Legal costs SA, United Kingdom and Germany perspectives - Patrick Hundermark Chief Legal Executive - Legal Aid South Africa
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Legal costs
SA, United Kingdom and
Germany perspectives
Patrick Hundermark
Chief Legal Executive - Legal Aid South Africa
1Introduction Conference on access to justice, legal costs and other interventions 2
Access to justice and legal costs
Introduction
• High litigation costs, in both civil and criminal matters are one of the main barriers of
access to justice.
• Renewed efforts to address this comes from the profession, individuals outside the
profession, from academic life, NGO’s and Government.
The paper is divided into three sections:
• Section I focuses on South Africa and the challenges faced with regards to high
litigation costs.
• Section II provides an analysis of research conducted in the UK focusing on the
review of civil costs. The reforms proposed by Lord Justice Jackson in his report on the
review of civil costs is also discussed in order to find possible solutions to the
challenges faced in SA.
• In Section III the position in Germany is briefly discussed in order to establish
international best practice. This section entails a discussion on how lawyer’s fees are
regulated in Germany.
Conference on access to justice, legal costs and other interventions 3SA Challenges Conference on access to justice, legal costs and other interventions 2
South Africa – challenges and possible solutions
• The unaffordability of litigation fees is a contributing factor, barring people from
access to justice.
• Case law wherein judges have expressed their dissatisfaction with the issue of high
litigation fees:
– Pretorius v Santam
– Camps Bay Ratepayers and Residents Association (CC)
– Motswai v RAF(GSJ) – Bruised ankle
– Masango v RAF (GJ)
• Costs are disproportionate relative to a matter in dispute.
• Contingency Fees Act (CFA) although intended to give access to justice has been
abused and the regulatory bodies have not taken decisive action.
• The party and party tariffs are regulated and limit the level of recovery for clients.
Conference on access to justice, legal costs and other interventions 5South Africa – challenges and possible solutions
• The attorney and client tariffs are mostly hourly/daily rates, unregulated and left to
market forces.
• The Law Society/GCB Fee Guidelines were abandoned due to being an uncompetitive
practice.
• Fees are time based and it is difficult to check or dispute the hours spent.
• Research can make up a large proportion of the time for which clients are charged.
• Section 35 of the LPA requires tariffs to be set for both litigious and Non‐Litigious and
which would of necessity cover both reserved and unreserved work.
• The client can however on his/her own initiative pay fees in excess of or below any
tariffs determined in terms of Section 35.
Conference on access to justice, legal costs and other interventions 6South Africa – challenges and possible solutions
• Complicated one size fits all system in the Courts save for Small Claims Court and
Equality Courts.
• The missing Middle/Gap Group cannot receive Legal Aid but still cannot afford the
cost of legal representation.
• Legal Insurance provides limited cover.
• Should Corporate entities also be covered or should the tariffs be limited to natural
persons?
• Guidance is to be found in the SA Context from the litigation around the setting of
pricing for medicines in terms of the Medicines and Related Substances Act.
Conference on access to justice, legal costs and other interventions 7UK
civil cost reviews
and reforms
Conference on access to justice, legal costs and other interventions 5UK – civil cost reviews and reforms
• Justice Wallis notes that the unaffordability of lawyers due to their high fees, is also an
issue in the UK, thus it is not a problem confined to SA.
• Analyse the efforts undertaken in other jurisdictions in order to find a solution to this
global problem. We focussed on the position in the UK, noting the UK’s recent research
conducted in order to review their civil cost system.
• Research conducted by Oxford University and the reports on the review of the civil
litigations costs by Lord Justice Jackson. In his report, he notes that in some areas of civil
litigation costs are disproportionate and impede access to justice.
• His recommendations include a coherent package of interlocking reforms, designed to
control costs and promote access to justice.
• Analyse the reviews conducted in the UK and the recommendations offered with regards
to regulating high litigation costs.
• The reforms proffered might be of assistance to SA.
Conference on access to justice, legal costs and other interventions 9The civil cost review
• Although the review will not assist us in finding a solution as to the regulation of
lawyer’s fees in SA, the recommendations might be useful.
• Given the multifarious kinds of litigation it is not feasible to preordain how much
clients must pay to their lawyers in every individual case.
• The Jackson Reforms, are worth considering. The reforms are based upon a number
of strategic objectives, namely:‐
• a) Amending rules of procedure, so as to streamline the litigation process and cut out
unnecessary work;
• b) Facilitating and incentivising early settlement of disputes;
• c) Controlling the amount of recoverable costs in advance.
Conference on access to justice, legal costs and other interventions 10The civil cost review
Lord Jackson notes that there are a number of general causes which give rise to excessive costs,
they are:
• (i) The rules of court require parties to carry out time consuming procedures involving
professional skill.
• (ii) In some areas of litigation, the complexity of the law causes parties to incur substantial
costs.
• (iii) The costs rules are such as to generate satellite litigation.
• (iv)Too few solicitors, barristers and judges have a sufficient understanding of the law of
costs or how costs may be controlled.
• (v) Lawyers are generally paid by reference to time spent, rather than work product.
• (vi) The recoverable hourly rates of lawyers are not satisfactorily controlled.
• (vii) The preparation of witness statements and expert reports can generate excessive
costs.
Conference on access to justice, legal costs and other interventions 11The civil cost review
• (viii) The conditional fee agreement (“CFA”) regime has had unfortunate unintended
consequences, namely (a) litigants with CFAs have little interest in controlling the
costs which are being incurred on their behalf and (b) opposing litigants face a
massively increased costs liability.
• (viiii) The advent of emails and electronic databases means that, in substantial cases,
the process of standard disclosure may be prohibitively expensive.
