Appropriate success fee where liability clear

Press release from well known personal injury solicitors commenting on holiday illness claim, where solicitors were acting for 276 clients, quoting their head of travel law:

“It is almost beyond belief that [the Defendant] has continued to deny liability for this terrible outbreak”.

Success fee claimed for this clearly clear-cut claim: 100%.

You couldn’t make it up.

Inaccurate costs estimates

The move from costs estimates to costs budgets has left rather a mess in the rules due to the absence of transitional provisions.

Nevertheless, under the old rules, and to the extent to which the old costs estimate rules continue to apply, the response of receiving parties to objections concerning inaccurate estimates is invariably, in my experience, misplaced.

Receiving parties almost always rely on the guidance given at paragraph 29 of Leigh v Michelin Tyre Plc [2003] EWCA Civ 1766:

“In our view, para 6.6 of the practice direction gives the court the power to take matters such as these into account in deciding whether, and if so how far, to reflect them in determining what costs it is reasonable to order the paying party to pay on an assessment. We do not, however, consider that it would be a correct use of the power conferred by para 6.6 to hold a party to his estimate simply in order to penalise him for providing an inadequate estimate. Thus, if (a) the paying party did not rely on the estimate in any way, (b) the court concludes that, even if the estimate had been close to the figure ultimately claimed, its case management directions would not have been affected, and (c) the costs claimed are otherwise reasonable and proportionate, then in our view it would be wrong to reduce the costs claimed simply because they exceed the amount of the estimate. That would be tantamount to treating a costs estimate as a costs cap, in circumstances where the estimate does not purport to be a cap.”

However, the guidance given in that case concerned an earlier version of CPD 6.6:

“On an assessment of the costs of a party the court may have regard to any estimate previously filed by that party, or by any other party in the same proceedings. Such an estimate may be taken into account as a factor among others, when assessing the reasonableness of any costs claimed.”

The Leigh judgment gave guidance as to how this should be applied in circumstances where the CPD was silent as to the approach to adopt.

Following Leigh, CPD 6.6 was significantly amended:

“(1) On an assessment of the costs of a party, the court may have regard to any estimate previously filed by that party, or by any other party in the same proceedings. Such an estimate may be taken into account as a factor among others, when assessing the reasonableness and proportionality of any costs claimed.

(2) In particular, where –

(a) there is a difference of 20% or more between the base costs claimed by a receiving party and the costs shown in an estimate of costs filed by that party; and

(b) it appears to the court that –

(i) the receiving party has not provided a satisfactory explanation for that difference; or

(ii) the paying party reasonably relied on the estimate of costs;

the court may regard the difference between the costs claimed and the costs shown in the estimate as evidence that the costs claimed are unreasonable or disproportionate.”

The amended CPD did not simply mirror the guidance in Leigh. It went further and produced a more robust test. Although the CPD was, no doubt, amended as a consequence of the Leigh decision, it was not an amendment designed to simply codify the Leigh guidance. Indeed, it is difficult to see that the guidance in Leigh was (or is) of much, if any, relevance, to detailed assessments undertaken after the CPD was amended.

Top costs expert

The media has a terrible habit of attributing expert status to those who clearly have no right to be called anything of the sort. Fox News famously interviewed a “terrorism expert” who claimed “In Britain, it’s not just no-go zones, there are actual cities like Birmingham that are totally Muslim where non-Muslims just simply don’t go in”.

In similar fashion, Costs Lawyer magazine recently published the views of “some of the country’s top costs experts” on what the coming year holds for the profession. In truth, they were prepared to publish the views of any idiot they could find.

My contribution was:

“The key elements to achieving the Jackson goal of ensuring proportionality in civil litigation were the extension of fixed fees for lower value claims and a new proportionality test for higher value claims.

Costs budgeting is already proving to be an expensive and counter-productive experiment.  The Court of Appeal has already undermined any credibility in the new test for relief from sanctions.  The end to recoverability of additional liabilities has been more than off-set in personal injury litigation by the introduction of Qualified One-Way Costs Shifting.  The extension of fixed fees has inevitably succeeded in bringing a degree of proportionality in the fast-track.

