Access To Justice And Access To Lawyers
ACCESS TO JUSTICE AND ACCESS TO LAWYERS
ADDRESS BY THE HONOURABLE J J SPIGELMAN AC
CHIEF JUSTICE OF NEW SOUTH WALES
TO THE 35TH AUSTRALIAN LEGAL CONVENTION
SYDNEY, 24 MARCH 2007
The wide range of issues often discussed under the heading of Access to Justice can be divided into two categories. First, access to the law, which, in matters of any complexity or significance, requires access to lawyers. Secondly, access to legal decision-making processes. From this range of issues I wish to concentrate today on two matters.
The first is access to lawyers and the positive social, economic and political contribution made by the legal profession. It is my view that the profession as a whole has not sought to articulate with sufficient force, indeed hardly at all, the scope and significance of that contribution, other than to each other.
The second matter upon which I wish to focus is the costs involved in legal decision-making processes. I am not concerned primarily with legal costs although, of course, they are a significant component. I am concerned with the overall costs imposed by the system upon parties, not simply legal costs which, of course, from a different perspective, lawyers usually call income.
POPULAR DISSATISFACTION
It is necessary to maintain a sense of perspective as well as of proportion about these matters. A century ago Roscoe Pound delivered a lecture entitled “The Causes of Popular Dissatisfaction with the Administration of Justice” [1]. This paper commences with the sentence “Dissatisfaction with the administration of justice is as old as law”. It still is. Much of what Pound said a century ago is still relevant. We have to accept a level of popular dissatisfaction as inevitable.
In a democratic polity such as our own there is an understandable reluctance to accept the necessity of expertise. Many approach the administration of justice on the basis that it requires an outcome that is responsive to the immediate wishes of the community. They assume that one could devise a mechanism for identifying such wishes. They also assume that these wishes are neither transitory nor likely to alter after tranquil deliberation. The common refrain is that judges are out of touch and that lawyers are at best greedy and at worst systematically deceptive.
There is nothing new in a conflict in which one side characterises the other as populist, and the latter characterises the former as elitist.
There are some voices in the community which suggest that they would never be happy unless legal decision-making occurs either by means of polls on talkback radio or by means of voting on reality television.
REALITY LAW
Ancient Greece did not have the technology that would enable citizens to sit at home, watch a trial and record a verdict by electronic communication. The reality audience of that era had to be gathered in one place. Major trials in Ancient Greece were conducted in the public agora by a jury of 500 citizens voting on guilt or acquittal and then on penalty [2].
It was one of the great Pericles’ innovations that jurors were entitled to significant pay for their deliberations, hence allowing the poorest of Athenians to participate, indeed for them to do so at a profit.
Lawyers were banned. Any litigant had to speak for himself or herself. However, a class of speech writers or logographers emerged and their drafts have come down to us as one of the major sources of our knowledge of Athenian society. Our other major source is such of the Greek plays as have survived.
It is noteworthy that a common theme, particularly in the plays of Aristophanes, is a sustained attack on the excessive litigiousness of Athenian society. Aristophanes satirised citizens who became as obsessed with litigation as any dedicated watcher of reality television, thrilled by the power of rendering a verdict, in the same way as a reality television audience is thrilled by the power of voting for an eviction from the programme.
A principal target of the dramatists, particularly Aristophanes, was the class of litigants in person who flooded the courts with tendentious processes. This class was denounced as “sycophants”. The word did not then mean a servile flatterer, as in contemporary usage, but something like a public informer, with an overtone of being a pest.
The plays of Aristophanes characterise sycophants as freelance operators out to make money, if necessary by blackmailing individuals, inventing false charges and indulging in slander.
On the two occasions when the Greek democratic system was suspended during the course of the 5th Century BC, law reform, particularly the control of sycophancy, was high on the list of changes. One of the leaders of the revolt known as “The Thirty Tyrants” was a student of the philosopher Socrates. Even Aristophanes had, before this revolt, characterised him as a subversive, when he described a gang of pro-Sparta aristocratic youths as “Socratified”.
Socrates was convicted by a jury of 500 citizens, voting 280 to 220 for guilt on charges of corrupting the youth of Athens and impiety. When Socrates treated the verdict with scorn, during the hearing on sentence, the 500 jurors overwhelmingly voted for death.
Any reality television audience would have done the same. This may not be the model to pursue in response to popular dissatisfaction.
