Ever since the reforms to the Civil Justice system were ushered in by Lord Woolf, solicitors have suffered from sleepless nights. They have had to adapt to a new dispute resolution regime; a regime which has eradicated unproductive work and disproportionate charging.
The litigation treadmill was a very nice little earner, as solicitors clocked up the hours unchecked. But as more and more cases settle and fewer reach Trial, work-in-progress is drying up. Firms are looking for new ways of making money, before the redundancies have to start.
But while doing this, they have taken their eye off the ball and missed the silent revolution which will impact more severely than the Procedure changes. Solicitors face being cut out of the loop, as insurers turn to direct instruction of barristers to meet their need for obtaining legal advice and litigation support more cheaply.
There was a time when you couldn't instruct Counsel except through a solicitor. Too often this created duplication, delay, and indecision: prolonging settlement and ratcheting up legal costs quite unnecessarily. This has now changed to the point where some insurers are talking to major Chambers about direct provision of legal services in future, for speed, efficiency, cost, and quality!
Barristers too are chasing instructions as Court appearances reduce; and as solicitors provide more and more advice on the evidence and the law, and take on advocacy in the Courtroom. Far from relying on solicitors to introduce work, the work is being taken from Chambers by the hands that fed them. But salvation is in sight; the model for sourcing and providing legal services is changing. Instructing principals no longer go to solicitors who then instruct barristers; instructing principals will go to barristers who may instruct solicitors.
The new force at work is BarDIRECT - the latest manifestation of the changes in the legal professions and processes, and it opens up to insurers new opportunities.
BarDIRECT is a licensing system operated on behalf of the Bar Council, the professional body which oversees barristers' activities. Barristers act as advocates in Court and provide specialist advice in litigation. Many specialise in insurance disputes. BarDIRECT licenses individuals in organisations to instruct barristers.
Insurers are impressed that Chambers can provide services at a far lower cost when instructed directly than when instructed by solicitors, or when the same services are provided by solicitors. Insurers are asking: "Why use solicitors for expensive and often inferior advice, and incur the duplication of costs, and often redo work, when ultimately Counsel has to become involved?" Under the new Rules, the balance of the work has shifted, and insurers look at the services required to realise most can be provided more readily, better and cheaper by Counsel than the major firms of solicitors.
The straight choice
It is now down to a choice between barrister and solicitor, for advice on law, advice on evidence (liability and quantum), drafting the defence, advice on valuation, advice on tactics, instruction of experts, advice on discovery, (tele-)conference with experts, (tele-)case conference, roundtable conference and ADR, negotiations with claimant's barrister, and Courtroom advocacy.
Chambers have realised this too, and are getting better organised to deliver a wider range of services to a wider range of instructing principals.
BarDIRECT's Guidance Notes for Clients make interesting reading for insurers and claims administrators. They spell out where barristers can add value; where they cannot act and how to engage their services direct. In time, perhaps the only services required of solicitors will be to deal with Proceedings and to proof evidence for Trial. But the major Chambers can arrange for even these services in-house. It is not a leap of the imagination to envisage the next wave of mega-mergers in the legal world will be solicitors' firms and major Chambers.
It could be that the value of Liability and Personal Injury instructions to defendants' solicitors will reduce by upwards of 40% in real terms over the next five years. Much of this will go direct to Counsel; but much will be pure saving of costs. It cuts both ways: claimants' solicitors will come under increasing pressure as wily defendants start to plead in the spirit of Woolf that claimants' costs are wholly disproportionate to defendants' costs.
Have solicitors had their day then? "No," says Tim Wallis, managing partner of insurance specialists, CRUTES Solicitors. "The key for solicitors is to focus very keenly on insurer clients' requirements and add value. We have developed specialised expertise (such as ADR) and IT; cost-efficient work allocation, handling and reporting procedures, and technical quality controls. As important, are new options to pay for the value which we add, such as fixed fees and task based billing."
BarDIRECT's Guidance Notes says solicitors remain best placed to manage large and complex cases. Other solicitors may not be unduly fazed: they have established the growth industries - environmental and employment litigation; human rights is the next big earner. But claims managers and handlers have options. Decoupling barrister and solicitor is a key strategy. We must change to get value-for-money and competitive edge.