I was talking to a friend of mine who is an eminent Canadian lawyer and arbitrator about his views of litigation in the United Kingdom and unsurprisingly he was very critical that we did not have a combined profession in the United Kingdom, where both solicitors and barristers undertook the same functions from the same offices. He argued that there is less and less merit to have segregation with the increased rights of solicitor audiences before the higher courts and more importantly the double burdens of cost thrust upon the client by this artificial division of duty. Whilst I do not entirely agree with this Canadian’s legal view point, the most important point of what he was saying to me is the current level and burden of costs on the client and the impact that this has on the way in which litigation is conducted or considered.

Sometimes when I have been engaged in acting as an expert witness in smaller cases the cost burden has outreached the total value of the dispute sometimes by as much as twice the value of the dispute, taking into account the costs of both parties. There must be an alternative to this for the smaller litigant who needs legal help and surely it is the duty of their solicitors to advise their clients on the cost consequences right at the outset of a case well before counsel is instructed and becomes involved. A combined legal profession may not be the answer to this debate about the burden of costs that hangs like a shadow over any litigator - instead it might be that the mechanism or method of dispute resolution should not always lie in litigation.

The point of using a barrister in any case is to provide guidance as to the development of judicial thinking and to harness the undoubted eloquence and skills of someone who has specialised in advocacy and case “tactics” so that their client has a successful outcome.

There are different styles adopted by barristers, some prefer to be the “professor” who is merely consulted on esoteric legal points who produces learned opinions and vets the whole procedure before going to Court to argue a point of legal principle. At the other extreme there are barristers who want to “case manage” their own side’s case and strategy running from the presentation of evidence and marshalling of fact to the drafting of application so that everything is ready in the best order to be presented for their client’s case.

These extremes are both stereotypes and in a way give credence to the view of the Canadian lawyer that there is room for a united legal profession in England and Wales, since there is no doubt that this would save a lot of the doubling up of legal costs.

However, there is an easier and more obvious solution. It would surely be better if many of the cases were not directed into the litigation stream by solicitors when they were first consulted by their clients concerning a dispute. There are alternatives, some of which are older than litigation, such as arbitration and perhaps it is worth considering these alternatives in greater detail.

There are certain parts of the Arbitration Act 1996 which greatly assist the party involved in a dispute in controlling their exposure to recoverable costs. If an arbitrator can be persuaded to use his powers under Section 65 of the Arbitratio it does prevent the other party from being asked at any point ever to pay those costs.

The idea of costs capping is not new but it is a power that arbitrators should harness to improve the efficacy of arbitration and reduce the risk of financial hardship post litigation. The individual costs and risks to the party of failing in pursuit of their claim can affect both the winner and loser. The capping of costs refers only to the parties own legal costs and out of pocket expenditure including expert reports. The arbitrator can word the cost cap in such a way as to make sure that only reasonable costs incurred will be recovered following the general rule in that “costs follow the event” mirroring the settled practice of the Courts. The arbitrators own costs are only capped by any inguishing any costs awarded against a party in respect of a particular application or hearing; and identify those costs incurred because a party has acted unreasonably or oppressively or has done something wrongful or improper in the course of events. The arbitrator has a further power to restrict recoverable costs where a party has failed to comply with the arbitrator’s order for directions, or has acted in such a way as to cause an unnecessary cost and expense; or the party has refused to accept an offer equal to or more than the monetary value of the amount awarded to him at the end of the dispute.

The arbitrator’s power to cap or limit recoverable costs has the effect of striking a balance between a powerful and wealthy party and a much smaller party, so that a dispute can proceed to a full hearing if that is the appropriate procedure without the smaller less wealthy party being forced to drop out on account th="300" valign="top">

This cost capping device promotes cost effective dispute resolution through arbitration and also reminds the parties and the arbitrator of the proportionality of costs compared to the amount in dispute.

Once recoverable costs are capped the quantum for recoverable costs is still determined by the arbitrator and a Section 63 of the Arbitration Act 1996, although if the arbitrator declines to determine the costs then either party may make an application to the Court to deal with costs in the usual way. The arbitrator or the Court will award costs on the standard basis under Section 63(5)(a) and (5)(b) unless the arbitrator or Court determine otherwise, which means that any reasonable cost reasonably incurred will be recoverable with any doubt being resolved in favour of the paying party.

The arbitrator has power to award costs on an indemnity basis but this can only be ordered where the party has acted in an unscrupulous or deliberate manner that caused the other party unnecessary additional costs. So that only unreasonable costs unreasonably incurred would be disallowed with any doubts being resolved in favour of the receiving party which is a reversal of the standard basis. Both these bases are on the same lines as those applied in Court proceedings. The arbitrator may also award simple or compound interest.

The arbitrator has a judicial duty to exercise his discretion in awarding interest fairly and in accordance with the general duties imposed on the arbitrator by Section 33 of the Arbitration Act 1996 and the power to award interest under section 49 of that act can be amended by mutual agreement of the parties. The purpose of interest is not to penalise the paying party but to compensate the successful part in having lost the use of the money from the time that he ought to have received it until the time that it was actually paid.

Arbitration also has several other advantages, the normal rules of evidence may be excluded, the arbitrator may award compound interest in appropriate circumstances and the power to appeal against any award may be waived by the parties which means that the award has absolute certainty.

I have a dream that one day there will be a Supreme Allocator of Disputes - a Quarigo whose sole occupation will be to list disputes under the most appropriate procedure for their successful resolution. Of course this should include litigation but it must also include arbitration; adjudication; mediation; expert determination and managed negotiation.

The Quarigo would set out criteria and guidelines to assist applicants and clarify the risks, costs and expectation from each procedure. The parties would pay a small fixed administration fee for this service and the dispute procedure outcomes would be monitored for costs, delay and quality. Were such a Utopian system in place then issues from other litigation; such as the financial elements of divorce settlements might be ring-fenced and referred for factual determination saving thousands of pounds of cost, lengthy delays and aerimony.

It is important that mechanisms are put in place to enable parties to resolve disputes without having to resort to litigation. Litigation is appropriate when the matters complained of have a high value and justify the involvement of the best legal minds in England and Wales. Certain types of dispute should always be settled without recourse to the full weight of a Court of Law and the concomitant expense.

Perhaps it is time that the legal profession and indeed Counsel used their expertise to isolate the issues which might be referred to arbitration for a determination of fact which might allow disputes to be settled by negotiation once the determination of facts had been issued on an unappealable basis by an arbitrator.

The question as to whether the arbitrator should be a legally qualified arbitrator or a technical “lay” arbitrator with expertise in a specific subject (be it engineering or accountancy) is outside the scope of this article but certainly worthy of some debate. The strength of arbitration lies in its flexibility of process, approach and procedure to be made to measure for each individual reference.