My office is in the process of being redecorated and this seemed like a good opportunity to have a general clear out.
As part of this, I came across a couple of articles published in Litigation Funding magazine from February and April 2000.
These show the dangers of trying to make predictions about the future of litigation.
In one article, barrister Gordon Wignall was quoted as saying:
“There is no reason now why either clients or unsuccessful defendants should not challenge the validity of their opponents’ lawyers’ retainers. There are likely to be disputes over new-style funding arrangements for years to come.”
In the other article, solicitor Kerry Underwood was quoted as saying:
“Satellite litigation [over CFAs] won’t be a cottage industry it will be a palace industry. … Everyone who knows anything about this area knows how complicated it is. There isn’t a hope in hell of district judges arriving at reasoned decisions.”
19 years later, I bet they both feel pretty silly.
The Legal Services Board (LSB) is apparently minded to refuse the Cost Lawyer Standards Board’s (CLSB) proposals to introduce a new route of entry into the profession.
The LSB chief executive Neil Buckley said:
“Having considered the application and responses provided by the CLSB to a number of issues that the LSB has raised, the proposed changes continue to raise significant questions for the LSB and, as a result, we are considering refusing the application under paragraph 25(3) of schedule 4 to the [Legal Services] Act.”
Mr Buckley said the proposed approach to granting rights of audience appeared “inadequate” and to contradict the wider outcomes-focused approach of the CLCA:
“In particular, the proposal to allow for rights of audience to be gained through attendance at a one day training course, with no assessment, is at odds with the CLSB’s rationale for the CLCA, to shift away from an inputs based model and towards an outcomes-focussed assessment based model. The proposal would appear to set the bar considerably lower than other approved regulators in relation to awarding rights of audience. The CLSB has not presented sufficient evidence to justify this approach.”
It is not clear whether the LSB is aware that the majority of current Costs Lawyers gained their rights of audience through no more than attendance at a one or two-day training course with no assessment.
I wrote about this in 2011. At the time, I commented that:
“In relation to advocacy, the ACL has not set the bar too low. It never set one in the first place and shows no plans to do so in the future.”
The LSB appears to be concerned that the CLSB is now in danger of repeating the same error in relation to its new proposed qualification route.
In relation to the old ACL training course, I wrote:
“There appear to be one of two ways of viewing this issue:
- Advocacy, at least in relation to detailed assessment proceedings, is something requiring little or no skill or experience. This includes costs appeals before High Court Judges and Circuit Judges. A level of “competence” can be achieved by those who may have had no previous advocacy experience in a 3 hour training session. Any form of initial or ongoing assessment is entirely unnecessary given how undemanding costs advocacy is. In this context, the ACL’s chairman’s comment that some of its members should be saying in big cases: ‘Don’t instruct a barrister. I can do this’ makes perfect sense. The ACL granting higher rights of audience as though they were handing out Smarties is nothing to be concerned about.
- Advocacy, at whatever level, is indeed a specialist skill that requires proper training and should be properly assessed. The ACL Costs Lawyer course should ensure that those standards have been met before granting higher rights of audience. The course is not fit for purpose.”
If the LSB is concerned that the proposed new training course is inadequate in respect to the granting of rights of audience, how does it judge the competency of many existing Costs Lawyers who achieved their rights of audience under the old ACL (one/two day) training route?
The Civil Litigation Brief blog contained an interesting post about the dangers of lawyers working on the move and being overheard discussing confidential client matters or allowing confidential information to be read over their shoulders or leaving legal papers behind.
The costs profession is not immune. Of the various examples given on Twitter:
“Absolutely correct. I once called to collect some files from a cost draftsman’s office. Manager greets me and says he’ll just get the files …. from his car. I almost had an apoplectic fit!” – Donna Beckett@BeckettandCo
“I once received a call from a bouncer of a London pub. Our cost draftsman had left one of our files there. Apparently it was a con with Counsel!” – Peter McKenna@PeterMcKenna2
When dealing with high value personal injury litigation, paying parties tend not to lose much sleep over the issue of whether VAT should be paid on the full amount of medical records fees, where the medical records are obtained through a medical reporting organisation (“MRO”), or whether VAT should only apply to the MRO’s administration fee.
