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Jackson fixed fee extension proposals

Posted by on 1st August 2017 in Uncategorised | 3 comments

Ancient Chinese curse: “May you live in interesting times”.

And so, Lord Justice Jackson has published his recommendations for extending fixed fees.  The key proposals for extending fixed recoverable costs (“FRC”) to all fast-track cases, and a significant increase in fixed fees for the majority of claims with a value of up to £100,000, are no great surprise.

In more detail, he proposes:

  • All recoverable costs in the fast track should be fixed, the figures should be reviewed every three years.
  • A new ‘intermediate’ track with a streamlined procedure should be created for monetary relief cases above the fast track, which are of modest complexity and up to a value of £100,000.
  • There should be a grid of FRC for intermediate track cases, the figures should be reviewed every three years.
  • There should be FRC for (a) applications to approve settlements for children and protected parties and (b) costs only proceedings, in respect of intermediate track cases.
  • Save as set out in recommendation (iv), Part 8 claims should be excluded from the proposed FRC regime.
  • The Civil Justice Council should, in conjunction with the Department of Health, set up a working party to develop a bespoke process for clinical negligence claims up to £25,000, together with a grid of FRC for such cases.
  • There should be a voluntary pilot of capped recoverable costs, in conjunction with streamlined procedures, for business and property cases with a value up to £250,000. If the pilot is successful, such a regime should be made available at the judge’s discretion for any suitable case in the Business and Property Courts or the Business and Property Lists of the County Court.
  • For FRC cases, where a defendant fails to beat a claimant’s Part 36 offer, instead of indemnity costs applying in place of FRC, the claimant should be awarded a 30% or 40% uplift on costs. (This is what I suggested, although with a different level of uplift, 18 months ago.)
  • A mediated agreement has been reached as to a new claims process for NIHL claims, with corresponding FRC, and this is endorsed.
  • The Aarhus Rules should be adapted and extended to all judicial review claims.
  • Costs management should be introduced, at the discretion of the judge, in ‘heavy’ judicial review claims.

Once the new reforms have bedded in, it is proposed that further consideration should be given to further extensions of fixed fees for other cases.  It is proposed that this review should be after four years.

In relation to fast-track matters, they should be placed into four bands of complexity, band 1 being the least complex and band 4 the most:

  • Band 1: RTA non-personal injury, defended debt cases;
  • Band 2: RTA personal injury (within protocol), holiday sickness claims;
  • Band 3: RTA personal injury (outside protocol), employers’ liability accident, public liability, tracked possession claims, housing disrepair, other money claims; and
  • Band 4: Employers’ liability disease claims (other than noise-induced hearing loss, which is set to have its own dedicated FRC scheme), any particularly complex tracked possession claims or housing disrepair claims, property disputes, professional negligence claims and other claims at the top end of the fast-track.

The criteria to qualify for the new intermediate track would be:

  • The case is not suitable for the small claims track or the fast-track;
  • The claim is for debt, damages or other monetary relief, no higher than £100,000;
  • If the case is managed proportionately, the trial will not last longer than three days;
  • There will be no more than two expert witnesses giving oral evidence for each party;
  • The case can be justly and proportionately managed under a new expedited procedure;
  • There are no wider factors, such as reputation or public importance, which make the case inappropriate for the intermediate track;
  • The claim is not for mesothelioma or other asbestos-related lung diseases;
  • Alternatively, if the above do not apply, where there are particular reasons to assign the case to the intermediate track.

When will all this happen?

Firstly, it would need government approval and then go out for public consultation.  Then the relevant Civil Procedure Rules would need to be re-written.  There is no realistic prospect of this all happening by October 2017.  April 2018 also looks optimistic.  We are probably therefore looking at October 2018.  In response to questions, Jackson indicated that the goalposts should not be moved mid-litigation.  I would therefore anticipate that the trigger-date will be the date of issue (ie all claims issued on or after 1 October 2018).

