Call us today0800 160 1298
 
 

Advantage Litigation

Welcome to Advantage Litigation Services. We provide affordable access to commercial litigation.

  • Home
    Home This is where you can find all the blog posts throughout the site.
  • Categories
    Categories Displays a list of categories from this blog.
  • Tags
    Tags Displays a list of tags that have been used in the blog.
  • Bloggers
    Bloggers Search for your favorite blogger from this site.
  • Team Blogs
    Team Blogs Find your favorite team blogs here.
  • Login
    Login Login form

LASPO: Insolvency Reforms Could Cost Creditors Millions

Posted by on in Litigation Protection
  • Font size: Larger Smaller
  • Hits: 3433
  • Subscribe to this entry
  • Print

The civil litigation reforms, and the potential damage they could do to businesses once they are implemented, has put the Department for Business, Innovation and Skills (BIS) in direct conflict with the Ministry of Justice (MoJ).

The Legal Aid, Sentencing and Punishment of Offenders Act (LASPO) has placed limits on contingency fee agreements during insolvency proceedings, which trade body for Insolvency Professionals R3 have long argued will be costly to creditors by prohibiting litigants from reclaiming certain legal costs from defendants.

But last week BIS insolvency minster Jo Swinson accepted the analysis of insolvency take body R3 that contingency free arrangement-backed litigation makes between £150 million and £160 million per year for creditors. Swinson did so in an answer to a Parliamentary Question, which marked the first time a minister had accepted R3's figures as credible.

Prior to this, there had been severe disagreement between insolvency trade body R3 and the MoJ. The trade body then appealed to 10 Downing Street, a move which was supported by the British Property Federation and several professional accountancy bodies.

A temporary exemption to the provisions of the LASPO Act has been in place since April has been enacted. However, this exemption is set to be lifted in April 2015. The assumption that alternative funding arrangements would develop for insolvency cases before the exemptions were lifted - which the Government's original impact assessment predicted - has not materialised for recovery of sums under £100,000, which spurred Jo Swinson to cite the academic findings in her response.

Jo Swinson said: "When the exemption for insolvency proceedings was introduced in 2013, the impact assessment made the assumption that by April 2015 alternative funding arrangements would have been developed for insolvency cases. On that basis it was assumed there would be no major impact on the volume of insolvency cases which were pursued, or on the value of assets recovered in the long-run, although the risk of recoveries falling was acknowledged."

Giles Frampton, R3 president, said: "While the Department of Business, Innovation, and Skills has been making efforts to improve the position of creditors in insolvencies, the Ministry of Justice's proposals contained in the LASPO Act will have the opposite effect. It's encouraging that at least part of government is now acknowledging that the reforms could hurt creditors. It's not too late for the Ministry of Justice to think again about what it's proposing.

"The Government's assumption was that an alternative would be found by 2015 and so the Act would not hurt creditors. The same report which quantifies the loss to creditors of £160m per year clearly outlines that there is no alternative to the current, temporary exemption that would help creditors in the same way", Mr Frampton added.

Contact Us - No Win No Fee Bankruptcy & Insolvency Litigation Claims

Whether you wish to commence legal proceedings or challenge those that are being brought against you, our specialist insolvency team can guide you through the procedures and help you find an affordable and cost-effective solution. To get in touch, click here. You can also call us on 0800 160 1298.

Get in touch

  1. Your Name(*)
    Please let us know your name.
  2. Your Email(*)
    Please let us know your email address.
  3. Company Name(*)
    Please write a subject for your message.
  4. Your Phone Number
    Invalid Input
  5. Message(*)
    Please let us know your message.
  6. Anti-Spam, please enter the characters shown
    Anti-Spam, please enter the characters shown
    Invalid Input

Latest News

  • Following recent Supreme Court rulings in two professional negligence cases, the Court has outlined a “wholly new legal roadmap” for professional negligence claims made in England and Wales. As a result, the Professional Negligence Lawyers Association (PNLA) have said that existing claims will now need to be reviewed, stating that “for many there could be a substantial impact on the likely chances of success and the assessment of financial loss”.The cases in question are Khan v Meadows [2021] and Manchester Building Society v Grant Thornton UK LLP [2021]. The first case centred on whether a medical expert, who failed to diagnose that a mother carried the haemophilia gene, was liable for the costs associated with her son’s autism as well as his haemophilia, whilst the second case concerned whether accountants Grant Thornton were liable for the costs of a building society... Read More

  • A recently failed business claim that was dismissed at court has once again highlighted the many pitfalls and legal complexities facing litigants in person (LIPs – that is, individuals taking legal action without professional representation from a solicitor or barrister). The claim in question - Daly & Anr v Ryan & Anr. 2021 - concerned an individual businessman who had a costly judgment entered against him simply because he had repeatedly failed to abide by the rules. Read More

  • Latest statistics from the Solicitors Regulation Authority (SRA), who are responsible for the regulation of solicitors and law firms in England and Wales, confirm what many in the profession have been predicting for a while; that law firms are accelerating the consolidation process as they begin to embrace new ways of working. Read More