Month: October 2015

The new ‘TripAdvisor’ style website for lawyers – ReviewSolicitors – should come with a series of warnings both for disgruntled customers looking to take pot shots at their lawyers and for solicitors wanting to protect their reputation by stamping out any criticism considered harsh or unfair.

ReviewSolicitors allows people to rate their solicitor whether or not that law firm is registered with the site but, unlike the infamous ‘Solicitors from Hell’ website which was closed down following legal action from the Law Society, the new platform is intended to be a productive resource for lawyers and the public alike.

This is unlikely to stop angry clients having a rant and some lawyers rushing to threaten, or even launch, defamation proceedings – after all speed is often of the essence especially when dealing with potential online libels.

Seriously damaging and defamatory allegations can and are made on websites. This was illustrated in the recent case of Brett Wilson LLP v Persons Unknown where Judge Warby ruled that words posted on a new website calling itself ‘Solicitors from Hell UK’ and suggesting that the claimant firm was corrupt, incompetent and oppressive were ‘clearly defamatory.’

In that case there was no attempt by the site nor its unknown operators to defend the claim but there may well be instances where allegations of incompetence or negligence, for example, may be warranted and can be successfully defended.

“Whether these allegations would give rise to an actionable claim in defamation by the lawyer concerned will largely depend on whether the allegations are true, could be defended as honest opinion or could be protected under qualified privilege,” said Amber Melville-Brown, Media and Reputation Management partner at Withers LLP.

In other words lawyers should think twice before starting a legal action that may end up damaging rather than protecting their reputation. Words do hurt and can cause significant damage but libel litigation may not be the best way to remedy a damaged reputation, said Ms. Melville-Brown.

“Careful consideration needs to be given to whether the downside of allowing the allegation to remain online, is worse than the time, energy, costs and publicity of taking the opponent on,”she said.

Indeed, a negative post might be the perfect opportunity for a law firm to beef-up or launch a ‘best practice’ for dealing with customer complaints. There are also a number of communications tools to rebut unfair and inaccurate reporting, without resorting to legal remedies, though with ongoing client confidentiality restrictions, being too open about the facts in mitigation, may be tricky.

Many solicitors already operate under the Law Society’s quality mark for excellence, Lexcel, which involves managing an effective complaints procedure but the possibility of being attacked online should serve as a timely reminder to any lawyer that clients and their feedback matter.

For their part, angry or disappointed clients should think twice before venting online. Being a defendant in a libel action in the UK is notoriously difficult because the onus of proof lies on the defence. It is the opposite in the US where the burden is on the plaintiff to show that the allegations are untrue and where, not surprisingly, there are already a number of well-established lawyer-rating sites.

It is also not always obvious to a client, and potential defendant, the precise extent or details of the work done by a solicitor on his/her behalf. For example, the solicitor is likely to have a record on file of checks made and work done which could catch out an unwary client. And, perhaps most importantly, along with the complex law and difficulties with factual evidence, potential defendants are likely to be up against well-heeled and insured lawyers.

2 October 2015

The Consumer Rights Act, which came into effect today, 1 October, is unlikely to herald a deluge of class actions despite the implementation of an ‘opt-out’ system for collective litigation that will enable as-yet unidentified individuals to be included in competition law cases.

The Act reverses the current system which requires all claimants in a collective action to expressly ‘opt-in.’ The rationale in the past had been to avoid unmeritorious litigation and US-style class actions but more recent thinking has come down in favour of making it easier for private individuals and businesses to take enforcement action.

However, the new legislation is not a bonanza for consumers looking to hold businesses to account – it only applies to infringements of EU or UK competition law and to claims brought on or after 1 October 2015.

The Competition Appeal Tribunal (CAT) will now have jurisdiction to hear cases in all competition infringement actions not, as now, just those subsequent to a previous decision by the relevant competition authority – so-called ‘follow-on’ actions.

In order to safeguard against frivolous and vexatious litigation, the CAT will have to certify that the collective action meets a number of criteria before allowing the claim to go ahead. These include:

• The adequacy of the representative bringing the action – the CAT will only authorise a person to act as a representative if it is ‘just and reasonable’ to do so.
• The collective claims raise the same, similar or related issues of fact or laws.
• The standard costs rules will apply such that the losing party is required to pay the successful party’s costs.
• Exemplary damages cannot be awarded and damages-based agreements, where the acting law firm receives a percentage of the damages if the claim is successful, are unenforceable.
• The opt-out procedure does not extend to foreign claimants who will still need to expressly opt-in.

The new system will primarily apply to price-rigging claims such as the illegal cartel operated by Virgin Atlantic and British Airways some ten years ago in which the airlines colluded to fix air passenger fuel surcharge prices and the current freight cartel action involving BA and eleven other airlines.

It won’t apply to the vast majority of main consumer claims, says David Greene, senior partner at Edwin Coe and expert in Competition Law. “It is unlikely to benefit the very people it was brought in to assist because it only applies to anti-trust actions.”

Mr Greene says that funding is also a big issue because in the opt-out system it is impossible to know the number of potential and actual claimants. He said this could deter third party funders.

Louis Young of third-party funder Augusta Ventures disagrees. “Costs can often dwarf the size of damages especially if they aren’t managed properly. With an opt-out system adverse costs risks are minimal because you only run one claim. This is certainly not a deal-breaker,” he said.

Businesses are understandably nervous about their increased level of potential exposure under the new regime which allows the CAT to assess damages on an aggregated group basis rather than limit an award to the amount of damages claimed by each opted-in claimant and quantified on an individual basis.

This means that the damages paid by defendants could often represent more than that which is actually claimed by members of the claimant group. If this happens, the unclaimed portion doesn’t revert to the defendant – instead the new system enables the CAT to allocate any unclaimed portion of the damages to a prescribed charity or to pay these to the representative in respect of costs incurred.

Whilst the Consumer Rights Act is unlikely to make an enormous difference to competition claims, it will give consumers and small businesses more options in competition infringement cases. If the new system is successful it could have a knock-on effect with product liability cases being the next in line for opt-out collective actions.  The recent VW scandal could well mark the first big test of this new regime.

1 October 2015