Late filing of costs budgets

Posted by on 11th July 2017 in Uncategorised | 2 comments

In Azure East Midlands v Manchester Airport Group Property Developments Ltd [2014] EWHC 1644 (TCC), a pre-Denton decision, it was held that a delay of two days in filing costs budgets in the context of a time frame of seven days was a “trivial” breach.

In Wain v Gloucestershire County Council [2014] EWHC 1274 (TCC), again pre-Denton, the Court held that serving a costs budget served a day late was a “trivial” breach and an application for relief from sanctions was allowed.

In Utilise TDS Limited v Davies [2014] EWCA Civ 906, another appeal heard at the same time as Denton and reported with it, the claimant failed to comply with an Unless Order by filing a costs budget 45 minutes late.  The Court of Appeal held this delay to be “trivial”.

Most recently, in the judgment in Lakhani v Mahmud [2017] EWHC 1713 (Ch), the defendant was one day late in filing its budget.  The judge at first instance refused relief from sanctions on the basis the breach was “not a trivial breach. It is a serious breach.”  This was a case specific decision and the full judgment needs to be considered to understand the reasons as to the conclusions as to the seriousness of the breach.  However, on appeal the decision was upheld even if some doubt was cast on whether the original judge had correctly followed the sequence of tests as set out by Denton.

The problem with these decisions is that if the issue of whether a delay of one or two days is, or is not, a serious/trivial breach is a matter which is fact sensitive, it inevitably leads to parties who are in breach feeling justified in making applications for relief and the other side feeling equally justified opposing those applications.  Satellite litigation prevails.

 

Impact of Jackson extension of fixed fees

Posted by on 7th July 2017 in Uncategorised | 1 comment

The current prediction is that Lord Justice Jackson will recommend fixed fees are extended to all claims with a value of less than £100,000.  If this is true, and subsequently introduced, there are two obvious issues to comment on:

  1. Without undertaking a detailed statistical analysis, it is reasonable to estimate that a figure of £100,000 is likely to mean at least twice as much costs work will survive as if the figure had been set at the previously mooted figure of £250,000. That is a good thing.
  1. A number of costs firms appear to have muddled through the original Jackson reforms as a consequence of the additional work generated by costs budgeting compensating, in part, for the loss of other work. Fixed fees for all claims under £100,000 will coincide with costs budgeting being abandoned for this category of claim.  This, combined with the other significant losses in work that will result from the extension of fixed fees, is likely to see civil costs work decline in volumes by 80-90% compared to current levels, and that is against the serious job losses that have already been seen.  That is a bad thing.

Offshoring costs drafting work

Posted by on 30th June 2017 in Uncategorised | 1 comment

An interesting recent blog post from Kerry Underwood discusses offshoring legal work.

He admits to a direct interest in this issue as Underwoods Solicitors offshore some of their work through their South African office and other firms have used this facility.

He also suggests:

“The same is true in relation to costs lawyers: why is it necessary to prepare a bill of costs here when it could be prepared for a fraction of that cost abroad?”

If memory serves me right, a few years ago a costs firm did outsource much of their work to Pakistan.  It did not go well and the firm is no longer trading.

Of course, one example of offshoring not working is not evidence the theory is flawed.  However, I believe part of the problem stemmed from the fact that the overseas costs draftsmen did not have access to the full files of papers.  In theory, the relevant papers were meant to be scanned and sent over, but this no doubt proved impractical for larger matters.

Therein lies the problem so far as costs work is concerned.  The majority of solicitor firms’ files are still, at least in part, paper based.  Access to all relevant documents is essential to properly prepare a bill of costs.  Unless, and until, firms move over to fully paperless offices it is unlikely outsourcing of costs work will catch on.  By that stage, most cases will be subject to fixed fees in any event and the economies that might be achieved by offshoring volume costs work will no longer be available.  There is likely to be limited demand for offshoring a relatively small number of higher value (and thus more important) costs matters.

