with litigation as it had not yet received a proper summary of the claim. 3.8 PRE-ACTION CORRESPONDENCE 3.8.1 The letter before claim When the solicitor is satisfied that the client has a valid claim, they should advise the client and obtain instructions to send a letter to the prospective defendant setting out full details of the claim. This is called a ‘letter before claim’. If the claim is of a type that is governed by a pre- action approved protocol, the letter should contain all the information required by the protocol. Note that in the case of professional negligence, a preliminary notice of claim should be sent first, and the letter communicating the claim is known as the ‘letter of claim’ under the professional negligence pre-action protocol. 3.8.2 Professional conduct The letter is normally addressed to the potential defendant in person, but if the solicitor is already aware that the defendant has solicitors acting for them, it should be addressed to the solicitors, as it is a breach of the SRA Code of Conduct (Principle 5 – to act with integrity – and para 1.2 – not to abuse the solicitor’s position by taking unfair advantage of others) to write directly to a defendant in those circumstances. If the potential defendant is likely to be insured in respect of the claim, the solicitor should ask that the letter is passed on to the insurers and will usually enclose a copy for that purpose. 3.8.3 The letter before claim under the Practice Direction 3.8.3.1 Content The Practice Direction provides at para 6(a) that the claimant’s letter before claim should give concise details about the matter. This should normally enable the defendant to understand and investigate the issues without needing to request further information. We would suggest that the letter should: (1) state the claimant’s full name and address; (2) state the basis on which the claim is made (ie why the claimant says the defendant is liable); (3) provide a clear summary of the facts on which the claim is based; (4) state what the claimant wants from the defendant; (5) if financial loss is claimed, provide an explanation of how the amount has been calculated; (6) list the essential documents on which the claimant intends to rely; (7) set out the form of ADR (if any) that the claimant considers the most suitable and invite the defendant to agree to this; (8) state the date by which the claimant considers it reasonable for a full response to be provided by the defendant; and (9) identify and ask for copies of any relevant documents not in the claimant’s possession and which the claimant wishes to see.  Early Action 51 In a straightforward claim, for example an undisputed business debt, the claimant will usually demand that the letter before claim is acknowledged and/or a full response given within 14 days of the defendant’s receiving it. However, if the case requires the involvement of the defendant’s insurer or other third party, or where there are issues about evidence, then the claimant will usually demand that the letter before claim is acknowledged within 14 days of the defendant’s receiving it and a full response given within 30 days. If the case is particularly complex, for example requiring specialist advice, then it may be appropriate for the claimant to allow up to three months for the defendant to respond in full. Unless the defendant is known to be legally represented, we suggest that the letter should also: (1) refer the defendant to the Practice Direction and in particular draw attention to paragraph 16 concerning the court’s powers to impose sanctions for failure to comply with the Practice Direction; (2) inform the defendant that ignoring the letter before claim may lead to the claimant starting proceedings and may increase the defendant’s liability for costs; (3) warn the defendant of any claim for interest in proceedings that may be commenced; and (4) suggest that the defendant takes independent legal advice. 3.8.3.2 Templates Note that Appendices B(1) and B(2) are templates to assist you to draft the letter before claim under the Practice Direction and the letter of claim under the Professional Negligence Pre- action Protocol. 3.8.3.3 Flow diagrams Note that Appendices C(2) and C(3) are flow diagrams that set out the main steps to be taken under the Practice Direction and the Professional Negligence Pre-action Protocol. CASE STUDY: THE LETTER BEFORE CLAIM Assume that Mr and Mrs Simpson obtained a report from an accident reconstruction expert who states that the most likely cause of the accident was Mr Templar’s speeding. The letter before claim is set out at Appendix D(2). Let us consider how it was drafted. 1. As Mr Templar has not instructed solicitors, the letter is sent to him. Formal notification has been given to his insurers and a copy of that letter is enclosed for his reference. 2. The letter has a heading which is sufficient to enable Mr Templar to identify the claim being made against him. The full names and address of Mr and Mrs Simpson are then given, and Mr Templar can immediately see the purpose of the letter. 3. Under a suitable heading the relevant background facts are briefly stated. You do not have to set out the evidence relied on here. In most cases the events leading up to the dispute will be largely undisputed. 