Association of Law Costs Draftsmen

I recently became a member of the Association of Law Costs Draftsmen (ALCD) after passing their Fellowship examination.  I can now put FALCD after my name.  As you can imagine, this was the proudest day of my mother’s life. 

Some readers may be surprised to discover I was not previously a member of the ALCD.  Other readers may be equally surprised that I managed to pass the exam.

Let me explain further.  Any idiot can, and often does, refer to themselves as being a law costs draftsmen.  Wendy Popplewell, Chairman of the ALCD, recently wrote that “it is recognised that ‘law costs draftsman’ is not a title protected by law to those holding ALCD qualifications”.

The ALCD exists as a body to train, regulate and promote costs draftsmen.  However, membership is entirely voluntary.  The ALCD was recently granted authorised body status which enabled it to grant rights of audience and the right to conduct costs litigation to Costs Lawyers.  A two day training course bumps up Fellows to Costs Lawyer status and I am booked onto the next course in May.

For practical purposes, being a Costs Lawyer brings limited additional rights to what any costs draftsmen/consultant can do, whether as a member of the ALCD or not.  I’ll discuss this in more detail later, but not having automatic rights of audience as a Costs Lawyer, and not being a practising barrister, has never prevented me from appearing in court in costs matters, including appeals in the High Court and at Circuit Judge level (only Ahmed v Powell managed that feat on one embarrassing occasion).

The ALCD normally requires its members to complete what has become over the years an ever more sophisticated training programme in all things costs related.  I entered straight in at Fellowship level.  There is a little known, and possibly soon to be abolished, shortcut for those who have been practising in the field of legal costs for long enough (I think the current requirement is something like a minimum of 50 years) and who then pass the written exam.

Well, I’ve been doing costs for long enough to have passed the first requirement.  I only had to worry about the simple matter of passing the exam.  The previous year’s exam papers had 6 questions of which 3 had to be answered.  The pass mark was 65%.  For me, the 3 out of 6 was likely to be the problem.  Regular readers (God bless both of you) may think I know all there possibly is to know about legal costs.  In truth, I work in the limited field of civil costs and, usually, only inter partes costs.  I don’t do criminal, family, legal aid, employment, etc, etc.  My big worry was that I might be able to answer, say, only 2 of the questions.  Then, unless I managed to score a rather unlikely 100% in both of those questions, there would be no way I could pass the exam. 

A number of years ago I did write to the ALCD, and they published the letter in their Journal, suggesting that their training programme should be amended to recognise that many costs draftsmen practise in a limited field of costs law and that familiarity with all areas is not necessary.  In the same way, a barrister can become fully qualified without ever having studied family law.  The ALCD decided not to alter the range of subjects they expected those who went through their training to study.  Fair enough.  Their ball and they can decide who gets to play with it.

So I went into the exam with every expectation that I would take one look at the paper and have to walk straight out.  (You might, at this stage, suggest that I should have tried to learn some of the other subjects to give myself a better chance.)  In the event, the paper had 9 questions and I was therefore able to find at least 3 I could answer.  This made it, possibly, even worse.  Now, if I failed, I would have no excuse.  It would have been a rather embarrassing day for the Legal Costs Blog if I had failed the exam.  And, I must say, the exam questions were certainly challenging.  It was with no small sense of relief when I finally opened the envelope informing me I had passed.

I write all this not because I think the average reader has any particular interest in my career development but as an introduction to what I will be writing about tomorrow which has real importance for all those working in the field of legal costs, whether as an ALCD costs draftsmen or otherwise.

Costs draftsmen's late Christmas present

A number of readers no doubt work in the area of RTA claims.  Some at the front-end of the claims process dealing with the substantive claim, others at the tail-end of the costs side.  Hopefully, those readers will therefore be aware that we have a new claims process for low value RTAs starting on 6 April 2010 (and if they didn't know they are in real trouble).

What some of the more observant may have noticed is that despite being only a few weeks away from the start date we still have no published rules as to how the scheme will work.  Quite how this shocking state of affairs arose is a mystery.  However, finally, some progress is being made.  The Ministry of Justice has written to a number of specific bodies:

"The Civil Procedure Rule Committee approved the drafts of the documents listed below on the 12^th February 2010.  These documents are in draft form until: 

(1) the Statutory Instrument has been signed by the Civil Procedure Rule Committee and the Minister and then laid before Parliament, and

(2) the practice direction making document has been signed by the Minister and the Master of the Rolls.   

It is expected that the Statutory Instrument will be laid before Parliament by the beginning of March.  In view of the familiarisation, training and system adjustments that practitioners will need to undertake in order to be compliant with the new process we have decided [how gracious of the powers that be] to circulate these rules etc in draft form.  Please circulate to your members as appropriate."

In case these haven't yet made their way to you, the Legal Costs Blog and Gibbs Wyatt Stone have provided a link to all the draft documents here: RTA Claims Process.  Read them and weep.  No surprise that the final report in the Jackson Costs Review commented on the new process in this way: "I have two concerns about the new process in its present form.  My first concern is the sheer complexity of the process.  Over 80 pages of new material will be added to the rule book, in order to deal with the simplest category of litigation which exists, namely low value RTA claims where liability is admitted.  I fear that collectively these procedures might possibly open up a new theatre for the costs war."

And that, of course, it the late Christmas present for costs draftsmen.  Jackson LJ may be intent on killing off the volume costs work but the Ministry of Justice, and those involved in formulating the new rules, have given it a massive boost.  

Time allowing, I'll have plenty more to say about this new RTA claims process.   

Specialist costs counsel

The 2010 edition of the Association of Law Costs Draftsmen's diary contains advertisements from six barristers' chambers holding themselves out as specialists in legal costs matters.  Five of these give the names of the barristers in their costs teams.  The number of named individuals totals 49.  There are a number of other chambers who have costs specialists who did not advertise in the diary.  So how many specialist costs barristers are there?  There were a large number of names I did not recognise and it may be that there is a certain amount of wishful thinking going on as to who can be properly described as a costs specialist.  Alternatively, it may be that they operate in areas of costs law that I do not deal with and our paths therefore do not cross.

A number of years ago, and before there were anything like the current number of specialist costs counsel, a senior judge (can anyone remind me who?) expressed displeasure about the fact that the complexity and number of legal costs disputes had reached the level that some lawyers were basing their whole career on costs matters.

Quite how many will be left in the post-Jackson world remains to be seen but their prospects are probably better than those of a large number of costs draftsmen.

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Costs draftsman - A secure career

I recently came across a job advertisement for a trainee costs draftsman with the following wording: "Are you seeking a career option that is secure? Would you like to work in a niche market? Would you like to work in the field of Law Costs?".  Secure?  Have I missed something?

Pro bono legal costs work

I recently received a telephone message asking if my firm did pro bono work. (The answer is "no", by the way.)  But this did cause me to pause for thought as it coincided with a report in the Law Society Gazette that: "The value of pro bono work done annually by lawyers has soared to more than £400m. ...  That figure does not include the contribution made by in-house solicitors or other legal professionals such as barristers or legal executives". 

