H2. Reforms and reducing costs

196.	As the figures discussed above show, litigation in Hong Kong is undoubtedly expensive. In relation to the smaller claims, the costs bill often exceeds or equals an unduly large proportion of the claim amount. Whether the litigant is an ordinary individual or a large company, paying for litigation in the HKSAR is often not regarded as getting value for money. It is likely that one important factor behind the increasing number of unrepresented litigants is the fact that they are unable to find affordable lawyers, even junior ones, to act for them. There are also clear indications that the cost of legal services is making the civil justice system uncompetitive and that large corporate litigants are finding it more cost-effective to arbitrate or to litigate elsewhere.
197.	The question therefore arises: To what extent will reforms to the civil justice system reduce litigation costs The answer requires caution.
197.1	In the first place, it is extremely difficult to assess the overall costs implications of a set of reforms. It may well be that while certain specific reforms may lead to the reduction of costs, other reforms may create new points at which costs need to be incurred, off-setting or possibly even exceeding the costs saved as a result of the other changes. For example, the introduction of pre-action protocols by Lord Woolf is sometimes said to have increased rather than reduced costs. This is discussed further below.
197.2	Secondly, changes to the procedural rules cannot in themselves be expected to result in a general reduction in litigation costs. Reforms are again only a necessary but not a sufficient factor in the lowering of litigation costs. Such costs are determined by the level of legal fees which in our system are market-driven.
198	Subject to these caveats, changes to the civil justice system aimed at lowering costs can and should be proposed. These are reforms which seek to eliminate rules which generate unnecessary expense, reforms which discourage profligacy and which give the court more powers to prevent oppressive conduct by richer litigants and to require procedural economy generally. Such reforms also aim at facilitating operation of the market by increasing transparency and the flow of information.
199	To take a handful of examples these include proposals seeking :-

	*	to give overriding prominence to the objective of countering the deficiencies of excessive cost, delay and complexity identified above;
	*	to change rules which impose blanket interlocutory obligations often disproportionate to the issues in a particular case;
	*	to discourage practices, such as the proliferation of interlocutory applications or the overworking of witness statements or expert reports, which unnecessarily or disproportionately increase costs;
	*	to facilitate early settlement by requiring greater openness between the parties and by increasing the parties' options in making effective offers for settlement;
	*	to make the parties' potential liability to costs, both vis- -vis their own lawyers and the other side's costs, more transparent and easier to assess;
	*	to devise a system of incentives and sanctions aimed at facilitating and enforcing procedural economy by the parties and their legal representatives;
	*	to reduce the need for the expense of costs taxations.