An insolvency lifeline

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As court fee increases and legal aid cuts continue to bite, Marian Riley-Poku assesses a High Court pro bono scheme set up to assist litigants-in-person facing corporate insolvency in the winding up court

The cuts to legal aid and the corresponding rise in the number of litigants-in-person (LiPs) since the Legal Aid, Sentencing and Punishment of Offenders Act 2012 came into force are well documented. 


This has been further compounded by the increases in court fees in 2015, and it is widely anticipated that this will have to have an adverse impact on the ability of individuals and small businesses to access the courts to exert their legal rights or to recover monies owed to them.

Lord Dyson, Master of the Rolls, giving evidence in January to the Justice Committee inquiry into courts and tribunals fees and charges, was particularly concerned about the impact on small and medium-sized businesses (SMEs), of modest means, which would fall outside the low threshold for
fee remissions.

The latest figures from the Bar Pro Bono Unit reported a 76% rise in the number of requests for free help in the courts since 2013. While much of the studies and commentary have focused on the impact on litigants in the areas of civil and family law, these changes have been felt widely in all areas of law including chancery and commercial matters. An increase in fees in bankruptcies and company insolvencies came into effect in November 2015, and the deposit amounts that have to be paid before petitions can be presented were also increased for creditors and companies (by 10% and 8% respectively). As a result of the complex nature of the law and procedure in these areas, litigants will usually need the help of an insolvency professional or practitioner; the changes, however, will mean that many will be faced with the prospect of ‘doing it themselves’.

Several steps and initiatives have been taken to improve access to justice and the court experience for affected LiPs in the Chancery Division, including the publication of practical guides and the setting up of pro bono schemes. Asplin J and Briggs LJ have published a guide on the practice and procedure for LiPs who need to make interim applications in the Chancery Division Interim Applications Court (CDIAC). There are also pro bono schemes for LiPs in the High Court, most notably the Chancery Bar Litigant-in-Person Support Scheme (CLIPS), which provides free representation for LiPs making urgent applications for interim relief in the CDIAC.

The latest addition to the chancery and commercial pro bono offerings is the City Law School’s Company Insolvency Pro Bono scheme (Co.IN) which was set up in early 2015 to help LiPs using the winding up court in the High Court. So far, Co.IN is the only High Court pro bono scheme that is specifically targeted at corporate insolvency. The Civil Procedure Rules (CPR) definition of LiPs includes a company or corporation which is not represented by a lawyer in court (r 46.5(6)), and the aim of Co.IN is to assist SME LiPs that have been presented with winding up petitions and have to attend a court hearing without the assistance of a lawyer. The scheme received the permission of the Chancellor of the High Court to begin operating in April 2015, at the beginning of the courts’ Easter term. It also received the support of the judiciary, including Chief Bankruptcy Registrar Baister and Asplin J.

Operation of the scheme

The scheme operates from consultation room 17 on the second floor of the Rolls Building from 10am until 1pm on Mondays during the courts’ term time. Volunteer barristers provide advice and representation and student volunteers are present to supervise and administer the scheme. Clients of the scheme are mainly directors or officers of SMEs who are appearing as LiPs. However, it is also available to creditors who present petitions to obtain monies owed to them by companies. The scheme is served mainly by junior barristers from the Chancery and Commercial Bar, and they are instructed by City Law School through its licensed access rights. When on duty, they provide advice on a variety of matters, including winding up law and court procedure, how to make or respond to a winding up petition, the meaning of documents such as statutory demands and petitions, what applications LiPs can make in court, how to apply for a validation order, how to comply with directions for a contested hearing and how to write a witness statement.

The barristers also make representations on behalf of the LiPs before the registrars of the winding up court. Common applications that volunteer barristers have made on behalf of LiPs include applications for a winding up order, for adjournments (eg, for time to pay/settle the debt, propose CVA/instruct insolvency practitioner, hold creditors’ meeting etc) and applications to dismiss the petition (eg, because petition debt paid, set off/counterclaim etc).

Student volunteers are mainly BPTC students at City Law School, although the scheme is also open to LPC students. There has been an overwhelming number of applications for a place on the scheme due to the shortage of student pro bono work in chancery and commercial law. From a learning perspective there is also the need for students to gain practical experience of an area of law that they mostly study within the confines of the lecture room. Most of the student volunteers usually have some background knowledge in insolvency law from their undergraduate studies, and many of them go on to take the company and/or commercial law options in the third term. Some already have pupillages in chancery and/commercial chambers. They are in charge of the supervision and administration of the scheme, including answering any enquires and explaining winding up procedure, sitting in on client conferences and taking notes during the conferences and the court proceedings.

Students can also observe the volunteer barristers as they give advice and represent the LiPs before the registrars of the court, and most importantly, they gradually become familiar with winding up advocacy – in particular, the unique phrases and orders that are used in the winding up court. Before volunteering, the students receive training in company insolvency legal practice and procedure by a member of the Chancery Bar, particularly on matters that they will come across when volunteering on the scheme and during the early years of practice at the at the Chancery and/or Commercial Bar.

Benefits

The LiPs benefit from receiving free advice and representation from barristers who specialise in insolvency law. They are also able to receive both legal and moral support from the barristers and students at an undoubtedly stressful time, when they are faced with the possible winding up of their companies and the prospect of having to appear in person before the court. The registrars have been very supportive of the scheme because volunteers have been able to ease some of the challenges involved with hearing a case involving a LiP. The Chief Registrar has written several guides and samples for the use of Co.IN, including witness statements and draft orders that are used by both volunteers and LiPs.

The students benefit from observing and practising many of the skills that are only taught or simulated in law school, such as advocacy and conferencing classes. According to LawWorks, the benefits of pro bono for law students include the chance to develop practical legal skills, the ability to deal with real legal queries for real clients, forging links with legal professionals and firms, and also adding value to training contracts and pupillage applications. Co.IN has helped the students to develop and gain many of these benefits and experiences, and most importantly, to involve them in the growing pro bono ethos of the legal profession. Their leadership and teamwork skills are also strengthened, as they work in teams of three on a rota; they also get a chance to be a supervisor at least once every term.

Volunteer barristers, including second-six pupils also benefit from having the chance to be on their feet in the winding up court, as many in chancery and commercial chambers may not get the chance to do so during their second-six pupillages. Chambers specialising in insolvency work are increasingly getting involved in charitable and pro bono initiatives that are linked to their areas of work, and volunteering on a scheme such as Co.IN will be a chance for junior barristers to contribute their skills for the benefit of the wider community. ●

Contributor Marian Riley-Poku is a barrister and a senior lecturer at City Law School

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Marian Riley-Poku

Marian Riley-Poku is a barrister and a senior lecturer on the Bar Professional Training Course (BPTC) at City Law School. She also co-ordinates the company law option and set up the Company Insolvency Pro Bono Scheme in 2015.