THE CONTRIBUTION OF LAWYERS
As members of this audience are well aware the lack of understanding, let alone appreciation, of the functions performed by lawyers is widespread. It is one manifestation of the general deficiency in civic education. Remedying this situation should be a major, indeed a central, task of the institutions that represent the profession, both at a State and national level.
So far as I am aware, there has been no systematic effort by the profession to articulate for the benefit of the public, in a comprehensive form, the positive contribution made by the legal profession to our economic, social and political life. We lawyers simply take for granted that the public at large understand what it is we do and why. That assumption is not justified.
We have all heard the array of jokes about lawyers, usually based on the proposition that lawyers are greedy and expendable. In fact, there do not seem to be many lawyer jokes, only multiple variations of the same joke or two. The late Chief Justice Rehnquist said, when opening a new building for the University of Virginia Law School, that he had once had the practice, when addressing a mixed audience of lawyers and non-lawyers, to tell the usual kind of lawyer joke about lawyers who are nasty, greedy and unethical. He said he had stopped that practice because the lawyers in the audience didn’t think the jokes were funny and the non-lawyers didn’t realise that they were jokes See Mark Gallanter Lowering the Bar: Lawyer Jokes and Legal Culture University of Wisconsin Press, Madison (2005) at 3.
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In a complex society such as ours, individuals and corporations interact with each other in a wide range of different ways. The harmony of our society, and therefore its economic prosperity, depends to an overwhelming degree on the operation of a vast network of rules and upon their effective enforcement. Almost every aspect of the life of an individual in a society as large and complex as ours is affected in some way by rules which are reflected in laws.
By and large we Australians take these rules for granted. We tend to take a lot of things for granted. When we flick a switch we expect electricity to be immediately available. When we turn a tap we expect clean water to instantly flow. We give no thought to the sophisticated infrastructure that makes these simple actions possible.
The same is true of the legal system.
Behind most everyday activities in which we engage, there is an invisible infrastructure of laws and mechanisms for their application and enforcement which Australians take for granted. The legal profession, in its many different manifestations and roles, is a critical part of this social infrastructure. Without lawyers this sophisticated system simply would not work. We need to convince other Australians that that is the case.
Let me just take the two examples I gave, flicking a switch to receive electricity and turning a tap to receive water. There is a legal infrastructure underpinning these actions, as well as a physical infrastructure.
No one would have built the electricity generating plants or the dams and the distribution systems for either electricity or water, nor would anyone pay for the costs involved in running the plants, such as employing the people required for operations or buying the fuel for electricity generation or pumping water through the reticulation system, if there was not a high level of certainty about both the existence and the enforcement of the contractual rights and obligations embedded in a network of exchanges in which many different parties buy and sell a wide range of services and goods culminating, of course, in the ultimate consumer paying the bills.
The legal infrastructure is at least as sophisticated, and definitely as necessary, as the physical infrastructure involved. There are other ways these services could be provided, but not in a way which preserves a wide sphere of personal freedom.
All of this is really quite obvious. At least it is obvious to a lawyer. It is almost embarrassing to say that matters of this character require articulation, particularly to an audience such as this. It should go without saying and it does. It is not said often enough. However, it needs to be said, at least sometimes.
The sorry state of civic education in our school curriculum is such that this is one of the many aspects of our social and political infrastructure that is not widely understood. It is, I believe, necessary for the profession to get on the front foot on this matter.
SOCIAL ORDER
No complex society can operate without the efficient and expeditious performance of legal functions, by means of direct enforcement of rules and by the deterrent effect of threatened or possible enforcement.
The sense of personal security and the existence of social order is determined in large measure by the extent to which people can arrange their personal affairs and their relationships with associates, friends, family and neighbours on the assumption that basic standards of propriety are met and reasonable expectations are satisfied. In all spheres of conduct it is essential that individuals and corporations know that they can pursue their lives with a reasonable degree of security both of their person and of their property.
This is not possible without the active involvement of lawyers. Lawyers perform a critical role in the promotion of social order by the administration of the law in a manner which answers the fundamental requirements of justice namely, fair outcomes arrived at by fair procedures. The fairness of the procedures is as essential as the correctness or fairness of the outcomes. When people talk about having their “day in court” this is a matter that is of significance to their sense of freedom and personal autonomy. In all these respects the contribution made by lawyers is fundamental.
Those in society who are wealthy or powerful, including but not limited to the numerous manifestations of the hydra-headed executive branch of government, have other means of getting their way. What confines those with power, whether in government or commercial corporations or the media or, in some societies and contexts, social or religious groups or trade unions, is the effective operation of the rule of law.
