The recent case of Ahmed v Aventis Pharma Ltd  EWHC 9052 (Costs) dealt with two small issues but both ones of interest.
Firstly, following the decision in Crane v Canons Leisure Ltd [2007 EWCA Civ 1352, where solicitors outsourced the job of sorting and summarising medical records they could treat this work as forming part of their profit costs rather than being treated as a disbursement, and thereby make a profit on this work.
The second issue considered whether photocopying charges were recoverable. CPD 4.16(5) states: “The cost of making copies of documents will not in general be allowed but the court may exceptionally in its discretion make an allowance for copying in unusual circumstances or where the documents copied are unusually numerous in relation to the nature of the case”.
Master Gordon-Saker dealt with the matter in this way: “Photocopying charges will generally only be allowed where they are exceptional, otherwise they are considered to fall within the solicitor’s overhead. To my mind what is exceptional will have to be measured by the facts of the particular case. In a case where the profit costs are less than £7,000 it would be unusual to see the generation of 2,540 photocopies. Accordingly I would view this as exceptional and allow the sum of £154.80 claimed as a disbursement”. This is no doubt correct. What might be considered exceptional in a low value matter may not be exceptional in a substantial piece of litigation.
I recently came across a job advertisement for a trainee costs draftsman with the following wording: "Are you seeking a career option that is secure? Would you like to work in a niche market? Would you like to work in the field of Law Costs?". Secure? Have I missed something?
Secondly, we do know that the new claims process for low value RTAs is due to be launched in April. Now at the time of writing, unless I have missed something, the actual rules have yet to be published. This is worrying with the start date so close. Jackson LJ clearly has doubts about the scheme which he expressed in his report: "I have two concerns about the new process in its present form. My first concern is the sheer complexity of the process. Over 80 pages of new material will be added to the rule book, in order to deal with the simplest category of litigation which exists, namely low value RTA claims where liability is admitted. I fear that collectively these procedures might possibly open up a new theatre for the costs war."
Much has been made of the fact that the level of fixed fee is set below the average amounts recovered by claimant lawyers under the current rules. Good news for defendants. But, and it may be premature to start looking for problems before we have seen the final rules, one issue looks likely to cause defendants problems unless expressly dealt with in the small print of the new rules.
Under the current predictable costs regime, recovery of costs is governed by the level of damages actually agreed. If a case settles at a level within the small claims track the predictable costs scheme does not apply. However, under the new claims process the fixed fee of £400 for stage one, providing notification of the claim to the defendant, is payable at the point when liability is admitted. At this point there will be no medical evidence. The scheme is only meant to apply where the personal injury element of the claim is at least £1,000. The Ministry of Justice's report recognises that some claims may be valued at the outset as having "reasonable prospects" of exceeding £1,000 but it later becoming clear that they do not. At that stage the claim will leave the process. However, I can see no mention of defendants getting their £400 back. Am I being incredibly cynical in thinking that there will be a very high number of claims that claimant lawyers value as having reasonable prospects of recovering over £1,000 only for these claims to undergo a surprising downwards revaluation or even disappear entirely after the £400 has been paid? There is no time limit under the scheme for obtaining a medical report and defendants may only discover several years down the road that they have been stitched-up in tens of thousands of claims.
Lawtel is a subscription service. It does provide cases summaries and has some interesting decisions not reported elsewhere. However, this service suffers from two problems (I am not talking now about their bizarre pricing structure). It has a very useful daily update service that notifies of relevant new court decisions. Unfortunately, the updates only seem to include recent decisions as opposed to older cases that have only just been added to Lawtel's database. Therefore, even if one subscribes to the updates, one can miss important and interesting decisions. The only way to make sure that other cases have not been reported is to search through the whole database.
The second problem with Lawtel is that it does not report many of the cases that appear on the Senior Courts Costs Office site. One is therefore stuck with having to visit that site on a regular basis to check for new cases and to skim read them to know what the case is about.
Surely there could be a one-stop solution to keeping up to speed on all costs decisions. Sadly, time constraints do not enable me to offer such a service. There is a ray of hope on the horizon to this problem and I'll provide more information on this shortly.
However, of more interest is the fact that the Committee was of the view that the change was introduced without proper consultation as part of the changes made following the MOJ's consultation concerning controlling costs in defamation claims and it was not clear how the change came to apply to all proceedings. Apparently the Committee was looking to see if the change could be revoked.
Given the current economic climate, the prices being charges by some legal training conference providers looks rather optimistic, but there is certainly some competition emerging in relation to pricing.
The IBC Solicitors' Costs Conference 2010, on 26th January, is priced at between £599 and £799 depending on when you booked (with a 20% discount for ALCD members). CLT's Solicitors Costs Conference 2010, also on 26th January, is £395 for CLT subscribers, ALCD and APIL members or £495 otherwise. This year they were, at one stage, offering a very attractive two for the price of one offer. Butterworth's Costs and Litigation Funding conference, at the end of last year, was priced at £499. If you don't mind a trip to Liverpool, the Liverpool Law Society's Costs Conference, on 16th March 2010, looks very good value at £199 for members and £249 for non-members.
In light of the Jackson Report, many may be wondering whether they will still have a job working in the field of legal costs and may decide none of these are worth the time, let alone the money.
Many working in the legal costs industry will have gone to work last Thursday, the day Jackson LJ published his final report on his civil litigation costs review, wearing brown trousers. Most of them will have been spending the weekend updating their CVs. Those who thought the final report would probably turn out to be something of a damp squib will have had the shock of their lives.