You wouldn't telephone a plumber and ask if he did pro bono plumbing.  I doubt you would do this regardless of how poor you were or how bad the leak was.  So why are lawyers viewed differently?  Why are some lawyers prepared to give so much of their time for free?  Undoubtedly, a lot of pro bono work is undertaken by lawyers working for Magic Circle firms or leading barristers who earn more money than they can spend and feel the need to "give something back".  However, this is not the whole answer and there are clearly those on far more modest incomes who also give their time freely.  Well done you.

There are probably a number of legal aid lawyers out there who feel they would be better off switching entirely to pro bono work.  The pay would be about the same but there would be far less forms to complete.

If there are any costs draftsmen out there who do pro bono work, let us know.

The art of good law costs drafting

The Law Gazette has reported the case of a Norfolk solicitor who charged clients based on the weight of their files, "by weighing the files in his hand", and was struck off after a hearing before the Solicitors Disciplinary Tribunal. You mean there's another way to cost a file?

Jedhead v Horsehair wigs

A recent article in the Evening Standard (click link) newspaper reported on the spread of the “Jedhead”.  This is the sticky-uppy hairstyle sported by Jedward, the twins from the X Factor.  The article claimed the “style crosses boundaries of age, gender, sexuality and taste”.  I have no problem accepting the first three in the list but can't accept the last.  All those sporting the Jedhead share the same taste: bad.

I have yet to see evidence that this hairstyle has infected the legal profession but a bottle of champagne to the first solicitor, barrister or costs draftsman who can produce a picture of themselves about to enter court displaying such a haircut. Horsehair wigs don't count (unless heavily gelled and sticking up).

Does proportionality still have a role in legal costs disputes?

At the end of a costs presentation I recently gave to some solicitor clients I was asked if the issue of proportionality was one that still carried any weight in legal costs disputes.

Given how central the issue of proportionality was meant to be when the Civil Procedure Rules were introduced, it is strange that this question even needs to be asked.  However, it is one that is entirely legitimate to raise.  As Cook on Costs 2009 states: “‘What is proportionality?’ is a conundrum the courts are still trying to solve”.  In an effort to throw some light on the issue, I will let you have my thoughts on the subject.

The starting point is CPR 44.4(2): “Where the amount of costs is to be assessed on the standard basis, the court will – (a) only allow costs which are proportionate to the matters in issue”.

In the early days of the CPR, defendants, naively with the benefit of hindsight, thought this meant what it said.  Costs would not be allowed at a level that was disproportionate to the matters in issue.  Therefore, for example, if there was a straightforward RTA claim with damages of £3,000 being recovered, if at the detailed assessment hearing the judge reduced the costs to £7,000 on the basis of what had been “reasonably” incurred, the judge would then stand back and make a further reduction to, say, £3,000 to ensure that the final amount allowed was “proportionate”.  If only.

The correct approach was indentified by the Court of Appeal in Lownds v Home Office [2002] EWCA Cic 365:

“what is required is a two-stage approach. There has to be a global approach and an item by item approach. The global approach will indicate whether the total sum claimed is or appears to be disproportionate having particular regard to the considerations which Part 44.5(3) states are relevant. If the costs as a whole are not disproportionate according to that test then all that is normally required is that each item should have been reasonably incurred and the cost for that item should be reasonable. If on the other hand the costs as a whole appear disproportionate then the court will want to be satisfied that the work in relation to each item was necessary and, if necessary, that the cost of the item is reasonable.”

 This test begs the question of what is the difference between “necessary” and “reasonable”.  Surely costs that are not necessary will not be reasonable.  Equally, costs that are not reasonable will not be necessary.  It is the lack of any obvious distinction between the two tests that has led to the widely held view that “proportionality” is a dead issue.  I have certainly routinely been in the Senior Courts Costs Office (as we must now call it) where, having heard detailed arguments as to whether the costs claimed are proportionate, the judge has given his decision and then commented, as an aside, that in his experience it will make little or no difference to what costs are ultimately awarded.

This problem, at least in part, appears to have been recognised by the House of Lords in Fourie v Le Roux [2007] UKHL 1 where Lord Scott of Foscote said:

“I think it needs to be understood that the difference between costs at the standard rate and costs on an indemnity basis is, according to the language of the relevant rules, not very great. According to CPR 44.5(1), where costs are assessed on the standard basis the payee can expect to recover costs ‘proportionately and reasonably incurred’ or ‘proportionate and reasonable in amount’; and where costs are assessed on the indemnity basis the payee can expect to recover all his costs except those that were ‘unreasonably incurred’ or were ‘unreasonable in amount’. It is difficult to see much difference between the two sets of criteria, save that where an indemnity basis has been ordered the onus must lie on the payer to show any unreasonableness. The criterion of proportionality, which applies only to standard basis costs, seems to me to add very little to the reasonableness criterion. The concept of costs that were unreasonably but proportionately incurred or are unreasonable but proportionate in amount, or vice versa, is one that I find difficult to comprehend.”

So is there any mileage at all in this issue from a paying party’s perspective?

It is clear that the judge at the outset of the detailed assessment must make a decision as to whether the costs overall are proportionate or not, assuming the issue has been raised.  The judge’s decision is then meant to influence how he approaches the assessment itself on an item-by-item basis.

If the paying party persuades the Court that the costs are disproportionate, then there is some scope to use this finding to attack costs that might not otherwise be considered unreasonable.  For example, an EL claim with a value at the lower end of the multi-track might have been handled by a Grade A fee earner.  Depending on the facts of the case, this might not be “unreasonable”.  However, the issue arises as to whether it was “necessary”.  This is a far higher hurdle and the receiving party may struggle to show that it was a necessary step and that a Grade B or C fee earner could not have handled the matter.  The Court may reduce the hourly rates accordingly.  Equally, in a particular claim it may not be “unreasonable” to obtain an advice on quantum from counsel.  Whether such a step was actually “necessary” is a different issue.  It is important at the detailed assessment for the paying party’s advocate (whether costs draftsman, costs counsel or other) to keep reminding the judge of his preliminary finding, where the costs have been found to be disproportionate, when dealing with individual items. 

The fact that, at the first stage, the costs as a whole appear to be proportionate does not prevent the court from finding that individual items are disproportionate and applying the test of necessity to them alone (Giambrone v JMC Holidays [2002] EWHC 2932 (QB))

Going back to the original question, the issue of proportionality can be a useful tool in nibbling at the edges of the costs claimed.  However, it is important to understand that even where a claim for costs is ruled at the outset to be wholly disproportionate, at the end of the assessment the amount may still be allowed in full.  Whether this is what those drafting the rules had in mind when they drafted: “the court will only allow costs which are proportionate to the matters in issue” is doubtful.  It is this problem that I constantly struggle to explain to some of my solicitor/insurer clients who cannot understand why it may be necessary to offer a figure that is clearly disproportionate to the damages recovered.