A complex, large society necessarily creates a body or rules both judge made and statutory, that regulate contracts, property, trusts, estates, corporations, partnerships, family relationships, etc. The role of the lawyer commences at the outset of any relationship. Much law should be regarded as the equivalent of preventative medicine.
Lawyers perform tasks which enable individuals and corporations to create obligations on the part of others towards their clients, by invoking the rights and powers created by this body of law. Furthermore, lawyers are often essential to ensuring that individuals and corporations understand what it is that they must do to comply with the duties imposed upon them by the law and to identify the boundaries of those duties, in order to establish what it is not necessary to do. Furthermore, when others, whether governmental authorities or private individuals or corporations, act contrary to their obligations or otherwise infringe the rights and expectations of persons and corporations, then lawyers are usually essential to enforce the law by advice and, if necessary, by litigation, to keep the actions of others within proper bounds.
THE RULE OF LAW
The form of social order which we identify with a society operating under the rule of law can only exist if laws are administered fairly, rationally, predictability, consistently and impartially. Improper external influence, including all forms of inducement or pressure, are inconsistent with each of these objectives.
Fairness requires a reasonable process of consideration of the rights and duties asserted. Rationality requires a reasoned relationship between the rights and duties of the outcome. Predictability requires a process by which the outcome is related to the original rights and duties. Consistency requires similar cases to lead to similar results. Impartiality requires the decision-maker to be indifferent to the outcome.
Any form of improper influence or incompetence or inefficiency distorts each of these objectives.
The rule of law involves a principle of universality, that is to say every person however powerful or wealthy is governed by the ordinary law and is personally liable for anything done contrary to the law. All authority and power, including all aspects of governmental authority and power, must find an ultimate source in the law. It is this principle that ensures that the rule of law differs from the arbitrary exercise of power. All authority is subject to and constrained by the law.
A second aspect of the rule of law is the concept of boundedness: that the law is not all encompassing. There is a substantial sphere of freedom of action. Citizens can only be constrained or punished for violation of the law and in accordance with the law. Where the law ends, so constraint ends. Lawyers are important boundary riders maintaining the integrity of the fences that divide legal constraint from the sphere of freedom of action.
Social order requires that laws which protect society, and individuals within society, are effectively enforced. It also requires that the personal autonomy and liberty of citizens is protected.
Social order is not a state of quiescence. It is a state of certainty, at least to the degree that certainty is capable of attainment in a complex society.
The minimum content of the rule of law is that the rights and duties of persons in the community, and the consequences of breach of any such rights and duties, must be capable of objective determination. It is only if this is the case that persons and groups in society can interact with each other with confidence in an environment of social order.
All forms of social interaction, including economic interaction, are impeded by the degree to which personal and property rights are subject to unpredictable and arbitrary incursion, so that people live in fear, or act on the basis of suspicion, rather than on the basis that others will act in a predictable way. It is a high level of predictability that establishes the requisite social order and the confidence to act in accordance with reasonable beliefs as to one’s rights and obligations and that reasonable expectations will be met.
Of course the rule of law is not simply a system that contains rules that must be obeyed. The law is a system to be used by citizens for their own protection and for their own advancement in their relations with the State and with other citizens or organisations.
None of this can happen without the active participation of lawyers both by means of advising people of their rights and obligations and by ensuring that issues are pursued, before an appropriate forum for resolution, when necessary.
Actual or threatened transgression of civil rights in society, notably but not limited to the exercise of the police function of government, are in large measure deterred by the very existence of an independent legal profession, with access to courts consisting of independent judges. From time to time deterrence may not work and the judicial arm of government must be invoked, sometimes against other arms of government, both executive and parliamentary. Traditional protections, such as the writ of habeas corpus, can only function if lawyers are prepared to bring cases before courts, often without instructions because individuals who are detained may not be contactable.
Of particular significance is the considerable expertise that lawyers acquire for the purpose of finding facts. Knowledge of the law is often treated as a higher order of attainment of legal skills and, accordingly, appellate courts are given higher status than trial courts. However, the overwhelming preponderance of decision-making processes that really matter are done by those trial courts in the course of the finding of facts. This role, which extends to investigatory tribunals such as coroners courts or royal commissions, requires the traditional lawyers’ skills to be deployed.
Social order requires that the social conflict that initiated the entire process is quelled by the result, both by reason of the fairness of the outcome and the fairness of the procedure.
