A firm of solicitors is prepared to accept instructions to act in an RTA claim where the claimant has the benefit of BTE insurance and where the BTE policy will pay the solicitors an hourly rate of £130 across the board, including work done by Grade A fee earners. The limit of the BTE indemnity comes to an end and the solicitors at this stage enter into a CFA. At the same time the solicitors more than double the hourly rates being charged.

If the solicitors were initially prepared to act in the matter for £130, on what basis does that rate cease to be adequate simply because the terms of the retainer change?

Discuss.

The Costs Law Articles Archive section of Legal Costs Central has been updated with an article previously published in Solicitors Joournal on whether the Jackson reforms are really too insurer friendly.

When the Court of Appeal handed down judgment, on 12 October 2011, in Motto & Others v Trafigura [2011] EWCA Civ 1150, ruling that funding costs are not recoverable, I raised the question as to how long we would have to wait before bills of costs stopped claiming for such work?

I'm afraid I can't give you a final answer to this question but the provisional one is: in excess of 10 months.

I'll keep you updated.

Another recent tweet from APIL (on 8 August 2012):

“Prof Löfstedt wrote in his recent report that no evidence has been presented of a compensation culture - it's a myth, not reality.”

Again, sadly APIL provided no link to this report and it is therefore not entirely clear which one they are referring to. However, from a quick internet search it appears that the report they had in mind is Reclaiming health and safety for all: An independent review of health and safety legislation, Professor Ragnar E Löfstedt, November 2011.

If that is correct, a reference to a November 2011 report is hardly the kind of breaking news one normally expects to see on Twitter.

But, does the report actually reach this conclusion? From a quick glance at the same, the closest the Professor seems to come is the following:

“The ‘compensation culture’ (or the perception of it) in the UK has been the subject of several reviews over the last few years, but no evidence has been presented for its existence. … The evidence does seem to suggest the belief in a compensation culture is still having a significant impact on the behaviour and outlook of business, with the Better Regulation Task Force concluding that, although it is a myth, the perception of its existence, driven by media coverage, has a significant impact on the behaviour of both public and private employers”

What there appears to be is a total failure to undertake any kind of statistical analysis on claims numbers or even to properly define "compensation culture".

Of course, one person's "compensation culture" is another person's “access to justice”.

The fact that the report refers back to the conclusions of the Better Regulation Task Force is revealing. As I have commented before, the Better Regulation Task Force’s conclusion that the compensation culture was a myth was based on the fact the total number of claims between 2000 and 2003 were broadly flat and then went down in 2003/2004. A reasonable conclusion based on the evidence.

Now let's examine the evidence since then.

The CRU figures for registered RTA claims:

2006/07 – 518,821
2007/08 – 551,905
2008/09 – 625,072
2009/10 – 674,997
2010/11 – 790,999
2011/12 – 828,489

A 59% increase over the period.

CRU figures for clinical negligence:

2006/07 – 8,575
2007-08 – 8,876
2008/09 – 9,880
2009/10 – 10,308
2010/11 – 13,022
2011/12 – 13,517

A 57% increase.

CRU figures for total claims registered:

2006/07 – 710,784
2007/08 – 732,750
2008/09 – 812,348
2009/10 – 861,325
2010/11 – 987,381
2011/12 – 1,041,150

A 46% increase

(The only category to have gone down overall is EL claims and this is almost certainly due to changes in the nature of employment of UK workers and possibly changes to the law concerning asbestos related injuries.)

The claimant lobby can't have it both ways. If the Better Regulation Task Force was correct to conclude that falling claim numbers was evidence there was no compensation culture, then the recent soaring in claims numbers must be evidence that one now exists.

When the facts change, I change my mind. What do you do?

I haven't been using Twitter much recently, but popped back the other day to see if anything interesting had been posted.

Although conventional tweets only allow for a limited number of characters per post (tweet), it is possible to insert short links to other parts of the internet to point readers in the direction of the full source of a story.

APIL recently posted a tweet saying:

“Whiplash is still too often the subject of negative headlines about insurance premiums, despite claims falling by almost 24k in past year.”

Sadly, they provided no link to the source of this information.

Given the Faculty of Actuaries has recently reported that despite the number of road traffic accidents being down by 11% in 2011 the number of personal injury claims during this period increased by 18%, the figures from APIL are surprising.

The figures produced by the Compensation Recovery Unit show the following:

Number of cases registered to Compensation Recovery Unit (Motor)
2011/12 828,489
2010/11 790,999

Settlements recorded by Compensation Recovery Unit (Motor)
2011/12 754,159
2010/11 659,671

Perhaps the answer is that APIL were referring specifically to the number of whiplash claims, and these have strangely fallen at exactly the same time that (presumably more serious) other RTA injury claims have increased. Perhaps not. APIL’s figures must have come from somewhere. Hopefully, next time they will provide a link to the source.

David Marshall, writing in Solicitors Journal, on the recent announcement by the Court of Appeal that general damages will be increased by 10% and the fact the Legal Aid, Sentencing and Punishment of Offenders Act 2012 itself had not included provision for this:

"This absence was raised in parliamentary debate. Ministers held to the line that this was to be taken forward by the senior judiciary. There had been considerable argument about which claimants would be 'better off' or 'worse off' with 10%, but if there was no increase then all claimants would be 'worse off'.