My intellectual property rights have been infringed

I assume readers are familiar with search engines such as Google and Yahoo.

In addition to the ordinary search results they produce, they also also show sponsored links.  This works by allowing advertisers to purchase the right to have their advert displayed when certain keywords are typed into the search engine.  For example, a business selling designer goods might choose the keywords "designer goods" and "fashion".

Louis Vuitton brought a case against Google complaining that adverts for counterfeit items popped up when internet users searched for the company and that this infringed their trademark rights.  They wanted to prevent others from being able to use their registered trademarks as a keywords. 

The case ended up being referred to the European Court of Justice.  The preliminary ruling was that there was no breach.

All very interesting, but what has this got to do with legal costs, I hear you ask?

I recently discovered that a Google search for Gibbs Wyatt Stone produces a sponsored link for an entirely different firm of law costs draftsmen (although I wouldn't quite describe our services as being those of traditional costs draftsmen).  I suppose I should be flattered that our reputation is such that others hope to raise their own profile by association with our name.  However, I'm left feeling vaguely used and violated.

And so what do you do?

In the past, when meeting people for the first time, I have always dreaded being asked what it is I do for a living.  To a non-lawyer there is no easy way to explain the role of a defendant costs consultant.  However, the recent furore over MPs' expenses has made my task easier.

Now, when I get asked this question, I can respond: "You know the way when MPs were allowed to police their own expenses they claimed for the most outrageous things?  Well, claimant lawyers are much the same when it comes to their legal billing.  I'm the type of lawyer whose job it is to police claimant lawyers and stop them from claiming for their duck house or to have their moat cleaned".

If any readers have a better summary of a defendant law costs consultant's role, that is remotely printable, please feel free to add under comments.

Future of the legal costs industry

An article of mine was recently published in the Solicitors Journal on the future of the legal costs industry.  For those who haven't already read it, it can be found here (click link).  Sure to ruffle a few feathers.

Not enough personal injuries occuring

The following letter was published in the latest edition of the Law Gazette:

"Rhonwen Barraclough's letter (8 October) complained about Lord Justice Jackson's recent suggestion of increasing the small claims limit if a deal cannot be done on fixing legal costs in fast-track claims.  Among the various reasons put forward as to why this was a bad thing, the most desperate was:

'There is also the prospect of losing even more high street practices, given the constant onslaught from professional indemnity insurance and farcical legal aid rates. Like it or not, personal injury is big business, with the majority of fee income going back into the economy in the form of taxes, VAT, wages and to other associated businesses. Has the practical impact of the reforms been considered in that context at all? Can the government really afford to lose the revenues generated by PI?'

Criminal behaviour is big business, keeping employed criminal lawyers, police, prison offices, security firms and so on, and generating various taxes as a result.  However, one would have to be going it some to argue that the government should be very cautious about trying to reduce crime.

What next?  The Association of Personal Injury Lawyers campaigning for more dangerous driving, unsafe work practices and more potholes in an effort to bail the government out of its current financial difficulties?

Forget high street practices, what about your average poor costs consultant if fixed fees are introduced? Now that is serious.

Simon Gibbs, Partner, Gibbs Wyatt Stone (defendant costs consultants), London"

Notification of funding - The New Rules

In a previous posting (read here) I discussed the old rules relating to providing information about the funding of a claim.  The latest update to the Civil Procedure Rules has made important amendments which came into force on 1^st October 2009.

The old CPR 44.3B read:

“(1) A party may not recover as an additional liability –

(c) any additional liability for any period in the proceedings during which he failed to provide information about a funding arrangement in accordance with a rule, practice direction or court order”

The new wording of CPR 44.3B is:

“(1) Unless the court orders otherwise, a party may not recover as an additional liability –

(c) any additional liability for any period during which that party failed to provide information about a funding arrangement in accordance with a rule, practice direction or court order;

…

(e) any insurance premium where that party has failed to provide information about the insurance policy in question by the time required by a rule, practice direction or court order.

(Paragraph 9.3 of the Practice Direction (Pre-Action Conduct) provides that a party must inform any other party as soon as possible about a funding arrangement entered into before the start of proceedings.)”

These changes fall into four categories:

1.      The wording “in the proceedings” is deleted and the reference to the new wording of the Practice Direction (Pre Action Conduct) makes it clear that notice must now be given pre-proceedings.

2.      The insurance premium provision deals with the consequence of not giving the information discussed below.

3.      The addition of the new wording “unless the court orders otherwise” is perhaps surprising. It was previously clear that failure to comply with the notification provision produced an automatic sanction in that the additional liability was not recoverable (in the absence of a successful application for relief from sanctions).  It now appears to be in the general discretion of the court as to whether to allow the additional liability despite the breach, although the starting point is obviously non-recoverability.  What is strange is that the new wording is followed by the same note that previously appeared: “Rule 3.9 sets out the circumstances the court will consider on an application for relief from a sanction for failure to comply with any rule, practice direction or court order”.  If the court now has a general discretion there would be no need to formally make an application for relief from sanctions.  Or, is the wording “unless the court orders otherwise” meant to refer to the situation where a successful application has indeed been made, but not otherwise?  We'll no doubt have to wait for the first decisions on the correct interpretation.

4.      The word “he” is replaced by the non-sexist “that party” (so as not to upset any chicks reading).

Paragraph 9.3 of the Practice Direction (Pre-Action Conduct) now reads (amendments underlined):

“Where a party enters into a funding arrangement within the meaning of rule 43.2(1)(k), that party must inform the other parties about this arrangement as soon as possible and in any event either within 7 days of entering into the funding arrangement concerned or, where a claimant enters into a funding arrangement before sending a letter before claim, in the letter before claim.”

For the reasons I gave in the previous posting on this subject, I am of the view that these changes clarify, rather than change, the requirements concerning pre-proceedings notification (although the corresponding transitional provisions might suggest the contrary).

An important change has been made to the Costs Practice Direction in respect of staged After-the-Event (ATE) premiums.  CPD 19.4(3) now reads:

“Where the funding arrangement is an insurance policy, the party must –

(a) state the name and address of the insurer, the policy number and the date of the policy and identify the claim or claims to which it relates (including Part 20 claims if any);

(b) state the level of cover provided by the insurance; and

(c) state whether the insurance premiums are staged and, if so, the points at which an increased premium is payable.”

This finally formalises the guidance given by the Court of Appeal in Rogers v Merthyr Tydfil CBC [2006] EWCA Civ 1134.

What is not 100% clear is what the consequence would be of failing to give notification of the fact the policy is staged or to give the trigger points.  Would the receiving party lose all premiums or would they still be able to recover the first stage premium (on the basis that the paying party can be no worse off in respect of this first premium even if they were not notified of the staging; the prejudice comes from not having the opportunity to settle the claim before the subsequent premiums become payable)?  More test litigation ahead for costs draftsmen and other costs professionals.

It should be pointed out that none of these changes affect those acting under discounted CFAs\CCFAs without a success fee (usually defendants).  There is no need to provide notice of funding in this situation because the full hourly rate payable in the event of a win is not treated as being an additional liability (see Gloucestershire CC v Evans [2008] EWCA Civ 21).