Of course, an adversary system is not the only means for finding facts. However, it involves procedures that are widely regarded as fair and, accordingly, those who are subject at the end of a process to adverse findings are more likely to accept their loss, than if other procedures were followed. The adversary system seeks to find truth by means of the Socratic dialogue, rather than by means of a Grand High Inquisitor.
The benefits of the rule of law are not capable of attainment without the active involvement of lawyers in the context of established institutions for the administration of the law based on a high level of interdependence. There is a symbiotic relationship between the judiciary and the profession, so that the performance and the functions of each depends to a substantial degree on the capacity and integrity of the other. If the functions and powers of any participant in the process are abused, by reason of corruption or bias or to serve the interests of those who wield power, the whole system becomes distorted, indeed perverted.
The contribution of the legal profession to the maintenance of social order in the course of the resolution of the conflicts that inevitably arise in our society is a matter of the highest significance for our social cohesion and our economic prosperity. In the latter respect, the contribution of lawyers is not often emphasised.
ECONOMIC PROSPERITY
It is a fundamental error to suggest, as many lawyer jokes suggest, that lawyers do not really “produce” anything. A lawyer’s contribution may be intangible, as most contributions are in a service economy, but it is fundamental. The services that lawyers perform both directly, with respect to economic transactions and indirectly, with respect to the maintenance of freedoms and the maintenance of a sense of fairness in our society, constitute a vital contribution to the economic prosperity, as well as to the social welfare, of the nation. An advanced economy is not feasible without lawyers. This is something that needs to be more widely understood.
There is widespread acceptance in the community of the importance of a free market economy for our economic prosperity. There is, however, only a limited understanding of how this market economy has been created. Only certain kinds of society, governmental structure and legal system have been able to sustain a market economy.
A successful market economy is not – as economists are inclined to assume – some kind of force of nature. It is the direct product of good government and of the law. The “market” in a complex economy is not a bazaar or a row of stalls offering face to face exchanges. The contemporary market is a dense network of rights and obligations, generally in writing. Economists who promote market solutions do not usually acknowledge that the market of which they are so enamoured cannot operate without lawyers.
The founding tract of free enterprise ideology, Adam Smith’s The Wealth of Nations put the proposition directly:
“Commerce and manufactures can seldom flourish long in any state which does not enjoy a regular administration of justice, in which the people do not feel themselves secure in the possession of their property, in which the faith of contracts is not supported by law, and in which the authority of the State is not supposed to be regularly employed in enforcing the payment of debts from all those who are able to pay. Commerce and manufactures in short, can seldom flourish in any state in which there is not a certain degree of confidence in the justice of government.” [4]
It is only if individuals and corporations believe that they can transact business with a high degree of assurance that promises will be kept and debts paid, that a market economy can effectively operate.
One commentator has described a business lawyer as a “transaction cost engineer” who facilitates commercial intercourse by reducing future transaction costs [5]. Well-drafted commercial arrangements avoid conflict with regulatory regimes, anticipate and therefore avoid disputes and create structures for dealing with the unknown or the unanticipated. By their involvement business lawyers add value to commercial transactions. Legal devices minimise transaction costs in the future, circumvent constraints on conduct, avoid liabilities, pursue strategic objectives and allocate the risks associated with commercial transactions.
All of this, of course, requires a facility with words. Indeed, we lawyers, both practitioners and judges, are traffickers in words. Words are the vehicle by which the law and legal relationships are necessarily conveyed. Words are our basic tools of trade.
All lawyers who draft texts attempt to be as clear and comprehensive as they can be. We try to anticipate the kinds of issues that may arise, to which the verbal formulae we devise, have to be applied. As Sir James Fitzjames Stephen put it:
“It is not enough to attain to a degree of precision which a person reading in good faith can understand. It is necessary to attain, if possible, to a degree of precision which a person reading in bad faith cannot misunderstand. It is all the better if he cannot pretend to misunderstand it.” [6]
Of course this objective can never be completely achieved. Hence disputes and litigation about what words mean. Nevertheless, the range of possible disputes that would arise in the absence of the enormous amount of experience and thought that goes into determining the content of written agreements, would be extraordinarily debilitating. This is just another one of those things that we take for granted. If nothing goes wrong, no one notices.
There are many nations in the world in which property rights are ill defined and legal assistance for constructing relationships and resolving disputes are not generally available. Those nations are driven by social and political factionalism and by poverty or are organised on authoritarian lives. Lawyers and legal decision-making processes, together with the effective operation of governmental institutions, constitute the principal difference between that situation and ours. From time to time, it is necessary to point that out. I regret to say that, in my opinion, the legal profession in Australia has not done so often enough.
