I have been a qualified solicitor for five years, prior to that I had 18 months as a trainee solicitor and ~four years as a paralegal.  Save for a short period I have always worked in litigation.  I therefore have seen what is “usual” over that period, including the errors people fall in to and which make a lawyer’s job much harder when people select a law firm to represent them.

Experience

The biggest error I have seen, regularly, is clients picking representation based upon pricing only.  They will pick what works out to be the cheapest for them up-front.

To be clear: your priority should never, ever be about pricing through seeking representation that has no up-front fees.  Most often, the ones that charge you literally no fees unless you win (except in personal injury and the like) are stacking up cases and factor in losing a large minority percentage of those cases.  Cases do not get dealt with properly because the law firm knows they need to pack in the cases, ram them through as fast as possible and get fees on a percentage – further details below.

Your priority should always, always be the experience of the law firm and the solicitor representing you.

For the first four years after qualifying, my primary area of concern was finance and claims against banks.  In that time, I learned a lot.  I had bosses who had decades of vast experience.  Between us we created a process of derivatives litigation that was second to none.  The “we do not charge an up-front fee” firms packed cases in, rammed them through the process and out the other end had a ~65-75% success rate.  They expect to lose cases because they cannot dwell on the minute details simply because they need that huge case load to make it profitable.  Better firms have a win rate of 95%+.

My team had a 100% success rate until the last nine months when we lost a couple (not my cases) and some (RBS) cases received alternative products instead of money.  My cases did not get alternative products, I in fact reversed alternative product decisions, and only two cases received nothing.  Both cases were time barred and both cases could not be part of the FCA review due to their size.  Our success rate came about because we took our time reviewing cases and looking for the unique issues in those cases.  That meant (and still means) the client paying a fee for that review.

We were so successful we had one client complain that we had been too successful, obtained too much money and he was uncomfortable paying us the percentage of damages because it was too much money!  I am not sure I will ever get that same complaint again, as it was a fairly unique and unusual complaint!

We were successful for two reasons.  My boss had 40 years’ experience as a solicitor and was second to none when it comes to litigation & strategy.  I also lived and breathed IRHPs and everything to do with the banking industry 2001 to the then present.  We spent our time plus we had experience.

So, when you are looking for representation, ask about experience.  Almost all good law firms will charge you to review your case.  Chances are, if they charge no up-front fees then for various reasons it is likely that your case will never be given the very detailed care and attention it needs.  When dealing in litigation a case can be won or lost on a single line in an email that no one else has spotted.  Firms that ram cases through and do not read that level of detail can over-look winning aspects of a case or miss crucial damaging evidence that could have been managed had it been spotted at the review stage.

Limitation

 The second most crucial factor is limitation and it is the bane of every lawyer’s job.

Primary limitation means the date by which a claim must be issued in court.  If it is not issued in court by this time, then your case, with some exceptions, cannot go further.  Financial Ombudsman Service also operates on the six year rule.

For some reason there is a class of people who have a wrong done to them and then decide that they almost always must wait six years and one week or five years and 360 days before approaching a solicitor or barrister about their case.  It is as if there is some in-built mechanism deep within business people’s DNA that forces them to wait either six years and one week or five years and 360 days before speaking to a lawyer about their case that they have been itching to sue over for years.

It is not always six years or five years and 360 days.  We regularly hear from people that have waited 10, 15, 20 or even 30 years.  I have had a case recently about a decision made by a bank in the 1960s and another one wanting to sue, despite losing at the High Court in 1992 and the Court of Appeal in 1994.

There are exceptions.  Muldoon Britton is currently working on a case that involves a decision by the High Court and a Government Agency in 1992, following decisions made in 1988.  We issued proceedings (unusually, in two different courts in the High Court) and the application to strike out both cases (citing the length of time) by the Government Agency failed.

There are also exceptions within the Limitation Act 1980.  Almost always people go for s. 32, which is where you were unaware of the right of action because it was hidden from you through fraud or deceit.  S. 32 is difficult because you have to allege fraud or deceit, and solicitors and barristers are under a very strict duty to only do so where there is clear and convincing evidence of fraud or deceit.  Many cases involve someone thinking it is possibly deceit, others allege it just because they think it could not be anything else.  That is not good enough, there has to be evidence and without it a barrister and solicitor would be prohibited from making such an allegation in Court.

Examples of s. 32 are LIBOR cases or GRG cases where it is alleged that actual fraud or deceit took place.  However, even there this is difficult.  The Mazars report on GRG did not make any findings on fraud, so arguing it will be very fact specific and will require a very detailed examination of the papers.  LIBOR is clear given the findings of the FCA and the criminal prosecutions.

Some people assume fraud means that you have no limitation period at all.  That is not true.  S. 32 gives you six years from the date you became aware or (more importantly) that date at which the ordinary person in your position would have become aware with some investigation that there was a right of action.