The missing piece in the jigsaw, and the last realistic hope of ensuring proportionality for the multi-track, is the new proportionality test.  Approaching two years after introduction we still do not know how the courts will apply this.  This will be the main battleground for 2015.

I predict a repeat of the relief from sanctions fiasco.  The matter will reach the Court of Appeal and they will deliver a robust decision following the guidance already given by Jackson.  This will be followed by howls of anguish from the usual suspects, with some justification, that the decision will deny access to justice for large numbers of potential claimants.

Shortly afterwards the Court of Appeal will then “clarify” their decision and reformulate their guidance giving such a watered-down test that it would have made the judges in Lownds blush.  The logic of Jackson’s recent calls for a massive extension of fixed fees will then become difficult resist, but only because a dog’s dinner was made of implementation of the original proposals.”

Part 36 costs offers

I recently received an offer as follows:

“We confirm that we can agree to accept the sum of £18,800.00 in settlement of our costs, this offer is made subject to S1 Part 36 CPR, applies to the whole of this matter and is open for acceptance for 7 days.

If we do not hear from you within that period we intend to set this matter down.”

I wonder what possesses people who have clearly never read Part 36 to think that making an offer purporting to be a Part 36 offer is a good idea.

Bloody provisional assessments

And another thing…

Problem:

Many judges make the average doctor’s handwriting look as though it was the winning entry to a calligraphy competition. They try to write their decisions to the provisional assessment in boxes which have been left smaller than a postage stamp by the receiving party. The decision is written in light green ink (or perhaps invisible ink) that does not photocopy properly in the copies returned to the parties. The court staff photocopying the Points of Dispute/Replies/Decision fail to notice that the part of the page with the judge’s decisions has not copied properly or that the document is double-sided.

Solution:

When the parties are advised of the date of the provisional assessment (6-9 months in the future), the receiving party is to email a copy of the Points of Dispute/Replies, in Word format, to the court. The judge’s decisions are typed into the Points of Dispute/Replies.

Even the courts’ creaking technology must be able to cope with this.

Provisional assessment – and another thing…

More issues as to provisional assessment…

Problems:

The timing of certain steps in the process is confusing at best.

The parties are meant to undertaken the arithmetic on the Bill as assessed post-provisional assessment. However, how does the judge undertake, where relevant, the global proportionality cross-check if the judge does not know the figure that has been initially arrived at? Some courts are issuing their own directions for the parties to inform the court of the initial calculations so proportionality can then be considered and the final amount determined. However, this step should be provided for in the rules.

The rule concerning filing of statements of costs is a mess. PD 47 para.14.3(c) refers to filing “a [in the singular] statement of the costs claimed in respect of the detailed assessment” implying that it is just the receiving party that will file a statement. What if the paying party has won? There is no requirement to serve the statement of costs on the opponent. The statement of costs will have to be prepared before the provisional assessment has occurred and before the parties have agreed the arithmetic. How much time should go in the statement of costs for the post-assessment number crunching and trying to agree the figures with the other side, when the work has yet to be done? For a Bill at the top end of the £75,000 figure, this can be time consuming if there have been, for example, amendments to the hourly rates and VAT figures. What if the parties cannot agree the figures and need to make written submissions to the court. How is this time dealt with in the statement?

Post-assessment, the parties “must” agree the total sum due to the receiving party on the basis of the court’s decisions within 14 days of receipt of Precedent G. But they then have 21 days to request an oral hearing. Is it necessary to try to agree the exact figures if a party is going to request an oral hearing in any event?