There are also important changes to the rules concerning ATE premiums in publication proceedings although, frankly, if you work in that niche area you should already be more than aware of those changes.

Click image to enlarge:

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The Legal Costs Blog - Who reads this rubbish?

Contrary to all logic and common sense, the Legal Costs Blog appears to have acquired a not insignificant readership.

The Solicitors Journal, aimed not just at solicitors but lawyers generally, claims that its website attracts over 34,000 users a month. Insurance Times, aimed at the whole insurance industry, claims over 45,000 users per month. Both websites have excellent and comprehensive content. The Gibbs Wyatt Stone website attracts over 12,000 users per month. The majority of this traffic is attracted to the Legal Costs Blog pages. Gibbs Wyatt Stone are a niche firm operating in a niche area of the law. These figures suggest one of two things. First, it may be that the figures quoted by the Solicitors Journal and Insurance Times are not as impressive as they first appear. Alternatively, the Legal Costs Blog is attracting a surprisingly high readership given the nature of its content. I'll leave readers to make up their own minds as to which of these it is.

It can safely be assumed that a large proportion of the readership are those who work within the English legal costs world. However, it appears that this blog has a wider reach. We have one subscriber from the High Court in Anguilla in the Caribbean. The other week I was contacted by a charming chap from the Czech Republic asking for book recommendations on the subject of legal costs as this was his "hobby" (and I thought I was the only one).

A comment recently added to one of my previous posts concerning the Jackson Costs Review complained that this was "a most biased defendant based blog". Well, yes. That's the point. Unfortunately, the comment was posted anonymously and so we will never know who expressed that view (although I'm sure there are plenty who share it). Strangely, a specialist costs barrister who had recently seen the blog suggested I should consider "making it more overtly for defendants". Goodness knows how some people would react if I did make it more defendant leaning.

On a related topic, it has recently been reported that Rupert Murdoch's News Corporation (whose publications include The Sun and The Times) is set to start charging online customers for news content across all of its websites. The internet has increasingly been viewed as a source of unlimited free information (in theory paid for by advertising). The tide may be starting to turn. You'll be pleased to know that we currently have no plans to start charging for the blog. Remember, you can subscribe to the blog by entering your email address in the box part way down the web page and receive posts straight to your inbox. If you get tired of receiving them, just unsubscribe.

Jackson Costs Review – Part 7 – A shrinking role for costs draftsmen?

Lord Justice Jackson's Preliminary Report on Civil Litigation Costs (see previous post) focuses on the perceived problems that have arisen in recent years in relation to legal costs: “There is no doubt that litigation over costs has increased dramatically in recent years, and that this growth is one of the driving factors behind the present review. Whilst many such disputes concerned issues which would need to be resolved under any system which involves costs-shifting, the disputes over the enforceability of conditional fee agreements have generated more litigation, arguably to less useful purpose, than any other. … [L]engthy detailed assessment hearings (largely devoted to legal arguments about recoverability and other technical challenges) still abound. This continuance of technical battles, albeit on changing fronts, appears to be attributable to the huge sums of costs which are in play. Both in the field of personal injury and in other areas, the Costs War is still being fought with some vigour.”

The Report goes on: “Taken collectively, the law reports of the last decade present the unseemly spectacle of endless and expensive squabbles about how much money should be paid to lawyers. … The question must be asked whether the Costs War either serves the public interest or benefits the profession as a whole. If the answer to this question is no, then consideration must be given to what further measures (beyond those already adopted) should be taken in order to stamp out such litigation. … In commenting on the issues raised in Phase 1 of the Costs Review, Professor Ian Scott (general editor of the White Book) stated: ‘I do fear that the profession to which I belong has lost its soul and is far too preoccupied with making money. Further, I think it is capable by its actions of killing the goose that has laid the golden egg. Another thing I feel strongly about is the shocking squandering of scarce court resources on refereeing of disputes about costs’”.

In addition to some of the radical proposals for dealing with these perceived problems, such as increased fixed fees and an end to two-way costs shifting, a number of the options up for consideration include changes to the current detailed assessment process. Some of the problems and options highlighted by the Report include:

1. “The most frequently expressed view is that the costs of detailed assessment and the court fees charged for it are often disproportionate to the amounts at stake in the main proceedings.”
2. “What is required is a bill which gives relevant information to the court and to the paying party and which is transparent. The current form of bill makes it relatively easy for a receiving party to disguise or even hide what has gone on.”
3. “Whilst detailed points of dispute may be necessary in high value complex cases, there is no such necessity in low value, straightforward bills.”
4. “A major problem in the SCCO is the fact that many detailed assessment cases settle very late in the day when it is too late to appoint another case in place of the settled case.”
5. “If a matrix, scale or tariff is in place for fast track cases there is no need for points of dispute or any reply. Depending on the structure of the fast track costs scheme it may be possible to do away with detailed assessment of such cases altogether. In order to cater for exceptional cases there should be an escape clause enabling a receiving party [or paying party] who feels that the scale allowance is too low [or too high] to apply to the court for a detailed assessment subject to a costs risk, e.g., if the assessment does not result in an increase [or decrease] of 20% or more the party applying will bear the costs of the detailed assessment.”
6. “[I]t is suggested that the Costs Practice Direction should be amended to the effect that in fast track cases points of dispute should not extend to more than three pages. … In low value cases it may be possible to dispense with points of dispute altogether, or at least to limit them to points of principle rather than quantum.”
7. “There should be a requirement that the paying party should make an offer in respect of the costs at the same time as serving points of dispute. Where the points of dispute assert that no costs should be payable, eg because of a breach of the CFA Regulations, a provisional offer should be made on the basis that the preliminary issue is decided in favour of the receiving party.”
8. “There appears to be no reason why Part 36 should not apply to detailed assessment proceedings in the same way as it applies to the substantive proceedings. This would provide greater certainty than the present provision in the rules that any offer to settle ‘may be taken into account’.”
9. “For bills of up to say £50,000 it may be possible to have a system of provisional assessment whereby the costs officer considers the bill and supporting papers in the light of the points of dispute.”
10. The decision in Crane v Canons Leisure Centre [2007] EWCA Civ 1352 may need to be reversed.

All these proposals are designed to reduce costs disputes and reduce the cost of costs disputes. None of this is good news for the average costs draftsman or other costs professional.

Changes to the assessment process

At the end of July I attended the last of Jackson LJ's Costs Review Seminars. This seminar focused on detailed assessments and explored various ways to try to improve the process. The majority of those attending were costs draftsmen, costs judges and other costs professionals.

What was interesting was the way that some of the ideas that emerged were met with virtually unanimous support from those present except for one or two individuals who clearly passionately believed that these very same proposals were either unworkable or entirely counter-productive.

