The Ministry of Justice’ statistics for the work of the Senior Court Costs Office gives the following:

Senior Courts Costs Office

Number of costs bills assessed, by type of case giving rise to the bill, 2006–2010

Number of bills

Type of case

2006

2007

2008

2009

2010

‘Between parties’ assessments

2,459

2,205

1,888

1,788

1,788

Civil legal aid assessments

6,315

5,756

5,146

4,319

4,542

Receivers' costs in the Court of Protection1

4,082

4,528

4,710

5,054

4,960

Appeals against determination of costs in the Crown Court

366

528

387

365

289

Total assessments

13,222

13,017

12,131

11,526

11,579

 

The commentary to the report states:

“In 2010, the Senior Courts Costs Office (SCCO) assessed 11,580 bills remaining level since 2009. It reflects the levelling out of the impact of Predictable Costs in Road Traffic Cases, the reduction in technical challenges to Conditional Fee Agreements and fixed success fees.”

The broadly flat figures for the last three years would be fine but for the fact the number of costs judges and costs offices is dropping. It is my imagination or are the dates for the listing of hearings in the SCCO getting pushed ever back?

By how much is the average claim for costs reduced?

When I started in costs law, back in 1997, average savings for volume legal costs negotiating work in insurance personal injury claims was in the region of 21-23%.

With the advent of claims management firms, ATE premiums and success fees, that rose at one stage to around 30-35%. (Depending on what was included or excluded in the figures different firms managed to massage the figures and direct comparisons have never been possible.)

The introduction of predictable costs in RTA claims considerably reduced the scope for argument in low-end RTA work and these claims are probably recorded separately by volume negotiating firms.

The introduction of fixed success fees for most RTA, EL and EL disease claims and the decision in Roger v Merthyr Tydfil CBC has considerably reduced the scope for argument in other claims. Has this been made up for with increased claims for hourly rates and time?

Where do average savings now stand?

For those claimant lawyers who submit reasonable claims for legal costs (God bless both of you) I am sure that it is often hard to understand the apparently irrational rants from defendants about excessive claims for costs. Some will also struggle to understand why Lord Justice Jackson, after extensive investigations, concluded that there was something seriously wrong.

I will therefore give you a small example of the kind of thing that some of us see on a daily basis.

A document schedule to a bill of costs contained the following two entries:

1/10/2010 - Attending the file and applicable information and preparing Schedule of Loss – 24 minutes

18/11/10 - Incorporating additional material into Claimant’s Schedule of Loss and updating the same – 24 minutes

At this point you may think: what’s the big deal? A total of 48 minutes for preparing a schedule of loss is hardly anything to get excited about.

The fee earner was claiming £192 per hour plus a 100% success fee plus VAT at 20%.

Therefore, the total being claimed for preparing this document was £368.64.

To put this into context, the Office for National Statistics lists the median weekly pay for full-time employees in the UK for 2010 as £499. After tax, the take home pay for the average full-time worker is almost exactly the same as was claimed for the preparation of this document.

And what did this document look like that a claimant solicitor is prepared to seek £368.64 for? Have a look: here (click to view or go online if you receive this via email).

I have anonymised the document but frankly I should probably be naming and shaming the solicitors and well known costs firm responsible. It’s not just those looting in the streets who believe in something for nothing…

A recent comment on a LinkedIn discussion forum raised the issue of whether the proposed changes to the Part 36 rules and the formal reversal of Carver v BAA were sensible.

The proposed changes will make clear that where a money offer is beaten at trial, by however small a margin, the costs sanctions applicable under CPR 36 will apply.

It will be remembered that this was one of Lord Justice Jackson’s main proposals.

But wait a moment. LJ Jackson also believes that recoverable costs should be limited to what is proportionate to the amounts at stake. Surely this should apply equally when there is an offer on the table. In the case of Carver, even if we accept that a claimant who beats a defendant’s offer by £51 has achieved a more advantageous outcome, surely the question should still be asked as to whether the further costs incurred to recover the extra £51 are proportionate.

What additional costs would be proportionate to throw at a case to get an extra £51?

I note the QualitySolicitors’ TV advertisement is offering a “free first consultation”. So I won’t expect to see that time claimed in any Bill then.

Costs Lawyer magazine recently listed a bumper number of those applying to join the Association of Costs Lawyers as new members. The ACL has also called for new tutors to help with the 100+ new students who will be inducted in September. This is a totally unprecedented number and remarkable for such a small body.  (The Costs Lawyer Standards Board has been proceeding on the basis that it will be governing a professional body of, initially, no more than 500 individuals in total.)

It is also counter-intuitive and the opposite of my own predictions.

With a combination of Jackson reform and major legal aid upheaval there will be many working in the legal costs field who will be worrying about their futures. I would have expected a number of existing members to be seriously considering whether it is worth renewing their membership. I would have expected zero interest over the next year or two from new people looking to join. It must be remembered that there is now no shortcut for new members looking to join. Those who join will join as student members and are required to undertake the full demanding training course before they become Costs Lawyers.

Why is the exact opposite of my predictions happening? It appears that both employers and individuals recognise the future of the legal costs profession is going to be more specialised (as the low-value work disappears), more competitive and require more highly skilled lawyers. It appears that joining the ACL is seen by many as the best way to prepare for the future.

On a fairly regular basis I receive unsolicited CVs from costs drafting recruitment firms.

I received one the other day in respect of an individual who had completed the LPC in 2009. In December 2009 they had started work for a costs drafting firm, giving them, by my calculations, 17-18 months experience. Apparently the average size bill they work with is £30k-£50k. They didn’t appear to be a member of the Association of Costs Lawyers.

For salary/expectations the figure given was £40,000+.

Perhaps the good times for those who work in costs law are not about to end any time soon.

Further to my post last week about the lawyers accused of legal aid fraud, readers may be interested to hear the outcome of the trial (particularly the anonymous reader who posted a comment asking if I “actually have the facts about the costs draftsman or are you basing your judgement of what Metro reported?”.

The Law Society Gazette reports (hey, I’m going to trust them on this), that “a criminal defence solicitor and a costs draughtsman [sic] have been jailed for a £430,000 legal aid scam. Solicitor Reuben Ewujowoh … was sentenced to five years’ imprisonment. Costs draughtsman Robert Odong … was sentenced to two-and-a-half years and recommended for deportation, as he is a failed asylum seeker. Legal case worker Lloyd McDonald … was entirely cleared by the Croydon Crown Court jury. … Describing the two convicted defendants as ‘remorseless and ruthless in their behaviour’, Judge John Tanzer said they had pocketed £430,000”.

The costs draftsman was not a Costs Lawyer and therefore not regulated. On the other hand, the solicitor was regulated. This coincides with the recent report on will writing suggesting regulated solicitors and unregulated will writers were equally responsible for substandard wills.

This story just highlights the limitations of regulation. Although it will be interesting to see if the Costs Lawyer Standards Board starts to implement spot checks on Costs Lawyers’ files to check for “irregular” billing.

The Law Society Gazette recently had an advice section on CFA precedents for CFAs with counsel which stated: “APIL/PIBA 6 was drafted specifically with PI and clinical negligence proceedings in mind where the solicitor is also working under terms with his client (on the Law Society model agreement). It is an industry-wide agreement and there is little prospect of a prudent PI solicitor departing from its key clauses”.

A prudent PI solicitor might wish to review the key clauses where they are entering into a CFA with counsel after liability has been admitted. “Grotesque” funding arrangement anyone?

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