The only other alternative is s. 14A.  This gives you an extra there years where you did not become aware of a right of action because of negligence.  This primary aim for this was for things such as builders inadequately building something that did not become noticeable until years later.  Negligence requires there to be a duty owed to you by the defendant.  Banks owe SME businesses virtually no duties save to be honest and to provide complete statements when making a statement of fact.  Outside of this there are very few duties and so negligence for bank claims is exceptionally rare and even rarer to succeed.

So, we can occasionally get around the six years, but if you are thinking of litigation, please do try to speak to a lawyer within the first couple of years, as waiting until or after limitation can mean no claim at all.  In the IRHP cases I had two failures, but failed as a consequence of the cases being substantially more than six years old and both being unable to take part in the FCA review due tot heir size.  One had a claim worth in the region of £40 to £70 million and they could do nothing about it because limitation had passed and they were fully aware of the rights of action during the first six years.  No matter how good we are as lawyers, there are cases that simply cannot get around limitation.  And it is far better you understand this than waste tens of thousands litigating a case that will be removed from the High Court quickly due to limitation.  But, if you do have a limitation problem, speak to a lawyer that has experience, they may be able to help.

Demanding

Litigation is probably one of the most stressful things an SME businesses will undertake.

It is important you understand that this all takes times.  No matter how many times you call your solicitor wanting an update, the dates and timetable will not change.  Courts are massively underfunded and as such have few employees compared with how many they ought to have.  Cases can therefore only be dealt with when someone picks it up.  Manchester, Birmingham, Luton and London are the principal courts for their regions.  They are beyond busy.  Getting a decision from a Judge is not speeded up by calling the court twice a day.  No employee at the court will give the Judge a “nudge”.  No employee will go and ask the Judge how long they are going to be.  Decisions on things from a Judge simply takes as long as it takes.  That is as frustrating for us lawyers (who tend to have multiple cases in these courts) as it is for you.  But very little can be done about it.  Even lawyers from outside the area think this can be speeded up – it rarely can.  Even more rarely an employee could get a decision out of a Judge the same day – they are very rare exceptions to the rule.  Court staff are all underpaid, overworked and very much under appreciated.  Some simply do not care, though there are some great people working that can really make a difference.

The other demanding issues we get, as alluded to above, is to allege fraud in a case or, worse, to over-egg the pudding in damages being claimed.

Solicitors and barristers are strictly prohibited form alleging fraud.  Just because it is “obvious” that there is fraud, without clear and convincing evidence of said fraud no barrister will include it in pleadings and no solicitors will allege it in correspondence with the otherside.  Simply put, for the most part fraud does not actually get you things that other heads of claim would get, save for cases that are only about fraud (such as LIBOR manipulation, for example) or where it is used in limitation (see above).  A Judge will react very badly to an allegation of fraud.  A Judge (quite rightly) would only make a findings of fraud in exceptional cases where it is well evidenced.  It is simply going to damage your case to allege fraud unless you can very clearly evidence it.  It being “obvious” is not in and of itself evidence of fraud.  Listen to your solicitor and barrister.  If they say it should not be pleaded, there will be a very good reason for that.  Your animosity for your opponent is not sufficient reason to make an allegation of fraud.  And it will most certainly damage your chances of winning if you allege it with no evidence.

The other aspect noted is over-egging the pudding.  That is, essentially, pushing in as many damages as you can possibly think of.  Many people do with a view to “If I allege £2 million they will settle for £1 million”.  This can and does work occasionally.  However, my experience is that if you allege damages that simply do not exist then you taint the rest of your damages’ claims.  And when this happens your £2 million pound becomes worth £100,000.  Everything becomes tainted with the stench of untruth flowing from the unbelievable claims.  However, if you put in a very well evidenced claim for £1 million and everything is very well evidenced, then your £1 million claim becomes £750,000 at mediation.  So which do you think makes for a better outcome?  Claim £2m and get £100,000 or claim £1 million and get £750,000?

So why would that be?  Do all lawyers not just automatically barter for 75% of the claim?

Yes and no.  Most settlements aim for the 70-75% region.  However, if you have filled up your claim with bogus demands, then, as noted above, the settlement simply aims to stop you being struck out and the claim becomes £100,000.  That is because badly evidenced claims, over-hyped claims and over-egged claims face a Judge.  If there is more in your claim that does not pass the sniff test, then you get closer and closer to a Judge simply finding against you on everything.  There is case law of Judges finding for a claimant but awarding £1.00 because the Judge found the damages claim to be simply unbelievable.