Latest costs news gossip

Posted by on 29th June 2017 in Uncategorised | 1 comment

The nice people at 4 New Square invited me to their Summer Party on Tuesday evening.  Although the weather was terrible, they had had the sense to book an indoor venue.

In addition to their own embarrassment of riches in terms of their specialist costs counsel, there were also a number of other costs practitioners attending as guests and it gave me the opportunity to catch up on the latest news and gossip from the costs world.

In no particular order:

  1. Word on the grapevine is that Lord Justice Jackson is likely to recommend next moth that fixed costs are introduced for all claims with a value of up to £100,000, as opposed to his previously mooted figure of £250,000. This may be no more than rumour and we will shortly know for sure.
  2. One experienced costs draftsman was of the view that the Jackson reforms to date had led to approximately 50% of independent costs firms closing and job losses in the profession running at a similar level.
  3. In September 2014, a record number of almost 200 new students started the Costs Lawyer training course. Current numbers are barely in double figures.
  4. One well-informed source estimated that once the full Jackson shake-up has gone through we may be left with around 200 practising Costs Lawyers.

Plenty for me to comment on in the coming days, weeks and months.

Costs budgets and detailed assessment

Posted by on 22nd June 2017 in Uncategorised | 0 comments

  1. The Court of Appeal has handed down judgment in the important case of Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792 concerning the correct approach to take to detailed assessment where there has been a costs management order made.

The facts of the case are irrelevant. The four points of principle that emerge are:

· Where a costs management order has been made, in relation to future estimated costs, at detailed assessment the court will not depart upwards or downwards from that approved budget without ‘good reason’. The court declined to provide further guidance on what amounted to ‘good reason’ other than to comment: “Costs judges should therefore be expected not to adopt a lax or over-indulgent approach to the need to find ‘good reason’”. This clearly leaves plenty of scope for argument on detailed assessment.

· No such ‘good reason’ is required in relation to incurred costs. Incurred costs are to be the subject of detailed assessment in the usual way, except to the extent to which the court may take into account comments made in relation to incurred costs by the judge when the costs management order was made.

· Importantly, the making of a costs management order does not close-off arguments on assessment as to what global figure would be proportionate for the case. This is because “the costs judge ordinarily will still … ultimately have to look at matters in the round and consider whether the resulting aggregate figure is proportionate”.

· For the purposes of proportionality and the transitional provisions, a claim is “commenced” when the relevant proceedings are issued by the court, not the date they are sent to the court. This is important for those cases issued around 1 April 2013. Unless the court actually issued the claim form before 1 April 2013, the new proportionality test will apply to post-1 April 2013 work.

The truth is out there

Posted by on 19th June 2017 in Uncategorised | 1 comment

It was a funny old General Election.

We witnessed the worst Conservative manifesto in history and watched as the Prime Minister went, in the public eye, from “strong and stable” to “weak and wobbly” in a few short weeks. The Conservative share of the vote duly increased by 5.5% compared to the brilliant and ruthless campaign run by David Cameron at the last election.

A highly efficient Labour campaign saw the all-conquering Jeremy Corbyn fall a mere 55 seats behind the disastrous Conservative campaign and achieve a massive 4 seats more than the terrible Labour campaign of Gordon Brown in 2010.

The Liberal Democrats ran a no-brainer of a campaign to appeal to the 48% of the population who voted Remain, and duly saw their share of the vote decline by 0.5% compared to their train-crash result in 2015.

At a more granular level, Diane Abbott had, what was widely regarded as being, the worst election campaign of an individual British politician in living memory. She was duly returned with a 12.2% increase in support and a massive 75.1% share of the vote in her constituency. (This was before any proper medical explanation was advanced for her shockingly poor media performance.)

In politics, perception may well be all. Nevertheless, one does begin to wonder whether voters were partaking in a parallel election to that being observed by most political commentators.