COSTS
For some decades one of the principal access to justice issues involving the administration of courts has been the problem of delay. Even two decades ago delays of five or more years were common. That is, generally, no longer the case. It is too early to declare victory, but by reason of inter alia the provision of additional resources and the widespread adoption of case management techniques, the problem of delay has been significantly attenuated. Of course delay must remain a priority. However, the principal focus of attention for those of us involved in the administration of justice must now be the costs of the process.
By costs I do not refer to legal costs in the sense of the system of billing. What I am concerned with is the overall costs imposed upon the parties by the entire process of dispute resolution. That is a matter influenced by, but not determined by, the system of billable hours or the rates at which hours are billed. We must be concerned with the entire range of what is required or permitted to be done, by whom and when, over the course of civil dispute resolution. The cost of lawyers is an important component part, but it cannot be the only matter to be considered.
Often enough what lawyers are required or permitted to do is determined by statute or court rules and practices and directions. We must continually re-engineer the process of dispute resolution because the pressures on the process are in a continual state of flux.
Some call this process “reform”. That is not always an accurate word because it suggests that what had been done before was in some way defective. The need to change is often driven by new pressures that have emerged, particularly in recent times with the acceleration of technological innovation.
A good example of this is the considerable expansion in the cost of discovery that has been occasioned by the explosion in the facility of the photocopier, the word processor, the computer and the internet. Telephone conversations which may never have been recorded in the past have now been replaced by emails which are either available on a hard drive or, with a sufficient expenditure of time, effort and energy, can be recovered from a hard drive. Disputes about what should be required to be done by way of recovery from databases are not easy to resolve. Many of these issues are new. What is required is not accurately called reform. We simply need to find ways to meet new challenges.
The scope and speed of changes in the economy and society which the law is designed to serve, will never permit us to declare victory and sit back content. Nor is it of much use to resist change on the basis that any form of new rule constitutes a threat to the adversary system because it inhibits the freedom of lawyers to act in their client’s interests in any way they see fit. There has never been a time when that freedom was not regulated by court rules and practices.
These issues are not new. In 16th Century England when legal fees and court fees were determined by the volume of documentation lodged with the court, prolixity became an art form. In response there were rules of court which required a minimum number of words per sheet in order to minimise the degree to which clients could be exploited by their lawyers. In the Court of Kings Bench every sheet had to have at least 72 words on it, in the Court of Exchequer, doing one better, every sheet had to have at least 78 words. But in Chancery, always more sensitive to matters of conscience, every sheet had to have 90 words on it.
Sometimes more dramatic measures were called for. In 1566 in a case when the plaintiff’s replication had been stretched from an adequate 16 pages to 120 pages, the Law Reports report:
“It is therefore ordered that the Warden of the Fleet shall take the said Richard Milward … into his custody, and shall bring him unto Westminster Hall on Saturday next … and there and then shall cut a hole in the midst of the same engrossed replication … and put the said Richard’s head through the same hole, and so let the same reproduction hang about his shoulders with the written side outwards and then … shall lead the same Richard, bare headed and bare faced, round about Westminster Hall, whilst the courts are sitting and shall show him at the bar of the three courts within the Hall.” [7]
Milward, I hasten to add, was the plaintiff not the lawyer. Nevertheless, in days gone by, interrogatories and, in the present day, affidavits and bundles of documents, could be subject to similar acts of public shaming. However, nothing that could conceivably adorn a person could be done with the contemporary agreed bundle. Perhaps we could order abusers of the system to be pushed around outside the court on a trolley.
However it is to be done, it must be recognised there was simply never a time in the history of the English common law when legal practitioners were able to do whatever they liked in the interests of their clients without any form of regulation by court rules and directions.
The new focus on costs must be borne in mind by proponents of statutory change, including law reform commissions. I had occasion to inquire what happened in New South Wales when the new code of evidence enacted by the Evidence Act 1995 went to Cabinet. I thought it likely that the compulsory item for any Cabinet paper – to specify the financial implications of the proposal – was filled out as “nil”. I was right.
In the decade or so since its implementation, the abolition of the well established and well known rules of evidence, with which the profession and judges had considerable familiarity, was such that, after being ignored for the first few years, a great deal of disputation emerged. It took up an enormous amount of time, both out of court and in the courts, and led to a substantial number of retrials. We have now returned to the pre-Act level of disputation about evidence. However, far from nil, I would confidently estimate that the Evidence Act 1995 has cost the taxpayers of New South Wales some tens of millions of dollars. It may have been worth it. But it was not costless.