4. The legal basis of the claim is dealt with next. In a contractual dispute you would identify the express and/or implied terms of the contract alleged to have been broken. In a negligence claim, as here, the duty breached by the defendant should be stated. 5. Having explained why the defendant is liable, full details of ‘how’ must be given, in other words, the factual basis of the claim. For a solicitor who has conducted a thorough case analysis, this will be a matter of translating the factual issues from the grid chart. As a general rule, it is best practice to summarise the facts on liability rather than attaching any expert’s report at this stage. The question of expert evidence will usually be addressed by the parties later, following the defendant’s response. 52 Civil Litigation 6. Quantum must then be dealt with clearly and in sufficient detail, including an explanation of how the losses claimed flow from the breaches alleged. Where convenient, list each head of damage claimed separately, and give an estimate for any loss claimed where an actual figure is unavailable. As to documents relied on, it is usual to include those that support the amounts claimed, such as receipts, estimates, etc. 7. The letter gives calendar dates for acknowledging and giving a full response, so Mr Templar can be in no doubt. Failing that, Mr Templar is subsequently warned of legal proceedings and their potential financial consequences for him. 8. As no approved protocol applies here, a copy of the Practice Direction is enclosed and Mr Templar’s attention is drawn to para 16. 9. As Mr and Mrs Simpson are not aware that Mr Templar has any grounds to dispute their claim, it is rather premature in the circumstances to propose any ADR mechanism. Once any full written response is received, with any ADR proposal from Mr Templar, this can be reviewed. 10. Note how well described sub-headings make this letter clear and easy to read. 3.8.4 The letter of acknowledgement under the Practice Direction We suggest that if the defendant is unable to provide a full written response within the deadline set by the letter before claim, the defendant should, instead, provide a written acknowledgement within the deadline. That acknowledgement should state whether an insurer is or may be involved and the date by which the defendant (or insurer) will provide a full written response, and it may request any further information needed by the defendant to provide a full response. If a defendant is unable to provide a full response within the deadline set by the letter before claim because they intend to seek advice, the written acknowledgement should so state and include details of from whom the defendant is seeking advice and when the defendant expects to have received that advice and be in a position to provide a full response. 3.8.5 The letter of response under the Practice Direction Paragraph 6(b) of the Practice Direction provides that the defendant’s letter of response to the letter of claim should include: (1) confirmation as to whether the claim is accepted and, if it is not accepted, the reasons why; (2) an explanation as to which facts and parts of the claim are disputed; and (3) whether the defendant is making a counterclaim and, if so, its details. In addition, we would suggest that the letter of response should also: (1) explain whether the defendant agrees to any proposal made by the claimant for ADR and, where appropriate, suggest an alternative form of ADR (or state why none is considered suitable); (2) list the essential documents on which the defendant intends to rely; (3) enclose copies of any documents requested by the claimant, or explain why they will not be provided; and (4) identify and ask for copies of any further relevant documents, not in the defendant’s possession and which the defendant wishes to see.  Early Action 53 CASE STUDY: THE LETTER OF RESPONSE Assume that Mr Templar has instructed solicitors and obtained his own report from an accident reconstruction expert, who states that the most likely cause of the accident was shards of glass on the driveway which caused Mr Templar to lose control of his car. The letter of response is set out at Appendix D(3). Let us briefly consider how it was drafted: 1. Mr Templar’s solicitors acknowledged receipt of the letter before claim within 14 days and agreed a new deadline for a full response. 2. Under suitable headings the relevant details are given. First, why the claim is denied. Then details of the counterclaim. As an alternative to totally denying the claim, Mr Templar also makes an allegation of contributory negligence against Mr and Mrs Simpson. 3. The quantum of the counterclaim is then detailed and documents in support of each item are enclosed. 4. Given that each side has differing expert evidence on liability, Mr Templar suggests that ADR on that issue is inappropriate. He leaves open the question of whether ADR might be suitable to determine the quantum of the claim and/or counterclaim. As the case develops the parties should review the suitability of ADR for the issues that remain in dispute. 3.8.6 Claimant’s reply We suggest that the claimant should provide the documents requested by the defendant within as short a period of time as is practicable or explain in writing why the documents will not be provided. If the defendant has made a counterclaim, the claimant should provide information equivalent to the defendant’s response (see 3.8.5). 