One of the suggestions was that the current format for bills of costs was inappropriate and should be replaced with a new format. Rather than, as now, largely focusing on a list of chronological items of work, the bill should be more focused on providing an explanation as to why certain work was necessary or why this work was unusually time consuming. This proposal received virtually unanimous support and a costs judge and a regional costs judge have been tasked with producing a new model bill to incorporate this suggestion.

Although understanding the logic behind this proposal, I was one of the very few who strongly opposed this idea. Preambles to bills are already often unnecessarily long and self-serving, trying to justify the level of costs claimed by highlighting the supposed difficulties in the matter. My concern is that any formal requirement to explain and justify at the outset the costs claimed will turn bills into pages of lengthy prose that serve little purpose other than to drive up costs. Worse, much of this may prove to be entirely wasted. Time will be spent seeking to justify work that the paying party may have had no intention of disputing. Hopefully the model bill and any changes to the rules will overcome my concerns.

A second proposal was to introduce provisional assessments for lower value claims for costs. These would be conducted on paper with an option to proceed to a full detailed assessment if a party was unhappy with the provisional assessment, though possibly with strict costs penalties if a party failed to do better at the full assessment. I shared the majority view that this was a sensible proposal. There were only two dissenters and these were, interestingly enough, a regional costs judge and a costs officer. Their concern was that the provisional assessment option would be so attractive to parties that it would lead to a far higher number of cases reaching the courts than currently proceed to detailed assessment. This would lead to the courts being swamped with work they could not cope with. Of course, given any proposals emerging from the Jackson Review will almost certainly include fixed costs for fast-track claims this concern may be somewhat misplaced. Based on the figures being discussed at the seminar, for cases to be eligible for provisional assessment, most multi-track claims would be excluded. There would be relatively few claims likely to qualify once fast-track claims are removed from the process. Further, the workload of the courts should significantly decrease, in terms of costs disputes, as a result of fixed costs.

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Advising on success fees

Advising clients on the level of success fee that might be allowed in any given case is an inherently difficult task given the unpredictability of the courts. Another reason why it is difficult to advise is due to the method by which success fee are normally calculated. The courts generally accept, as a starting point, the "Ready Reckoner" (see for example paragraph 4 of Atack v Lee [2004] EWCA Civ 1712). This allows for a calculation that, based on the prospects of success fee in any given case, produces the correct level of success fee to reflect that risk. The difficulty with the figures produced by this method is that a tiny change in the prospects of success can produce a radically different success fee. For example, a case with a 50% chance of success produces a 100% success fee. A case with a 60% chance of success produces only a 67% success fee. Therefore even a very small difference in a judge's assessment of the prospects of success can radically alter the amount that can be allowed on a bill. How can one accurately advise a client as to what a judge is likely to allow?

Gibbs Wyatt Stone were instructed in relation to a case concerning a claimant who had tripped over a defective paving stone. This type of claim is generally recognised as not being straightforward due to the availability of a s58 statutory defence. However, the typical difficulty still arose as to what figure to recommend in relation to the level of success fee. In the event, GWS advised that the Defendant's offer of £14,500, made prior to a formal Bill being served, provided reasonable protection. A formal Bill was served and the matter proceeded to detailed assessment in the Supreme Court Costs Office. The matter was heard by Principal Costs Officer Lambert. He assessed the prospects of success at 65% and, using the "Ready Reckoner", allowed a success fee of 55%. Taken together with the other reductions made, the Bill of Costs was reduced from £35,150.50 to £13,991.83. The Defendant therefore succeeded on its offer and was awarded the costs of the detailed assessment proceedings.

The Claimant was unhappy with the success fee allowed and appealed to a Costs Judge. An odd aspect of appeals from a Costs Officer to a Costs Judge, in addition to there being an automatic right of appeal, is that such an appeal is by way of a complete rehearing rather than a straight appeal. This means that the Costs Judge will consider the matter afresh rather than simply decide whether to uphold or overturn the Costs Officer's decision.

The "appeal" was heard by Master O'Hare who decided not only that the Costs Officer's assessment of the prospects of success had not been unduly low but had actually been too high. He assessed the prospects of success at 67% and, based on the "Ready Reckoner", this reduced the success fee to 50%, which was what he allowed. The Claimant's appeal therefore not only failed but resulted in a further reduction to the amount which had originally been awarded. The Defendant was awarded the costs of the appeal.

Until fixed success fees are introduced for this type of case, costs draftsmen and other costs professionals will continue to struggle to advise their clients in these claims.

Late settlements

Those of us who work in the legal costs world have countless stories of last minute costs settlements where the other side crumbles at the last moment. In fairness, both claimants and defendants are probably equally to blame. Naturally, the closer a matter gets to a final hearing the more it focuses the parties’ minds. The same behaviour can be seen in substantive litigation with door-of-the-court settlements. However, in costs matters, this problem is usually due to a failure by someone appropriately experienced to consider the merits of a case at an early stage. Instead, a proper analysis is often only undertaken very late in the day. The following recent example is by no means the worst case I have seen.

A personal injury claim was settled in June 2007 and the Claimant subsequently presented a schedule of costs totalling about £21,000. The Defendant offered £7,800 in August 2007. The Claimant made a counter-offer of £13,500 in September 2007. The Defendant made a final offer of £8,500 in November 2007 which was rejected. A Bill of Costs was served totalling about £23,000.

At this stage Gibbs Wyatt Stone were instructed to act for the Defendant. We advised against increasing the Defendant’s offer and drafted Points of Dispute requesting disclosure of the Claimant’s CFA. These Points of Dispute were served in December 2007. In January 2008 Replies were served which declined to give disclosure of the CFA. After further communications the CFA was eventually served in March 2008. It was clear that there were serious issues as to the validity of the CFA. Supplemental Points of Dispute were served in April 2008 challenging the validity of the CFA. The Claimant made a further settlement proposal of £12,300 in May 2008. In February 2009 the Claimant served Replies to the Supplemental Points of Dispute that claimed the CFA was valid.

In March 2009, having paid a court fee of £600 for the privilege, the Claimant requested a detailed assessment hearing. The Court issued directions requiring the parties to hold a joint discussion to narrow the issues. The parties undertook the joint discussion and prepared a joint statement identifying the issues still in dispute.

The Court listed the matter for a pre-hearing review in June 2009. Two days before the hearing the Claimant contacted the Defendant seeking to accept the Defendant’s offer of £8,500 made back in November 2007. After further discussions, settlement was agreed at £7,500 to allow for a contribution to the Defendant’s costs that had been incurred since the offer in November 2007. Once the Claimant had paid the court fee, their costs draftsman’s fees for preparing the Bill and the other costs incurred between November 2007 and June 2009, the Claimant probably recovered something in the region of £4,500 net as against the offer of £8,500 previously made by the Defendant.

Running a case all the way to assessment and losing is one thing but marching all the way to the top of the hill only to march back down again is less easy to understand.

Feel free to post your own favourite examples.

