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New rules for companies involved in court cases

In an effort to improve access to justice, the law on people representing a business in court has changed.

Until now, and unlike individuals, businesses and other organisations had to instruct a solicitor to represent them in a court action: incurring legal fees to pursue or defend an action.

Since last November, a ‘non natural person’ such as a company, partnership or association, can now be represented by someone else: typically a director, partner or other office holder connected to the business.

While these changes are a welcome attempt to level the playing field, the reality may be somewhat different.

A fairer deal for businesses?

You may – understandably – ask why a solicitor is spreading the word about this.

From pursuing or defending cases focused on a perceived wrongdoing, or sums allegedly due, as a solicitor operating in the courts throughout the Highlands and Islands it is not uncommon to see members of the public representing themselves in civil – non criminal - actions, particularly if the case is of relatively low value.

And businesses should have the same opportunity to access justice as individuals.

While sitting in court I have seen cases where an individual has raised an action for payment against a small family-run business.

In contrast to the individuals, who represented themselves and didn’t incur any legal fees, the businesses had to pay for a solicitor.

So on the face of it, these new rules mean a fairer deal, particularly for smaller businesses and other organisations.

But as with so many things, delve a little deeper and it’s not quite that simple.

The right for a business to be represented by someone other than a solicitor comes with significant restrictions.

  • The automatic right applies only in actions involving a sum of money of less than £5,000
  • In cases where payments of more than £5,000 are in dispute it will be necessary to apply to the court for permission for representation by a lay person
  • There are strict criteria for the granting court permission

Court permission criteria

In deciding whether or not grant permission, the court has to be sure the business is unable to pay for a solicitor to conduct the proceedings.

At the moment, it’s not clear what evidence the business will have to provide to demonstrate this, but it may well be that businesses are reluctant to be seen to “plead poverty” in what remains a public forum.

Further, the court is only entitled to grant permission if it is ‘in the interests of justice’. The court will need to consider the prospects of success of the action and the likely complexity of the proceedings.

Mixed success

I think it is fair to say that members of public conducting litigation on their own behalf will have mixed success. Despite the best efforts of the judges to ensure fairness, courts may not always appear to be the most welcoming or user-friendly places for individuals.

Cases and court procedures can be complex, and the implications of getting it wrong are dire.

In conclusion then, I can understand the logic of imposing some form of restriction to avoid vexatious claims and genuine claims being dismissed for technical failures. However the issues potentially arising from not being represented by a solicitor in court apply equally to individuals as well as businesses.

Therefore if restrictions are deemed necessary, in my view, they should apply both to businesses and individuals.

Victoria Leslie is a Senior Associate in Ledingham Chalmers’ court team based in Inverness. She is a Law Society Accredited Specialist and conducts litigation in the Highlands and throughout Scotland.

An earlier version of this article appeared in the Press and Journal’s The Leader publication in January 2017.

Victoria Leslie

Victoria Leslie a partner at Ledingham Chalmers. She is based in the Inverness office.

Posted, 11 January 2017 by Victoria Leslie
Categories: Corporate | Litigation