3.8.7 Taking stock After their initial exchange of correspondence, the parties should have a genuine opportunity to resolve the matter without needing to start proceedings. At the very least, it should be possible, as para 12 of the Practice Direction points out, to establish what issues remain outstanding so as to narrow the scope of any subsequent court proceedings, and therefore limit potential costs. 3.8.8 Instructing experts Paragraph 7 of the Practice Direction reminds the parties that many matters can and should be resolved without the need for advice or evidence from an expert. If an expert is needed, the parties should consider how best to minimise the expense, for example by agreeing to instruct either a single joint expert (ie engaged and paid for jointly by the parties, whether instructed jointly or separately) or an agreed expert (ie the parties agree the identity of the expert but only one party instructs the expert and pays the expert’s costs). As to a single joint expert, see 12.13.8. Where the parties go ahead and instruct their own expert or experts pre-action, it will be for the court to determine later if any party can rely on any particular expert’s evidence and how expert evidence should be given at a trial (see further 12.13). 3.8.9 False statements Paragraph 2 of the Practice Direction reminds the parties that any person who knowingly makes a false statement in a pre-action protocol letter or other document prepared in anticipation of legal proceedings may be subject to proceedings for contempt of court. A 54 Civil Litigation client should be reminded of this regularly, particularly when asked to approve significant letters or documents. 3.9 PRE-ACTION DISCLOSURE In a relatively small number of cases it may be necessary for a prospective claimant to see documents held by a potential defendant who is unwilling to show them voluntarily. An application for disclosure of documents prior to the start of proceedings is permitted under s 33 of the SCA 1981, or s 52 of the CCA 1984. The application must be supported by evidence, and the procedure is dealt with in r 31.16(3) of the CPR 1998. The court may make an order for disclosure only where: (a) the respondent is likely to be a party to subsequent proceedings; (b) the applicant is also likely to be a party to the proceedings; (c) if proceedings had started, the respondent’s duty by way of standard disclosure set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and (d) disclosure before proceedings have started is desirable in order to– (i) dispose fairly of the anticipated proceedings; (ii) assist the dispute to be resolved without proceedings; or (iii) save costs. An order under this rule must specify the documents or class of documents which the respondent must disclose, and require them, when making such disclosure, to specify any of those documents which they no longer have, or which they claim the right or duty to withhold from inspection. The order may also specify the time and place for disclosure and inspection to take place. The most common examples of pre-action disclosure where the claimant is deciding whether or not to make a claim are to be found in personal injury litigation, for example where the other side holds the records of an accident. However, pre-action disclosure may also be ordered in significant commercial cases to try to resolve a dispute without proceedings or to save costs: see, for example, Burrells Wharf Freeholders Ltd v Galliard Homes Ltd 2 EGLR 81. The court will not allow applications for pre-action disclosure where there is no sufficient evidence that a claim exists and the application is purely speculative (see Hunt v Caddick (Mill Harbour) Ltd EWHC 2933). Disclosure and inspection of documents are dealt with fully in Chapter 11. 3.10 SETTLEMENT 3.10.1 ‘Without prejudice’ negotiations A solicitor may soon find that they are in a position to commence negotiations with their opposite number, or with the opponent directly (provided they are not represented) or with an insurance company (eg, in a professional negligence case). The opportunity to negotiate will continue throughout the pre-action stage, the proceedings, and even during the trial itself. Any negotiations that take place as a part of a genuine attempt to settle a claim are impliedly ‘without prejudice’. However, it is preferable to mark any correspondence accordingly, or to clarify at the start of a meeting/telephone negotiation that this is the basis on which you are proceeding. If ‘without prejudice’ negotiations take place, neither party may rely upon anything said or written in the course of the negotiations for the purpose of proving liability and/or quantum at trial.  