The future of the Jackson Costs Review becomes ever more intriguing and yesterday’s post on the Jackson Review may only tell half the story.

I have received information from a reliable source that both main political parties support the Jackson reforms, but that support is not particularly strong on the opposition’s side. The opposition support only parts of it, but they are looking more at setting up a CLAF rather than implementing the proposals. If this happens, then large parts of the reforms will not be implemented (or, if they are implemented, they will be implemented late). 

If true, this would seem to turn conventional wisdom on its head in terms of the political element of the Jackson Review.
 
To make things even more interesting is the latest claim from the insurance industry that the public will pay more if the Jackson Report is implemented. Aviva claims it has computer-modeled Jackson’s final report and found that civil litigation costs under the proposed system would increase, rather than fall as intended. The extra costs would have to be passed on to all policy holders in the form of higher premiums.  This is based on the proposal for a 10% increase in general damages.
 
It is somewhat hard to understand what modeling system produced such an odd outcome. 
 
The claimant lobby had been suggesting the Report is the insurers’ dream come true, with Tom Jones, head of policy and public affairs at Thompsons, saying on publication: “the champagne corks will be popping at insurers’ headquarters.  They have got almost everything they have been lobbing for”.
 
I suspect this is a bit of clever spin by insurers (and why not?).  By suggesting they are not entirely behind the Report it implies it must be a more balanced set of proposals and increases its prospects of overcoming the political problems.
 
As Jackson LJ said: “It is interesting that the claimant lawyers are saying to me that the 10% uplift is too mean, but the insurers are saying that the increase of 10% is too generous.  It’s just possible that the balance of the report is right”.

The big issue over the Jackson Review of Civil Litigation Costs is whether there is the political will to implement the proposals.  It appears that the Final Report is now starting to gain the political support it needs.

The Law Society Gazette reports: "The government and the opposition have hinted that they would implement some of Lord Justice Jackson’s recommendations on civil litigation costs, following the first parliamentary exchange on the judge’s report since its publication a month ago.  Justice secretary Jack Straw said: ‘Lord Justice Jackson’s proposals… are designed to reduce the costs of civil litigation overall. Those costs have risen too high, and that is a bar to proper access to justice.’ He said that the government is ‘actively assessing’ the proposals."

Dominic Regan, writing in the New Law Journal, says: "The greatest myth of the moment is that 'Jackson will never happen'.  It will and soon."

A number of readers no doubt work in the area of RTA claims.  Some at the front-end of the claims process dealing with the substantive claim, others at the tail-end of the costs side.  Hopefully, those readers will therefore be aware that we have a new claims process for low value RTAs starting on 6 April 2010 (and if they didn't know they are in real trouble).

What some of the more observant may have noticed is that despite being only a few weeks away from the start date we still have no published rules as to how the scheme will work.  Quite how this shocking state of affairs arose is a mystery.  However, finally, some progress is being made.  The Ministry of Justice has written to a number of specific bodies:


"The Civil Procedure Rule Committee approved the drafts of the documents listed below on the 12th February 2010.  These documents are in draft form until: 

(1) the Statutory Instrument has been signed by the Civil Procedure Rule Committee and the Minister and then laid before Parliament, and

(2) the practice direction making document has been signed by the Minister and the Master of the Rolls.   

It is expected that the Statutory Instrument will be laid before Parliament by the beginning of March.  In view of the familiarisation, training and system adjustments that practitioners will need to undertake in order to be compliant with the new process we have decided [how gracious of the powers that be] to circulate these rules etc in draft form.  Please circulate to your members as appropriate."

In case these haven't yet made their way to you, the Legal Costs Blog and Gibbs Wyatt Stone have provided a link to all the draft documents here: RTA Claims Process.  Read them and weep.  No surprise that the final report in the Jackson Costs Review commented on the new process in this way: "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."

And that, of course, it the late Christmas present for costs draftsmen.  Jackson LJ may be intent on killing off the volume costs work but the Ministry of Justice, and those involved in formulating the new rules, have given it a massive boost.  

Time allowing, I'll have plenty more to say about this new RTA claims process.   

