Lawyers Covered - May 2024

Published on 29 May 2024

It can be tough for busy lawyers to find enough time to service clients, make it safely through the regulation obstacle course, win new work and keep up-to-date with developments, but we've got you covered!

Welcome to the May edition of our Lawyers Liability & Regulatory Update, in which we highlight the last month's key developments affecting lawyers and the professional risks they face.

Silence in response to an invitation to engage in ADR could be seen by the court as unreasonable conduct

The recent Court of Appeal decision in Northamber PLC v Genee World Ltd & Ors [2024] EWCA Civ 428 should act as a warning to parties to litigation and their solicitors that simply failing to respond – or ignoring – an invitation to mediate from the other side could be seen as unreasonable conduct by the court.

During the underlying dispute (relating to various exclusivity agreements), the court had made a case management order which provided that, at all stages, the parties needed to consider settling the litigation by engaging in ADR. The order went on to say that any party not engaging in ADR proposed by another party must serve a witness statement giving reasons within 21 days of that proposal.

The claimant's solicitors subsequently invited two of the defendants to mediate the dispute. Solicitors for one of the defendants responded to say that they were taking instructions, but did not reply further, and the other defendant's solicitors did not respond at all. Neither of the defendants served a witness statement to explain why they were not interested in mediating.

In the first instance decision, the judge suggested that the claimant's invitation to mediate may have been half-hearted, its main purpose to enable the claimant to say at the end of the trial that it had tried to engage in ADR. The judge flagged that the claimant's solicitors made no attempt to chase the defendants' solicitors for a response to the claimant's invitation to mediate.

On appeal, however, the court held that the defendants' silence in response to the claimant's invitation to mediate was in itself unreasonable, made worse by the fact that neither party had served a witness statement (in accordance with the case management order) explaining why they did not want to engage in ADR. Whilst the first instance judge expressed concerns about the claimant's solicitors' failure to chase up their invitation to mediate, the Court of Appeal said: "[the claimant] made a clear offer to mediate… after that, the ball was in [the defendants'] court. That was particularly so in the case of [one of the defendants] given that its solicitors said that they were taking instructions but did not reply substantively. [The claimant's solicitors] were entitled to assume that a chasing letter would not have been met with a positive response". The Court of Appeal imposed a costs penalty accordingly.


Legal Services Board confirms its support of innovation in AI

The Legal Services Board (LSB), which oversees the regulation of legal services in England and Wales, has promised that it will continue to deliver a pro-innovation approach to AI regulation.  The LSB has outlined its approach in a recent letter to Michelle Donelan MP, Secretary of State for Science, Innovation and Technology.

The progress of Al continues apace, and is already finding applications in the legal sphere.  Machine learning tools are able to review large quantities of documents and identify relevant evidence, and have been developed to predict likely litigation outcomes based on analysis of court judgments.  Moreover, chatbots can gather client information and answer simple legal queries. 

Such applications of AI can save significant time and expense, potentially reducing the cost to the client.  This, in turn, can improve access to justice.  Indeed, the LSB's letter states, "We have prioritised our work in this area to focus on how the legal sector can proactively harness the benefits of technology and innovation to help widen access to justice and reduce unmet legal need".

However, the LSB recognises that the adoption of new technologies introduces new risks, which it promises to assess, manage and mitigate.  The key regulatory challenges the LSB has identified are:

  • Accountability – where AI fails, who is responsible for the consequences?
  • Transparency – clients must be told that AI has been used in the preparation of advice.
  • Explainability –the processes behind AI outputs should be understood to foster trust in the technologies.

The LSB has published new statutory guidance for regulators.  This identifies three outcomes for regulators to seek when developing regulatory approaches to technology and innovation, including AI. Such regulation should:

  • enable technology and innovation to improve access to legal services and address unmet need;
  • balance the benefits and risks, and the opportunities and costs, of technology for the greater benefit of consumers;
  • actively foster a regulatory environment that is open to technology providers and innovators.