Meanwhile, back in the world of law and cold hard facts, Access to Justice tweeted: “We definitively prove that #PIReforms are a huge mistake!” on the basis that research they commissioned apparently shows the government’s personal injury reforms will boost insurers’ profits by up to £700m a year. Virtually simultaneously, the Law Society Gazette published an article highlighting that motor insurers suffered combined losses of £3.5bn last year as a consequence of the changes to the Ogden rate change.

In a post-truth world, there is a “fact” out there to satisfy any point of view.

What can law costs draftsmen do?

Posted by on 31st May 2017 in Uncategorised | 1 comment

What steps in costs litigation are (non-Costs Lawyer) law costs draftsmen able to undertake?

Although the issue, inexplicably, still sometimes arises, it should now be clear (post-Kynaston v Carroll [2011] EWHC 2179) that they can appear at (first-instance) detailed assessment hearings so long as they are properly instructed by the legal representative on record.

However, the role of independent (ie not in-house) costs draftsmen extends beyond advocacy at detailed assessment.  It is not uncommon for costs draftsmen/costs firms to:

  1. Serve Notices of Commencement.
  2. Make Part 36 offers in detailed assessment proceedings.

Is this permissible?

Both Notices of Commencement and Part 36 offers are subject to the formalities that go with service (CPR 6).  If a costs draftsman is not on record as acting for a party (and, further, not an authorised litigator), can they properly serve a Notice of Commencement or Part 36 offer?

The answer is possibly now to be found in the recent decision of Coulson J in Ndole Assets Ltd v Designer M&E Services UK Ltd [2017] EWHC 1148 (TCC).

In brief terms, the issue arose as to whether a non-regulated claims firm could properly serve a Claim Form and Particulars of Claim on behalf of a litigant in person.  It was not in issue that the claim firm was not permitted to carry out reserved activities.

The judgment analyses whether service of Claim Form and Particulars of Claim amounted to “prosecution” of the proceedings (a reserved activity).  If I have understood the judgment correctly, it concludes that such service was a reserved legal activity but this was a task that could legitimately be delegated to a third party, it being noted that service by process-servers happens all the time:

“In my view, the (partial) answer to this is that process-servers are engaged by the relevant solicitors to carry out this particular task. They have the solicitors’ delegated authority to serve the documents. In those circumstances, since the solicitors on the record are responsible for the carrying out of all reserved legal activities, the solicitors remain responsible for the service of the documents, even if they have sub-contracted the task to professional process-servers. In that way, there is nothing inconsistent in concluding that the service of proceedings by process-servers is a reserved legal activity, for which the solicitors on the record are and remain responsible.”

To the extent to which a solicitor could delegate such a task, so could a litigant in person.

If this reasoning is correct, it would equally mean solicitors could delegate the service of a Notice of Commencement or the making of a Part 36 offer to external law costs draftsmen.  The extent to which such work needs to be properly supervised and undertaken under express instructions is less straightforward.

Personal Injury Small Claims, Portals and Fixed Costs

Posted by on 18th May 2017 in Uncategorised | 1 comment

Kerry Underwood’s Personal Injury Small Claims, Portals and Fixed Costs has now been published and is available to order here.

Running to over 1,300 pages over three volumes, you certainly get your money’s worth (a steal at £80).

The value of the book falls into three categories:

  • It is an indispensable practical guide for any claimant or defendant lawyer (or insurer) dealing with lower value personal injury claims. It is full of tips and guidance that will not only assist on a day-to-day basis but may make the difference between a happy client and a professional negligence claim.
  • It should be on the shelf of any costs practitioner who deals with fixed fee cases (or who needs to identify when a case should have been fixed fee).
  • It is absolutely essential reading for mangers/owners of claimant solicitor firms who deal with personal injury work. This book spells out how to keep this work profitable (and includes detailed model funding agreements).  Failure to buy this book, and follow the advice, may well make the difference between still having a profitable business in five years’ time and having shut up shop long before then.

Buy.

Interim costs payment

Posted by on 15th May 2017 in Uncategorised | 6 comments

This blog has previously looked at the interrelationship between interim payments on account of costs and interim costs certificates.

