'Skin in the game' disputes and the rise of boutiques may have unwelcome results, says Norton Rose's Paul Morris

Those practising as commercial litigation lawyers will be familiar with the reported decisions spawned by the great legal brawls of the 1980s and 1990s: Lonrho v Fayed (No 5), Derby v Weldon (No 10) and many more. Arguably, the most interesting aspect of these decisions was the numeral. Every interlocutory consideration was the subject of vehement disagreement and ferocious challenge. The parties trooped in and out of the Queen's Bench Division with frightening regularity, setting up camp in the Royal Courts of Justice like medieval besiegers.

The atmosphere has been notably more sedate (some would say dull) since the introduction of the Civil Procedure Rules (CPR) in 1999. Claimants and defendants are compelled to assess their legal position in detail before putting arguments before the court and penalised with costs orders if they fail to do so. Constant and pedantic 'refinement' of pleadings – leading to the rejoinders and surrejoinders so beloved of lawyers a generation ago – are now frowned upon and mercifully rare. The CPR's 'overriding objective' – which requires the parties and the court to save money and time, deal with cases in a manner proportionate to the amount of money involved, and have regard to the courts' resources – is invoked daily with varying degrees of sanctimony in solicitors' correspondence. 'Proportionality' is the watchword.

It is, of course, true that a handful of oligarchs have recently brought back a few memories of the good old days, but the cases they bring and the manner in which they are fought are the exception, not the norm. By and large, most large commercial disputes in the UK are dealt with sensibly, proportionately and quickly.

In April next year, the enactment of the Legal Aid, Sentencing and Punishment of Offenders Bill, will – for the first time in the UK – bring contingency fees into general circulation, or 'damages-based agreements' (DBAs, to adopt the new jargon). Subject to further regulation for medical negligence claims, claimant lawyers will be able to fix their remuneration by reference to the amount recovered by their client. Currently, the most lawyers can charge is a success fee capped at 100% of their standard rates.

There is a vigorous debate as to whether DBAs are a sensible means by which to provide access to justice for people who would not otherwise have the means to litigate. However, the conventional view as regards commercial litigation is that the grown-ups can look after themselves, and the market will determine if and how DBAs shall operate.

Another new feature of the legal landscape in the UK has been the rise of the boutique litigation firm. The demand for this innovation in the commercial sphere has arisen as a result of financial institutions and large corporates retaining large panels of law firms who are contractually obliged not to act against them. Most of the traditional City firms are therefore put offside as regards litigation involving the big institutions, and many choose not to litigate against those institutions as a matter of policy, regardless of any panel relationships or commitments. If reports are to be believed, the boutiques have done very well out of exploiting this gap in the market.

The consequences of these developments for commercial litigation are unclear, but one can make an educated guess. In the US, where there has been less historic tension between public policy and the recovery of contingency fees, the plaintiff attorney, flying from case to case in a Learjet to prosecute negligence claims for eye-watering punitive damages, is a stock character.

We have already seen some unedifying spectacles here as claimant lawyers extracted vast fees for themselves on the back of miners' claims for compensation. Perhaps lessons have been learned in the 'retail' litigation sector as a result of such excesses, but what awaits the field of commercial litigation, where the only regulation will be provided by the market?

The environment here is rather more hostile to the plaintiff attorney model than in the US. Juries do not sit in civil cases except in defamation trials and, even in this context, the forthcoming enactment of the Defamation Bill will ensure that juries do not sit at all, save in exceptional circumstances. Furthermore, and by contrast to the position in the US, those who lose cases in England and Wales generally have to pay a large proportion of the other side's costs. Although insurance can be purchased to cover that liability, the principle does operate quite effectively to discourage frivolous claims.

Nevertheless, the introduction of DBAs and the rise of the litigation boutique, not to mention the rapidly increasing depth and sophistication of the litigation funding market, is a potent mix to stir into the comparatively tranquil waters of English commercial litigation. The CPR will not change, of course, but the rules are not a complete firewall against cynical claims. It is not unduly pessimistic to expect a rise in the number of dubious claims against large institutions, brought by lawyers with a considerable amount of skin in the game on behalf of the naive or the opportunistic. One cannot help but consider it unfortunate that DBAs are being introduced with so little oversight and that only litigation boutiques can now act against large institutions. Neither of these developments was – or is – inevitable.

However the brave new world pans out, change is unavoidable. The challenge facing litigators, litigants and the courts is to ensure the change is sensible, and 'proportionality' remains the watchword. Unless the challenge is met with sober heads, the atmosphere in the Commercial Court is likely to deteriorate and the legal profession, never the public's darling, will attract further ordure. Derby v Weldon (No 11), anyone?

Paul Morris is a dispute resolution partner at Norton Rose.