Jackson Costs Review – Part 3 – Cost Shifting

Lord Justice Jackson's Preliminary Report on Civil Litigation Costs (see previous post) seriously considers whether the current two-way costs shifting rules should continue. He writes: "The first possible modification would be to introduce one-way cost shifting. One-way cost shifting means that when the defendant loses, he pays the claimant’s costs; when the claimant loses, each side bears its own costs. Such a system would self-evidently benefit claimants. Ironically, such a system would also benefit defendants in certain areas. A one-way cost shifting regime would be cheaper for defendants than a regime under which they recover costs when they win, but pay ATE premiums (as well as all the other costs) when they lose. A crucial consideration, however, would be the need to provide incentives for claimants to accept reasonable offers".

The Report goes on: "On looking at the data which has come in during Phase 1 of the Costs Review, it seems to me that a one-way costs shifting rule would (a) be cheaper for defendants than the present two-way rule and (b) reduce the burden on claimants. It is therefore necessary to look at this proposal and its implications in further detail. The proposal which I raise for consideration during Phase 2 is whether it would be more cost effective to remove the claimant’s liability for costs in respect of unsuccessful cases. … Whilst there are different arguments for cost shifting for and against claimants, it is appears that in most categories of litigation the case for retaining cost shifting in favour of successful claimants is a strong one. My working assumption is, therefore, that cost shifting in favour of claimants, in the sense that successful claimants should generally expect to recover their costs, should continue".

Michael Zander QC, writing in the New Law Journal, stated: "If I were a betting man I would put some money on there being a recommendation in the final report that in personal injury litigation we should move to one-way fee shifting (as existed under legal aid) so that the claimant would no longer need, and losing defendants would no longer have to, pay for the claimant's ATE insurance cover".These suggestions would have a major impact on two groups if they find their way into the rules. Firstly there would be a significant reduction in work for costs draftsmen, both defendant and claimant. If one-way costs shifting removed recoverability of defendants’ costs this would remove the need for defendants’ bills of costs to be drafted or opposed. Of course, defendants do not win a high proportion of cases but this loss of work would not be insignificant. The second group who would be affected is ATE insurers. I will deal with them in a future post.

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Jackson Costs Review – Part 2 – Fixed Fees

Lord Justice Jackson's Preliminary Report on Civil Litigation Costs is, in general, careful to avoid reaching any final conclusions or making any firm recommendations (see Part 1). However, even from a cursory reading, it seems all but inevitable that the final report will recommend the introduction of fixed fees to all stages of fast track claims.

Jackson LJ writes: “I have canvassed views from my panel of assessors and it is our unanimous view that we should take forward this work and try to achieve a fixed costs system in fast track cases”. This is as I previously predicted (see previous post). Further, it is suggested that: “There appears to be a strong case for some method of applying fixed costs in fast track cases at all stages” and not just pre-issue as in the current low-value RTA scheme. This is supported by FOIL who the Report states: “believe that there should be fixed costs for all cases within the fast track”. The conclusion reached is that: “It should be possible to devise a fair system of fixed costs for all cases within the new fast track limit”. To avoid one of the perceived problems with the current fixed fee regime, he writes: “I would propose an annual review mechanism to be included in any such fixed costs regime”.

Unlike other elements of his Report, he appears to have reached a clear view already on this issue. Good luck to those who try to persuade him to change his mind.

Of course, the idea of extending fixed costs in fast track cases is not exactly new. That is what was proposed in the Ministry of Justice’s consultation paper: Case track limits and the claims process for personal injury claims. Those proposals were largely abandoned when the new claims process was announced. It remains to be seen whether the final report carries sufficient weight to persuade a (new) government to resurrect this idea. However, at the very least, this Preliminary Report does seem to finally kill off the new claims process. Or, more accurately, delay any implementation of the new claims process pending a decision being taken as to Jackson LJ’s final proposals. The Report states: “It may therefore be sensible to dovetail in the development of the new claims process with whatever implementation programme may be put in place following completion of the 2009 Costs Review. The introduction of two different packages of reforms addressing the same subject matter may be unsettling for both practitioners and court users”. I have previously reported on the problems the new claims process has been facing. The sooner an announcement is made to, at least, put into hibernation the introduction of the new claims process the better. To see how bizarre the whole issue has become read this article on the RTA claims process (external link) from Anthony Hughes, President of the Forum of Insurance Lawyers.

What impact would Jackson LJ’s proposals have if fixed fees are rolled out to all stages of fast track cases? The new fast track limit is £25,000. The Report gives details of “a substantial firm of claimant personal injury solicitors” who informed Jackson LJ that 92% of all personal injury cases which they undertake fell within the bracket £1,000 to £25,000. This would therefore catch the vast majority of such personal injury claims. In addition to impacting on the revenue of claimant solicitors (for better or worse) it would wipe out a large proportion of costs draftsmen and other costs professionals. This proposal has massive implications.

Jackson Costs Review – Part 1 - Introduction

Lord Justice Jackson's Preliminary Report on Civil Litigation Costs was published on 8 May 2009. I did not immediately rush to comment on this report for three reasons:

1. The Report runs to almost 700 pages plus appendices and takes some reading.
   
2. Given the importance of this report to the future of the legal costs system it seemed appropriate to give some time to reflect on the Report before rushing to reach any conclusions.
3. I was on holiday when the Report was first published.

The first thing to note about this report is how truly masterful it is in its scope, clarity and ambition. Jackson LJ, and those who have assisted in its writing, are to be congratulated on their work. If nothing else, large sections of this report should be compulsory reading as an introduction to the basics of the current costs system.

Over coming posts I will comment on key aspects of this report. These will focus on the elements that will potentially have the widest impact on the legal profession. Inevitably, this will mean some important but niche areas, such as defamation, will not be covered.

Jackson LJ is under no illusions when he states in his opening comments to the Report: “Whatever I may recommend at the end of this year (and at this stage I still have an open mind) one thing is inevitable. My final report will generate protest from at least some directions and quite possibly all directions. … This report does not reach any firm conclusions”. This passage contains two important warnings. Firstly, the Preliminary Report is intended to do no more than set the background and identify the issues that need to be determined. The Report does contain some tentative conclusions and one could read too much or too little into these. However, nothing has yet been decided. Secondly, Jackson LJ does not seem to be afraid to upset certain groups and no doubt sees such an outcome as an inevitable part of any proper overhaul of the current system. His comment that: “The personal injury litigation industry is populated by numerous interest groups and middlemen, all of whom have to meet their overheads and make a profit on top. If any layer of activity can be removed from the process … it may be thought that this will serve the public interest”, should have particular concern not only to ATE insurers but also claimant solicitors dealing with low value claims, costs draftsmen and other costs professionals.

The next two stages of the Costs Review are:

May to July: Phase 2 – consultation
September to December: Phase 3 – preparation of final report

I will comment on some of the specific issues in more detail and the potential options considered over the coming days.

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Costs draftsmen - Good times or bad?

Costs draftsmen and other costs professionals are currently living through an interesting period (or possibly that should read "worrying period").