By "all claimants" this appears to ignore entirely those claimants who are funded by BTE insurance or privately fund their claims. These claimants would have been no worse off with the ending of recoverability of success fees and ATE premiums.

Interesting Court of Appeal judgment in Hawksford Trustees Jersey Ltd v Stella Global UK Ltd & Anor [2012] EWCA Civ 987.

Main issue concerned a claimant who had been unable to obtain ATE cover prior to the original trial. He was successful at trial and the Defendant appealed. At this stage the Claimant managed to obtain ATE cover that not only provided cover in relation to the costs of the appeal but would also provide cover in relation to the costs of the original proceedings, if the appeal succeeded. The Court was concerned with issue of whether that element of premium attributable to providing cover for the original proceedings was recoverable as costs of the appeal (short answer: no).

Of rather wider significance was part of the reasoning why the majority of the Court concluded that it would be wrong to allow for such recovery. The importance of giving notice of funding to an opponent was highlighted. In the judgment of Lord Justice Rix:

“the importance of fair notice being given to the other party of a potential liability in additional costs is entirely undermined if the premium which the respondent seeks to recover in the appeal, so far as it relates to costs of trial, could be recoverable. For the defendant would have incurred all the costs of trial together with its potential (but retrospective) liability for the respondent's ATE premium in ignorance, necessarily so, of what was coming round the corner when it appealed. When, however, in the course of its appeal, it learns for the first time of the ATE premium taken out in the appeal embracing cover for the costs of trial, it is too late for the defendant to do anything. It cannot concede the claim – it has already fought the trial. And if it concedes the appeal, then, if the respondent is correct in its interpretation of section 29, it will have to pay the ATE premium for the costs of trial. This is despite the fact that, in obtaining an appeal, it has persuaded the trial judge or the court of appeal that permission to appeal should appropriately be granted to it (while there is no similar hurdle in the standard case of a domestic claim form). In my judgment, such a situation is both unfair and antithetical to the purposes of the section. Moreover, although the matter was not debated before us, it is not clear to me that such unfairness can be dealt with as a matter of the question which arises before the costs judge of ‘whether the cost of insurance cover is reasonable’ as a matter of quantum: see CPR 44 PD 11.10. The present issue is rather a matter of principle and jurisdiction.”

It appears that exactly the same reasoning could be used to decline to allow recovery of a retrospective success fee.

This decision follows on from the earlier judgment of Master Gordon-Saker in JN Dairies Ltd v Johal Dairies Ltd & Anor [2011] EWHC 90211 (Costs) where he declined to allow recoverability of a retrospective success fee, although applying slightly different reasoning.

The other day I posted a link to a website showing some case summaries of various first instance decisions. One angry reader commented: “I’m surprised this is publicised on the blog as useful case summaries – will we now all be submitting every DJ decision and taking it as Gospel?”

I see no reason to interfere with the long-established tradition amongst law costs draftsmen and costs lawyers to treat a decision made late on a Friday afternoon by a Deputy District Judge, sitting in Worthing County Court, on the appropriate grade of fee earner to allow in a public liability tripping claim, as being binding on all other members of the judiciary for similar claims. Indeed, surely there is no need to even produce a copy of a judgment or transcript, one can simply tell a judge that: “Costs Officer So-and-So always allows me a rate of £200 per hour for this type of case" and the judge will be obliged to allow the same.

Of course, aside from the issue of whether first instance decisions are binding or not, there are often no higher authorities on a given issue of costs law. Therefore these decisions can often throw useful light on the various arguments that can be run, and a well delivered judgment can provide an extremely helpful summary of what can otherwise be quite complex issues.

With the above in mind, here is a link to the interesting decision in Faisel v Lancashire County Council, Preston County Court (25 May 2012) concerning the situation where the original firm of solicitors ceases to act following them going into administration. Where they are acting under a CFA, are their costs recoverable at the conclusion of a case? This issue usually comes down to a question of analysis of the terms of the CFA that deal with termination of the agreement before the successful conclusion of the claim and how the Court determines the agreement was ended.

Here the District Judge appears to have concluded, although not exactly expressing himself in these terms, that it was the decision of the Claimant to terminate the original agreement (notwithstanding the fact that the original solicitors were already in administration), and the terms of the CFA therefore allowed for the solicitors to recover their costs in this situation.

Thank you to Paul Tidman of County Cost Consultants for providing a copy of this judgment.

I mentioned the other day some of the anomalies thrown up by the Court of Appeal's recent judgment that general damages should be increased by 10% where judgment is given after 1 April 2013.

Kerry Underwood has now drafted a comprehensive, and masterful, analysis of some of the problem issues and this can be read on the Litigation Futures website. This is absolutely essential reading for all litigators and not just those directly involved in costs.

However, he concludes the article with the sweet sounding words: "Oh, to be a costs lawyer now that Jackson is near!".

The website of barrister Sarah Robson contains some useful costs related case summaries, particularly in relation to RTA Portal claims: http://www.sarahrobsonbarrister.co.uk/Reported-Cases.html.

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