Legal Cost Finance - Another Response to Sky Rocketing Court Fees

Jane Lambert

Yesterday the Ministry of Justice increased fees for issuing proceedings to 5% of the value of the claim for claims over £10,000 with a cap of £10,000 for claims of £200,000 or over.  For some claims that it is a whopping 622% increase in fees.  The statutory instrument that effects those increases is The Civil Proceedings and Family Proceedings Fees (Amendment) Order 2015 which is available only in draft on the legislation.gov.uk website.

For entrepreneurs, designers and inventors this fees increase is very bad news because most IP infringement claims are for injunctions and unspecified damages. As I explained in Why "IP Yorkshire?" 10 Sept 2008  there is a correlation between patenting and the cost of enforcement. That is why this country consistently trails not only France and Germany in the number of European  patent applications but also the Netherlands with a third of our population and Switzerland with one eighth. It was because of that correlation that the government reformed the Patents County Court (the predecessor of the Intellectual Property Enterprise Court) in 2010 (see New Patents County Court Rules 31 Oct 2010) and introduced the small claims track (see Patents County Court - the New Small Claims Track Rules 20 Sept 2012). This swingeing increase threatens to undo all the good that has been achieved over the last 5 years.

Happily there are things that can be done about it and I suggested some of them in How to enforce your IP claim after court fees sky rocket 7 March 2015 NIPC Inventors Club. These include making more use of

• the small claims track by limiting damaging claims to £10,000, 
• Intellectual Property Office tribunals and opinions service, 
• established ADR schemes such as ICANN's Uniform Domain Name Dispute Resolution Policy and Nominet's Dispute Resolution Service for domain name disputes where they exist

as well as inserting arbitration and other dispute resolution clauses into licences and other agreements and taking out before-the-event insurance.

Today I can suggest another option which is payment by instalments through Legal Cost Finance ("LCF").  LCF is described by the Bar Council as "an innovative financial boutique that provides a payment solution tailored for the legal services market" which has entered a service partnership with the Bar. According to the Bar Council

"LCF provides an FCA regulated service to arrange ‘payment plans’ for consumers of barrister services on the basis of third-party credit agreements. This offers clients greater convenience, affordability and access to justice. In practice, LCF provides clients with the option of paying for legal services by instalments over extended periods, while ensuring lawyers enjoy full payments of their bills on time."

One advantage of this source of funding for clients is that it is not limited to litigation but is available for any type of legal service including non-contentious work.

On its home page LCF describes itself as an escrow partner of BARCO which is

"a third party company, owned and operated by the Bar Council, which manages the funds required to facilitate on-going legal services provided by lawyers in England and Wales."

It exists because barristers are prohibited from handling client funds under Rule C73 of the Code of Conduct in the BSB Handbook. In other words it performs the functions of a client account in a law firm thus expanding the scope of public access and litigation services provided by barristers.

In its Terms of Business LCF explains:

"As a condition of your ‘payment plan’, you hereby agree to deposit and maintain the funds in a designated Client Account as directed by us."

It continues:

"Clients who instruct barristers directly (pursuant to the Public Access Scheme) and need to make advance payments (on account) in respect of their legal case requirements, shall use BARCO (Bar Council’s escrow account service) for such purposes subject to BARCO’s Standard Framework Agreement."

In its news page LCF quotes the headline of an article about LCF in The Barrister magazine:

"Barristers risk losing their Public Access advantage – Unless essential steps are taken"

It continues:

"If barristers can provide a unique selling proposition by not only offering clients more affordable access to justice, but also easier payment terms, the public access trophy will be theirs for the taking.”

While I for one am very cautious about going into court without an experienced litigator behind me there are some cases and many circumstances where direct access is possible and in the best interests of the client. Also, it is very clear from other pages of LCF's website that it off its services to law firms and other authorized litigators. I shall certainly explore the use of LCF as I already do with before-the-event insurers and litigation funders (see Intellectual Property Litigation - the Funding Options 10 April 2013 NIPC Law).

If anyone wants to discuss this article or IP litigation in general he or she should not hesitate to contact me on 020 7404 5252 during normal office hours or use my contact form.