Early Action 55 EXAMPLE A is suing B for damages of £150,000. A’s solicitor writes to B’s solicitor on a without prejudice basis, saying A will accept £120,000 if that sum is paid within 28 days. B does not accept that proposal. Neither A nor B can refer to this letter at trial, and A can still try to obtain judgment for the full amount of the claim. Note that if A had marked the letter ‘without prejudice save as to costs’ then A could unilaterally show the letter to the judge when the judge was deciding the question of costs. This rule exists to encourage litigants to reach a settlement, if possible, and to give effect to their implied agreement not to use information revealed on a ‘without prejudice’ basis in the proceedings (see Ofulue v Bossert AC 990). It means that all negotiations which are genuinely aimed at a settlement are excluded from being given in evidence. The rule applies whether the negotiations are oral or in writing, and thus applies to an attendance note of a without prejudice conversation as well as to correspondence. As Oliver LJ stated in Cutts v Head Ch 290: That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should, as it was expressed by Clauson J in Scott Paper Co v Drayton Paper Works Ltd (1927) 44 RPC 151, 156, be encouraged fully and frankly to put their cards on the table... The public policy justification, in truth, essentially rests on the desirability of preventing statements or offers made in the course of negotiations for settlement being brought before the court of trial as admissions on the question of liability... The rule applies to exclude all negotiations genuinely aimed at settlement whether oral or in writing from being given in evidence. Although as a matter of good practice the words ‘without prejudice’ should appear on this type of correspondence, the presence or absence of the words is not conclusive. What is important is that the letter is a genuine attempt to settle the case. If there is a dispute as to whether or not a communication is protected in this way, the court can examine the document (obviously in advance of the trial by someone other than the trial judge) to see whether or not its purpose was to settle the dispute. If it was, it cannot be used or referred to in evidence; if not then, even if it carries the words ‘without prejudice’, it can. The court must consider the circumstances of the communications from an objective standpoint: Sang Kook Suh v Mace (UK) Ltd EWCA Civ 4. In addition, as Bodey J stated in BE v DE EWHC 2318 (Fam) at , [i]t must be necessary … that both parties realised or must or should have realised [that the parties were seeking to compromise the dispute], not just the person now praying in aid the without prejudice protection. Once a settlement is concluded, any ‘without prejudice’ correspondence can be produced in court to show the terms agreed between the parties. This might be necessary if, for example, a dispute arose as to enforcement of an agreed settlement or the true terms of the agreement reached (see Oceanbulk Shipping & Trading SA v TMT Asia Ltd UKSC 44). As noted in the example above, if a party wishes to reserve the right to draw the trial judge’s attention to a without prejudice offer to settle a case on the question of costs, they should mark the offer ‘without prejudice save as to costs’ (see Cutts v Head Ch 290, Sternberg Reed Solicitors v Andrew Paul Harrison EWHC 2065 (Ch) and also 3.10.2 below). A without prejudice or without prejudice save as to costs offer of settlement that has no time limit for acceptance can be accepted even after the trial has started; such an offer does not 56 Civil Litigation lapse at the commencement of the hearing (see MEF (A Protected Party, by his Mother and Litigation Friend, FEM) v St George's Healthcare NHS Trust EWHC 1300 (QB)). Details about the solicitor’s authority to negotiate are to be found at 13.1. 3.10.2 Pre-action offers under Part 36 As we have seen, before litigation starts the parties are encouraged to negotiate and settle the claim. It is open to the parties to make ‘without prejudice’ offers to settle (see 3.10.1). Part 36 of the CPR 1998 formally recognises this and gives ‘teeth’ to such offers, which are made ‘without prejudice save as to costs’ (ie, once a trial judge has dealt with the issues of liability and quantum, they can be addressed on Part 36 offers when dealing with the question of costs). Any party can offer to settle a monetary claim for a specified sum, or on express terms for any non-monetary claim. So, if litigation occurs and the claimant fails to obtain a judgment more advantageous than a defendant’s Part 36 offer, the claimant will usually suffer severe financial penalties (see 13.4.5). Likewise, if a claimant makes a Part 36 offer and the judgment against the defendant is at least as advantageous to the claimant as the proposals contained in the claimant’s Part 36 offer, the defendant will usually suffer severe financial penalties (see 13.4.6). Care should be taken when drafting the Part 36 offer to ensure that the stated terms are consistent with Part 36. If not, there is a risk that the court may not apply the financial penalties under Part 36, although the court may take the offer into account when exercising its general discretion with regard to costs (see James v James EWHC 242 (Ch)). See also 13.4.1.1. 