12 December, 2012

New proportionality test

Filed UnderLegal Costs  

Solicitors, particularly in commercial litigation, will often inform their clients at the outset that it is unlikely there will be full cost recovery if successful and that recovery in the region of 70%-75% might be anticipated.

In April 2013 the new Jackson proportionality test will be applied to costs. Where a solicitor estimates that the likely costs to bring a matter to a successful conclusion will be £100,000 but the amount at stake is only £25,000 what advice should the solicitor give as to the level of costs recovery that can be expected?

Answers on a postcard.

Comments

5 Responses to “New proportionality test”

  1. annon on December 12th, 2012 9:27 am

    quite frankly this new proportionility test is a disgrace

    Total inequality of arms will follow.

    Defendants will now know they can test Claimant’s resolve by fighting and whilst knowing that the Claimant’s legal representative will only recover a limited fraction of their costs notwithstanding that the work was nececessary and was work which the Defendant’s Defence of the matter compelled them to undertake

  2. Chris B on December 12th, 2012 11:12 am

    This new test takes a costs draftsman “crystal ball” gazing to a new level!
    Will any transtional arrangements save a Solicitor in respect for work undertaken pre April 2013 but assessed post that date??
    If not that advice letter for the Bill currently on your desk now need be water tight!!

  3. Pete B on December 12th, 2012 2:04 pm

    The question based on those figures is easy for a PI Lawyer as they can point the client to the new fixed costs tables. The hard bit will be telling the client that they cannot possibly act for him, as the maximum level of fixed costs in Table B will only cover 1/10th of the actual costs incurred.

  4. Abbie C on December 14th, 2012 4:24 pm

    Well what about the exceptional case clause where costs fall above 20%?………….I thought this was especially for such cases as this? Am I wrong?

  5. Pete B on December 17th, 2012 12:05 pm

    No, you’re quite right. The problem as I see it though is that the solicitor will want to know that they will get properly remunerated before they take the case on. Will the Court hear an application for exceptional circumstances before the case has started? One solution is to seek allocation to the multi-track under CPR 26.8, but by this time the solicitor will have incurred a fair amount of costs. They risk losing those costs if they are on a CFA and they decide to stop acting if the Court allocate to the fast track. I really can’t see solicitors taking the risk on larger cases when the profit has been taken out of the lower value matters.

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