Nicholas Gruen recently posted about the high cost of civil court proceedings in Australia (and for that matter throughout the common law world):
A more promising kind of imperialism would be the application of simple economic principles to the way various social systems are managed. HECs and managing child support within the tax system are examples of this kind of reform. We should apply it more widely to our system of civil law which, as it stands is a scandal – available to the rich and those poor enough to access legal aid, but only otherwise to those willing to risk a large part of their life savings.
I can see what Nicholas is saying, and it’s a powerful indictment of a legal system whose traditional design may (perhaps) deliver Rolls Royce justice but also at Rolls Royce prices. Moreover, well-intentioned reforms based on the recommendations of the UK Woolf Committee from the 1990s, the most frequently adopted approach to achieving more accessible and affordable civil justice, have at best had mixed success. Woolf-style reforms have been implemented to varying degrees by courts throughout Australia, arguably most fully in the Northern Territory’s Supreme Court.
These systems involve vigorous caseflow management by judges, designed to push cases along and reduce delay and unnecessary tactical time-wasting and expense-incurring tactics by parties with “long pockets”. There are strong costs incentives and disincentives to induce the parties to make detailed informal disclosure of their respective cases and make bona fide attempts to reach a negotiated settlement before even commencing proceedings. In the NT these reforms have certainly reduced the length of Supreme Court lists, apparently by causing quite a few matters either to be settled or abandoned at an early stage. However, it isn’t evident that they have reduced the actual costs of litigation significantly. As in the UK, all that has happened (at least for matters that don’t settle early) is that costs have become “front-end loaded” i.e. much more of the preparation work is done at an early stage of litigation. Surveys in the UK indicate that 81% of lawyers don’t believe that litigation costs have become cheaper for their clients.
However, in Australia that is a long way from the whole picture. For a start, no-fault workers’ compensation and motor accident compensation schemes in most states have effectively removed expensive, risky litigation as a necessary path to justice in the most common types of dispute that average citizens experience. The right to sue at common law is abolished or severely restricted in these areas in most jurisdictions, and actions between injured people and insurers are relatively uncommon (entertaining exceptions include proceedings as to whether injuries resulting from vigorous evening sexual activity while on a work-related trip amounted to a workplace injury).
More importantly, every state and territory now has a “civil and administrative tribunal”, largely copied from Victoria’s VCAT model. The NT has recently established its very own Northern Territory Civil and Administrative Tribunal (NTCAT). Unlike VCAT it doesn’t deal with all domestic building disputes, but it will progressively end up dealing with disputes under some 100 different Acts including residential tenancy disputes. Moreover, it will soon take over the Local Court’s general small claims jurisdiction, with the dollar limit for claims being lifted to $25,000 (personally I think it should be significantly higher again than that).
Tribunals run on the VCAT model are purpose-built to deliver speedy, simplified justice. The Rules and Forms are straightforward and designed to allow litigants to handle their own cases without lawyers. In the NT Act, one key to that objective is section 53 which sets out the overarching principles:
(1) In conducting a proceeding, the Tribunal must act fairly and according to the substantial merits of the matter that is the subject of the proceeding.
(2) The Tribunal:
(a) must comply with the rules of natural justice; and
(b) may inform itself in any way it considers appropriate and is not bound by the rules of evidence; and
(c) must act with as little formality and technicality, and with as much speed as the requirements of this Act, a relevant Act and a proper consideration of the matter permit; and
(d) must ensure, so far as is practicable, that all relevant material is disclosed to the Tribunal to enable it to decide the proceeding with all relevant facts.
(3) The Tribunal may accept any document into evidence despite any non-compliance with a time limit or other requirement under this Act or the relevant Act relating to the document or the service of the document.
However, the biggest disincentive to using lawyers lies in the fact that the default position in NTCAT (and other CATs) is that legal costs are not awarded (although costs can be awarded if a party has been guilty of significant time-wasting or other misbehaviour in conducting their case). This means that in many/most cases parties do indeed handle their matter themselves, although canny corporates (e.g. builders in the domestic building jurisdiction of VCAT) often make strategic use of lawyers at key points to outgun naive consumer plaintiffs. However in most situations, even with a $25,000 claim limit, it makes little sense to have a lawyer run your case when the legal costs will inevitably consume a large proportion of the judgment sum, even for a plaintiff who has a 100% win.
The downside of this largely lawyer-free tribunal “paradise” is that it can often result in quite arbitrary and unfair outcomes, where the more literate, educated, confident and business-like litigants-in-person tend to win irrespective of the actual merits of their case.
I am not at all sure that the current situation is an improvement on traditional common law civil court justice, although it is undeniably a lot cheaper and quicker.
However I’m optimistic about the future under the CAT model for resolving bread-and-butter disputes. At the moment few lawyers have examined or reformed their practice models in response to VCAT and its copyCAT tribunals in other states. Litigation firms have mostly failed to respond to the challenge of a new tribunal model that is in the process of stripping them of much of the “bread-and-butter” work on which their practices have depended.
And yet in my view there are huge opportunities for progressive lawyers to undertake remunerative legal work in the CAT tribunals in a way that WILL achieve both accessible and affordable justice for clients along with a financially rewarding and satisfying living for practitioners. Traditional litigation management models involve the lawyer acting as the “sage on the stage” who completely takes charge of the client’s litigation and undertakes all the work on it from go to whoa, even though many of the tasks are very routine and tedious and entirely capable of being done by the client (sometimes with some judicious expert hints from a lawyer “guide on the side”). Of course lawyers charge their clients at generous rates for all that tedious routine work, partly because they can, partly because high practice overheads necessitate it, and partly because the legal consequence of lawyers taking almost full responsibility for the conduct of litigation is that their potential professional negligence liability (and hence professional indemnity insurance premium) is massive.
In the CAT era, lawyers will be forced to re-evaluate their liitgation practice model. Clients will need to retain both formal and actual “litigant-in-person” responsibility for conduct of their own matters; lawyers will not go “on the record” in the tribunal and will not be legally or practically responsible for conducting the case. Most clients are entirely capable of keeping a systematic diary (the key litigation skill for a solicitor); sending, receiving and filing documents; attending case management conferences by themselves; and engaging in everyday phone, letter and email communication with their opponent/s, witnesses and the tribunal.
There are certainly key aspects of a case where expert legal assistance confers large advantages:
- initial strategic analysis of the case, including what needs to be proved and how it can be proved;
- taking witness statements from the key witnesses;
- occasional advice on procedural/tactical aspects;
- attendance at the mediation conference; and
- actual conduct of the final hearing.
As lawyers adjust to the CAT era, those aspects will typically be undertaken by lawyers on a piecework, fixed fee basis as the matter proceeds. Legal fees for a matter conducted on this “teamwork” basis, with the client taking responsibility and doing all the routine tasks, will typically involve total legal fees of less than $10,000 (and sometimes quite a bit less) for the average dispute with a final hearing length of a day or less. And there will be minimal risk of being ordered to pay the other side’s costs even if you lose.
If, as is already starting to happen, the VCAT model ultimately subsumes most areas of general litigation work in Australia (except big commercial disputes), market pressures will force lawyers to adopt this sort of “guide on the side” approach. The result should be a fair, accessible, affordable legal system where litigants don’t need “to risk a large part of their life savings”.