The defendant costs specialists

Posts made in January, 2013

New small claims limit

By on Jan 21, 2013 | 8 comments

The Ministry of Justice is consulting on increasing the small claims limit for RTA personal injury claims to £5,000. The theory being that these claims should be straightforward enough for litigations to act in person without the need for legal assistance and, correspondingly, without the need to incur legal fees (win or lose). The Court of Appeal has separately announced that general damages should increase by 10% to compensate claimants from being unable to recover success fees post-Jackson. If the Ministry of Justice does increase the small claims limit for RTA claims to £5,000 it will cover the majority of personal injury claims in this country. Claimants will therefore recover a 10% uplift in damages despite, in theory, no longer needing the services of a lawyer (obviously a debatable proposition) and therefore not having to pay any success fee. Will the Court of Appeal then reverse its decision for small claim RTAs? This is but one of the numerous problems being caused by the piecemeal introduction of Jackson and the Ministry of Justice exploring ideas never proposed by...

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IBC Solicitors' Costs Conference

By on Jan 18, 2013 | 2 comments

My diary is already starting to fill up with legal costs conference speaking engagements. First up is the IBC Solicitors’ Costs Conference 2013 on 29th January. I’m due to talk about the latest news on Jackson implementation. I rather suspect this task would be easier if the new rules had all been published, if various issues were not still out for consultation and if the government didn’t keep changing its mind as to implementation...

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SG v Hewitt

By on Jan 15, 2013 | 2 comments

I note the Court of Appeal’s decision in SG v Hewitt [2012] EWCA Civ 1053 has begun to cause problems for the courts trying to determine in what circumstances the normal Part 36 rules should be disapplied. If only someone had been able to predict that this would happen. On an entirely different subject, my Solicitors Journal article on SG v Hewitt and how this would generate satellite litigation is now available to read on the Costs Law Articles Archive section of Legal Costs Central....

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RTA portal fees

By on Jan 11, 2013 | 5 comments

The lobbying over the Government’s proposals to slash RTA portal fixed fees has thrown up some interesting arguments. The Law Society has waded into the debate to argue that there is “substantial evidence” that the RTA portal fee should go up by £100, rather than down by £700. The Law Society has based this on its law management section’s financial benchmarking survey which put the median cost of an employed fee-earner at £40,860, median support staff costs at £12,624 and the median spend on non-salary overheads per fee-earner at £37,992, meaning a break-even point of £97,348 per annum. It states: “It would be usual to calculate that a fee-earner’s billable hours at 1,100 per annum. This would result in a break even hourly rate of £88 approximately (i.e. £97,348/1,100). This is cost only and does not allow for any profit. Using a mark up of 50% (which brings a rate of return on investment of 33%), the corrected rate would be £132 per hour.” It calculates that the proposed two-stage fee of £500 is “unjustifiable and will be unsustainable” as it equates to a rate of £50 per hour on the basis of 10 hours’ work – which is what surveys estimate an average portal case takes to complete – or less than four hours’ work at £130, which the society calculated as the correct rate for solicitors handling this work. It said: “It would be impossible for solicitors to undertake every claim properly in accordance with the RTA protocol and their professional conduct requirements in this amount of time. To do so will result in consumers receiving a less than adequate service… It is likely that such rates will result in many solicitors simply being unable to carry out the work.” At the same time research has suggested that the cost of acquiring personal injury cases is around £700, whether through the payment of referral fees or through own marketing costs. This raises a number of interesting issues: 1. Firms currently undertaking this work recover fees of £1,200. From this amount an average figure of £700 is paid to acquire the case, leaving a balance of £500. The Law Society claims it is “impossible for solicitors to undertake...

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Year of the Law Costs Draftsman

By on Jan 2, 2013 | 11 comments

Law costs draftsmen, costs lawyers and others working in the field of legal costs are set to have a great 2013. This may sound counterintuitive given the Jackson costs reforms are being introduced this year but it is worth considering the facts. Costs budgeting is set to be introduced in April. Overall this is bad news for costs practitioners. Costs budgeting produces a small amount of frontloading of costs work (preparing budgets and seeking the courts’ approval) which is more than offset by the loss of work at the end of the claim (drafting bills, points of dispute and replies, negotiating costs and attending detailed assessment hearings). However, given the life cycle of a typical claim, 2013 is likely to produce the additional work generated by costs budgeting without practitioners experiencing the corresponding loss of work at the end of a claim. Claims subject to costs budgeting are unlikely to settle this year. Inter partes recoverability of success fees and ATE premiums is due to end in April. This is almost certainly likely to reduce the number of costs dispute. However, the change will not be retrospective and it is unlikely that the negative impact on cost work will therefore be felt this year. Again, the vast majority of claims where this is likely to be relevant will simply not have settled. The extension of the RTA portal will have a dramatic impact on work volumes. But the news that implementation will not happen in April will again mean that the impact of this change will not be felt in 2013. The really noteworthy factor to consider is the number of substantive claims that are likely to settle this year. Whereas claimants solicitors immediately see the additional work generated by new claims, those working in costs traditionally have to wait until the conclusion of a matter for it to produce any cost work. Recent years have seen an ever increasing number of new claims being brought. 2013 should see these figures translating into additional costs work. This combination of factors should see a boom in 2013 for those working in legal costs. 2014 will be...

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