A good example would be the IRHP cases.  Many people assumed it was easy to get the first stage (cash flows) redress in the FCA review.  So they therefore packed their damages claims for stage 2 (consequential losses).  Almost all of them said the same thing.  “If I demand £2m they will settle for £1m.”  That simply is not how it works, but sadly some people think it is.  How it actually works is the defendant looks at your claims and then discounts the unbelievable claims.  If that is the majority, then their thoughts turn to having the claim dismissed.  They do not start thinking about settling for 50%, they think about how many different ways they can show your claims to be bogus and asking a Judge to kick the whole claim out of court off of the back of the dubious and spurious claims.  At that stage your lawyers will know that any mediation will result in a “drop hands” agreement whereby you both walk away and only look after your own legal fees.  That happens when your lawyers know that the otherside absolutely will succeed in an application to have your claim struck out or where they know the likelihood is that your case will be found in your favour but you will only get a nominal award of £1.00.  At that stage getting you £100,000 (the cost of the defendant to go to trial is often offered as a way of getting you to go away) is a win.  Your view that if you just pack enough damages in there the defendant will cave and offer you 50% does not work.

In the alternative, where you have only included very credible damages that are well evidenced, the other side, instead of working out how many different ways they can get your claim kicked out of court, spend their time worrying about quite how high the Judge will be when he makes his award.  It is only well evidenced cases in which the defendant’s lawyers think like this and that is when they start seeing 70% of the damages as being far more acceptable than 100% of the damages.  That is why when you have a £100,000 loss you really should not be putting in a £16 million claim.  The only time that is appropriate is where historically you have taken £100,000 and turned it into £16 million.  If your business has run on its overdraft for 15 of the last 20 years, then you are unlikely to be putting forward a credible claim that is worth millions and millions.  Again, it is far, far better to have a credible £500,000 than an unbelievable £2 million claim.  One will likely get you £400,00, the other nothing.

And the costs’ order when you lose is the other.  You also can get costs orders even where you win.  So, for example, if you put in a £300,000 claim and only win on one point out of five, and was awarded £100,000 damages, you could be faced with paying 4/5 of your opponent’s costs and them paying you 1/5 of yours.  It is possible to watch your damages go up in smoke as they are used up to off-set the costs order you received because you lost on four of the five main points of your claim.  That is why it is always important you listen carefully to your solicitor and barrister.

And that is why it is essential you have very experienced solicitors representing you.  In the FCA’s IRHP review many inexperienced people, claims managers and solicitors, allowed their clients to put in spurious multi-million-pound claims.  They almost always ended up with very little.  Properly evidenced claims tended to get adequate settlements.  And in any review, like the RBS GRG review, the bank does not say “Oh, their claim is worth £1 million, let’s offer them £700,000”.  In that review, like the IRHP review, the bank will deal with each line and reject it or accept it, they are not, as part of the review, looking at it like mediation where you make offers.  They are not making offers and they are not accepting them in the review.  They are making a full and final determination, you accept it or reject it.  If you reject it you have Court or FOS, if either option is available to you.

GRG: RBS

 The GRG issue has been known about for some time.  They have been ruining businesses since Summer 2007.

The FCA did an investigation, but refused to release the report.  The Treasury Select Committee has been trying to force them to release it but the FCA is prohibited by legislation from doing so.  The TSC and FCA therefore came to a compromise.  They released an interim report on the FCA findings, and this was finalised on 28 November 2017.  This can be found here:

https://www.fca.org.uk/news/press-releases/fca-publishes-final-summary-rbs-treatment-sme-customers

The special advisors’ report can be found here:

http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/treasury-committee/the-work-of-the-financial-conduct-authority/written/72329.html

The special advisors’ report is the most crucial, because it finds that the Bank in a co-ordinated and premeditated way schemed against SME businesses.  It finds that certain senior people at RBS were fully aware of what was going on in GRG.  That will make a huge difference.

The GRG review is different to the IRHP review.  That is because IRHPs were regulated products.  Commercial lending and dealing with insolvent (or allegedly insolvent) businesses is only governed by common law and contract.  The contracts are usually the loan agreements and over-draft agreements.  The FCA has no power over RBS at all in regards to either.  The Bank could, if it wanted, decide that all loans going forward will only have an annual interest rate of 1,000,000%.  The FCA could do nothing about that.  That would go down to whether a business wanted to agree to the loan and if they did not they go to another bank.  The FCA could not prohibit the bank from doing so.

So the GRG process was agreed, but it has to be remembered that the Bank has no regulatory obligations except in so far as how they deal with complaints are concerned.  That is why it is known as the GRG Complaints’ Process.  It is true that a retired Judge is over-seeing, but that only goes to how they are running the review, it is not open to businesses to ask the retired Judge to review their case.

As with the IRHP cases there are various firms doing GRG complaints.  All of the above points must be remembered.  Making a quality complaint has substantially higher returns than making dubious claims.  Listen to your lawyers on this.  The six year rule does not apply to the complaints’ process, but litigation may need to be assessed based upon whether you can meet one of the exemptions if you are outside of the six years (which would go from six years from you entering GRG).  Muldoon Britton, as noted above, has substantial experience in bank complaints.  Call our Manchester office to discuss it further: 0161 826 6922.