- Fixed costs for all stages in all personal injury fast track matters. - This is the big one. This change does not require primary legislation and is therefore all but certain to happen. Jackson LJ wants the new regime in place by October 2010! Yes. That quickly. Fast-track personal injury work (with the limit now being £25,000) accounts for the vast majority of the civil costs work out there. This will mean the end, at least in their current form, for most volume legal cost firms. Although there will be a run-off period for existing claims, for fast-track matters this will not be long. Firms are going to be starting to plan their redundancy programmes now. Firms will be looking for mergers and management buy-outs for what remains of these businesses, if anything. To make matters worse for employees, many of these firms will have no incentive to retain quality staff and will look to maximise profits for the short run-off period. Await news of big changes to bonus structures.
- An end to recovery of success fees and ATE premiums between the parties. - Although this will not have a direct impact on the nature of the work out there, it is likely to have two indirect consequences. Many claimant lawyers will feel unable to charge their clients success fees if these cannot be recovered from defendants. Even if they do feel able to charge success fees, the proposed new cap on success fees will dramatically reduce the amount lawyers can charge. This may have an impact on the willingness of firms to accept risky personal injury claims. Any reduction in new claims being accepted will mean a future reduction in costs work. Secondly, it has been the amounts at stake as a result of the recoverability of success fees and ATE premiums that has done much to increase the importance of legal costs in litigation and generate the need for specialists. Once additional liabilities are removed from inter partes bills, the amounts at stake will appear much more modest. Lawyers and insurers may feel much more comfortable negotiating costs in these cases and not feel the need to involve costs experts.
- Even if recovery remains in place, Jackson LJ not only wants to reverse the decision in Crane v Canons Leisure Centre  EWCA Civ 1352, which allowed success fees to be claimed on work done by external costs draftsmen, but he wants recovery of success fees to be ended entirely in detailed assessment proceedings. In recent years, detailed assessment proceedings have often been more profitable than the substantive litigation itself. This will end and there will be less incentive for claims to be pushed to detailed assessment.
- Jackson LJ wants new software developed that will enable time to be recorded on case management systems in such a way that schedules of costs and bills of costs can be generated automatically. Yes, you did read that correctly. The traditional job of a law costs draftsmen, drafting bills of costs (as the name implies), is to end. The bread-and-butter work for claimant costs firms will disappear. This proposal would take some time to put into place, and faces a number of problems, but does not make for happy reading.
- Lengthy points of dispute and replies have become an industry in their own right and generated much work for the costs world. Jackson LJ wants a radical change in approach and these pleadings to be much shorter. Interestingly, the new model points of dispute (page 556 of the Report) are very similar to the kind I have been producing for years. This recommendation is more one of guidance as to what the courts will expect to see rather than a fundamental change in the rules. Although this change anticipates an actual amendment to the Costs Practice Direction, we can expect judges to want parties to implement the spirit of this change immediately. Receiving parties will have to think carefully before preparing optional replies unless there is a point of principle arising or positive concessions are being made. If they carry on producing replies along current lines they are unlikely to recover the costs of the exercise. You heard it here first.
- There is a proposal for a pilot scheme of a provisional assessment procedure for bills up to £25,000. If fast-track cases become subject to fixed costs, this proposal is unlikely to impact on a large number of cases.
- Jackson LJ recommends the introduction of qualified one-way costs shifting (in simple terms it means that defendants in personal injury claims will not normally be able to recover their costs when they win a case except where the defendant has succeeded on its Part 36 offer). This will mean an end to the need for defendant bills of costs in most cases where a defendant wins on liability. It will mean an end to the need for losing claimants to challenge such costs.
- The introduction of rules for costs management in cases is proposed. At one stage it was hoped in certain quarters that this idea would generate significant new work and keep experienced costs specialists busy. However, it is proposed that it will generally be in the discretion of the judge as to whether to order costs management and it is unlikely that it would be adopted much beyond the type of case that is currently considered appropriate for costs capping orders (ie virtually none).
- Judges will be given a bit more discretion as to the circumstances where they are meant to summarily assess costs. Basically, if they don’t want to, they don’t have to. However, given fast-track cases will be caught by the fixed costs proposals this is only going to have limited impact on costs work levels.
- The radical proposals for “proportionality” (which I’ll discuss in more detail on another occasion) seems certain to generate a flurry of satellite litigation initially, but this will probably be short-lived.
Amazon are taking pre-publication orders for Dr Mark Friston’s Civil Costs: Law and Practice (see link) at the discounted price of £56.25 (with free postage). This would be an insanely low price for any legal text book. I really can’t believe that the price is so low for this book. Don’t be fooled into thinking the low price means you won’t get something of serious substance.
So, are the proposals contained in the final Jackson Report as dramatic as some were expecting? Oh, yes.
- Success fees and after the event insurance premiums to be irrecoverable between the parties (this would mean the end for most ATE insurers);
- To offset the effects of this for claimants, general damages awards for personal injuries should be increased by 10%;
- Referral fees should be scrapped (this would mean an end for claim management firms);
- Qualified ‘one way costs shifting’ – claimants would not usually be liable for a defendant's costs if a claim is unsuccessful (as long as they have behaved reasonably), removing the need for after the event insurance (and the need for some costs drafting work);
- Fixed costs to be set for ‘fast track’ cases (those with a claim up to £25,000) to provide certainty of legal costs (this would mean an end for many costs negotiators and costs draftsmen);
- Allowing lawyers to enter into contingency fee agreements, where lawyers are only paid if a claim is successful, normally receiving a percentage of actual damages won.