How much does a Court Case actually cost?

How long is a piece of string? Both questions are equally meaningless and therefore impossible to answer.

Of the court case there are just too many variables: take for instance the type of court. It might be the Small Claims Court, the Patents County Court, the County Court, the Defamation Court, the Mercantile Court, the Technology and Construction Court, the High Court, the Commercial Court, the Supreme Court or the Court of Appeal. (This is considering only cases in civil courts. Criminal cases would need a separate list and additional consideration for costing.) Generally the higher the court’s jurisdiction, then the more costly the case will be. Another rule-of-thumb is that London courts will be more expensive than provincial ones. A case which needs hearings in several courts will also be more protracted, and therefore more expensive than one which is decided at the first hearing. Equally a case which settles before trial will be cheaper still. Not surprisingly mediation and alternative methods of dispute resolution are increasingly popular, as a way of avoiding court costs altogether.

Equally divergent will be type of case and the degree of complexity.  A cut-and-dried claim for damages between two individual litigants will cost nothing like as much as a major breach of a commercial contract. The latter might involve hundreds of litigants and years of legal wrangling. Degree of legal complexity links to lawyers’ fees. Complex cases will need more experienced lawyers. At solicitor level an equity partner’s work will be more expensive than a legal trainee or recently qualified lawyer. If the case needs the opinion of counsel, then a QC’s opinion will cost more than a junior barrister’s. Expert witnesses may be needed for complex medical or technological claims, and will be another variable expense.

So given that calculation of legal costs at the outset of a case is virtually impossible, what can be done to minimise and control these? Firstly, a case will need accurate and fine budgeting. An experienced solicitor will not only advise on the legal merits of a case, but will advise on projected costs of running the case. Gone are the bad, old days when a retainer might mention a hourly billing fee and little else. Such laxity often resulted in horrendous bills, years later which the hapless client received with shock. Indeed recent governmental concern with controlling the costs of litigation has led to new legislation and tighter controls. Since April 1, 2013 new Civil Procedure Rules lay down stringent requirements for case budgets to be drawn up by both sides at the initial stage of a dispute. These require approval of the judge and court managing the case. Rules for amending agreed budgets are equally demanding and a driving factor in agreeing any budget is that it must be proportionate to the claim. All this is to help control costs and to ensure more uniformity and accurate predictability of costs. Such reforms not only help standardise good practise and control costs; they also aid transparency, especially for a client from the outset of the case.

A further aid to calculating the likely cost of a case, is that it now a professional obligation for solicitors to discuss ways of funding cases with their clients. For such discussion to be meaningful an accurate budget must have been prepared. In the past most clients, whether individuals or companies , would have financed their own litigation. A few might have qualified for legal aid, but in the present climate this has all but disappeared. However, to help companies and individuals finance legislation, there are now new options. Foremost of these has been the growth of third party funding. This is an arrangement whereby a commercial funder or investor (who is not a party to the legal proceedings) finances all or some of the legal costs, in return for an agreed share of the damages, in the event of success. Although the client foregoes a share of his award, there are advantages. Third party funders reject 90% of applications for funding, so acceptance is indication that the claim is a strong one. Without funding the client might not be able to bring the case at all, so to give up some of the winnings is a small price to pay. Where a company secures funding, it often releases resources for investment in options other than a risky law case. For it is this risk which is the unknown expense. If a case does fail, then a third party funder receives nothing and loses the investment, possibly having to pay costs. The average winning case would probably recover 80% of damages. Reducing these to say 50% for a funded case is not bad, since the risk has been diverted. Again careful costing options would have to consider insurance premiums. These might be Before the Event or After the Event. The new CPR’s have changed the guidelines here; for example, After the Event insurance premiums are no longer a recoverable cost from a losing party. Contingency fees (no win, no fee) are now permitted as a way of paying the legal bill, but these alongside Damage Based Awards are all part of the complex web of calculating the real costs of the litigation.

