The defendant costs specialists

fixed fees

RTA portal fees

By on Jan 11, 2013 | 5 comments

The lobbying over the Government’s proposals to slash RTA portal fixed fees has thrown up some interesting arguments. The Law Society has waded into the debate to argue that there is “substantial evidence” that the RTA portal fee should go up by £100, rather than down by £700. The Law Society has based this on its law management section’s financial benchmarking survey which put the median cost of an employed fee-earner at £40,860, median support staff costs at £12,624 and the median spend on non-salary overheads per fee-earner at £37,992, meaning a break-even point of £97,348 per annum. It states: “It would be usual to calculate that a fee-earner’s billable hours at 1,100 per annum. This would result in a break even hourly rate of £88 approximately (i.e. £97,348/1,100). This is cost only and does not allow for any profit. Using a mark up of 50% (which brings a rate of return on investment of 33%), the corrected rate would be £132 per hour.” It calculates that the proposed two-stage fee of £500 is “unjustifiable and will be unsustainable” as it equates to a rate of £50 per hour on the basis of 10 hours’ work – which is what surveys estimate an average portal case takes to complete – or less than four hours’ work at £130, which the society calculated as the correct rate for solicitors handling this work. It said: “It would be impossible for solicitors to undertake every claim properly in accordance with the RTA protocol and their professional conduct requirements in this amount of time. To do so will result in consumers receiving a less than adequate service… It is likely that such rates will result in many solicitors simply being unable to carry out the work.” At the same time research has suggested that the cost of acquiring personal injury cases is around £700, whether through the payment of referral fees or through own marketing costs. This raises a number of interesting issues: 1. Firms currently undertaking this work recover fees of £1,200. From this amount an average figure of £700 is paid to acquire the case, leaving a balance of £500. The Law Society claims it is “impossible for solicitors to undertake...

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Of course it's a road traffic accident claim

By on Dec 21, 2011 | 3 comments

In costs law you can be sure of only one thing: If something looks like a duck, swims like a duck and quacks like a duck, it’s probably not a duck. Following on from my recent post as to When is an RTA not an RTA?, the decision of Costs Judge Master Campbell in Schneider v Door2door PTS Ltd [2011] EWHC 90210 (Costs) is worth reviewing. The issue being: “did the Claimant, Mrs Schneider, suffer injury in a road traffic accident, in which case her costs are limited to those fixed under the recoverable costs regime in CPR rule 45 Part II; or are they ‘at large’ because the accident was an accident, but not a road traffic accident and accordingly her costs are recoverable without limit, subject to being proportionate and reasonable?” The facts were that the claimant was offered transport by an NHS Trust after a hospital appointment. Following the appointment the claimant was waiting with another patient. Transport was provided by the defendant. The claimant was informed by the defendant that the steps at the side of the transport vehicle were not working. They were supposed to unfold so that the patients could use them to gain access to the vehicle. Instead, the defendant offered the claimant a steep ramp which was for wheelchairs or passage through the central part of the vehicle. She chose the latter. She was holding on to two contact points (one of which was a handle). She placed her foot high up and this was on the floor of the vehicle. As she transferred weight onto the right foot, she felt her hip dislocate. The subsequent claim for damages against the defendant for negligence succeeded with a costs order in the claimant’s favour. The claimant’s bill of costs sought a total of £22,982.91 including VAT and disbursements, whereas it was the defendant’s case that the costs should be limited to those payable under the fixed costs RTA regime in CPR 45 Section 2, so that no more than £800, plus 20% of the damages calculated at £1,000 and a success fee of 12.5% plus VAT together with a reasonable sum for the disbursements listed in CPR.45.10 (2), would be payable. The...

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Fixed fees to be reduced

By on Oct 17, 2011 | 4 comments

Jonathan Djanogly has confirmed that the Government intends to reduce the fixed fees in RTA claims once the ban on referral fees comes in. Can we also expect a reduction in Guideline Hourly Rates, which haven’t been increased this year? A nicely balanced piece on the subject of RTA claims was published in the Daily...