Gordon Exall’s Civil Litigation Brief blog recently had a post on this issue that I struggle to describe as being anything other than bizarre (although the post itself is an entirely accurate summary of the decision being reported).

HH Judge Robinson gave permission to appeal in relation to an unsuccessful application for an interim payment on account of costs.  The order granting permission does, to be fair, highlight:

“I appreciate that I have not had the benefit of hearing submissions to the contrary, and the observations set out below must be taken to be subject to receipt of such submissions.”

Nevertheless, the robustness of what follows makes it clear that the judge did not have much of an open mind as to the issue:

“I have read the transcript of the telephone hearing.  It seems to me that the District Judge was completely misled by the Advocate for the Defendant.

The Defence advocate directed the attention of the Judge to chapter 5 of the 2015 edition of Cook on Costs.

That chapter deals with interim payments on account of costs by the client to his own solicitor [Judge’s emphasis]. It has no relevance to a claim for an interim payment on account of costs by the paying party to the receiving party.  That issue is dealt with at chapter 25 of Cook.

The Judge was directed to a passage from Cook (2015) at page 85, paragraph 5.24 in these terms:

‘there is no scope to seek an interim payment of costs until a detailed assessment hearing is requested (via an interim costs certificate). …’ and

If you do not get an order as discussed here, you will have to wait until you have requested a detailed assessment hearing before being able to apply for an interim costs certificate.’

Those passages persuaded the Judge to conclude that the court had no jurisdiction ‘to entertain an application for payment on account of costs until [CPR] 47.16 kicks in, once you’ve lodged your request for detailed assessment’.

Those observations apply only to payment by the client to his own solicitor [Judge’s emphasis].

Chapter 25 of Cook (2015) is entitled ‘payment on account of costs’.  It is to this chapter that the Judge should have been directed.  The commentary is unchanged in the 2016 and 2017 editions.  I leave it to the parties to the parties to read it themselves.

Thus, unless I have fundamentally misunderstood something, this appeal is bound to succeed.  If it proceeds to a hearing, and this analysis prevails, I shall be asking why the Judge’s attention was drawn to an irrelevant chapter of Cook and why it was not drawn to Chapter 25.”

For the purposes of this post, I am not overly concerned with whether Cook on Costs 2015 was correct, but rather whether the advocate for the Defendant misled (deliberately or not) the Judge as to what Cook on Costs said.

Paragraph 5.24 of the 2015 edition reads in full:

“Where agreement has been reached by acceptance of a Part 36 offer, there is no scope to seek an interim payment of costs until a detailed assessment hearing is requested (via an interim costs certificate). Consequently, these circumstances should prove a powerful incentive for you to get your breakdown or bill drafted and submitted to the other side as soon as possible.

Where there has been a mediation or other form of negotiation which requires a consent order to be prepared for the court’s approval, there is scope for you to include an order for an interim payment. Given the wording of CPR 44.2(8) it will be difficult for your opponent to justify any outright opposition to an interim payment.

Don’t forget, cash (flow) is king. If you do not get an order as discussed here, you will have to wait until you have requested a detailed assessment hearing before being able to apply for an interim costs certificate. The laudable aim of provisional assessments is that they will be completed within six weeks of the request for detailed assessment. It is unlikely that courts will entertain interim costs certificate applications if the delay in getting a provisionally assessed bill is well under two months. If the courts do not manage to hold the six week target, they are likely to be sufficiently overwhelmed with work that they are not necessarily going to be dealing with interim costs applications speedily in any event. So if your costs are under £75,000 in total you definitely need to make sure that you seek an interim payment when the case concludes and do not leave it until later.”