So clearly calculation of the cost of a court case is complicated and open to many variables. In stark monetary terms a fairly average bill for a run-of-the-mill dispute in the High Court has been calculated at £50,000 as a minimum. But remember the variables and funding options. The best advice is to choose a good law firm and one that is up to speed on all the recent costs legislation and rules since April 2013.   At least these make budgeting compulsory!

Guest post provided by Anne Evans, a legal consultant for Vannin Capital. For more information visit litigationfunding.com.

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UK’s economy predicted to rise by 1.2% in 2013

The CBI business group has predicted an increase of 1.2% in 2013 and 2.3% in 2014. This is due to a shift in the economic climate although it is “still early days” according to the CBI lobby group of 240,000 UK businesses which also feels that due to frequent imports from overseas in an attempt to improve growth more attention needs to be place to encourage exports. John Cridland, director-general of the CBI said that the government needs to “get behind talented UK businesses” and help them with encouraging business overseas.

On a positive note, John Cridland said: “The economy has started to gain momentum and confidence is picking up… We need to see a full-blown rebalancing of our economy, with stronger business investment and trade, before we can call a sustainable recovery… We hope that will begin to emerge next year, as the Eurozone starts growing again.”

The recent sunny weather has also helped to boost UK high street sales. A spokesman from Capgemini Consulting, Alex Smith-Bingham responded “The warm weather encouraged shoppers to leave their homes and shop on the High Street to enjoy the sunshine. As a result, bricks-and-mortar retailers saw sales rise.” There are also less empty shops in the UK, in comparison to previous years, due to the increased footfall shown in research conducted by the British Retail Consortium and Springboard, which has risen by 0.8% in July.

Online sales in the UK however have declined by 2% in June-July, which is reported to be the lowest since 2010. There is also some concern as to news that use of payday and Doorstep loans providers has more than tripled in the past 18 months, and many blame inflation and government policy for this.  The general secretary of Unite Union Len McCluskey stated “Low wages and insecure employment are destroying incomes, forcing people to turn to payday lenders… This is a personal debt pile-up that cannot be ignored and certainly ought to correct overblown claims of economic recovery. No recovery can be built on hardship and misery.”

Despite the mixed picture, the UK is officially rising from recession as figures reported by bloc’s GDP showed an increase of 0.3% towards the end of 2013. There is also positive movement in the services, construction, housing and manufacturing sectors. In spite of this, the UK’s economic improvement will still see an increase in imports rather than exports, countering any potential increase in trade contribution if strong enough support is not shown by parliament for UK businesses.

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The Legal Cost Reforms Are Finally Here: But Are They a Good or Bad Thing?

By now everyone involved in the UK legal system should know that the much-anticipated legal costs reforms have arrived. The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) became law on 1st April 2013 which means new regulations for litigation funders, lawyers and insurers.

Many have been speculating what effect LASPO will have on the industry, especially since Lord Justice Jackson’s review in 2009 and his published report in 2010. The changes have caused uncertainty as much of the details remain hazy. Some parties, who have been trying to understand the new rules, are still unsure what the law means on a practical level.

So, here is a breakdown to what the reforms entail. On one hand it can be argued that the reforms bring positive changes to the industry however; on the other hand it can be claimed that it will only cause obstacles.

  • Reform 1: Damage-Based Agreements (DBAs)

It has to be said that this is the biggest change to come about. DBAs replace Conditional Fee Agreements (CFAs) and involve the client paying their lawyer a percentage of the damages. This is in return for the professional taking the risk of being paid nothing if the cases loses.

The problem is that the fee is dependent on the amount of damages awarded and there is confusion on the exact figure to pay including disbursements, counsel’s fees and VAT. It has been predicted that fewer commercial law firms will take these cases on board because there is danger of no fee at all.

The Legal Services Board (LSB), which regulates both the Bar Standard Board and the Solicitors’ Regulation Authority (SRA), has warned that consumers may need protecting against the mis-selling of DBAs.

