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Legal Costs

VAT Skeleton Argument

By on Mar 8, 2016 | 9 comments

The last increase in the VAT rate occurred on 4 January 2011. It is therefore surprising, to say the least, that some receiving parties appear to be still ignorant of the rules relating to work undertaken when the VAT rate was lower (15% or 17.5%). (Of course, it is perfectly possible that this is simply a wheeze to try to recover VAT at a higher rate and then pocket the difference between that actually charged.) In any event, I have updated my VAT Skeleton Argument and the links to the relevant documents on Legal Costs...

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Not so fixed fees

By on Feb 23, 2016 | 6 comments

I’m not sure if Lord Justice Jackson has recently started taking backhanders from the Association of Costs Lawyers but, if so, I’d be happy to start contributing to the payments. How else to explain his proposals for the extension of fixed fees? Payments are to be linked to one of ten different phases with endless scope for arguing it was premature to undertake a particular phase (eg Witness Statements), full payment for each phase is subject to it being “completed” (what does “completed” mean?), or 50% payment if a phase has been “substantially started” (what does this mean?). It would not be difficult for a costs firm to set up a business model offering to maximise solicitors’ recovery based on these proposals and charging on a contingency fee basis. The real problem with these proposals, I would suggest, it not a practical one but, rather at a more fundamental level. (And I do not simply mean whether it is realistic or fair to try to have fixed fees at all.) There are two basic approaches to recovery of inter partes costs. The first is to have a fixed fee system where the fees are fixed by reference to the nature of the litigation, or the complexity of the case, or the value of the claim, or a combination of these elements. Under this system, the actual work undertaken is irrelevant. The second approach is to have a system which attempts to set the level of fees payable based on the amount of work actually done. This is the existing (if imperfect) hourly rate system we currently have (for those cases not already subject to fixed fees). The more work (reasonably) undertaken, the greater the payment. Jackson LJ’s proposals run the danger of conflating the two different systems. If we are to have fixed fees, why should it matter whether a solicitor has, for example, completed work in relation to witness statements, or substantially started work in relation to witness statement, or, indeed, done any work concerning witness statements? What does a fixed fee system partially based on the work actually done add to the supposed benefits (certainty, end to costs budgeting, end to costs disputes) of fixed costs generally?...

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Jackson fixed fees problems

By on Feb 19, 2016 | 5 comments

Lord Justice Jackson’s suggested rules and grid for introducing fixed fees for all claims with a value of up to £250,000 (which he suggested could be accomplished this year if the political will is there) rather has the appearance of being put out there, not necessarily with the intention it will be formally adopted in its current form but, rather, out of a sense of frustration at the lack of progress to date and is designed simply to start discussion on the issue. It may, perhaps, therefore be unfair to be overly critical of the proposals in their current form. Nevertheless, let us take them at face value as they currently stand. There appear to be two obvious problems. The first relates to the decision that the grid of fixed fees should follow the ten stages set in Precedent H for costs budgeting. This is on the basis that: “Practitioners are now familiar with this structure and reasonably comfortable with it. Although ‘boundary disputes’ are inevitable in any structure, they will be reduced if we stick to the now established division of tasks”. The Guidance Notes for preparing costs budgets state that the Pre-action phase should not include any incurred work relating to other phases of the budget. For example, if work is done in relation to witness statements pre-proceedings, that should go in the Witness Statements phase under “Incurred” costs, not in the Pre-Action phase. This is not an issue with costs budgeting as recording work under any particular phase does not trigger any payment. However, how does this work with the Jackson grid? In any case that settles pre-action in a claimant’s favour there will have been some negotiations, even if only a single offer and acceptance. Does this therefore trigger an entitlement to the whole Negotiations/ADR fixed fee in addition to the Pre-action fee? If so, why bother with a separate phase for Negotiations/ADR if it will always be triggered? Similar issues apply to phases such as Expert Reports or Witness Statements where some work may have been done pre-action. The second problem, which does not appear to solve the first, is the proposed rule that: “The fixed cost is payable only if a work stage...

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Important lessons to learn

By on Feb 15, 2016 | 6 comments

Last Monday I attended a detailed assessment hearing concerning a bill totalling £93,000. The last offer made by the paying party, based on my advice, was for £27,500. The bill was assessed at £69,000. This proves what a terrible costs lawyer I am and how wholly unrealistic the offers are I put forward. My opponent was junior costs counsel. This case also proves it is a mug’s game to instruct a costs lawyer to undertake advocacy when much better results would have been secured if my client had instructed costs counsel instead of me. On Friday I attended another detailed assessment hearing concerning a bill totalling £383,000. The last offer made by the paying party, based on my advice, was for £175,000. The bill was assessed at £155,000. This proves what a brilliant costs lawyer I am, if, perhaps, rather overly cautious, and thus overly generous, when formulating offers. My opponent was a top costs QC whose brief fee was over six time what I charged my client. This case also proves that my advocacy skills are up there with the top QCs and that instructing specialist costs counsel, rather than a costs lawyer, is a grotesque waste of money. Monday’s case was before a Deputy District Judge whereas Friday’s case was before a Regional Costs Judge, which may or may not prove anything. What both cases do prove is the spectacular unpredictability of the assessment process and the difficultly in trying to advise a...

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Predictions for 2016

By on Feb 5, 2016 | 6 comments

Costs Lawyer magazine recently published the predictions for 2016 of the great and the good in the profession. They also asked me. This was my contribution, written before Lord Justice Jackson’s latest speech: “When I was asked this question last year, my prediction was that 2015 would be the year guidance would be given by the Court of Appeal on the new proportionality test.  However, at the time of writing, we still have nothing from the High Court or above as to how proportionality is to be applied as part of the detailed assessment process.  I was clearly wrong in my timings and can only hope we have something in 2016.  I also repeat my previous prediction that what will ultimately emerge will be a fiasco and nothing close to what Lord Justice Jackson envisaged. I also predicted that there would be calls for a massive extension of fixed fees as a consequence of the mess being made of Jackson implementation.  Such calls have indeed been made (with proposals for fixed fees in clinical negligence cases and noise induced hearing loss cases amongst other things).  Expect much more of the same in 2016. This will be the year where the judiciary finally properly grasps the fundamentals of costs budgeting with sensible and consistent decisions being made at all levels.  Resistance to costs budgeting will be overcome and all legal practitioners will acknowledge budgeting to be a useful tool to control disproportionate costs. ...

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Signature to a Bill of Costs

By on Feb 3, 2016 | 9 comments

In Mansion Estates Ltd -v- Hayre & Co (A Firm) [2016] EWHC 96 (Ch) His Honour Judge Saffman commented: “in my view it would be wrong to assume that it is inherently more improbable that a professional person will be dishonest than anyone else. If ever such a view validly had traction, I do not think it can do so in the modern world.” Although not a decision relating to costs, this must have equal applicability to the signature of accuracy to a bill of costs. There may once have been a stage when “the Court can (and should unless there is evidence to the contrary) assume that his signature to the bill of costs shows that the indemnity principle has not been offended” (Bailey v IBC Vehicles Ltd [1998] EWCA Civ 566) but the world has now moved on from such innocent...

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