The following issues arise:

  • Chapter 5 is headed “Running cases with conditional fee agreements”. Some sections of this chapter are clearly aimed at the solicitor/client relationship but other parts are clearly concerned with the position between opposing parties (eg paragraph 5.3 concerns notification to the other side of recoverable additional liabilities.  Paragraph 5.32 concerns interest on costs between the parties.)  There is nothing to suggest that chapter 5 is intended to deal simply with solicitor/own client matters.
  • There is clearly nothing in the wording of CPR 47.16 to support the idea that this is a provision that only applies to solicitor/own client detailed assessment.
  • Paragraph 5.24, which HH Judge Robinson selectively quotes from, expressly states: “these circumstances should prove a powerful incentive for you to get your breakdown or bill drafted and submitted to the other side [emphasis added] as soon as possible”. Why would it be necessary to submit details of costs to the other side if these “observations apply only to payment by the client to his own solicitor”?
  • Again, paragraph 5.24 discusses it being “difficult for your opponent [emphasis added] to justify any outright opposition to an interim payment”. How is this consistent with this short section of Cook being confined to interim payments by the client to his own solicitor?

The decision becomes even stranger when one turns to chapter 25 of Cook.  Having invited the parties to read this for themselves, one wonders what HH Judge Robinson made of this section:

“The amended CPR maintains the distinction between a payment on account (CPR 44.2(8)) and an interim costs certificate (CPR 47.16).  The former, as we have seen, obliges a court that has made a costs award to order a payment on account.  The latter may only be made requested after the receiving party has requested a detailed assessment.”

One is left with the suspicion that any fault did not rest with the Defendant’s Advocate at the original hearing, but rather with a misleading Appellant’s Notice and skeleton argument (although I have seen neither).

For completeness, paragraph 5.26 (corresponding to 5.24 in the 2015 edition) of the 2017 edition of Cook on Costs (excellent as always), now reads:

“Where agreement has been reached by acceptance of a Part 36 offer, there is no opportunity to seek an interim payment of costs until a detailed assessment hearing is requested and an interim costs certificate under CPR 47.16 can be sought. This is simply because there is no court making an order for costs subject to detailed assessment under CPR 44.2. Instead a deemed order has been made by virtue of Part 36. Some courts have considered that this line of reasoning is an attempt to oust the court’s jurisdiction. But, as we discuss in Chapter 25, we consider the rationale for this position to be set out clearly in Dyson Ltd v Hoover Ltd. There are good policy reasons for requiring parties to get on with the detailed assessment proceedings in accordance with Part 47 rather than making interim applications to the court. Once a request for a detailed assessment hearing has been made there can be no argument regarding jurisdiction. Consequently, these circumstances should prove a powerful incentive for you to get your breakdown or bill drafted and submitted to the other side as soon as possible.

Where there has been a mediation or other form of negotiation which requires a consent order to be prepared for the court’s approval, there is scope for you to include an order for an interim payment. Given the wording of CPR 44.2(8) it will be difficult for your opponent to justify any outright opposition to an interim payment.

Don’t forget, cash (flow) is king. If you do not get an order as discussed here, you will have to wait until you have requested a detailed assessment hearing before being able to apply for an interim costs certificate. The laudable aim of provisional assessments is that they will be completed within six weeks of the request for detailed assessment. It is unlikely that courts will entertain interim costs certificate applications if the delay in getting a provisionally assessed bill is well under two months. If the courts do not manage to hold the six week target, they are likely to be sufficiently overwhelmed with work that they are not necessarily going to be dealing with interim costs applications speedily in any event. So if your costs are under 75,000 in total you definitely need to make sure that you seek an interim payment when the case concludes and do not leave it until later.”

Chapter 25 reinforces this view, although recognises there have been conflicting decisions:

“If anything, this position has been strengthened by the April 2013 amendments. Under the previous provision, where the court had ordered a party to pay costs it had the power to order an amount on account before the costs were assessed. CPR 44.2(8) seems less flexible, suggesting that the time for an order for payment on account is when the costs order between the parties is made, although we are aware of conflicting first instance decisions on this point. This interpretation creates problems when there are deemed costs orders under CPR 44.9(1) as, inevitably, an application for payment on account will be after the date of the deemed order.”