• (x) There is no effective control over pre‐issue costs; certain pre‐action protocols lead
to magnification of these costs and duplication of effort.
• (xii) In some instances there is ineffective case and cost management, both by the
parties and by the court.
• (xiii) Some cases which ought to settle early settle too late or not at all.
Conference on access to justice, legal costs and other interventions 12Procedural Reforms
• Lord Justice Jackson recommends a number of procedural reforms that will promote
efficiency. These reforms are:‐
Alternative dispute resolution
• Market forces are seeking alternatives to high litigation costs. Dispute resolution
mechanisms are appearing that are outside the courts, do not involve lawyers, or
involve lawyers less. Examples include ombudsmen, tribunals and alternative dispute
resolution techniques. Within the courts, special techniques are being created, such
as procedure‐light tracks (e.g. small claims or pre‐action protocols), encouraging
mediation, or adopting fixed cost regimes.
Facilitating early settlement of disputes
• One of the interventions proposed by Lord Justice Jackson is facilitating and
incentivising early settlement of disputes.
Conference on access to justice, legal costs and other interventions 13Procedural Reforms
Case management
• It is recommended that judges should take a more robust approach to case
management, to ensure that timetables are observed and that costs are kept
proportionate.
Cost management
• Cost management is an adjunct to case management, whereby the court, with input
from the parties, actively attempts to control the costs of cases before it. The primary
means by which costs management is effected is for the parties to provide budgets of
their own costs, with those budgets being updated from time to time and submitted
for approval to the court. The court then formulates the directions and orders which it
makes with a view to ensuring that costs do not become disproportionate. It may do
this, for example, by limiting disclosure, or limiting the number of witnesses.
Conference on access to justice, legal costs and other interventions 14Procedural Reforms
• To modify the procedural rules with the aim of reducing the attorney own client cost
• The Oxford study was concerned with the question whether it was possible to identify
parameters of civil dispute resolution procedure that will produce costs that are
predictable and low.
In their analysis they considered the following issues:
• a) Can procedures be shortened and simplified?
• b) Who needs to do the essential work and when?
• c) Can we predict the amount of work that needs to be done in certain types of case
and then fix a predictable cost for it (taking into account attorney and own client
costs)?
• d) How can a case‐type approach be taken further?
Conference on access to justice, legal costs and other interventions 15Procedural Reforms
• Socio‐legal research in England and Scotland has looked at civil justice from the
different types of legal issues that individuals have and have identified different
pathways to justice for different types of claims.
• A ‘pathway’ and ‘track’ approach has a number of benefits. The outcome should be
that predictable costs should be definable in a number of case‐types and that the
amount of work necessary could be limited.
• The study notes that appropriate pathways may of course, not only be through courts
or tribunals but also through ombudsmen, compensation schemes and other
alternative options.
Conference on access to justice, legal costs and other interventions 16Implementation of Procedural Reforms
Price transparency rules
• England's law firms will have to publish details of their employees' experience and the time
work is likely to take, as well as their prices, when new transparency rules come into force
in December.
• The Solicitors Regulation Authority (SRA) confirmed the scope of regulations designed to
ensure clients have the information they need to make an informed choice of legal services
provider.
• The areas of work requiring price transparency were already well‐known to solicitors: costs
for residential conveyancing, probate, motoring offences, employment tribunals and
immigration must all be published on firms' websites.
• For small business clients, firms must also state their fees for debt recovery (up to £100
000), employment tribunals and licensing applications for business premises.
• The full list of rules requires that firms also publish what services are included under the
displayed price, any services not included in the price that might reasonably be expected to
be included, and typical time‐scales and key stages of the matter.
• The SRA has made clear that it is prepared to bring disciplinary action against any firm
which does not comply. Those without a website must ensure that information is readily
available upon request.
Conference on access to justice, legal costs and other interventions 17Germany Conference on access to justice, legal costs and other interventions 15
Section III: German fee model
• The Regulation of Attorneys’ Fees (RVG) provides a system of legal fees for German
lawyers.
• The RVG consists of the text of the law as such, which contains the general provisions
regarding fees, plus an annex in the form of a list of the individual acts performed by
the lawyer and the respective applicable rate.
• The RVG provides for several types of fees either fixed fees or fees within a fixed
range.
• Fees with a fixed range depend on the value in dispute. The level of the fee that is
dependent on the value in dispute is given in the fee scale in the annex to RVG.
Conference on access to justice, legal costs and other interventions 19German fee model
• The appropriate fee in each individual case within this prescribed fee range has to be
determined by the lawyer at his own discretion in an equitable manner, taking into
account all the circumstances linked with a case, in particular the scope and difficulty
of the legal work, the importance of the matter and the income and financial situation
of the client. In addition, a lawyer’s increased risk of liability may be taken into
consideration.
• The German model has predictable costs for virtually all cost items (court costs,
lawyers’ fees and to a great extent for witness and expert costs).
• It works well for simple, lower value claims, but is less effective for more complex
cases as larger commercial cases tend to use arbitration.
Conference on access to justice, legal costs and other interventions 20Conclusion Conference on access to justice, legal costs and other interventions 18
• Access to justice is, although a guaranteed Constitutional right in SA, still out of reach
of most people.
• Paper looked at ways to address the challenges of regulating fees with emphasis on
the UK and Germany to establish international best practice.
• UK
– Jackson reforms and recommendations.
– Recent implementation of procedural reforms ‐ price transparency rules.
• Germany
– Fees are subject to several legal regulations.
– RVG provides a list of flat charges for items that a lawyer can charge, such as
copies and travel disbursements.
– Fixed fees or fees within a fixed range.
Conference on access to justice, legal costs and other interventions 22Thank you Conference on access to justice, legal costs and other interventions 20
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