New rules when suing individuals for fees
The new pre-action protocol for debt claims could have a severe impact on you if you have outstanding debts due from individuals
The new protocol (download it from the Ministry of Justice web site) will apply to any business (in limited form, partnerships or sole traders) when claiming payment of a debt from an individual (which is also defined to include sole traders).
The stated aims of the protocol are to:
- encourage early engagement and communication between the parties, including early exchange of sufficient information about the matter to help clarify whether there are any issues in dispute
- enable the parties to resolve the matter without the need to start court proceedings, including agreeing a reasonable repayment plan or considering using an Alternative Dispute Resolution (ADR) procedure
- encourage the parties to act in a reasonable and proportionate manner in all dealings with one another (for example, avoiding running up costs that do not bear a reasonable relationship to the sums in issue), and
- support the efficient management of proceedings that cannot be avoided.
This all means the process of recovery will be much more cumbersome because:
- you will be required to provide more documentation to debtors in specific formats
- there is more scope for delay by debtors (an extra 90 days)
- you will need to be more pro-active when engaging with debtors to ensure information is properly exchanged and time periods are met
- extra costs may be incurred, particularly if ADR proceedings are triggered.
Naturally, on the odd occasion that an expert has to take debt recovery action through the courts, it will normally be against a law firm. So this new protocol will not come into play. But when, on occasion, the expert has to sue, say, a litigant in person for fees, the need to comply with this protocol will add an extra layer of complexity. If ever there was a reason to require ‘cash on account’ when being instructed by parties rather than their lawyers, this is it!