The Commercial Agents Regulations mean I have access to justice, right?

Access to justice – an idealistic catchphrase well-used by politicians and lawyers which seeks to reassure those who have been wronged that there is redress available to them, but what does it really mean and does it actually exist? The availability of legal redress to all… Accessing legal expertise when it is most needed… An available court system which is fair and independent… The phrase ‘access to justice’ means something different to everybody but what does it mean for commercial agents? A commercial agent who has been terminated by his principal is likely to find himself without an income, or a proportion of it. The justice available to that commercial agent is to commence a claim under The Commercial Agents (Council Directive) Regulations 1993. It sounds so simple yet in reality, while many commercial agents find themselves ready and willing to pursue a claim, they are unable to do so. In recent years of austerity, reduced public spending and cost cutting, significant changes have been made to the civil justice system. 86 local courts have been or are earmarked to be closed and Court fees have risen dramatically, in particular the cost of issuing a claim, which now runs up to a maximum cap of £10,000. In addition to the increase in Court fees, ATE (after the event insurance) premiums and CFA (conditional fee agreement or “no win no fee agreement”) uplifts remain irrecoverable from the losing principal and with the costs recovery of a successful commercial agent averaging at around just 70% of costs incurred (not including uplifts or insurance costs), the costs shortfall of a winning agent remains a problem. The reality of the future conduct of litigation in the Courts of England and Wales looks set to further limit costs recovery to just fixed costs, fixed solely on the value of the claim and not its complexity, significance or the amount of work which it has required. While a CFA might be a solution for a terminated agent with little or no cash to get a claim off the ground, the reality of funding litigation in this way is that the sum of damages which the agent recovers from the principal must be sufficient to pay the success fee (a percentage on top of a solicitor’s base costs), ATE premium (if applicable) and any shortfall in costs not recovered from the principal, while still leaving the agent with a net sum of money when all other fees and expenses have been paid. In substantial claims this is not a concern however for lower value claims, this method of litigation funding is not economically viable. As a result, commercial agents earning low to modest incomes can often find that justice is inaccessible, purely because of funding reasons.

As a result of the ever-increasing cost of litigation alongside the stress and risk of litigating through the Courts, we are finding that mediation (a form of alternative dispute resolution whereby an independent mediator carries out “shuttle diplomacy” between the parties) is becoming more and more popular, and successful, in achieving a resolution of a terminated commercial agent’s claim. There are a number of reasons why mediation is so suited to commercial agency claims – often, the liability of the principal to make a termination payment to the agent is accepted or established and therefore, the only question to be answered is, how much? There is so little case law surrounding the valuation of claims under the Regulations, particularly claims for Regulation 17 compensation, that nobody can ever really predict with any degree of certainty what a Court would likely award the agent anyway. This means each party’s best and worst case outcomes can differ significantly, leaving great scope for negotiation to come to a deal somewhere in the middle.

 

Emma Marshall is a Solicitor in Dispute Resolution & Commercial Litigation Disclaimer: This column does not contain legal advice and is for general guidance only. Agentbase, Myerson Solicitors and the writer accept no liability in connection with the general guidance given in this column. Please ensure that you obtain legal advice before acting in reliance upon anything in the article. For example please be clear that the answers given in this column may not cover all possible angles, aspects, relevant considerations and/or points of law and so that all or any information which is given above needs in every instance to be referred for legal advice for clarification and amplification, before being relied upon.

Regent Road, Altrincham, Cheshire, WA14 1RX Emma.marshall@myerson.co.uk Tel: 0161 941 4000 www.myerson.co.uk

Download PDF