On the other hand, for volume, lower value claims, the impact of this small amount per case can be significant when insurers are dealing with 10,000s or 100,000s of claims.
In Matthew Hoe’s excellent “A Practical Guide to Costs in Personal Injury Cases”, published as far back as April 2016, he writes:
“VAT on medical report fees is a doggedly contentious issue that has been producing notable judgments for a decade. Although very small sums are involved in each case, it arises in so many claims that paying parties take the point. The basic propositions are generally accepted and the disputes centre on the practices of medical agencies.
The correct VAT treatment of medical fees by medical agencies is an issue in desperate need of a decision by the senior courts to settle the point once and for all.”
As if by magic, three years later we have such a decision.
In British Airways Plc v Prosser  EWCA Civ 547 the Court of Appeal held:
- It would normally be appropriate for MRO’s, in circumstances where they were doing more than simply acting as a post-box and where the report/records are being requested by the solicitors to enable them to perform their service to the client (rather than the solicitors acting just as the client’s agent), for VAT to be charged by the MRO on the total cost.
- In the context of a low value claims, where the amount of any VAT is not substantial, payment of VAT on the full amount was a cost that was “reasonably and proportionately incurred” and “reasonable and proportionate in amount”, so as to satisfy the requirements of CPR 44.3 regardless of whether the MRO was actually obliged to charge VAT as it did.
For many years, a large number of personal injury solicitors have automatically charged their clients a 100% success fee regardless of the risks of the case. This has been a standard business model for many firms, with the reasoning being that this will usually lead to an automatic 25% cut of the client’s general and existing financial damages (as a result of the cap on the level of success fee in personal injury claims) in addition to any costs recovered from the other side.
The Court of Appeal has now held, in the case of Herbert v H H Law Ltd  EWCA Civ 527, that this will normally be inappropriate and that any success fee should reflect the actual risks in the case (here held to be 15% for a straightforward RTA) unless the client has given “informed consent”.
In terms of CFAs already entered into, this decision is likely to open the floodgates to solicitor/own client challenges.
Going forwards, it is likely to be an uphill struggle, when entering into new CFAs, to show that the average lay client has given informed consent to a success fee that does not fairly reflect the risks of the case.
For a detailed summary of this decision, see Robin Dunne’s, junior counsel for the respondents in the appeal, article. This also deals with the important issue of whether an ATE premium is a disbursement that needs to be included within a statute bill.
The Ministry of Justice (MoJ) has announced its intention to implement Sir Rupert Jackson’s proposals for extending fixed recoverable costs to most cases worth up to £100,000.
However, rather than introducing a new intermediate track for cases worth £25,000 to £100,000, as Sir Rupert had suggested, it proposes extending the fast-track to claims worth up to £100,000.
The MoJ has accepted the fixed costs figures set out in the grid proposed by Sir Rupert in his 2017 report:
“Sir Rupert consulted with his team of 14 assessors, drawing on a breadth of views and experience, and brought his own expertise to bear in finalising the figures. As such, we consider that the figures have been devised with appropriate rigour and intend to implement them as he recommends.”
The MoJ has proposed an uplift of 35% on the fixed costs figure where a party succeeds on a Part 36 offer. This will replace an order for costs on the indemnity basis.
The intention is to make the extended fixed costs regime more watertight and thereby make escaping it harder. This will clearly require careful drafting.
In the event there remains a dispute as to the costs payable, and the matter has not gone to trial with the costs being summarily assessed, there will be a shortened form of detailed assessment, with a provisional assessment fee cap of £500.
If that was not enough, the MoJ has stated:
“It remains our intention to extend the areas in which costs are controlled in due course: such an extension could include extending FRC to further categories of claims, including claims of higher value, and controlling costs incurred before the first costs and case management conference, where cases are not otherwise subject to FRC.”
The matter is now out for Consultation, with closing dates for submissions by 6 June 2019.
A new pilot scheme starts on 1 April 2019 for a new Statement of Costs for Summary Assessment.
- Will run from 1 April 2019 to 31 March 2021.
- Applies to all claims, regardless of when “commenced” (presumably meaning when issued), that are subject to summary assessment.
