Lord Justice Jackson's recent lecture on Assessment of Costs in the Brave New World reveals a number of important forthcoming amendments to the CPR and Costs Practice Direction.
One of the big changes it to scrap the current CPR 47.18 and 47.19, concerning liability for detailed assessment costs, and substitute these with:
(1) The general rules about costs contained in Parts 36, 43 and 44 apply to the costs of detailed assessment proceedings, as if “claimant” means receiving party and “defendant” means paying party.
(2) The court will summarily assess the costs of detailed assessment proceedings at the conclusion of those proceedings, unless otherwise ordered.
Unless the court otherwise orders, interest on the costs of detailed assessment proceedings shall run from the date of the default, interim or final costs certificate, as the case may be.”
I’m not entirely sure what to make of this (it isn’t clear as to what this will actually mean).
The existing express presumption that the receiving party gets the costs of assessment goes. You will then have to look at CPR 44.3 as the starting point:
“(2) If the court decides to make an order about costs –
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.”
What does this mean it relation to detailed assessment costs? Is the “successful” party the party who won the substantive claim? Or, is the “successful” party the party who succeeds in relation to the detailed assessment hearing, which is the subject of the order being made? How do you define success if neither party has made a successful offer? If a paying party reduces a bill by 40% are they the “successful” or the “unsuccessful” party? Satellite litigation round one.
Even if we accept that the intention of the rule is that the receiving party is to be treated as the “successful” part, having won the substantive claim, where do we go from there other than having a presumption?
The current Part 47.18 creates a presumption in favour of the receiving party but then says at Part 47.18(2):
“In deciding whether to make some other order, the court must have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) the amount, if any, by which the bill of costs has been reduced; and
(c) whether it was reasonable for a party to claim the costs of a particular item or to dispute that item.”
Is this very different from Part 44.3, which will now govern matters:
“(4) In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including –
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of his case, even if he has not been wholly successful; and
(c) any payment into court or admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.
(5) The conduct of the parties includes –
(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction (Pre-Action Conduct) or any relevant pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended his case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim.”
Both rules give a court the discretion to depart from the starting point presumption where, for example, a bill is reduced on assessment by 50% or where unreasonable items of costs have been claimed.
The removal of the current Part 47.19 rule and the substitution of Part 36 to deal with costs offers will create more certainty where a party succeeds on their own offer (a successful Part 47.19 is currently just a factor for the court to consider).
The ability to make Part 36 offers will create a considerable incentive to receiving parties to make realistic Part 36 offers at an early stage if they can recover interest at 10% above base rate on their costs (assuming that is how this will operate) where they succeed at detailed assessment on their offer. Although, if interest currently runs at 8% (Court of Appeal shortly to clarify) some may take the view that they would rather drag out settlement and get 8% for a longer period than make a sensible early offer and risk having the matter settle early on the outside chance they might have recovered 10% plus base rate at assessment.
Advising on where to pitch offers is going to become an increasingly sophisticated task.
The government has announced that implementation of the Jackson reforms in the Legal Aid, Sentencing and Punishment of Offenders Bill has been put back six months to April 2013, whilst remaining committed to the reforms.
Andrew Dismore, co-ordinator of the Access to Justice Action Group, recently wrote a letter to the Guardian newspaper predicting that “there will be at least 25% fewer claimants” as a result of the proposed changes to the no win, no fee system.
This is the same Andrew Dismore who recently predicted, in relation to clinical negligence matters, the proposed changes would lead to “an increase in the number of cases of 1/3rd”.
Now, I recognise that it is theoretically possible that the number of clinical negligence claims might go up at the same time the overall number of claims might go down. However, given it is generally recognised that clinical negligence claims are, typically, riskier and much more expensive to run than other types of claim, it seems absurdly unlikely that they would go up significantly at the same time as the number of other claims significantly declines.
It is probably too late to have a grown up and informed debate on the impact of the proposed reforms, and only time will tell, however, perhaps the Access to Justice Group could be clear as to which types of claim they are predicting increasing or decreasing numbers and why.
I'll drop an email to Andrew and let you know when I get a response.
