LEGAL
Day in court Last month the government quintupled court fees and it is SMEs that will be hit hardest when it comes to civil litigation
WORDS: ryan mcchrystal
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o you have £10,000 to spare? Well, this is exactly what an SME now has to fork out should it need to recover £100,000 through the courts. This presents a real danger that small businesses won’t have deep enough pockets to seek justice. Unsurprisingly, the government’s hike in court fees on March 9 this year has sparked uproar from both the small business community and the legal profession. Seeking redress is more expensive than ever, and considering last year’s cuts to legal aid, you’d be forgiven for thinking that the UK’s legal system favours the rich. Many entrepreneurs will now see justice as simply being not worth the hassle. As it stands, a third of UK companies with potentially valid cases don’t take action because of the financial burden and this proportion only looks likely to increase. Michael Lent, insurance and litigation funding consultant at Annecto Legal, says the increased cost of litigation should be one of the main issues facing SMEs ahead of next month’s election. “This is a big chunk of money that they’ve got to find, and it comes at a time when they don’t typically have much,” he says. “The reason they’re having to litigate, typically, is because somebody did not pay them the money that they owe them in the first place.” Lent makes the point that while the courts are experiencing a huge deficit, the government is targeting the wrong people to solve it. “They are turning to the people who can afford it the least, which is the individuals and SMEs, whereas well-heeled litigants are more than capable of paying.” There are no two ways about it – the courts do need to be better resourced. They are woefully undersupplied in terms of IT and they are still largely paper-based. However, one would think that the government could find a better way to spread the cost. “It has all the hallmarks of something that’s not been thought through,” says Lent. One of the dangers is that if people can’t afford to use the legal system then it encourages all sorts of undesirable behaviour. “If people can’t get the results through using the courts, then all of a sudden you’re moving towards a third world situation which encourages corruption and criminality,” says Lent. Increasingly, the person with most money is in a better position. “The big players are back in the position where they can behave pretty badly and make life very expensive for poor claimants who, unless they’ve got funding behind them or very deep pockets, will frankly get a bit of a kicking,” says Lent. One person who knows all about just how burdensome litigation can be is Jon Welsby, director of Insolvency Assist CIC, which helps
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31/03/2015 22:49