June 2021

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Complex dynamics influence litigation outcomes


by Resolve Editor Kate Tilley


Reducing the influence of the parties’ relative power over the outcome of litigation is explored by New Zealand academic Bridgette Toy-Cronin in a new paper.

Dr Toy-Cronin is a Director and Senior Lecturer in the Faculty of Law, University of Otago, NZ. She was scheduled to deliver a lecture to NZILA members on the subject, but the event could not to proceed because of pandemic restrictions.

In a paper she has written for Policy Quarterly, Dr Toy-Cronin says dispute dynamics are more complex than simply two warring individuals. Parties have different levels of economic and other forms of capital, and different life experience, vulnerabilities, and strengths.  

Parties may be represented by lawyers, which can influence the power they exert, and those without representation must proceed as litigants in person (LiP), leaving them “particularly vulnerable”.

Dr Toy-Cronin says when an insurer controls the litigation, they can be subject to pressures including from their reinsurers and the need to achieve certainty about exposure to liability and to maintain reserves.

She says a range of factors influence the parties’ levels of power. Access to financial resources is important. “The courts confer an advantage on the party with the money and with information and skill to navigate restrictive procedural requirements.”

More experienced parties have multiple engagements with the system and can play a longer-term game than “one-shot” players. Insurers and banks typify repeat players, and can choose which cases to settle – to avoid creating adverse precedent – and which to fight.

Dr Toy-Cronin  says the overall price is important, but more so resources relative to the other party. The one with the deepest pockets is likely the winner.

Parties that can set the rules of the game influence the power dynamics. Interest groups, like insurers, can lobby for rules that favour their interests.


Reform options

Dr Toy-Cronin presents several options for reform.

  • Suppress lawyers’ fees – Dr Toy-Cronin says they’re so high that most, particularly individuals, cannot pay to even start the fight. Other jurisdictions have begun introducing regulatory “sandboxes” to experiment with reforms. “This could be a useful initial step for Aotearoa.”  
  • Even up the amount spent on lawyers – a cap on litigation spending could ensure all the “teams” are on roughly equal footing. But Dr Toy-Cronin points out there are difficulties because personal autonomy demands there be no restraint on legal spending, plus a cap would likely further fuel the flight from the public courts to privatised dispute resolution.
  • Remove lawyers from the picture – but that attends only to the question of money, not other forms of power. For example, insured defendants’ cases will still be run by the insurer, with their experience and in-house and external legal advisers. Companies must instruct a real person (likely a lawyer) to represent their interests. A fundamental flaw is that removing lawyers makes the legal market the determining factor, rather than a more principled determination of how resources should be allocated.
  • Judicial control – there is potential for judges to take greater control of how proceedings are managed. That could address unequal power because a judge can limit the steps that can be taken, meaning one party has less power to try and outlast another party. Dr Toy-Cronin says the NZ Rules Committee is actively considering various models that, if implemented, would increase judicial control. But real change would occur only if there was “a paradigmatic shift” from the concept of “party control” to judicial control and rationing of procedure.
  • Conglomerate claims – the NZ Law Commission is considering whether and to what extent the law should allow class actions and litigation funding. Class actions increase  plaintiffs’ power: “they are no longer a lone David battling Goliath, but a whole team of Davids”. However, Dr Toy-Cronin notes class actions are complex and require expert legal assistance. Litigation funding is profit-driven, creating “incentives that may be at odds with the aims of a justice system”. She suggests stronger regulation for representative actions and litigation funding may be useful. Dr Toy-Cronin also suggests making public watchdogs responsible for bringing claims on behalf of wronged parties, which shifts litigation costs from parties to the state.
  • Involve disputants in creating rules – many jurisdictions have developed court-user committees that bring together people with experience of the justice system to provide feedback on proposals. Another promising trend in rebalancing power is using “legal design” or “human-centred design” in reforming court procedures. For example, British Columbia’s Civil Resolution Tribunal, an online, self-service platform for small quantum disputes.

Dr Toy-Cronin says the complexities of the legal market and the disputants that use the system mean there is no silver bullet to address the distortion that power creates in the civil litigation system.

“The Rules Committee is showing some appetite for introducing the most promising type of reform, greater judicial control of proceedings,” she says.

“The regulators now need to engage with difficult questions about how to make legal services more affordable. Together with reforms to introduce greater public involvement in court procedure reform, there is real potential to at least minimise the effect of power in litigation, working towards the aim of equal justice before the law.”

 
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Resolve is the official publication of the Australian Insurance Law Association and
the New Zealand Insurance Law Association.