Click image to enlarge:
The Provisional Assessment Pilot, only one year into the two year pilot, has been hailed a success by Lord Justice Jackson (see Report on the Provisional Assessment Pilot). He recommends that it is rolled out nationally.
The scheme covers bills up to £25,000. The first thought is how are junior law costs draftsmen and costs lawyers going to gain advocacy experience if these bills are all assessed on paper (a similar kind of problem the junior bar faces with the loss of much low level advocacy to solicitors)? The second thought is how many bills under £25,000 will there be once fixed fees are extended across the fast-track? The third thought is have I got a big enough pension pot to consider early retirement?
The report advises there were 119 cases in the pilot during the first year. After provisional assessment only 2 cases proceeded to an oral hearing. In neither case did the requesting party achieve an improvement of 20% or more upon what it had secured in the provisional assessment. There’s a surprise.
The average time spent on each provisional assessment was 37 minutes and the median time was 40 minutes. Experience during the second year of the pilot suggests that where provisional assessment is carried out by a district judge who is not a regional costs judge (and therefore has less experience of assessing costs) 60 minutes should be allowed for the exercise. Make of that what you will.
The report found that the process is far cheaper for the parties than traditional detailed assessment, because (save in rare cases) they avoid the costs of preparing for and attending a hearing. DJs Hill and Bedford estimate that the savings for the parties are at least £4,000 per case. (Not a thought for the poor lawyers who find themselves out of pocket. It’s like trying to encourage healthy lifestyles without a thought for the doctors and nurses who may find themselves out of work as a result.)
It looks as though provisional assessment will be rolled out nationally at the same time as the other major costs reforms (currently October 2012 although there are some suggestions this may be pushed back to April 2013).
Sir Rupert’s recent lecture on Assessment of Costs in the Brave New World reveals a number of important forthcoming amendments to the CPR and Costs Practice Direction. I’ll deal with some of these in bite size pieces over the coming days.
I will be speaking at the CIPFA Insurance Network’s conference Effective Claims Handling and Implementing Successful Approaches to Reducing Insurance Claims and Costs covering the subject of Controlling Third Party Solicitors' Costs. This will be held in London on 14 March 2012 and in Leeds on 21 March 2012.
There are just a limited number of places still available. Visit: http://www.cipfanetworks.net/insurance/events/ for more details.
I mentioned the other day the fact that the court hearing fee is refundable in whole or in part where a matter settles a certain number of days before the hearing.
I am grateful to Murray Heining for reminding me of the other schoolboy error to watch out for. This is the fact that the listing fee, and therefore also the hearing fee, is payable once only in the same proceedings. This is the case even where there has been a split trial ordered on liability and quantum. This may not stop certain courts from asking for the fee twice but, if a claimant is silly enough to pay again, that is no reason to recover two sets of fees on assessment.
The Costs Law Articles Archive section of Legal Costs Central has been updated with the latest Costs Update written by Nicholas Bacon QC, Roger Mallalieu and Daniel Saoul from 4 New Square chambers. This includes coverage of legal aid reform, the Trafigura litigation and Part 36 offers. Thanks to 4 New Square.
I stumbled across another law costs drafting firm’s blog the other day (they’re all at it now) which said:
“VAT is an elective decision and thus again should you wish to charge VAT at 20% throughout on matters where a CFA has been used the decision is practice by practice and not determined by years where the VAT was actually at a different rate.”
I beg to differ. It is extremely rare in CFA cases that the solicitor has any right to election. This is because of something called the indemnity principle. What do the terms of the CFA allow the solicitor to charge the client in respect of VAT? If the solicitor has a CFA that incorporates the standard Law Society wording the following clause will apply:
“We add VAT, at the rate (now [………]%) that applies when the work is done, to the total of the basic charges and success fee.”
The solicitor is contractually limited as to what they can charge (the rate in force when the work was done). Not that the indemnity principle stops certain law costs draftsmen claiming whatever they think they can get away with…
[Gibbs Wyatt Stone now recruiting. Visit: http://www.gwslaw.co.uk/recruitment/]
I don’t even begin to understand what message this advert is meant to convey.
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I've just came across the website of a legal recruitment firm that has a section on tips for CVs. This included:
“CV should consider [sic] of the following:
Do check your CV for spelling and grammar errors. One error on your CV will often hinder your application”