23 April, 2014 at 5:58 am
The majority of those working in costs have never been busier.
We are still benefiting from the historical increases in personal injury claims, with settlements now flowing into new costs work.
The transitional provisions relating to the introduction of the Jackson reforms have meant those areas of costs work that will reduce or disappear (eg fast-track personal injury claims) have yet to bite or are only just beginning to be felt (eg reduced numbers of detailed assessment hearings in light of provisional assessment).
For those undertaking costs budgeting there is an increase in the front-loading of work for claims that are still ongoing, with the potential reduction in work (no need for bills, detailed assessment, etc) at the end of the process yet to happen.
Although a period of satellite litigation was to be expected by the new rules, the unexpected boost in work has come about as part of the Mitchell approach.
My diary is rapidly filing up with hearings to deal with applications concerning:
1. Applications to strike out Points of Dispute due to a failure to serve an open offer. (These misconceived applications are dropping off.)
2. Applications for relief from sanctions for failing to provide proper notification of funding during the life of the claim.
3. Applications for relief from sanctions for failing to serve with the bill the correct documents in support of additional liabilities. (How many years do lawyers need to get this right?)
4. Applications for permission to serve Replies late.
5. Applications to strike out Replies served late.
(If you need representation for any hearings in the London area, let me know.)
This is not all good news for costs practitioners. Some of these applications are the result of costs draftsmen and costs lawyers failing to do what they should, when they should. Next year’s professional indemnity premiums are going to spike.
16 April, 2014 at 5:50 am
Implementation of the Jackson reforms was predicted by many to mean a dramatic drop in claim numbers. The Access to Justice Action Group predicted “there will be at least 25% fewer claimants”.
Many scoffed at the idea the reforms would lead to a reduction in motor premiums.
To date there has apparently been no reduction in the number of new claims being notified or issued. The number of complex commercial litigation cases in the courts surged by 16% last year.
News emerges comprehensive motor insurance prices have fallen by around 19% in the last year.
We can no doubt expect a flurry of apologies for inaccurate predictions.
14 April, 2014 at 5:48 am
PD 47 para.13.10 allow a party to vary their bill:
“(1) If a party wishes to vary that party’s bill of costs, points of dispute or a reply, an amended or supplementary document must be filed with the court and copies of it must be served on all other relevant parties.
(2) Permission is not required to vary a bill of costs, points of dispute or a reply but the court may disallow the variation or permit it only upon conditions, including conditions as to the payment of any costs caused or wasted by the variation.”
It is in the court’s discretion as to whether to disallow the variation. For a case proceeding to a detailed assessment hearing this is straightforward enough. The court can rule on this issue, if it is contentious, at the start of the hearing.
But what about a case going to provisional assessment? Does that require an application is advance of the provisional assessment, despite permission not being required to make the variation itself? Will the court even know there has been a variation if only the amended bill is filed with the court?
11 April, 2014 at 5:40 am
The Association of Costs Lawyers has published an excellent White Paper on the First Year of Costs Management.
Unfortunately, it repeats the myth that costs budgeting means Costs Lawyers are the “quantity surveyors of the litigation world”.
When a quantity survey puts a price on constructing a building, he knows the precise shape and size of the planned building. Give of take a margin of error of a few millimetres, at most, the end building should follow the exact measurements given in the architect's plans. Working out the number of bricks required, sacks of cement, etc, is a scientific process. Quantity surveyors do not face the problem of not being sure whether the end building will be a bungalow, a skyscraper or a half finished flat.
There are going to be some very upset Costs Lawyer clients if they buy into this quantity surveyor myth.
9 April, 2014 at 6:20 am
Now that we are a year into the Jackson Reforms, where do we find ourselves?
Strangely, not as far forward as we might have expected.
A combination of the staggered introduction and transitional provisions to the extended Portals (not actually a Jackson reform, but the extension of fixed fees was a Jackson proposal) mean the impact on these claims has yet to be fully felt. Nevertheless, the next 6-12 months will see a significant reduction in costs work in an area that is the bread and butter of many costs practitioners.
The impact of the introduction of provisional assessment has also yet to be fully felt with the transitional provisions stills seeing some lower value costs claims in the system. Although I undertake only a relatively small amount of advocacy at detailed assessment on an agency basis, I know there are some practitioners who undertake a significant amount of such work. They will acutely feel the loss of this work. Additionally, for those larger costs firms that have dedicated advocates for detailed assessments, the end to assessment for bills under £75,000 will have a major impact for work levels. Whether the provisional assessment scheme will ultimately be judged a success depends on whether the judiciary get a proper grip of the process. Early signs are not great.