What matters is that clients are fully aware of what they are signing up for and at what cost.

  • Reform 2: Cost budgeting

As part of the new law, all costs must be budgeted at the start of the trial as well as throughout proceedings. This safeguards the client against any nasty, unexpected legal fees and they can learn what costs are proportional to the claim to understand if the case is financially viable to pursue.

New disclosure rules will also improve collaborations between parties and this should make the case more cost-effective to run. What’s essential is that it is clearly stated what costs are not recoverable from the losing party i.e. ATE (After-the-Event Insurance) and lawyers’ success fees. This will make costs more transparent.

The reforms will be accompanied by new financing packages from third party funders that will be given to clients. In anticipation of the Act, the number of litigation finding companies has increased in the last three years. From a positive point of view, this gives lawyers and businesses a better choice of funding opportunities and legal insurance products.

However, when choosing a third party funder it is imperative that they fully assess the risk involved and create a budget before agreeing to find your case.

Whether you think LASPO is a good or a bad influence on litigation is regardless because it is here to stay. You can dwell on the negative views or you can embrace the reforms and move forward with an industry that has greater transparency and better budgeting.

Surely that is best for both the business and the third party funding provider?

This article was provided by litigationfunding.com, the UK’s leading experts in litigation funding.

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Changing the Bonus Culture in Banking

Careers prospects in banking have changed in the banking industry over the last decade in the UK.

Formerly, all bankers wanted to be investment bankers, or hedge fund managers, or traders. They were seen as the glamourous end of the industry, seeing the most activity, prospects, money and reputation. The back office functions, such as secretarial or administrative, were not as attractive to the best and brightest bankers. In a few short years, how things change.

As a result of many scandals in the banking sector, and amidst great public condemnation, the government has imposed a great many regulations and legislative checks upon bankers. The Financial Conduct Authority (previously the FSA) has been keeping a watchful eye on banks and bankers’ actions- with the EU and current financial issues with the Eurozone fiscal adding to this new culture of restraint and checks.

This has brought about a shift in banking culture. Although the front office traders an investments bankers still have great job satisfaction and prospects, the mood there (including in career prospects) is somewhat muted. It is in the traditional back office functions that the greatest changes has been seen. In the wake of increased oversight, the role of the compliance department had become more important. From being an often overlooked bank department, the compliance department is now crucial as all financial transactions and deals have to be checked by them to ensure that banks’ actions are in line with regulations.

As the importance of the compliance department has risen- so has compliance as a job. The more regulations imposed by the FCA, Whitehall or Brussels, the more jobs open up for compliance experts, and the more vital their knowledge and expertise becomes. Compliance departments are growing in size, and are now staffed with specialist financial professionals who are experts in the area of financial oversight.

Recruitment consultants have notice the change. Most hedge funds, for example, have hired a compliance professional to fulfill a role that was usually performed by the chief operating officer. There has been a steady rise in the number of jobs in compliance – one recruiter notes a rise of 16.5% in insurance based compliance vacancies alone.  Also, the compliance industry has seen a rise in salaries coupled with a shortage of candidates; see compliance roles at Randstad.

According to the Black Swan Group, compliance is now seen as a respected financial career in its own right, with many graduates choosing it an initial financial career choice. Large financial institutions now have graduate schemes in compliance, and many mid- tier institutions have now followed suit, such is the importance of compliance professional. Graduates are now strongly advised to complete one of those schemes, or to have a detailed technical knowledge of regulatory related areas.

Indeed, another of Black Swan’s findings is that compliance is not just for graduates. The recruitment company has seen many lawyers, auditors or front office bankers move into compliance. Candidates for compliance jobs now often have accountancy or legal qualifications, or backgrounds in the financial sector such as risk management,  investment banking or similar. Candidates often have a background in risk in investment banking or an accountancy qualification, or a background in project management. Recruitment consultants are now stressing the specialist nature of the role.