The Legal Costs Division of recruitment agency Adept Recruitment have been sending out marketing literature reporting: "As the 2nd Quarter of 2009 draws to a close we continue to see high levels of Legal Costs Recruitment throughout the UK. Despite the economic downturn many of our Clients have continued with ambitious expansion programmes, whilst some have opened large, new departments in major cities as their workload continues to increase". Sounds like good news, but there is a catch.

In previous postings I have commented on the potential increase in work for costs draftsmen (link to post) that may result from the current economic downturn. However, it is far too early for this work to have yet worked its way through to the legal costs industry. There is no "extra" work out there beyond what there was a few years ago. Indeed, some work, such a RTA work, has dramatically declined.

So what is happening? The short answer is that some firms are taking work at the expense of others. This has certainly been the pattern over the last five years or so in relation to defendant work. A number of the previous big players in the legal costs negotiating industry have either disappeared or shrunk dramatically. This, in part, has been caused by reductions in real terms in work volumes but has also been caused by work moving to new providers. A similar process seems to be in progress now in relation to more traditional costs draftsmen and particularly those in the claimant field. There are one or two large players who have recently been engaged in aggressive and successful expansion plans. Over recent months I have heard from claimant costs draftsmen who have told me how they are feeling the pinch as a result of the success of their rivals' expansion programmes. The claimant costs industry is going down the same road the defendant side previously travelled where it is becoming dominated by a smaller number of large players. Whether that is good news or bad depends on your perspective.

All this redistribution of work may be interesting but will potentially become an irrelevant sideshow if some of the suggestions in the Jackson Review see the light of day. More on that subject shortly.

Legal costs uncertainty continues for costs draftsmen and lawyers

In previous blogs I have been commenting on the proposed new claims process and the problems that arise as to what the relationship will be between the proposed new staged fixed fees under the new claims process and the existing fixed predictable costs (CPR 45.7-45.14).

This problem is beginning to look more acute as time goes on. At the recent Legal & Medical conference, Amanda Stevens, President of APIL, raised concern over the level of consultation yet needed to deliver a tight and clarified costs process by the expected reform start date of October 2009.

There will be a continuing period of uncertainty for insurers, lawyers and costs draftsmen.

Don't be surprised if the whole concept is scrapped and they go right back to the drawing board. You heard it here first.

"NHS leeches"

Although The Legal Costs Blog is unashamedly defendant biased, and always ready to have a go at claimant lawyers, even we were somewhat taken back by the attack launched on claimant clinical negligence lawyers in yesterday's Sunday Times.

One article was headed "Lawyers use NHS as £100m cash cow" and another "Lawyers get m0re than victims in NHS compensation scandal". The leading article ran with the headline "Taking a knife to the NHS leeches". The source of this fury seems to have been The NHSLA submission to civil litigation costs review.

The NHSLA paper states that "the whole costs structure is indefensibly expensive in relation to the compensation awarded or agreed". It highlights the large discrepancies between the amounts charged by defendant and claimant lawyers in clinical negligence cases and claims that "claimant legal costs are more than double the defendant legal costs on average and that the gap ... has been widening over recent years".

The impact of CFAs is particularly criticised, with it being claimed that "they are effectively a means of claimant lawyers virtually doubling their profit costs having cherry-picked their cases". It also claims that the effect of CFAs is to produce hourly rates of potentially over £800 an hour.

The papers makes a number of proposals for reform including the introduction of routine costs capping orders and fixed staged success fees.

The NHSLA's submission paper is for the benefit of Lord Justice Jacson's ongoing review of the current costs system. It appears that it is now being generally accepted that he really has neither ruled anything in nor ruled anything out. We can now start to expect a growing number of similar submissions from various interested parties trying to influence his thinking.

The Sunday Times leading article concluded: "The NHS Litigation Authority is right. We need to reform this process and end the party for lawyers." It is fair to say that the Sunday Times is not an entirely uninterested party. The Ministry of Justice is currently engaged in the Controlling costs in defamation proceedings consultation. The press has been attempting to limit CFA funded costs in such claims and a general attack on claimant lawyers' fees will do no harm to that cause.

It might be thought that the Jackson review is coming rather late in the day. Given the damp squib that, so far as costs proposals went, emerged from the Ministry of Justice's Response on the new claims process it seemed that the current government had no real appetite for a major shake-up of the current costs system. However, the Sunday Times quoted Mark Simmonds, the shadow health minister as saying: "It is unacceptable in some cases that the legal fees are many times higher than the awarded damages". With there being every chance of a new government next year, anything now looks possible.

Just as costs draftsmen and other costs professionals were beginning to think there might be some stability emerging, it now looks as if we are in for another period of uncertainty.

Cole v News Group - The unread judgment

Many years ago, when I was studying for my law degree, I was told never to simply rely on the headnote of a law report, but to read the judgment in full. This was for two reasons. Firstly, it was often only by reading the full judgment would one properly understand the decision and the reasoning behind it. Secondly, and perhaps more importantly, the headnote was sometimes inaccurate and misleading. Of course, at the time, I ignored that advice.

The modern equivalent to that advice is never trust case summaries you have simply read on the internet (this blog included) but to actually read the full judgment yourself.

A perfect example of the problems that arise from not following this advice is the strange case of Cole v News Group Newspapers Ltd (18/10/06, SCCO, unreported). I say "strange" because of the way this case has been reported. The background to the judgment was a libel claim brought by a certain well known footballer. I don't need to repeat the salacious details of the original story, but I'm sure Ashley would be intrigued to discover this case has become best known in certain circles as a legal costs law authority rather than for the original allegations.

A quick Google search for "Cole v News Group" produces a number of legal websites offering case summaries of this judgment. They all appear to be inaccurate. I say "appear" because the difficulty with this case is it truly does seem to be unreported and is not available on any of the normal resources such as Bailli or Lawtel. This seems to have encouraged a number of individuals to pass on details of this case on a Chinese whispers basis without actually obtaining and reading a copy. Further, a growing number of claimant costs draftsmen routinely quote this case to resist requests for disclosure of CFAs. It may be that the transcript of the case that I have seen is not the final decision and that a further decision exists. If that is the case, and any reader can produce a more recent decision, I will happily write a further post on the subject.

Of the various case summaries that do exist on the internet, three of them refer to this being a decision of Master Haworth in the SCCO. Two of those give the date of the judgment as being February 2007. The third states it is a decision of the Court of Appeal in February 2007. All the summaries seem to suggest that the Court (whichever Court it was) held that a court would not order disclosure of a CFA unless the paying party had first raised a "genuine issue". I don't propose in this post to address what the law actually is on that point.

So what did the judgment actually say? I believe the summary in Cook on Costs 2009 provides a true account of the decision (if not the law): "With the removal of the [CFA] Regulations from 1 November 2005 a CFA needs only to be in writing and signed but that did not stop an application for disclosure in Ashely Cole v News Group (2006) Oct 18 SCCO. That application failed simply because no points of dispute had been served hence CPR 47.14 and CPD 40.14 did not apply. No decision was made as to the applicability of Hollins to post 1 November 2005".

