3 February, 2012 at 5:41 am
Should no-win, no-fee be banned?
Filed Under Legal Costs | 5 Comments
Has the Guardian newspaper gone mad? Well, obviously yes, but nothing new there. Rather, what incoherent drivel is their latest poll?
The headline reads:
“Should no-win, no-fee be banned?”
It then continues:
“The legal aid bill proposes altering conditional fee agreements so that successful claimants will have to pay their own lawyers' fees. Lord Prescott says this will affect vulnerable individuals. Do you agree?”
The first sentence of this is obviously entirely different to the headline. No ban is proposed. Those with any understanding of the proposed changes know that the sentence: “The legal aid bill proposes altering conditional fee agreements so that successful claimants will have to pay their own lawyers' fees” is inaccurate. Firstly, it proposes only that successful claimants should pay an element of their solicitors’ fees (the success fee). In any event, since when did the current law make CFA Lites compulsory? Solicitors have always been able to make their claimant clients pay something towards their fees. This is the solicitor/own client element.
And what does this mean: “Do you agree?”. There may be a number of propositions one might be prepared signing up to, but one that says you agree with Lord Prescott is unlikely to be one of them.
And then we get the actual question, which is totally different again: “Should CFAs be reformed?” Entirely different to what has gone before.
The two answers available are:
“Yes - they limit freedom of expression by making fighting libel cases inhibitingly expensive for newspapers”
Or
“No - they allow individuals fighting multinationals access to the courts”
That’s totally different again. You might agree or disagree with the proposal that CFAs should be “reformed” but not necessarily for the reasons given in the answers.
The Electoral Commission would have an aneurysm.
None of this nonsense has stopped the Access to Justice Group promoting this poll or APIL excitedly tweeting: “No-win no-fee should NOT be reformed according to 94.4% (currently) in the @guardian poll bit.ly/wo7rGh”.
Given those who vote are therefore likely to be either members of the public who know nothing about the current law or the proposed changes, and will be none the wiser after reading the incoherent preamble to the question, or claimant lawyers furiously clicking away at the “No” button, I’m sure the Government will give the result of this poll the weight it deserves.
2 February, 2012 at 5:57 am
Open offers in detailed assessment proceedings
Filed Under detailed assessment | 7 Comments
The forthcoming changes to the Costs Practice Direction substitute for paragraph 35.3:
“The paying party must state in an open letter accompanying the points of dispute what sum, if any, it offers to pay in settlement of the total costs claimed. The paying party may also make an offer under Part 36.”
I really don’t know what to make of this.
Under the current rules, which will remain, Points of Dispute must be served within 21 days of service of the Bill (subject to any extension being obtained). Receiving parties have the luxury of 3 months to prepare a Bill (why the huge difference in timescale?). It can be bad enough for receiving parties to instruct a costs draftsman, get the papers to them, the costs draftsman to draft the points of dispute (which can require several days of reading in time), arrange for approval and serve within 21 days. There are many cases where quantifying an offer and obtaining instructions (especially where there are multiple defendants or insurers) within 21 days is simply not realistic.
What will be the sanction for failure to make the open offer? The new rules are silent. Does it invalidate service of the Points of Dispute? Or does one just shrug?
What happened to the suggestion of being able to make a conditional offer, such as where there was an issue over a retainer?
The paying party’s offer is meant to be contained within an open letter. Does this mean it can be referred to during a detailed assessment hearing? If so, it potentially prejudices paying parties. There is no corresponding requirement for the receiving party to make an open offer.
What role does this open offer play? The rule is absolutely silent. We are expressly told that the general rules relating to Part 36 will apply in the future to assessment proceedings. A paying party can therefore make an improved Part 36 offer at any stage, notwithstanding the open offer.
Costs Practice Direction 46.1 currently states:
“An offer made by the paying party should usually be made within 14 days after service of the notice of commencement on that party. If the offer is made by the receiving party, it should normally be made within 14 days after the service of points of dispute by the paying party. Offers made after these periods are likely to be given less weight by the court in deciding what order as to costs to make unless there is good reason for the offer not being made until the later time.”
Although most courts will currently take into account offers made long after 14 days, offers made at a very late stage are often given less weight. CPD 46.1 is to be scrapped and a Part 36 offer may therefore be made at any stage. A paying party may not have any costs protection until they do make a good Part 36 offer (subject to how “successful party” is to be interpreted for the purposes of CPR 44.3(2)), but overall the change to the rules makes an early offer less important than under the current rules. Why then the mandatory open offer requirement?
If the normal Part 36 rules will apply to assessment, which is what we are told, where does the open offer come into play? For example, a paying party makes an open offer of £10,000 on a £100,000 bill. Six months later the paying party makes a Part 36 offer of £90,000. At assessment the bill is assessed at £80,000. The receiving party will get their costs from 21 days after they made their Part 36 offer plus interest on those costs. What relevance then the open offer of £10,000? Why have a rule requiring an offer to be made that becomes irrelevant once a better Part 36 offer is made?
Or, is this to deal with the issue I raised the other day about the fact the new rules appear to remove the presumption a receiving party is entitled to the costs of assessment? Is the open offer to be the key factor the court takes into account unless and until a successful Part 36 offer is made? Will beating the open offer be treated as meaning the receiving party is the successful party for the purposes of Part 44.3(2) and, if not, that the paying party is the successful party?