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Abuses in RTA claims portal

By on Jul 15, 2011 | 3 comments

Back in January 2010, I raised some concerns about the upcoming new RTA claims process. I wrote: “Much has been made of the fact that the level of fixed fee is set below the average amounts recovered by claimant lawyers under the current rules. Good news for defendants. But, and it may be premature to start looking for problems before we have seen the final rules, one issue looks likely to cause defendants problems unless expressly dealt with in the small print of the new rules. Under the current predictable costs regime, recovery of costs is governed by the level of damages actually agreed. If a case settles at a level within the small claims track the predictable costs scheme does not apply. However, under the new claims process the fixed fee of £400 for stage one, providing notification of the claim to the defendant, is payable at the point when liability is admitted. At this point there will be no medical evidence. The scheme is only meant to apply where the personal injury element of the claim is at least £1,000. The Ministry of Justice’s report recognises that some claims may be valued at the outset as having “reasonable prospects” of exceeding £1,000 but it later becoming clear that they do not. At that stage the claim will leave the process. However, I can see no mention of defendants getting their £400 back. Am I being incredibly cynical in thinking that there will be a very high number of claims that claimant lawyers value as having reasonable prospects of recovering over £1,000 only for these claims to undergo a surprising downwards revaluation or even disappear entirely after the £400 has been paid? There is no time limit under the scheme for obtaining a medical report and defendants may only discover several years down the road that they have been stitched-up in tens of thousands of claims.” Now, FOIL is reported in the Law Society Gazette expressing the following concerns: “FOIL also blamed claimant lawyers for causing delays in the portal process, and called for time limits to be introduced for claimants between stages 1 and 2. It added that insurers should not have to pay stage 1 costs...

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Costs in infant approval hearings

By on May 25, 2011 | 2 comments

Lisa Wright, barrister at 4 King’s Bench Walk, recently wrote a couple of interesting articles in the New Law Journal (18 February 2011 and 15 & 22 April 2001) on costs in RTA infant approval hearings. The second article dealt with costs under the new fixed costs regime under CPR 45.27 to 45.40. The article, when considering hearings to assess damages, stated: “Where the defendant is ordered to pay the claimant’s stage 3 costs, the court can order the stage 1 and stage 2 costs to be paid. CPR 45.38 does not provide for this, however, it is presumed that the court can make such an order given that in adult claims, such costs are paid at the end of each stage (paras 6.18 and 7.61 of the Protocol).” The fact that CPR 45.38 “does not provide for this” picks up on the point I identified when the draft rules were first released (see New RTA scheme rules and win a bottle of champagne). Given the rules were introduced back on 30 April 2010, would it not make more sense for the rules to be updated to fill this lacuna rather than expect judges to have to make it up as they go...

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Fixed costs – Another Jackson myth

By on May 10, 2011 | 1 comment

At this year’s Association of Costs Lawyers’ National Conference, one of the guest speakers, a regional costs judge, observed that the introduction of fixed fees for fast-track personal injury matters was not something that those present needed to be concerned about as most fast-track matters were currently dealt with by way of summary assessment. The logic was presumably that costs lawyers did not currently see much fast-track costs work as this was dealt with by way of summary assessment at the conclusion of a trial and the introduction of fixed fees would therefore make no real difference to costs lawyers’ workloads. It is noteworthy that even a judge with a genuine interest in legal costs related matters should have reached this conclusion. This is much the same mistake that Lord Woolf made with his civil justice reforms. He assumed that the costs of preparing for trial would have to be incurred at some stage in any event and it therefore made sense for such costs to be incurred at an early stage in the hope that this would increase the likelihood and speed of settlement. What he overlooked was the fact that the vast majority of cases settled pre-trial and often with limited disclosure. His front-loading of case preparation meant that a large amount of expensive work is now unnecessarily incurred. Members of the judiciary, inevitably, only see the cases that are litigated and assume that these are typical with a large number of these making it all the way to trial. In reality, of course, the vast majority of cases settle pre-proceedings. For litigated matters, most settle well before trial. Even for those cases that do run close to trial, a high proportion still settle before they actually reach the door of the court. None of these cases are dealt with by way of summary assessment. For all these fast-track claims it is necessary for someone at the receiving party’s end to quantify the costs that have been incurred and then for someone at the paying party’s end to scrutinise the costs claimed. Some of those cases will make it all the way to detailed assessment. For most law costs draftsmen working in the personal injury field, fixed...

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