 

A further definition from The (Alternative) Legal Costs Dictionary:

Costs muppet n. someone who had the stuffing knocked out of them when they read the Jackson Report’s proposals in relation to fixed fees.
The legal press and various other sources have been busy in recent weeks providing various summaries and commentaries on the final report of the Jackson Costs Review.  One of the best comes from specialist costs counsel Andrew Hogan of Ropewalk Chambers (although I don't necessarily agree with all of his interpretations of the proposals or their possible consequences). For those of you who have not yet read the full 557 pages of the report (shame on you) or feel you are not fully up to speed with some of the recommendations and implications, I can thoroughly recommend this. The first newsletter provides an overview of the report, the second newsletter looks at it implications and proposals in relation to personal injury litigation and the third newsletter considers the practical difficulties thrown up by Lord Justice Jackson's proposals.
In a previous post I commented on the unsatisfactory way that legal costs case law (see post) is scattered all over the place and the problems this causes trying to keep on top of developments.

One potential solution to this problem may come from the re-launched Costs Law Reports.  This is a publication that has gone through (to put it mildly) recent difficulties.  It is now in the hands of new publishers who are making a very serious attempt to make this the most comprehensive collection of costs case law available.  The service will officially re-launch at the beginning of March.  Further information can be obtained by emailing: CostsLawReports@classlegal.com 

There will still be a print service, but more interesting is an online service with a fully searchable database and an email alerting service.

More exciting still, I understand that the publishers longer term goal is to try to bring together on the online database a fully comprehensive collection of costs case law going way beyond those cases reported in the print version.  If this ambitious goal can be achieved then this will become an absolutely invaluable tool for those with any involvement in legal costs.  The Legal Costs Blog strongly supports Costs Law Reports in this endeavour.

It is not unusual for me to make offers in relation to claimants' bills of costs that represents only a fraction of the amount claimed.  However, from time to time the response I receive is not simply the inevitable one of displeasure but what appears to be a genuine reaction of incredulity.  There appears to be total disbelief in relation to the figures I have put forward, particularly in relation to document time in high value claims.  The claimant's lawyer takes the view that no solicitor, however good, could possibly be expected to undertake the work in so little time.

The problem that many claimant lawyers have is that their experience of what is "normal", in terms of time taken to run a claim, is often limited to no more than how long it takes them, or possibly some of their colleagues in the same firm, to run similar cases.  They have no idea how other firms handle such claims or how quickly.  If they spend 100 hours on documents for a certain type of disease claim they assume that is normal and reasonable.  The fact that the majority of other firms, for a similar claim, might take, for example, 50 hours is something totally outside their field of experience.

On the other hand, as a defendant costs practitioner, I see large numbers of bills of costs from firms throughout the country.  In my capacity as a manager, I have seen literally thousands more claims for costs beyond those I have dealt with personally.  It is staggering the difference in the size of a bill from an efficient firm compared to those from inefficient firms.  Before some readers start complaining that they should not be criticised for dealing methodically and conscientiously with their clients' claims and not cutting corners, my experience is that the best fee earners, in terms of the results they achieve for their clients, are very often exactly the same ones who produce the most modest bills.  It is often those firms that are not real specialists (despite their claims to the contrary) who under-settle claims, take twice as long to achieve under-settlement, and then produce the highest bills.  One of the obvious criticisms of the current legal costs system is that it not only rewards inefficiency but fails to properly reward the skilled lawyer.

I fear that there is a similar danger for costs judges.  The bills that come before them are invariably the ones that are the most excessive. A paying party (or at least one with any sense) will not take to detailed assessment a bill that is broadly reasonable.  Even where the bill is overstated by 10-25% it will usually be possible for the parties to agree a compromise.  Therefore, the cases that come before costs judges are usually ones where the amounts claimed are more likely to be at least 25%+ over what a paying party knows to be reasonable compared to cases run by other firms.  More often, the amount claimed is 35%+ over a reasonable figure.  So what do most costs judges have to measure these claims against?  Other excessive bills that have also been brought before them to be assessed.  You can see the problem.  Costs judges run the danger of coming to believe the excessive bills that come before them are typical.  There should be some process whereby costs judges routinely have submitted to them the bills produced by the best claimant firms so that they have a yardstick of excellence against which to measure claims for costs.

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Another VAT change?

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Legal costs practitioners are still struggling to work out exactly how the most recent VAT change impacts on what level of VAT to apply to different periods in bills of costs.  What news do we now receive?  Both Labour and the Conservatives are apparently considering a VAT increase to 20% to help fill the massive public deficit.  Are they deliberately trying to torture us?     

