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CFAs

Article on CFA challenges

By on Apr 16, 2012 | 6 comments

Readers of Solicitors Journal will know I contribute a regular costs column. Somehow I usually manage to find something new to write about that hasn’t already appeared on the Legal Costs Blog. As part of our Costs Law Articles Archive project I will be uploading some of these old articles over the coming weeks. First up is a discussion of the Tankard v John Fredricks Plastics Ltd [2008] EWCA Civ 1375 judgment and whether it would kill off CFA challenges. In the article I wrote: “Although a collective sigh of relief will have gone up from panel members of the ALP scheme the decision has done little or nothing to limit the scope for challenges to other schemes or introduce any greater certainty. Hollins introduced the vague (and often shifting) concept of the ‘material’ breach and Tankard has introduced the even more unhelpful ‘reasonable person’ test. Although this appears to represent a common sense approach it actually produces nothing but uncertainty. If you asked the ‘reasonable person’ whether he thought that a scheme that provided only 1% of a firm’s revenue might affect the advice it gave then the answer would probably be no. If you informed the same person that an interest amounted to £50,000 a year you would possibly get an entirely different answer. Of course, it is quite possible that 1% of a given firm’s revenue is indeed £50,000 a year. Would two judges give the same answer to this set of facts? Equally, £50,000 for some firms really would be irrelevant but for others would represent the difference between profit and loss. This new test will mean that there may have been a breach of the Regulations by one firm when advising a client but no breach by the firm next door giving exactly the same advice on the same scheme.” Having recently had a CFA challenge upheld on appeal, and with one or two others still in the pipeline, I am sticking by the view that Tankard did not kill off CFA challenges but simply made the outcome more...

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"No" to entity regulation for costs firms

By on Mar 27, 2012 | 2 comments

Today I continue my examination of the calls for the Costs Lawyer Standards Board (CLSB) to introduce entity regulation of costs firms, in light of the decision in Kynaston v Carroll [2011] EWHC 2179. There appear to be two further arguments as to why entity regulation is required. The first one is that if Costs Lawyers can delegate their rights of audience to non-Costs Lawyers there is a danger that many costs firms will decide there is no need, or advantage, to employing a large number of Costs Lawyers. They will only need one Costs Lawyer per firm to enable them to exercise all the rights of Costs Lawyers. The number of those paying for a Costs Lawyer practicing certificate will rapidly decline and a disproportionate burden will be carried by the few remaining. (It would be pure speculation as to how many of those who recently joined the Association of Costs Lawyers joined on the back of rights of audience concerns pre-Kynaston.) Therefore we need entity regulation to cover the costs of Costs Lawyer regulation. This argument, I suspect, places too much weight on the advantages that come with Costs Lawyers’ “rights”. There are a significant number of Costs Lawyers who work in-house for solicitors. They have never needed Costs Lawyer’s rights (beyond possibly costs appeals, which I doubt are utilised other than in the rarest of cases). Equally, there are those who do only Legal Aid work and never use their “rights”. Costs Lawyer status must therefore be viewed by many as having a value beyond the rights that come with it. In similar fashion, the number of practising solicitors continues to spiral ever upwards despite much of the work done by solicitor firms not being regulated work and despite the fact that much litigation work is indeed done by unqualified paralegals acting under the supervision of a single qualified solicitor. Again, the perceived benefits of being a qualified solicitor appear to go beyond the rights that go with it. Now that Kynaston has established that detailed assessment hearings are “in chambers” and anyone may attend if properly instructed by an authorised person, the rights of audience that come with Costs Lawyer status are of limited value....