As regards future prospects, the future is bright for compliance. According to Badenoch & Clark, hiring for compliance based roles has risen dramatically over the last year, and continues to do so. A survey carried out by recruiters Robert Walters found that many compliance professionals were in line for a pay rise this year- despite public and governmental pressure for bankers’ salaries to be cut down. Despite pressures on recruiting in the financial industry, the mood concerning compliance jobs is optimistic.

The financial industry has criticised the mount of regulations and oversight of their actions. However, such oversight shows no sign of stopping- rather, it is increasing. While this trend increases the cost of doing business for banks, and makes doing business more complicated and convoluted, it has proved to be a gain for the compliance department. As the skill and importance of compliance increases in this age of banking oversight, it is proving to be a rewarding and fulfilling career for the right candidate.

 

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… and the latest on the PPI claims scandal is?

Well, news broke a couple of weeks ago that Lloyds were rejecting genuine PPI claims in the hope that the claimants would not take the case to the FOS and more worryingly, telling their staff to ignore the possible cases of fraud by their peers. Shocking? Well no not really! Those working in the PPI claims industry have been complaining about this for a while now… it’s just that it’s now become public!

Told to Ignore Fraud

Having taken on staff to handle mis sold PPI claims, provided by a third party – in this case Deloitte, it seems that there have been various misdemeanours occurring within the call centre, and they have been uncovered by an undercover journalist working for The Times. This is not what Lloyds needs at this moment.

The journalist concerned posed as a worker within the call centre and reported that staff in training there had told him they were instructed to overlook possible cases of fraud. Furthermore, they were also told that most first-time callers would not follow up claims, in an apparent attempt to deter them from encouraging claims. The contract with Deloitte has since been terminated after Lloyds Banking Group was forced to apologise, although Deloitte insists the reason was not linked to the story in The Times, but to Lloyds choosing other providers.

FOS Receives Record Complaints

Also in the news is the latest statement from the Financial Ombudsman Service (FOS) which has been receiving a record number of complaints involving financial products of late. Indeed, the FOS is so stretched that is dealing with 7000 complaints every day, and is set to take on upwards of 1000 staff in order to deal with the backlog. It dealt with over half a million complaints regarding mis-sold PPI in the last year, a vast increase on the previous 12 months. The reasons for the increase are many, but the High Court’s instruction that banks must repay all mis sold fees will have had an effect.

Complaints Continue to Flood in

The rise in numbers of people claiming, coupled with the banks threatening to impose a deadline (now unlikely to happen) has meant many more people have been coming forward to make a claim much to the delight of PPI Claims Companies like PPI Claims Adviceline.

Claiming may be easier than ever but with the lenders seemingly still attempting to stall on claims it may make sense to use an expert to handle your case, especially if you are unsure of the procedure.

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Bankers to face jail time… Ooooh, that’s more like it!!

A report by the Parliamentary Commission on Banking, published today, has recommended that “senior persons” who run banks in a “reckless manner”, should be jailed and have their bonuses clawed back… nice!!

According to a report by a cross-party group of MPs and peers, led by Andrew Tyrie MP, bankers had escaped “personal responsibility” for their actions following the banking collapse, and said that radical reforms are required to restore trust in the UK banking sector. “Where the standards of individuals, especially those in senior roles, have fallen short, clear lines of accountability and enforceable sanctions are needed,” said Mr Tyrie.

The 576 page report, which is the fifth and final publication by the commission, brings to an end a 6 month investigation during which it’s members asked 9,000 questions of hundreds of witnesses, during 73 sessions which lasted a total of 161 hours.