Proponents of statutory changes must take the costs of change into account. New requirements, new procedures and new rules are not self-executing. They require detailed attention, personal reskilling and their adoption is never frictionless. All of this means additional cost.
Changes in court processes have been underway for some time and will continue for as long as one can foresee. The primary target has been delay. However, control of costs has also been a focus. For example, there have been significant attempts to control discovery. There have also been major changes in the procedures for taking expert evidence. Recently, we have adopted in the New South Wales Commercial List, a stopwatch system for the conduct of trials in which the parties agree on a total amount of time that a trial will take and allocate it amongst themselves. It is not possible in a lecture of this character to review the numerous ways in which the profession and the courts have attempted to control costs by changing the structural requirements of the dispute resolution process.
The task is, in large measure, still ahead of us. It requires reconsideration of many case management practices adopted at a time when delay was the principal concern. Case management may impose disproportionate, indeed even unnecessary, costs on the parties. From the outset of modern case management, concerns were expressed that the effect would be to frontload costs by bringing forward costs, including in many matters that would in the normal course have settled without incurring any such costs at all. The new focus of attention must make us more sensitive to these concerns.
This would, for example, require a diminution in the number of times a matter is brought before the court, particularly in the form of requiring attendance by lawyers at courts, often in long lists where a substantial amount of the costs are incurred in just waiting to get on. Extensive use of telephone directions hearings and electronic communications must be given a higher priority than in the past.
These are examples of how the focus on costs requires us to continually review our practices. One of the matters to which it is particularly important to have regard is the tendency of any rational participant in the process to shift costs from themselves to other participants. This is true of courts as well as parties.
A good example is the practice of overlisting which enables a court to make full use of its resources despite the occurrence of last minute settlements. However, when matters are not reached, the costs imposed on the parties may well be greater than any cost savings to the court. As we shift focus from delay to costs, matters of this character should receive greater salience.
PROPORTIONALITY
There is now a widespread recognition that some sort of test of proportionality is required. The cost of dispute resolution must in some manner be proportionate to what is in dispute. That is difficult to achieve, particularly in circumstances where a civil dispute involves matters that are not able to be computed in terms of money, at least on any objective basis likely to be accepted by all parties. Nevertheless, the principle is a valid one.
Following the English lead [8], New South Wales has expressly adopted, in s60 of the Civil Procedure Act 2005, a requirement that the practices and procedures of courts should be implemented with a view to resolving disputes “in such a way that the costs to the parties is proportionate to the importance and complexity of the subject-matter in dispute”. I accept this is a statement of ambition, rather than a description of what occurs.
There is, of course, a great deal of flexibility in the words “importance and complexity”. This objective, which I know is accepted in many jurisdictions which do not have the statutory mandate found in New South Wales, requires a continual process of collaboration between the profession and the courts in determining how the process of dispute resolution is to occur.
The first step must be to review areas of practice in which the costs involved in the process sometimes bear no rational, let alone a proportionate, relationship to what is involved. This occurs more frequently than we care to admit.
A classic case was the dispute over a property settlement following a divorce in an English case which went on appeal as far as the House of Lords. The total value of the property in issue was £127,400. The legal costs incurred by the English Legal Aid system, which assisted both parties about the how the property should be divided, was estimated to exceed £128,000. As Lord Hoffmann said:
“If one includes applications for leave, the facts of this case, by the time it reached the Court of Appeal had been considered by five differently constituted tribunals. This cannot be right. To allow successive appeals in the hope of producing an answer which accords with perfect justice is to kill the parties with kindness.”[9]
Lord Hoffmann’s reference to the “quest for perfect justice” reminds us that, neither in result nor in process, does the word “justice” refer to an absolute. The objective of attaining fair outcomes arrived at by fair procedures does not require identical conduct in every conceivable kind of case. What is required is “appropriate” rather than “perfect” justice. The concept of “proportionality” is probably as good as we are able to do in terms of identifying a relevant qualification. We simply have to stop killing litigants with kindness.
There are, of course, a significant number of cases which conclude with an identifiable dollar amount. Not all cases are like that but a substantial proportion are. It is at least theoretically possible to adopt rules, which must necessarily be flexible because of the contingencies of the litigation process, that operate as a default in such a manner as to control the costs recoverable by reference to the amount ultimately awarded. This is a matter that can be done in the exercise of the discretion to award costs.
