The defendant costs specialists

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Good reason to depart from costs budget

By on Aug 18, 2017 | 6 comments

n Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792 the Court of Appeal confirmed that a court, on detailed assessment, would not depart upwards or downwards from the last agreed or approved budget unless there was a good reason to do so.  The battle has now moved on to the issue of what constitutes a “good reason”. An interesting decision on this issue comes in the case of RNB v London Borough of Newham [2017] EWHC B15 (Costs). Deputy Master Campbell decided that there was a “good reason” where the hourly rates claimed in the agreed/approved budget were in excess of the reasonable hourly rates as determined as part of the detailed assessment process. This decision is contrary to my understanding as to the judicial training for costs budgeting.  The rules expressly state (at PD3E para.7.3): “The court’s approval will relate only to the total figures for budgeted costs of each phase of the proceedings, although in the course of its review the court may have regard to the constituent elements of each total figure.” and (at PD3E para.7.10): “The making of a costs management order under rule 3.15 concerns the totals allowed for each phase of the budget. It is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget. The underlying detail in the budget for each phase used by the party to calculate the totals claimed is provided for reference purposes only to assist the court in fixing a budget.” It was generally understood that the purpose of these provisions was to set a globally reasonable and proportionate figure for each phase of a case.  It was not to dictate how the work for that phase would then be undertaken. For example, a budget might include 10 hours at £300 per hour by a Grade A fee earner for the witness statement phase, equating to a total of £3,000.  If that figure is agreed/approved for the phase, it is then entirely a matter for that party as to whether the work is actually done by a Grade A fee earner in 10 hours, or by a Grade D fee earner charging £150 per...

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Impact of Jackson on Costs Lawyers

By on Aug 10, 2017 | 1 comment

The response to the Jackson reforms has taken the classic five stages of grief: denial, anger, bargaining, depression and acceptance (although not everyone has worked through all the stages yet). When the original reforms were first published, back in 2010, many confidently predicted that the reforms would never come to pass (denial stage) and the report would quietly gather dust, particularly as this coincided with the new coalition government with many anticipating they would have more pressing matters to worry about than civil costs reforms. The “new” proposals for fixed costs across the fast-track are, of course, no more than what had been proposed originally.  The further proposals for fixed fees for most claims with a value of up to £100,000 are more significant and far reaching than originally proposed.  It is certainly true that Jackson’s original report suggested the possibility of extending fixed fees further if his initial reforms were successful, but I suspect most observers anticipated that his original package of reforms would, if implemented, take sufficient heat out of the system such that further reform would be unnecessary.  We therefore now find ourselves in a much “worse” position than expected from the initial Jackson Report. The Association of Costs Lawyers seems to have been particularly susceptible to the denial stage of the grief process. There do appear to have been some members who genuinely believed that the Jackson reforms presented all kinds of exciting opportunities for Costs Lawyers, including costs budgeting and (apparently) the project management of litigation.  In reality, it was difficult to see that any new work generated could realistically compensate for the large volume of lower value work that would disappear.  It is only from the perspective of positive denial that some of the ACL’s past decisions make any real sense. There was, at one stage, quite a lot of discussion about the ACL going to university milk rounds to promote becoming a Costs Lawyer as a wonderful future career.  Post-Jackson this was difficult to justify on any level.  In so far as the ACL’s primary role is to promote the interests of its members, it was not obviously consistent with that role to encourage a new group of, potentially, better qualified new...

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Jackson fixed fee extension proposals

By on Aug 1, 2017 | 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...

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Late filing of costs budgets

By on Jul 11, 2017 | 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....

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Impact of Jackson extension of fixed fees

By on Jul 7, 2017 | 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: 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. 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...

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Offshoring costs drafting work

By on Jun 30, 2017 | 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...

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