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Retrospective revocation – Revisited

By on Mar 13, 2012 | 3 comments

The proposed amendment to the Legal Aid, Sentencing and Punishment of Offenders Bill that I discussed yesterday has been causing no end of fuss (understandably) with at least one expert commentator advising against signing a client up to a CFA until the Bill is in its final form. However, further analysis of the proposed amendment has led most commentators to come round to the view that, if implemented, it will not render success fees irrecoverable if a matter is not settled prior to April 2013 (see this analysis for the current line of thinking). It appears that the amendment is actually intended to catch CCFA claims once the implementation date is reached. In other words, the amendment is necessary to stop success fees in CCFA cases being recovered where work begins after April 2013. It will not be possible, under this amendment, to claim a success fee is recoverable simply because the original CCFA pre-dates April 2013. It does seem rather bizarre that it has only just been appreciated that CCFA cases might not have been caught by the Bill as originally drafted. (What else is being overlooked?) As to this amendment, as I mentioned yesterday, “this could have been worded considerably more clearly”. I think we can all agree on...

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Date success fee recoverability will end

By on Mar 12, 2012 | 4 comments

One of the big issues concerning Jackson implementation is which date will be chosen for ending recoverability of success fees. Will it be by reference to the date of the accident date (as per the fixed RTA success fee regime) or the date the CFA was entered into (as per revocation of the CFA Regulations 2000)? The Legal Aid, Sentencing and Punishment of Offenders Bill, as drafted, reads: “The amendment made [concerning ending recoverability] does not apply in relation to a success fee payable under a conditional fee agreement entered into before that subsection comes into force”. With April 2013 likely to be the date of implementation, this would mean no recoverable success fee where the CFA is entered into after that date. Well, at this point those of a claimant disposition may want to make sure they are sitting down before reading further. (If you think you look cool reading this on your ipad, standing up on the train, that image is likely to be shattered when you have to be helped up from the floor by your fellow passengers.) Justice Minister Lord McNally has proposed an amendment that reads: “Clause 43 Page 30, line 30, leave out from “not” to end of line 32 and insert “prevent a costs order including provision in relation to a success fee payable by a person (“P”) under a conditional fee agreement entered into before the day on which that subsection comes into force (“the commencement day”) if – (a) the agreement was entered into specifically for the purposes of the provision to P of advocacy or litigation services in connection with the matter that is the subject of the proceedings in which the costs order is made, or (b) advocacy or litigation services were provided to P under the agreement in connection with that matter before the commencement day.” Although this could have been worded considerably more clearly, commentators (including APIL) have read this to mean that unless a costs order is obtained before April 2013, no success fee will be recoverable regardless of the date of the CFA. Let me spell that out. If this amendment is passed it will mean that a claimant who is currently pursuing a...

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Access to Justice Action Group explains

By on Feb 8, 2012 | 0 comments

I recently commented on the apparent contradiction between Andrew Dismore’s, co-ordinator of the Access to Justice Action Group, letter to the Guardian newspaper predicting that “there will be at least 25% fewer claimants” as a result of the proposed changes to the no win, no fee system and his other prediction, in relation to clinical negligence matters, that the proposed changes would lead to “an increase in the number of cases of 1/3rd”. Andrew has kindly elaborated. The prediction that there will be a 25% drop in overall claim number is reached by two routes, firstly, by making a comparison with the number of claims pursued in Scotland. In Scotland, additional liabilities are not recoverable from the other side. There are 25% fewer claims reported to the CRU for Scotland, on a pro-rata basis given the size of the population, compared to the number of claims brought in England and Wales. Scottish Sherriff Court starts compared with county court case numbers produces a similar disparity. It is therefore assumed that if recovery of success fees and ATE premiums ends here, it will lead to claims numbers reducing to a similar level as seen in Scotland. Secondly, an analysis was undertaken of 69,000 claims pursued via a claims management company. New claims accepted by the claims management company are offered to different firms of solicitors unless and until one is prepared to take the case on a CFA basis. Of these claims, two-thirds were accepted by either the first, second or third firm to be offered the claim. The balance were accepted by the fourth to twenty-fourth firm offered the claim. AJAG predict that it is this one-third of cases that will be considerably less attractive once success fees and ATE premiums cease to be recoverable and therefore estimate that 25% of the total claims currently run will not be taken on. Different considerations are thought to apply to clinical negligence claims, which represent a tiny proportion of overall claim numbers. Currently a high proportion of claims are accepted by solicitors but then turned down by either the Legal Aid Board or by ATE insurers, and therefore do not proceed. ATE insurers apparently turn down two-thirds of cases presented to...

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