The key recommendations of the report are:

  • Introduction of a new Senior Persons Regime, to ensure that the most important responsibilities within banks are assigned to specific, senior individuals so they can be held fully accountable for their decisions
  • Making reckless misconduct in the management of a bank, a criminal offence carrying a custodial sentence
  • For bonuses to be deferred by 10yrs so that they can be clawed back retrospectively, even after the senior persons have left their position
  • Introduction of a new Licensing Regime underpinned by new Banking Standards Rules to ensure that senior persona are subject to the full range of enforcement powers
  • Replacing the existing inadequate and confused statements of principle with a new set of Banking Standards Rules

Recommendations by the commission, which was set up last year in the wake of the Libor-rigging scandal, which require legislation are expected to be added to the Banking Bill that is currently going through Parliament, meaning a criminal law for bankers could be in place before the end of 2015.

We’re still digesting the contents of the report and will no doubt be discussing it in more detail in the coming weeks!

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How to Choose the Right Credit Card

Credit cards are found everywhere nowadays and it has never been easier to fill in an application and have one delivered to your door within a few days.

Even individuals with a poor credit profile can often get small amounts of credit thanks to companies that cater specifically for people looking to improve their credit score.

If you’ve decided to get a credit card then it is important to make sure that you’re getting the best possible deal for you, so here are some tips to help you choose the right credit card:

  • How will you Use the Card?
    The card you choose will ultimately depend on how you plan to use it. If you want a credit card to pay for balance transfers, for example, it would be wise to opt for a card which has a low interest rate specifically on balance transfers. Are you going to pay your balance in full each month or do you plan on carrying it over from month to month? This will determine if you opt for a charge card or perhaps a card with a low interest rate.
  • Use Comparison Sites
    Comparison websites such as Credit.com, IndexCreditCards.com, and CardRatings.com provide an excellent resource for comparing the various features of different credit cards. This makes life so much easier because all of the information will be in one place in an easily-digestible format, enabling you to make a fair and objective comparison.
  • What is the Grace Period?
    The grace period simply refers to the amount of time you have to pay your balance in full each month before additional charges and interest are applied. Many cards typically offer a one month or 28-day grace period; however, some offer a longer period so this is something to look out for if you think you may need more time to pay your balance in full.
  • What is the APR?
    The annual percentage rate or APR is the amount of interest applied to balances carried over past the grace period mentioned above.
    Credit cards often have a different APR for balance transfers and purchases so make sure you’re aware of the different rates for each to ensure you’re getting the best rate for your purposes.
  • What is the Credit Limit?
    If this is your first credit card, you will probably be given a lower credit limit but this can really depend on your credit history.
    The spending limits imposed will vary from card to card – as will the fees imposed for going over your limit – so make sure you’re getting a limit that is appropriate to your level of spending, and check that the over-limit fees are not excessive.
    The best way to avoid spending beyond your credit limit is to always keep your balance fairly low and set a percentage amount that you will never allow it to exceed. Many card providers also send alerts when you are within a certain range of your limit so this is definitely worth taking advantage of.

 

Guest contributor:  Oliver Harding has written many articles for thebestdiscountcodes. He covers money saving tips in addition to providing great money management advice.

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How To Keep Your New Business Afloat

After all the hard work that goes into setting up a small business, including establishing contacts with customers and achieving the first sales, it is unfortunate that many start-up businesses find the going to be too tough and have to cease operations before reaching their second anniversary.  It is difficult to run a small business and the prevailing financial climate can make it very tough indeed; however, there are some tactics that can help to keep a business afloat even in such stormy financial weather.

Difficulties of the current climate

The national and international economy at present appears to be stacked up against the interests of small businesses. It can seem that corporations and large companies have distinct advantages in terms of taxation legislation. For example, it has been reported in sources such as Recruiter news online that falling foul of the distinction between contractor employment and self-employment can have tough financial consequences based on calculators under recently amended laws which you can discover when you file your income taxes this year.  Moreover, small businesses are finding it very difficult to receive financial backing from banks and other lending institutions, which are generally in a phase of being very conservative about small business loans.  All of this is against a backdrop of low demand and variable consumer confidence.