- The two new forms that have been designed “may” be used during the pilot. It is therefore clear that use of the new forms is voluntary (although there does not appear to be anything to prevent a judge from making a case management decision requiring the use of the new forms).
Form N260A is designed for interim applications. Form N260B is designed for matters that have proceeded to trial.
Both forms require detailed document schedules. These “may” be created from electronic time records.
Both forms are available in paper/pdf form and in electronic spreadsheet form. Parties are free to use the paper/pdf version only.
Where the claim is subject to a costs management order, any party filing the N260B in advance of the trial must also file a Precedent Q (which shows a summary of the costs claimed compared to the last approved/agreed budget). Given summary assessment at trial is normally reserved for fast track matters, where there is no costs budgeting, it is not immediately obvious to me when this would occur. (The separate Capped Costs List pilot scheme provides for summary assessment at the end of trials limited to two days but expressly states costs management does not apply.)
For firms that are 100% confident that their fee earners are properly time recording by phase, activity, etc, there might be some time saving in preparing statements of costs using the new forms and inputting the data directly from case management software, but I suspect the overall take up will be extremely low during the pilot.
I recently looked at the case of Beardmore v Lancashire County Council where the court allowed recovery of medical agency fees (limited to £30 in addition to the direct costs) for obtaining medical records in an EL/PL Portal claim.
These records were presumably obtained by the medial agency from the GP/hospital under the Data Protection (Subject Access) (Fees and Miscellaneous Provisions) Regulations 2000 which prescribe a maximum fee by the holder of the medical records of £50 to include photocopying and postage for access to medical records.
The judgment in that case made no reference to the General Data Protection Regulation (GDPR), presumably because the records were obtained before this regulation came into force (on 25 May 2018).
Less than two weeks ago the Information Commissioner’s Office (ICO) posted a blog advising that it was reasonable for solicitors to use GDPR to obtain clients’ medical records. The GDPR provides that the holder of medical records must process a request for such records free of charge and within one month.
If solicitors can obtain medical records free of charge relying on GDPR, it is difficult to see how a decision could be justified to instead make the request under the Data Protection (Subject Access) (Fees and Miscellaneous Provisions) Regulations 2000 and incur a fee in the process.
If that is correct, there should, in future, be no claims by claimants for the direct costs of obtaining medical records in personal injury claims.
This, in turn, raises the question of whether the continued use of medical agencies for this task is justified. It might be argued that in non-fixed fee cases a medical agency can obtain the records more cheaply (at, say, £30) than if the fee earner undertook the task. It is less easy to see how this would continue to be justified in fixed fee cases where the medical agency work is clearly undertaking work that is of a fee earner nature.
Put another way, in Beardmore the judge concluded that the “appropriate measure for the disbursement recovery is the reasonable and proportionate cost of obtaining the medical records”. If the records can be obtained free of charge by the solicitors using GDPR, what justification is there for incurring any fee in a fixed costs matter? Expect pressure for CPR 45.29I (2) to be amended.
In Beardmore v Lancashire County Council (County Court at Liverpool, 1/2/19), His Honour Judge Graham Wood QC allowed the claimant to recover medical agency fees incurred in obtaining medical records in an EL/PL Portal claim despite the fact there is no express allowance for this in the CPR, unlike the RTA Portal rules.
A medical agency had been instructed to obtain the claimant’s medical records. The direct costs were £50 for the hospital notes and £10 for the GP notes. With a profit element on top, the claimant sought £96 including VAT in relation to each.
The defendant had argued that only the direct costs were recoverable.
The RTA Portal rules makes specific provision for the recovery of the medical agency fee as a disbursement of up to £30 on top of the direct costs (CPR 45.29I (2A)(c)).
HHJ Wood concluded:
“CPR 45.29I (2) allows for the recovery of a medical agency fee in this public liability case as a disbursement, and it is not excluded by the specific reference to the maximum recovery for the medical agency fee in RTA claims. In a public liability case, in my judgment, the appropriate measure for the disbursement recovery is the reasonable and proportionate cost of obtaining the medical records”.
In the absence of any evidence as to how the £96 figure had been arrived at, HHJ Wood allowed the same amounts as would have been recovered in an RTA Portal matter (ie the direct cost of obtaining the records plus £30 per set plus VAT).