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Posts Tagged "CFAs"

Jackson Report – Success fees

By on Feb 2, 2010 | 0 comments

Arguably, Lord Justice Jackson’s most significant recommendation, in his Final Report, is an end to recovery between the parties of success fees. This proposal will lead to obvious and huge savings to defendants.  Those who think that current political uncertainty will lead to much of the Report being shelved should think again.  Whichever party is in power after the general election, there will be a pressing need to control public expenditure.  In terms of the money paid out by the NHSLA alone, and ignoring all the other areas where the public purse pays for litigation, this will be a compelling reason to adopt this recommendation.  This is great news for defendants but really bad news for claimant lawyers. Yes, solicitors can still enter into CFAs with their clients and charge a success fee.  But there are two big problems.  Firstly: (If you receive the Legal Costs Blog via email you made need to adjust your security settings to view the video.) Heavy advertising in recent years telling potential claimants that they will keep 100% of their damages will make it very unattractive for claimant solicitors to now start taking a cut of their clients’ damages.  There will be enough firms who decide to take the hit themselves that others will be forced to follow.  Success fees in personal injury claims are likely to disappear.  For the lower-end RTA claims, the loss of the 12.5% success fee will not be dramatic but it will come straight from solicitors’ profit margins.  It is likely to discourage some claims from being pushed to trial where the incentive of the automatic 100% success fee will disappear.  On the other hand, the removal of the 100% threat will encourage defendants to take more cases to court, especially in relation to quantum disputes. Even if firms do feel able to charge success fees, Jackson LJ’s proposed cap will limit to a large extent the amount that can be charged.  Not only is a cap of 25% of damages recommended, but Jackson LJ’s master-stroke is that this cap will exclude damages referable to future loss.  The element of damages that claimants will be required to pay as success fee will be limited to the general damages...

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Regulation 4(2)(c) lives on

By on Dec 14, 2009 | 2 comments

Under the old Conditional Fee Agreement Regulations 2000 a solicitor had a duty, before entering into a CFA, to inform the client “whether the legal representative considers that the client’s risk of incurring liability for costs in respect of the proceedings to which agreement relates is insured against under an existing contract of insurance” (Regulation 4(2)(c)).  Failure to comply would generally render the CFA unenforceable (see Myatt v National Coal Board [2006] EWCA Civ 1017).    The CFA Regulations have now been revoked.  Does that mean that a powerful weapon has been lost to defendants and that sloppy claimant solicitors can rest easy?  Not necessarily.  A fascinating decision has recently emerged from the Senior Courts Costs Office that suggests this issue may still be a live one.   The decision in Thomas v Butler and Other T/A Worthingtons Solicitors [2009] EWHC 90153 (Costs) concerned a solicitor/own client assessment but there is no reason to suppose the decision would have been any different if this had been an inter partes assessment.  The key issue that arose was whether the solicitors had complied with their duties under the Solicitors Costs Information and Client Care Code 1999 that was in force at the time (and remained in force until 30 June 2007) which states:   “4. Advance costs information – general   The overall costs   (a) The solicitor should give the client the best information possible about the likely overall costs, including a breakdown between fees, VAT and disbursements.   ….   Client’s ability to pay   (j) The solicitor should discuss with the client how and when any costs are met, and consider:   (i) whether the client may be eligible and should apply for legal aid (including advice and assistance);   (ii) whether the client’s liability for their own costs may be covered by insurance;   (iii) whether the client’s liability for another party’s costs may be covered by pre-purchased insurance and, if not, whether it would be advisable for the client’s liability for another party’s costs to be covered by after the event insurance (including in every case where a conditional fee or contingency fee arrangement is proposed); and …”   Having considered the evidence presented, Master Campbell concluded:...

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A working alternative to recoverable success fees?