3.11 RESEARCHING THE LAW Researching the law will often not be necessary. The solicitor will be familiar with the relevant law in the areas in which they practise. Nevertheless, from time to time, unfamiliar points arise which need to be researched. On a point of law, reference should be made to the recognised practitioner works in the relevant subject; but as textbooks rapidly become out of date, it is essential to check a current authority. If the point to be researched is procedural then the solicitor needs to refer to the CPR 1998 and Practice Directions themselves, together with any relevant case law on their interpretation and any recognised practitioners’ works. For this purpose, it can be useful to look at one of the hard-copy versions of the CPR 1998 that are annotated and contain references to relevant cases and statutory instruments where appropriate. 3.12 COST–BENEFIT ANALYSIS As we have seen, litigation is the last resort. A solicitor should discuss with the client whether the potential outcomes of any legal case will justify the expense or risk involved, including, if relevant, the risk of having to pay an opponent’s costs. So, a form of cost–benefit analysis needs to be done at the beginning of a case, and this must be reviewed regularly. The client will have already incurred legal costs at Stage 1. These will include the costs of investigating the case (whether a potential claim or a defence to such), taking the steps required by the appropriate pre-action protocol and possibly attempting some form of ADR. These costs may include barristers’ and experts’ fees. Hundreds or thousands of pounds may already have been spent. Once court proceedings start, legal costs will escalate. Have a quick look at the bill of costs at Appendix A(17). If you just skim-read the description of work done, you can see that court fees will have to be paid, court documents prepared, and further time will be spent by the solicitor with the client and witnesses, etc.  Early Action 57 You should now appreciate that a client runs up a solicitor’s bill rather like a taxi fare – in other words, the longer a case goes on, the bigger the legal bill. This analogy is rather apt, as the professionals involved in a typical case – solicitors, barristers and experts – will all charge by the hour. Statistics from the Senior Courts Costs Office show that in recent years the average costs recovered by a successful party in a High Court case exceeded £39,000 in the King’s Bench Division and £95,000 in the Chancery Division; whilst in the County Court the figure was £33,000. This gives you a very rough idea of the potential costs that may be incurred. 3.13 SUMMARY OF PRE-ACTION STEPS (1) Check any professional conduct points: – conflict of interests – confidentiality – identity of client for money laundering regulation purposes. (2) Identify the client’s objectives: – what does the client want? – what might realistically be achieved? (3) Identify and locate, if necessary, all potential parties. (4) Check the financial viability of the defendant: – will the defendant be able to pay any judgment and costs? – what assets are available? (5) Check jurisdiction: – any relevant contractual clause? – are one or more parties outside the jurisdiction? (6) Ascertain the limitation period: – any relevant contractual clause? (7) Discuss and agree funding with the client: – explain all options – set out in a letter. (8) Collect and preserve evidence: – where are relevant documents located? – what witnesses can proofs of evidence be taken from? – is an expert’s report needed? – are photographs or a site visit needed? (9) Carry out any necessary legal research. (10) Do a case analysis: – have you identified all potential causes of action? – for each element, have you identified all the factual issues? – what is the likelihood of success? – what further evidence is needed? (11) Write letter of advice to client summarising analysis and advising on options. (12) Explore possible methods of ADR. (13) Comply with any approved pre-action protocol requirements or the Practice Direction. (14) Keep the client informed. (15) Should the client make a Part 36 offer? 58 Civil Litigation 3.14 SUMMARY OF PRACTICE DIRECTION ON PRE-ACTION CONDUCT AND PROTOCOLS (1) Litigation should be a last resort. The parties should consider whether negotiation or some other form of ADR might enable them to settle their dispute without commencing proceedings. (2) The parties should exchange sufficient information in order to: (a) understand each other’s position; (b) make decisions about how to proceed; (c) try to settle the issues without proceedings; (d) consider a form of ADR to assist with settlement; (e) support the efficient management of those proceedings; and (f ) reduce the costs of resolving the dispute. (3) The steps taken under the Practice Direction should usually include: (a) the claimant writing to the defendant with concise details of the claim; (b) the defendant responding within a reasonable time; and (c) the parties disclosing key documents relevant to the issues in dispute. (4) Only reasonable and proportionate steps should be taken by the parties to identify, narrow and resolve the legal, factual and/or expert issues. (5) Where a dispute has not been resolved after the parties have followed the Practice Direction, they should review their respective positions to see if proceedings can be avoided and at least seek to narrow the issues in dispute before the claimant issues proceedings. (6) If a dispute proceeds to litigation, the court will expect the parties to have complied with the Practice Direction. A party may be sanctioned for failing to do so.