Bill of Costs

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To outsiders the language of the legal costs world can seem strange and archaic.  Why are “indemnity costs” and the “indemnity principle” totally different and totally unrelated?  Why did “taxing masters” have nothing to do with tax?
To help cast some light on this obscure area of law the Legal Costs Blog is pleased introduce The (Alternative) Legal Costs Dictionary.  Over coming weeks we hope that these clear and concise definitions will provide invaluable assistance.  
Bill of Costs (claimant’s) n.  a work of fiction (usu. pure fantasy).
Bill of Costs (defendant’s) n.  a true and accurate account of the work reasonably and proportionality done to secure access to justice for a defendant who has had a claim entirely lacking in merit brought against him.

Default costs certificates

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In legal costs it can often be the case that a judgment that is concerned with one particular issue may have unexpected relevance in another area.  One example of this is the case of Roundstone Nurseries Ltd v Stephenson Holdings Ltd [2009] EWHC 1431 (TCC).
The matter concerned a claim where proceedings had been issued.  The parties agreed that the proceedings should be stayed by court order to allow for the parties to complete the Pre-Action Protocol process.  The period of the stay came to an end but neither party had applied to the court to extend the stay of the proceedings, despite the Defendant noting in correspondence that such an extension was needed.  In the absence of a defence being filed by the Defendant, the Claimant, without any further reference to the Defendant, applied for and obtained judgment in default. 
The Claimant subsequently agreed to have the judgment in default set aside by consent but claimed they were entitled to their costs of the application to set aside and should not be required to pay the Defendant’s costs of the application.
The judge, Mr Justice Coulson, accepted that the Claimant was technically entitled to enter judgment.  However, the judge concluded:
“During the course of his helpful submissions on this point, Mr. Crangle went so far as to say that, if a claimant was technically entitled to enter judgment in default then he was entitled to do so, even if he knew that the defendant had a real prospect of defending the claim and therefore setting aside such judgment.  I am afraid I do not accept that submission: it seems to me that it is contrary to the entire basis of the Civil Procedure Rules.  If a claimant knows that, because of some technical glitch, he could enter judgment in default against the defendant, but that the defendant had a real prospect of successfully defending the claim (and therefore getting judgment set aside) then that claimant should not, at least as a general rule, enter judgment in default.  If he does, it seems to me that he must face the costs consequences of that decision.”
This decision seems to be relevant in relation to default costs certificates.  Although the gentlemanly thing to do where a paying party has not served Points of Dispute within time is to remind the paying party, it is common for the receiving party to simply proceed with an application for a default costs certificate without further reference to the paying party.    
A default costs certificate can be set aside where “it appears to the court that there is some good reason why the detailed assessment proceedings should continue” (CPD 47.12).  There is only limited case law on the issue of what amounts to a “good reason”.  One useful starting point is Seray-Wurie v London Borough of Hackney [2002] EWCA Civ 909.  The Court of Appeal, commenting on the decision of the Court below, said:
“When the judge considered the effect of the overriding objective, he said that there was a clearly articulated dispute about the amount of costs.  For the purposes of this judgment he was content to assume that the council had been late in submitting its points of objection, but it did dispute them and there was clearly a dispute to be determined.  The overriding objective necessarily implied that dealing with a case justly included actually dealing with the case.  If the deputy judge had made any other order [to that setting aside the default costs certificate], he would have shut out the council entirely from pursuing the disputed points in relation to costs, and both sides agreed that the amount of costs were very substantial indeed.  In these circumstances, whilst assuming that the disputed facts (some of which related to the hearing before the deputy costs judge) were found in the claimant’s favour, there was no possibility of any reasonable costs judge reaching any other conclusion.  There was therefore no realistic prospect of an appeal succeeding.  Permission to appeal was accordingly refused.”
Although each case will depend on its own facts, where an application to set aside a default costs certificate, supported by points of dispute, is filed reasonably promptly it is hard to envisage many situations where the Court will not set aside the certificate.  In the past, where this happens, it would generally be accepted that the paying party should have to pay the associated costs.  The decision in Roundstone Nurseries Ltd v Stephenson Holdings Ltd suggests that this may not be appropriate.  If a receiving party has been too quick off the mark and failed to warn the paying party that they intend to apply for a default costs certificate, may they find themselves having to pay the costs of having it set aside?

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