Solutions (and I confess this may need some more thought):

  1. No statement of costs to be served when requesting provisional assessment.
  2. The initially provisionally assessed Bill, pre-proportionality consideration (where the new test applies), is returned to the parties for them to agree within 21 days the calculations and, if possible, any remaining issues including costs of assessment.
  3. Failing agreement, the parties have a further 7 days to, if necessary:
    1. Confirm the agreed calculations and ask the court to deal with proportionality. The court rules on proportionality and provides the decision to the parties. The parties have a further 7 days upon receipt of the same to agree the costs of assessment. Failing agreement, both parties are to file statements of costs together with written submissions as to costs.
    2. If the calculations cannot be agreed, the parties are to make written submissions to the court, and ask for proportionality to be dealt with if necessary. The court rules and provides the decision to the parties. The parties have a further 7 days upon receipt of the same to agree the costs of assessment. Failing agreement, both parties are to file statements of costs together with written submissions as to costs.
    3. If the calculations are agreed and proportionality does not need to be dealt with, but the costs of assessment cannot be agreed, both parties are to file statements of costs together with written submissions as to costs.
    4. Request an oral hearing. Statement of costs to be filed in advance of the hearing in the usual way.

Further issues with provisional assessment

More problems with the provisional assessment process…

Problems:

The, very limited, provisional assessment pilot was based on claims for costs with a value of up to £25,000. When provisional assessment was rolled out the figure was moved up to £75,000. This was an interesting experiment. It failed.

The provisional assessment rules do not require the receiving party to lodge the bulk of their papers with the Court in advance of the assessment. The Senior Courts Costs Office believes it is not possible to properly assess a Bill without the proper supporting documents and requires the solicitor’s full file to be lodged. If the Rules Committee and other courts believe they know better than experienced costs judges and costs officers as to what is required to undertake a fair assessment, they are wrong.

Solutions:

Reduce maximum figure for provisional assessment to £25,000.

Require full supporting papers to be lodged.

Another provisional assessment problem

Another issue with provisional assessment…

Problem:

The rules remain a mess over the issue of what is or is not included in the £1,500 provisional assessment cap. There has already been one amendment to try to clarify the issue but a second is needed. Does the £1,500 include or exclude the costs of negotiating costs prior to a notice of commencement being served? Does the £1,500 include or exclude the costs of Part 8 costs-only proceedings.

Solution:

It should include the costs of any negotiations. It should not make a difference whether this work is done pre or post formal service of a Bill. If the costs of Part 8 proceedings are to be excluded, a fixed fee should be applicable for issuing Part 8 proceedings (say £80 plus court fee).

Problems with provisional assessment

The Forum of Insurance Lawyers is liaising with the Association of Costs Lawyers to identify and suggest solutions to the various problems with the new provisional assessment process. One suggestion…

Problem:

Provisional assessment proceeds on the clearly mistaken belief that either disputes over claims for costs with a value of up to £75,000 are entirely devoid of any points of costs law or, the equally mistaken belief, that all District Judges and Deputy District Judges tasked with undertaking provisional assessment have a basic working knowledge of black letter costs law such that they do not need the assistance of oral submissions and can reach decisions based on the limited contents of Points of Dispute and Replies. Those at the coalface know that many judges do not have even the most rudimentary understanding of basic costs law. The inevitable result is a string of widely unpredictable decisions.

Solution:

There is 0% chance of the time or money being provided to train all District Judges and Deputy District Judges up to even the most basic level required for them to properly undertake provisional assessment. Provisional assessment should be reserved to costs judges or costs officers. The Senior Courts Costs Office should deal with assessments for the South of the country and a second dedicated court appointed to deal with the North. Additional costs judges or costs officers would need to be appointed but the cost would almost certainly be more than off-set by freeing up significant District Judge time and by a corresponding increase in efficiency if the job is being undertaken by those who know what they are doing. If this work was all done at costs officer level, there would presumably be salary savings to be achieved as against the work being done at District Judge level.

Legal cost of travelling to see client

I recently came across an article on the internet about someone in New York giving dance lessons over Skype to someone else living in Baghdad.

If this kind of thing is now being done by ordinary people, why do some solicitors still insist on travelling half way across the country to interview their clients and/or witnesses?

Even if the client/witness does not already have the technology to use Skype (or the equivalent), the solicitor could buy them a top of the range tablet computer pre-loaded with the relevant software and with a 4G data contract (and talk through over the phone even the most technology illiterate person how to answer a Skype call) for a fraction of the amount that is often claimed by solicitors for travel costs.

But we mustn’t rush into modern technology just to reduce legal costs. Nothing wrong with quill and ink.