Other than the odd judicial comment, we still have no real clue as to how the new proportionality test will be applied. Although this is no big surprise in relation to detailed assessment, because of the transitional provisions, we would have expected something to emerge from the costs budgeting process. Why no decision yet along the lines of: “I would have approved budgets of £100,000 given the complexity of the issues but I note the value of the claim is only £25,000 and I will therefore limit each party’s budgets to that amount”.
Costs budgeting is in serious danger of turning into a disaster. More judicial training is urgently needed to introduce some consistency in approach and to ensure judges understand the rules. The big problem is judges uncoupling costs management from case management. (More on this another day.)
Work on the new bill of costs format continues. All bills to be prepared at the touch of a button when this is ready?
And then we have Mitchell. I have already seen a number of Costs Lawyers and costs draftsmen Mitchelled and this will only get worse before it gets better. Professional indemnity insurance premiums are set to rocket.
If this was the end of the first year school report, the Jackson Reforms would merit the school teacher’s favourite: “Very trying”.
7 April, 2014 at 6:13 am
Different courts are introducing their own directions as to the provisional assessment process (and rewriting the rules in places).
The Senior Courts Costs Office requests that the receiving party’s full file of papers is filed with the Court rather than just the limited documents provided for within the Practice Direction. This is a very sensible requirement and the Practice Direction allows the Court to order the filing of any papers it considers appropriate (although the Practice Direction did not, perhaps, envisage that everything would be requested in every case).
Other courts are ordering that “optional” Replies are served in every case.
Some courts are expressly inviting parties to serve Replies not limited to points of principle and concessions only (in direct contradiction of PD 47 para.12.1).
Other courts are annotating Precedent G: “in the absence of a reply from receiving party, I assess this item as per the paying party’s offer”, clearly not being aware why no reply has been given (see PD 47 para.12.1 again).
This nonsense has to stop.
A judge at a sufficiently senior level needs to get to grips with this urgently.
It is perfectly possible (for “possible” read “obvious”) that the provisional assessment rules were not very well thought out or well drafted. Nevertheless, any revision to the rules should be applied consistently and after proper consultation (this could be done in the space of a few weeks with appropriate stakeholders), not piecemeal and at the whim of different judges rewriting the rules to their own design.
There. I’ve said it.
3 April, 2014 at 5:21 am
The issue over late service of optional Replies in detailed assessment proceedings rumbles on. I cannot comment on whether the Senior Courts Costs Office has developed a “policy” line on this point (other than referring you to paragraph 19.5 of the Senior Courts Costs Office Guide 2013) but can report on a recent decision before Master Gordon-Saker.
Claimant made an application for permission to rely on Replies served out of time. Application dismissed with costs to the Defendant. Timescales set down in rules are there to be followed. No good reason put forward for late service. The hope that the cost of drafting Replies might be avoided by a negotiated settlement was not a “good reason”.
None of this is to suggest the parties may not agree sensible extensions between themselves for service of Replies.
The lesson is that if you wish to serve Replies after the date provided for by the rules, agreement should be reached before the deadline passes. If you wait until afterwards, you will have an uphill struggle.
1 April, 2014 at 5:47 am
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28 March, 2014 at 5:34 am
Request received this week from costs drafting firm:
“We would be much obliged if you could provide to us your Points of Dispute on computer disk or by email pursuant to Costs Practice Direction 35.6, to enable us to prepare Replies”.
Never let it be said that costs draftsmen do not keep up to date with the latest developments in costs law.
24 March, 2014 at 5:31 am
Mr Justice Ramsey, speaking at the IBC Solicitors’ Costs Conference, suggested that under the new proportionality test parties should bear in mind that combined costs should not normally exceed the sum in dispute.
We have been waiting for some helpful guidance on the new test and now we have it. If we assume that the ratio between claimants’ costs and defendant’s costs is roughly 60/40 in favour of claimants, we now have a simple formula for calculating the maximum cap that should be allowed when setting budgets or undertaking assessment under the new test:
• Claimant’s costs capped at 60% of the realistic valuation of the claim when setting a budget or 60% of the damages recovered when assessing costs.
• Defendant’s costs capped at 40% of the realistic valuation of the claim when setting a budget or 40% of the damages recovered when assessing costs.
There are some arguments as to whether the defendant’s costs should be capped at the level of the pleaded case rather than the likely or actual damages, but you get the general idea.
The need for detailed assessment will disappear in a large number of lower value cases as it will be obvious the cap will bite.