 

Tips for the entrepreneur

Entrepreneurs can mitigate the risks inherent in the current climate, however, by taking some steps to consolidate their business position. Some small businesses call upon the services of an umbrella company to assist with several of the financial and taxation aspects of running a firm and ensure good support for entrepreneurship. On a day-to-day basis, businesses need good levels of sales, and this often means prioritising good customer relations so that the flow of sales continues and hopefully grows. In turn, this requires effective and well-targeted advertising.

Practically, these elements can be achieved with some simple actions. Holding face-to-face meetings with individual customers, to gather feedback and explore possible expansions in their needs, is one of the most obvious methods available. For many businesses, an increased focus on the online side of the business and a reduction in costly physical premises is another way to balance the books between income and expenditure. Furthermore, it is necessary to maintain vigilance to spot ways to improve business efficiency and to find possible new business outlets and revenue streams. Many companies have survived over the years by shifting their strategic position rather than remaining locked into a single market area.

 

The need for efficiency

Maintaining and improving business efficiency is, indeed, one of the key issues in running a successful business. There is little point in spending time, and paying for it, if somebody else has already covered the task in question. When a small business involves several people or employees, the tasks and roles need to be clearly defined and co-ordinated, to avoid unnecessary overlap and to ensure that each person can focus on the things that they do best.  Focus, organisation, and efficiency may sound a little like business buzzwords, but they can be the key to small business survival.

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The Numbers Behind the PPI Claims Scandal

As you know, we love a good infographic here at Financial Reform! And having followed the Payment Protection Insurance (PPI) scandal closely, we’re delighted that someone has finally taken the time and effort to produce a visually pleasing yet informative infographic about the controversial subject!

It’s no surprise, looking at those numbers, that PPI mis-selling was such common practice within all branches of all banks across the country… 87% commission paid to financial advisers for selling the policy – WOW!! But they’re now paying the price as it’s estimated the the total refund bill will be approx. £25billion… making it the biggest compensation scheme ever in the UK.

More information about the facts and figures behind this infographic can be found on the PPI Claims Company website.

 

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Should everyone have a mortgage?

Jumping on the property ladder is a dream for many would-be first-time mortgage buyers who want a slice of bricks and mortar success. Fresh statistics from the Council of Mortgage Lenders have found that the amount of mortgages have increased by 12%. This shows the appetite for first-time mortgages in the UK as lenders start to come back to the industry after the belt-tightening of the recession where consumers looked for cash from sources like payday loan providers. Let’s look at the advantages and disadvantages of first-time buyers in the mortgage market:

Pros

  • Mortgages make everyone investors: Property is an investment in the same way that art is. It’s really important for people to have the chance to own a slice of property to protect them in the future and to get on the property ladder. The positive effects of mortgages are that it allows everyone the chance to be investors in their own financial portfolio and to take control of their ability to shelter themselves.
  • It’s better to do it now: Time plays a huge factor in the success of first-time buyers and it’s really important to get in on the act before prices for homes rise and the effect of inflation affects your ability to get on the ladder. Many people subscribe to this way of thinking and this is why many first-time buyers look for additional help from family to get a mortgage.

Cons

  • It can be expensive: Being a first-time buyer is not necessarily cheap regardless of how small the deposit can seem especially coupled with savings and money from inheritances. You need to consider if you can afford having a mortgage. If you lose your job or you become sick, you should look at whether you can pay your mortgage to avoid getting into debt.
  • It eats into savings: Paying off a mortgage for a set amount of years means that it can be more difficult for you to save especially if you have dependants that you need to pay for. Always have emergency savings in place before you jump onto the property ladder in case times get difficult, you then know you are not eating into your personal finances.

A mortgage is seen as a right that everyone is entitled to. In the UK we love property, and mortgages come as the glossy packaging to dream properties for first-time buyers. Ensure that you can financially afford the mortgage and start your property journey today with thorough planning.

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