The transcript I have is dated 18 October 2006 (the same as the one quoted in Cook on Costs) and I am therefore proceeding on the basis that it is indeed the only judgment made in this case on that point. Cook on Costs' summary is accurate. The application was dismissed simply on the basis that it was premature. There is absolutely no mention of "genuine issue" in the judgment, let alone any finding on this point. Indeed, the judgment concludes that when the matter comes back to the Court for the detailed assessment hearing "it may very well be that at that stage a disclosure of the CFA is appropriate".

So my advice, particularly to any claimant costs draftsmen reading this blog, is obtain and read the actual judgment in this case before seeking to rely on a decision that does not actually support your position.

I'll come back to why Cook on Costs was wrong on the law on another day.

Good news for costs draftsmen and costs consultants

In a previous posting I reported some good news for personal injury lawyers and, in due course, costs draftsmen and other costs professionals in the announcement that clinical negligence claims were predicted to increase.

Similar good news comes in a survey conducted by legal recruiters ASA, carried out among law firms. Only 18% expected the economic downturn to adversely affect them, with 46% expecting work to increase. One partner was reported as commenting: "people are always more likely to claim when money is tight".

Further, in the current edition of Litigation Funding, Peter Smith, managing director of ATE insurer FirstAssist, was quoted as reporting a 40% increase in the past few months in the number of professional negligence cases it had funded. He stated: "Everything suggests that if you are unhappy with work that's been done, then you might fight harder trying to obtain recompense during the credit crunch".

In the next 12-24 months, costs draftsmen and costs consultants can expect to see an upturn in work. So long as contingency fees haven't been introduced first.

Offers to settle costs

One of the more unfortunate costs provisions in the CPR is the general presumption that the receiving party is entitled to the costs of the detailed assessment proceedings. This encourages some receiving parties to submit inflated and unrealistic bills and, unless the paying party makes an offer that they consider puts them at real risk, pursue the matter to an assessment hearing without making any attempt at settlement or making any offers of their own.

It is worth mentioning at this point that an offer to settle a costs claim made under Part 47.19 does not carry any automatic consequence, unlike a Part 36 offer. The courts certainly do place enormous weight on Part 47.19 offers but it would be a mistake for either party to think that beating such an offer is determinative.

However, the approach of failing to actively engage in negotiations carries its its own dangers. CPR 47.18 lists the various factors that the court "must" have regard to when deciding whether to make an order other than that the receiving party recovers their costs. This includes the conduct of the parties and the amount by which the bill is reduced.

Referring to the case of Butcher v Wolfe [1999] 1 F.L.R. 334, the Court of Appeal in Codent Ltd v Dyson Ltd EWCA Civ 1835 stated:

"The second point to be derived from the case of Butcher is that there is an obligation to negotiate, placed upon the parties, which, as that case held, was not limited purely to family proceedings. A party who has refused a Calderbank offer point-blank and failed to negotiate might be penalised in costs if such refusal was unreasonable."

This approach has been reemphasised by Jackson J (now Jackson LJ) in Multiplex Constructions (UK) Ltd v Cleveland Bridge UK Ltd [2008] EWHC 2280 (TCC) where he held that if one party makes an offer to settle a claim which is nearly but not quite sufficient and the other party rejects that offer outright without any attempt to negotiate, then it might be appropriate to penalise the second party in costs.

In my experience, judges are willing to apply this reasoning to detailed assessment costs. Further, even where (rarely) I have not succeeded on my own Part 47.19 offer, I have often been able to persuade a judge to make a costs order in the paying party's favour or no order for costs where the bill has been significantly reduced.

As readers are no doubt aware, Jackson LJ has now been given the task of undertaking a fundamental review of litigation funding. I am sure he is a regular reader of this blog and he may wish to consider the following modest proposal. Receiving parties have an enormous advantage in detailed assessment proceedings because they have access to something the paying party does not: their own file of papers. A receiving party is in a far better position than the paying party to actually calculate what their bill is really worth. Paying parties must always engage in a certain amount of guess work, however "educated" that guess is.

Why not introduce a rule that the receiving party must make an offer to settle in relation to their own bill of costs and they will not be able to recover their assessment costs if they fail to beat that offer? Something similar was proposed, but dropped, in respect of quantum hearings for the new claims process. This offer should be made at the same time as serving the bill and any further offers would provide no further protection. This would force receiving parties to sensibly value their costs from the outset and would almost certainly dramatically reduce the number of detailed assessment hearing.

I would be interested to hear readers' views.

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NHS facing £700m negligence bill

In a time of global recession, some good news for personal injury lawyers and, in due course, costs draftsmen and other costs professionals in the announcement that clinical negligence payouts by the NHS in England are expected to rise by 80% next year.

The BBC reports that Steve Walker, chief executive of the NHS Litigation Authority, said part of the increase was prompted by a recent ruling in the Court of Appeal - the Thompstone judgment - which changes the way that payments for care are calculated.

He also said the move to more "no win no fee" cases had increased costs "dramatically" because it meant that solicitors were picking their cases carefully.

"The proportion of successful claims has gone up and is rising," he said.

"Legal practices are businesses and why not try and double your income for the same amount of work."

Claims Handling Law and Practice – Book Launch

GWS partner Simon Gibbs has contributed two chapters on legal costs to the recently published Claims Handling Law and Practice - A Practitioner's Guide. Produced, and otherwise written, by leading defendant solicitors Kennedys, this practitioner’s desktop handbook is an invaluable tool for claims handlers. It covers all areas of general liability including motor claims, clinical negligence, health & safety, disease, abuse and housing disrepair. The previous edition of this book proved extremely popular (see link: Amazon review) and this new fully updated edition is sure to be similarly successful. For ordering details use this link: Publishers.

Expert Witness

GWS partner Simon Gibbs acted as an expert witness in the field of the legal costs industry in the case of Andrew Reid v Capita Group. The case recently settled on confidential terms.

15th Annual Solicitors Costs Conference

We are pleased to be able to announce that Simon Gibbs of GWS as been invited for the second year running to be a speaker at the prestigious CLT Annual Solicitors Costs Conference. He will be speaking on the subject of “Personal Injury – The New Claims Process”. The event will be held on 30th January 2009 in London. For a copy of the Conference Brochure use this link: Brochure.

We are able to arrange a 20% discount on the normal delegate fees to any of our clients. Please contact us if you would like to take advantage of this discount.

Tumultuous period for costs draftsmen continues

Click through to an article published in the Gazette on the uncertain future facing costs draftsmen.

Munich Re – Annual Claims Managers’ Seminar

GWS were this year’s guest speakers at Munich Re’s prestigious Annual Claims Managers’ Seminar.

New Appointment – Emily Fraser

We are delighted to announce that Emily Fraser has joined GWS. She was called to the Bar in 2005 and was previously Costs Advocate with Legal Costs Negotiators Ltd. Emily has a strong background in dealing with technical costs matters and a broad range of advocacy experience, particularly in high value claims including clinical negligence matters. She represents a significant addition to the GWS team.