I am not directing attention to the costs chargeable to the client. I am referring to costs awarded to a successful litigant. The objective is to create cost incentives for parties to narrow the scope of disputation and to make serious attempts to settle, in the same way as the regime that has already been developed for recognising offers of compromise, including by way of indemnity costs, creates such incentives.
There may be a case for adopting, perhaps arbitrary but definite, amounts or proportions of an award to be recovered as costs, by way of a table or formula which gives results capable of being computed in advance [10].
There may also be a role for identifying, in a separate way, proportionate recovery for matters of particular significance in specific areas of jurisdiction, such as the costs of discovery in commercial litigation.
Plainly there is a range of relevant considerations which can qualify the effect of any presumptive rules that are developed in this respect. The exercise of a discretion can be affected by the manner in which parties conduct proceedings, such as the extent of discovery upon which one party may have insisted, or the degree to which a party has made a serious effort to confine the issues and other such matters.
It is, however, essential to ensure that we do not excite a wave of satellite litigation. Disputes about such matters have to be decided quickly and without excessive refinement. The English experience is salutary in this respect. The attempt to control and regulate proceedings by means of costs sanctions has spawned an enormous amount of disputation. This can only be controlled by summary disposition.
There has been a growing literature on proportionality and many minds have been applied to this issue. The process of adaptation is underway, but without any definite resolution. Nevertheless, proportionality must be pursued as a matter of priority. If the legal profession does not do so, it is quite likely that the resolution of the issues will simply be taken out of its hands as has happened in other areas of practice.
To the extent that the legal profession does not succeed in achieving the objective of proportionality, then it is likely that more areas of disputation will simply be taken away from legal decision-making processes. Over recent decades there have been a number of major changes, notably in personal injury litigation, which have been driven to a substantial degree by what had come to be regarded as an unacceptable proportion of compensation awards that were taken up by the decision-making process. This has sometimes taken the form of no fault liability schemes. On other occasions it has taken the form of detailed requirements, including the exhaustion of alternative dispute resolution mechanisms, prior to the institution of proceedings. On other occasions it has taken the form of substituting comparatively informal arbitral mechanisms for the more formal hearing process of court adjudication.
No one should be at all sanguine that this kind of intervention will be limited to personal injury cases reflected in what had come to be regarded as an unacceptably higher level of insurance premiums borne by the community. Such a reaction is capable of being implemented in any area of legal disputation.
For example, I know that concern has been expressed about the costs of many Family Provision Act disputes, which appear to consume a significant proportion of the assets to be distributed. Similarly, in the area of commercial disputation, the costs of discovery are more than the commercial community is likely to tolerate. When senior partners of a law firm tell me, as they have, that for any significant commercial dispute the flag-fall for discovery is often $2 million, the position is simply not sustainable.
COMMERCIAL DISPUTES
The cost structure of Australian commerce has been transformed over recent years by new management techniques, by technology and by the full gamut of micro-economic reform. The contemporary commercial community has an expectation that all areas of its cost structure are subject to similar review. Lawyers are not immune to this expectation. Commercial decision-makers are conscious that one of the few areas of business expenditure that has not diminished over recent decades is the cost of dispute resolution. Unless business lawyers are seen to deliver a cost-effective service, they may very well find themselves bypassed in the same way as some other sections of our profession have come to be bypassed.
If the costs of commercial litigation are to be controlled, to be made proportionate to what is in dispute, and preferably to be minimised, the principal role in achieving that must be played by members of the profession. Judges are able to contribute to that process and, particularly in commercial litigation, there is a recognition that that must occur.
As this audience is well aware, the time billing system, appropriate as it may be in many contexts, has been questioned because of its virtually universal adoption. It creates a perverse incentive for lawyers to resist time saving measures. That incentive can be controlled by maintaining high standards of professionalism.
The costs and delay of commercial litigation and corporate insolvency should be regarded as a drag on the economy. The amounts in dispute are, in effect, dead capital. Neither party to a commercial dispute can treat the amount in dispute, with confidence, as either working capital or for purposes of investment or for distribution to investors. Nor can a creditor with a claim on a company in liquidation.
The longer a commercial dispute continues, or the longer a corporate liquidation continues, the greater the loss to the community in terms of dead capital. At any point of time there are literally thousands of such commercial disputes and hundreds, perhaps thousands, of liquidations under way. It is impossible to compute, but if these processes could be reduced across the board by, say, one year, it would probably liberate hundreds of millions of dollars of capital into the Australian economy. This is capital that could be effectively deployed, rather than remain frozen. If we wish to maximise the positive social contribution of the legal profession, we must all seek to resolve commercial disputes and liquidations expeditiously.