The guidance in non-prescriptive.  In other words, the LSB expects regulators "to consider their approaches to meeting the outcomes in a way that is most appropriate to their regulated communities".  Moreover, the LSB expects that individual regulators are best placed to assess the risks facing their regulated communities and to put in place appropriate mitigation strategies.

The LSB's letter goes on to set out its plan for the next 12 months, including building its horizon scanning capability, developing guidance for education and training, and facilitating information sharing between regulators.

Failure to provide reasons for seeking an order did not invalidate application

An application to extend time for compliance with a consent order, which was made 3 minutes before the deadline, was held to be an in-time application to extend time, even though there were no reasons given for the extension in the application notice and the accompanying witness statement was 'to follow'.  The court held that this was a procedural error which it could – and did - rectify under CPR Part 3.10, and, therefore, did not invalidate the application.  The court therefore applied the principles in Everwarm Ltd v BN Rendering Ltd, rather than the three-stage test for relief from sanctions in Denton v T H White [2014] EWCA Civ 906.   Whilst the Court commented that the manner in which the application had been made was unsatisfactory and the cause of considerable waste of time and money, it granted the application in the interests of the just and fair disposal of the litigation.

Lloyds Developments Limited (in administration) v Accord HotelServices UK Limited [2024] EWHC 941 (TCC)

Men's only membership shaken not stirred

Last month, we reported on the Garrick Club membership story and can now provide an update.

At the heart of the Bar Council is a "commitment to fairness, equality and diversity" says Chair Sam Townend KC, echoing the words of Lady Hale when she spoke about diversity at an event back in 2011.  At that time, she said, "I regard it as quite shocking that so many of my colleagues belong to the Garrick, but they don’t see what all the fuss is about… [Judges] should be committed to the principle of equality for all."  Thirteen years on and her words have finally been heeded.  

Since early 1800, the Garrick club had been a bastion of inequality, only allowing men as members.  At long last, after nearly two centuries, the Garrick Club, following statements in favour of admitting women from the likes of Stephen Fry and Sting, held a vote to decide whether women should be allowed to join. Ordinarily, a two-thirds majority was needed for changes at the club but, in a recent move seeing a club rule change, only 50% was needed.  By a reported majority of 60%, women will finally be accepted into the Club as members. 

It is reportedly hoped that this will "rejuvenate membership".  Who will be the first female member of this institute you ask?  The one and only Dame Judi Dench – who will no longer need Bond to accompany her while attending the Club.

Bahrain and Singapore sign ground-breaking arbitration treaty

A new Bahrain International Commercial Court (BICC) has been established, following the signing of a bilateral treaty between the Government of Singapore and the Government of the Kingdom of Bahrain.  Going forward, the Singapore International Commercial Court (SICC) will hear appeals from the BICC involving a body of judges drawn from the superior courts of both Bahrain and Singapore. 

The treaty effectively creates an English-speaking international court in Bahrain that has jurisdiction to hear commercial disputes in international matters.

joint media release from both countries outlines the key features of the treaty:

  • Cooperation between the SICC and the Supreme Judicial Council of the Kingdom of Bahrain to establish the BICC;
  • The hearing of appeals from the BICC by the SICC, which will provide parties with a transnational commercial dispute resolution option; and
  • Opportunities for the development of commercial jurisprudence.

Establishment of the BICC forms part of the Bahrain Arbitration Bay (BAB), a neutral hub for international dispute resolution being created in Bahrain's capital, Manama. The BAB is modelled on Singapore's integrated ADR hub, Maxwell Chambers.  Bahrain's justice minister, Nawaf bin Mohammed Al Maawda, expressed his hope that the BICC will "[strengthen] the rule of law and [promote] access to justice on an international level" in Bahrain, by hearing all international arbitration-related cases.   The treaty also emphasises Singapore's commitment to positioning itself as the leading centre, and influential model, for arbitration in Asia and internationally.


Additional contributors: Cat Zakarias-Welch, Sally Lord and Aimee Talbott

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice. We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date. You should seek legal or other professional advice before acting or relying on any of the content.

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