Rules committee, please explain.
The new rules are presumably meant to simplify matters but I am struggling with the basics at this point. I’m going to have a right go at the costs lawyers sitting on the rules committee who came up with this mess. Please remind me of their names again.
1 February, 2012 at 5:10 am
New Points of Dispute format
Filed Under Legal Costs | 11 Comments
The upcoming changes to the Costs Practice Direction include amendments to the rules concerning Points of Dispute.
The current CPD 35.2 reads:
"Points of dispute should be short and to the point and should follow as closely as possible Precedent G of the Schedule of Costs Precedents annexed to this Practice Direction."
This is to be replaced by:
"Points of dispute must be short and to the point. They must follow Precedent G in the Schedule of Costs Precedents annexed to this Practice Direction, so far as practicable. They must:
(1) identify any general points or matters of principle which require decision before the individual items in the bill are addressed, and
(2) identify specific points, stating concisely the nature and grounds of dispute. Once a point has been made it should not be repeated but the item numbers where the point arises should be inserted in the left hand box as shown in Precedent G."
You will note the use of the word “must” in place of “should”. There is now no scope for arguing over the point.
I still receive, on a virtually daily basis, claimants’ Replies arguing that a dispute that simply says: “Hourly rate excessive, reduce to £150” or “Time claimed on documents excessive, reduce to 50 hours” is defective as failing to give sufficient reason for pleading a reduction. These are clearly written by law costs draftsmen or costs lawyers who have never bothered to read the current Precedent G (click to view). We will now have a new Precedent G (click to view) which “must” be followed. Consider the following examples taken from it:
"Point 1 - General point - Rates claimed for the assistant solicitor and other fee earners are excessive. Reduce to £158 and £116 respectively plus VAT."
"Point 2 - Point of principle - The claimant was at the time a child/protected person/insolvent and did not have the capacity to authorise the solicitors to bring these proceedings."
"Point 5 - (47) - The total claim for work done on documents by the assistant solicitor is excessive. A reasonable allowance in respect of documents concerning court and counsel is 8 hours, for documents concerning witnesses and the expert witness 6.5 hours, for work done on arithmetic 2.25 hours and for other documents 5.5 hours. Reduce to 22.25 hours."
Note the absence of references to case law, the absence of lengthy (any?) justification for the reductions proposed and the total lack of a line-by-line challenge to the document time. Failure to comply with Precedent G is likely to lead to costs sanctions. At best, the time that will be allowed for drafting Points of Dispute will be reduced to the time that should have been spent on the task to comply with Precedent G.
None of this is meant to be particularly revolutionary. This is how it was always meant to be done and what costs judges in the Senior Courts Costs Office have been clamouring for over the years. The problem has been that the costs profession has ignored the existing guidance. This should no longer be possible (if judges do their jobs properly).
Although these "new" rules will not be retrospective, given we now know what is to be expected (and this is no more than what the current Precedent G requires), law costs draftsmen and costs lawyers would be well advised to start following this guidance immediately.
Note the reference to: “Once a point has been made it should not be repeated but the item numbers where the point arises should be inserted in the left hand box as shown in Precedent G”. This is why every individual item on a bill should be numbered. Those who draft bills and those who produce bill drafting software, please note. It’s no good giving all the profit costs a single item number.
The one area where I have concerns is how this links in with the roll out of provisional assessments. Fine if you had regional costs centres (the one failure of Jackson in failing to recommend this) or if everything was listed before a regional costs judge. However, if a district judge is expected to conduct a provisional assessment on paper in one hour faced with such Points of Dispute, are they really all capable of dealing with a dispute as brief as “The claimant was at the time a child/protected person/insolvent and did not have the capacity to authorise the solicitors to bring these proceedings”?
I can’t be alone in having attended a detailed assessment hearing where there is a Wraith v Sheffield Forgemasters Ltd dispute only to discover the judge is unaware of the case or what is it authority for. Will they be expected to research the law without being referred to any case law? Will they go away and locate copies of judgments if referred to the case law (all in one hour)? How is one expected to plead this kind of point with no knowledge of the level of costs knowledge the judge will possess? It is often a mistake to assume a judge on assessment has any costs knowledge.
Oh, and some of you might have realised that complying with these rules will be less labour intensive and reduce the fees that can be properly charged.
31 January, 2012 at 5:59 am
Liability for detailed assessment costs
Filed Under Legal Costs | 2 Comments
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:
“47.18
(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.
47.19
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.
30 January, 2012 at 6:35 pm
Jackson postponed
Filed Under Legal Costs | Leave a Comment
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.
30 January, 2012 at 6:14 am
Boom or bust for litigation numbers?
Filed Under Legal Costs | Leave a Comment
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:
27 January, 2012 at 5:14 am
Provisional assessment pilot hailed a success
Filed Under detailed assessment | 5 Comments
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.
26 January, 2012 at 5:17 am
Controlling Third Party Solicitors’ Costs
Filed Under Legal Costs | Leave a Comment
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.
25 January, 2012 at 5:33 am
Listing fee payable once only
Filed Under Legal Costs | 1 Comment
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.
24 January, 2012 at 5:16 am
Costs law update from 4 New Square
Filed Under Legal Costs | Leave a Comment
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.
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