In this respect the two sub-themes that I have discussed come together. If we can restrict delays and costs in the commercial litigation process then we will make an even greater contribution to the society in which we live than we now make. It is a worthy objective. It will not occur unless the profession as a whole determines that it should occur.
CONCLUSION
The way we conduct ourselves in legal advice and in commercial arbitration and litigation has developed over long periods of time. There is much of value to be preserved. However, we must be able to stand back and assess the reasons why it is we do what we do, so that we can articulate the case for their preservation. Fair outcomes arrived at by fair procedures is a worthy objective. However, the pressures, especially in the commercial field but not so limited, to minimise the costs of the process as a whole are particularly acute under contemporary conditions.
The one thing we cannot do is to rely on the traditional lawyer’s instinct that nothing must ever be done for the first time.
Giuseppe di Lampedusa, in his great novel, The Leopard, had a perceptive aristocrat, facing the oblivion of the Sicilian aristocracy, say:
“If you want things to stay the same, you have to change.”
Not all societies or social groups prove capable of changing their practices, often with disastrous results. As Jared Diamond noted in his recent book Collapse: How Societies Choose to Fail or Survive, a form of intellectual paralysis may emerge which leads to doom. What, he legitimately asked, was in the mind of the Easter Islander, when he chopped down the last tree on that island upon which the whole society had long depended? A similar question could be asked of some legal practitioners, particularly in some specialist jurisdictions.
Ours is a profession that values stability with reason. However, the one thing that is a constant in legal history is the omnipresence of continuity and change. As Aharon Barak, the recently retired Chief Justice of Israel once put it:
“Like the eagle in the sky that maintains its stability only when it is moving, so too is the law stable only when it is moving.” [11]
During the Second World War, the British pressed into service for home defence whatever armaments they had available, including artillery of great vintage. Mobile units were deployed up and down the coast and trained in the traditional manner of the Royal Artillery. Concern developed about the apparent lack of efficiency of the processes. The methods which the soldiers had been trained to perform in the loading, aiming and firing routines was subject to careful study. Something was extremely odd. A moment before firing, two members of the gun crew ceased all activity, stepped back from the piece during its entire firing sequence and stood to attention. The investigator called in an old retired Colonel of artillery to ask him why all this energy and time was being wasted. The Colonel knew where these practices had come from. He said: “They are holding the horses” [12].
We in the law have to understand why we do the things that we do and the reasons why we do them in the particular way that they are done, in order to ensure that we are not just holding imaginary horses.
END NOTES
1. (1906) 29 ABA Rep 395; accessible in full at http://www.answers.com/topic/the-causes-of-popular-dissatisfaction-with-the-administration-of-justice.
2. The following analysis is based in large measure on Matthew R Christ The Litigious Athenian John Hopkins Uni Press, Baltimore (1998).
3. See Mark Gallanter Lowering the Bar: Lawyer Jokes and Legal Culture University of Wisconsin Press, Madison (2005) at 3.
4. Adam Smith An Inquiry into the Nature and Causes of the Wealth of Nations Encyclopaedia Britannica edition (1952) Vol 5 at 403.
5. Robert Gilson “Value Creation by Business Lawyers: Legal Skills and Asset Pricing” (1984) 94 Yale L J 239; Lisa Berstein “The Silicon Valley Lawyer as Transaction Costs Engineer” (1995) 74 University of Oregon L Rev 239; See also David Driesen and Shubha Ghosh “The Functions of Transaction Costs: Rethinking Transaction Costs Minimization in a World of Friction” (2005) 47 Ariz L Rev 61.
6. In Re Castioni [1891] 1 QB 149 at 167 per Stephen J.
7. Milward v Weldon (1566) quoted in 5 Holdsworth A History of English Law 233 note 7.
8. Civil Procedure Rules r 1.1(2)(c).
9. Piglowska v Piglowski [1999] 1 WLR 1360 at 1373.
10. See e.g. Bret Walker “Proportionality and Cost Shifting” (2004) 27 UNSW L J 214.
11. Aharon Barak “A Judge on Judging: The Role of the Supreme Court in a Democracy” (2002) 116 Harvard L Rev 16 at 29.
12. Elting E Morison Men, Machines and Modern Times MIT Press, Cambridge Mass. (1966) at 17-18.
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