Each year, courts hand down hundreds of thousands of judgments. While many are significant only to the parties involved, occasionally a decision sends ripples much further afield.
A prime example happened last October, when the Court of Appeal issued a straightforward ruling that upended the lending sector and created significant headaches for the Financial Conduct Authority in its efforts to establish a redress scheme.
A few years earlier, the Supreme Court shocked the legal sector by ruling that a litigation funding agreement granting a funder a return based on a percentage of damages recovered constitutes a damages-based agreement, a decision that remains an issue in the litigation funding sector.
The latest judgment to be added to the table, surpassing a legal ruling, happened last month in the Mazur and Stuart v Charles Russell Speechlys case.
On paper, the case seemed straightforward. Law firm Charles Russell Speechlys (CRS), using law firm Goldsmith Bowers to sue Mrs Julia Mazur and Mr Jerome Stuart for £54,000 in unpaid legal fees.
However, the case became a talking point for the legal sector after the pair appealed against an application to lift the stay against CRS over how the case was handled. A move that even saw the Solicitors Regulation Authority (SRA) and the Law Society of England and Wales intervene in the case.
The problem was that the person handling CRS’s claim, Peter Middleton, who was described as the head of commercial litigation at Goldsmith Bowers, signed both the claim form and the particulars of claim on behalf of CRS.
The pair challenged Middleton’s right to litigate against them, arguing that he was not entitled to do so because he lacked a current practising certificate. A legal practising certificate is a mandatory licence that allows a solicitor to practice law, issued by a regulatory body such as the SRA in England.
Judge Simpkiss agreed, and the High Court held that simply being employed by an authorised law firm does not permit a non-authorised individual to ‘conduct litigation’, even when supervised by a qualified solicitor.
A ruling that has caused a headache in the sector and a knock-on effect on certain law firms.
Oversight in the spotlight
Speaking to City AM, Jarret Brown, head of compliance at Stokoe Partnership Solicitors, explained: “This unexpected judgment throws a spanner in the works for many law firms and the way their financial models function.”
Some law firms in high-volume, low-value sectors, such as debt recovery and personal injury firms, traditionally relied on non-qualified staff to cost-effectively run cases.
Vicky Lankester, associate at Brett Wilson, stated, “The reality is that many volume and legal aid firms rely on non-authorised staff to conduct litigation under an authorised person’s supervision to remain commercially viable, something the High Court has now confirmed is not permitted.”
“This took place with the SRA’s knowledge. In that context, it would seem harsh and impractical for the SRA to take retrospective action against such firms,” she added.
The ruling also casts a shadow over paralegals and trainees, as well as the fine line between permitted “support” and prohibited “conduct”. But it did clarify that chartered legal executives (CILEx), who do not hold specific litigation practice rights, are prohibited from conducting litigation.
“The consequences could be far-reaching, forcing firms to rethink how they involve paralegals, legal executives and trainees in litigation, how they develop new lawyers, and even how they balance costs and pricing in a tighter, more regulated market,” Brown added.
London-based insurer Howden stated that the Mazur judgment represents “a seismic shift” in how law firms must approach the delegation of litigation work. The insurer stated that the message from the judge is clear: act now, conduct an audit, revise policies and practices.
Nick Leale, partner at CM Murray, questioned whether this ruling “limits access to justice or ensures that in litigation there is a gatekeeper present to ensure good quality representation”; he argued the latter.
As the dust settles, it’s clear that trainees and paralegals are likely to bear much of the fallout from this decision, as many aspiring lawyers could see their opportunities to gain crucial experience narrowed. In the end, it is a wake-up call that will make firms reassess their approach to managing cases and training staff.
Eyes on the Law is a weekly column by Maria Ward-Brennan focused on the legal sector.