By on Dec 4, 2009 | 2 comments

As the tension mounts as to what might be going through the mind of Lord Justice Jackson as he prepares his final report on his civil costs review, might he be influenced by the litigation landscape north of the boarder?  The recently published Report of the Scottish Civil Courts Review states that the majority of damages claims in Scotland are pursued on the basis of "speculative fee arrangements" (no win, no fee agreements).  This is despite the fact that: "Unlike in England and Wales, success fees and ‘after the event’ insurance premiums are not recoverable and will have to be paid by a successful [claimant] from the damages recovered, unless they are waived or absorbed by the [claimant’s] solicitor".  Jackson LJ’s Preliminary Report raises a number of concerns about the English system of recoverable success fees and ATE premiums.  If non-recovery seems to work in Scotland, why not here? And while Jackson LJ may be looking north of the boarder, they are looking back.  The Scottish report concludes: "We have given careful consideration to the use made of speculative fee arrangements in this country and the experience of conditional fee agreements in England and Wales. We consider that it would be premature to recommend any changes to speculative fee agreements as they are presently constituted in Scotland. The civil costs review in England and Wales chaired by Lord Justice Jackson should be monitored for its research findings and its conclusions" Deep-fried Mars Bar anyone? Click image to enlarge:  ...

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Challenging success fees

By on Oct 28, 2009 | 2 comments

The, now revoked, Collective Conditional Fee Agreement Regulations 2000 state: “5. (1) Where a collective conditional fee agreement provides for a success fee the agreement must provide that, when accepting instructions in relation to any specific proceedings the legal representative must prepare and retain a written statement containing – (a) his assessment of the probability of the circumstances arising in which the percentage increase will become payable in relation to those proceedings (“the risk assessment”); (b) his assessment of the amount of the percentage increase in relation to those proceedings, having regard to the risk assessment; and (c) the reasons, by reference to the risk assessment, for setting the percentage increase at that level.” In Various Claimants v Gower Chemicals (Cardiff County Court, 28/2/07) the paying party sought to argue that a failure to prepare a statement of reasons in accordance with Regulation 5(1) rendered the retainer invalid and all costs should therefore be disallowed.  That argument was rejected on the basis that “the natural and ordinary meaning of the regulation is that there must be a provision in a CCFA that complies with the specification set out in the regulation. Regulation 5(1) does not additionally require that the prescribed provision must be performed”. Is that an end to the story?  Not quite.  The ever ingenious Gibbs Wyatt Stone recently acted for the Defendant in an EL claim (Middleton v Mainland Market Deliveries Ltd (Southampton CC, 20/10/09)).  The Claimant’s Bill claimed a 100% success fee on the basis that the fixed EL success fees had been applied to the case when the claim was accepted under the CCFA and the matter had settled at trial.  In fact, the date of the accident was such that it did not fall within the fixed success fee regime.  The judge accepted that fixed success fees did not apply as a matter of law and that the Court could not simply adopt the fixed success fee figures when assessing the success fee in this case (see Atack v Lee [2004] EWCA Civ 1712). Costs Practice Direction 32.5(1)(b) requires a receiving party to serve with his Bill: “a statement of the reasons for the percentage increase given in accordance with Regulation 3(1)(a) of the...

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Notification of funding – The New Rules

By on Oct 14, 2009 | 1 comment

In a previous posting (read here) I discussed the old rules relating to providing information about the funding of a claim.  The latest update to the Civil Procedure Rules has made important amendments which came into force on 1st October 2009.   The old CPR 44.3B read:   “(1) A party may not recover as an additional liability –   (c) any additional liability for any period in the proceedings during which he failed to provide information about a funding arrangement in accordance with a rule, practice direction or court order”   The new wording of CPR 44.3B is:   “(1) Unless the court orders otherwise, a party may not recover as an additional liability –   (c) any additional liability for any period during which that party failed to provide information about a funding arrangement in accordance with a rule, practice direction or court order;   …   (e) any insurance premium where that party has failed to provide information about the insurance policy in question by the time required by a rule, practice direction or court order.   (Paragraph 9.3 of the Practice Direction (Pre-Action Conduct) provides that a party must inform any other party as soon as possible about a funding arrangement entered into before the start of proceedings.)”   These changes fall into four categories:   1.      The wording “in the proceedings” is deleted and the reference to the new wording of the Practice Direction (Pre Action Conduct) makes it clear that notice must now be given pre-proceedings.   2.      The insurance premium provision deals with the consequence of not giving the information discussed below.   3.      The addition of the new wording “unless the court orders otherwise” is perhaps surprising. It was previously clear that failure to comply with the notification provision produced an automatic sanction in that the additional liability was not recoverable (in the absence of a successful application for relief from sanctions).  It now appears to be in the general discretion of the court as to whether to allow the additional liability despite the breach, although the starting point is obviously non-recoverability.  What is strange is that the new wording is followed by the same note that previously appeared: “Rule 3.9...

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