I assume readers are familiar with search engines such as Google and Yahoo.

In addition to the ordinary search results they produce, they also also show sponsored links.  This works by allowing advertisers to purchase the right to have their advert displayed when certain keywords are typed into the search engine.  For example, a business selling designer goods might choose the keywords “designer goods” and “fashion”.

Louis Vuitton brought a case against Google complaining that adverts for counterfeit items popped up when internet users searched for the company and that this infringed their trademark rights.  They wanted to prevent others from being able to use their registered trademarks as a keywords. 

The case ended up being referred to the European Court of Justice.  The preliminary ruling was that there was no breach.

All very interesting, but what has this got to do with legal costs, I hear you ask?

I recently discovered that a Google search for Gibbs Wyatt Stone produces a sponsored link for an entirely different firm of law costs draftsmen (although I wouldn’t quite describe our services as being those of traditional costs draftsmen).  I suppose I should be flattered that our reputation is such that others hope to raise their own profile by association with our name.  However, I’m left feeling vaguely used and violated.


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 Conditional Fee Agreements Regulations or Regulation 5(1)(c) of the Collective Conditional Fee Agreements Regulations 2000. [Both sets of regulations were revoked by the Conditional Fee Agreements (Revocation) Regulations 2005 but continue to have effect in relation to conditional fee agreements and collective conditional fee agreements entered into before 1st November 2005]”


The Claimant in this case had served a document, prepared at the time the case was accepted, that gave a detailed analysis of the various strengths and weaknesses of this case and then stating that the success fee would be 27.5% if the claim settled pre-trial of 100% if settled at trial.

However it was argued for the Defendant that this document did not properly comply with the requirements of 5(1)(c).  That section required “the reasons, by reference to the risk assessment [emphasis added], for setting the percentage increase at that level”.  Because the solicitors had simply adopted the fixed success fees, they had not undertaken the “risk assessment” required by 5(1)(a).  Regulation 5 is a 3-stage process.  To comply with 5(1)(c) requires the earlier steps to have also been undertaken.  As such, it was argued there was a breach of CPD 32.5(1)(b) and that, by virtue of CPR 44.3B(1)(d)(i), the success fee was therefore not recoverable.   

This was a different argument to the one run in Gower Chemicals.  That argument was based on there being a breach of the CCFA Regulations which rendered the whole retainer invalid and all costs being irrecoverable.  The argument advanced in this case was not that there was a breach of the Regulations, but that there was a breach of the detailed assessment disclosure requirements and the success fee alone was irrecoverable.

The judge accepted the Defendant's submissions and disallowed the success fee.

If this decision were to be followed by other judges, a very large number of other cases would potentially be affected.  A large number of “risk assessments” prepared in CCFA cases do not strictly follow the 3-stage process.  Interestingly, there is a possible argument that the requirement to comply would have existed even if this was a fixed success fee case.  The CCFA in place pre-dated the revocation of the Regulations (as most still do).  There is nothing in CPD 32.5(1)(b) that disapplies the rule in fixed success fee cases.  Although Lamont v Burton [2007] EWCA Civ 429 and Kilby v Gawith EWCA Civ 812 are authority for the proposition that the courts have no discretion as to whether to allow fixed success fees, does this extend as far as overriding the disclosure or notification requirements?  If a party fails to comply with CPD 19.4(1), for example, surely they can't recover the success fee notwithstanding that it is a fixed fee case.  Does this also apply to CPD 32.5(1)(b) in its current form?

In the same case, Counsel had entered into his CFA after liability had been admitted.  The CFA did not put Counsel at risk in relation to Part 36 offers (despite his risk assessment being prepared on the mistaken basis that it did).  Nevertheless, the fixed success fee figures had also been applied producing a claim for 100% as the matter proceeded to trial.  The judge accepted that the success fee should be reduced to the 5% figure suggested in paragraph paragraph 24 of C v W [2008] EWCA Civ 1459.

Who says that legal costs isn't exciting?  
Contrary to all logic and common sense, the Legal Costs Blog appears to have acquired a not insignificant readership.

The Solicitors Journal, aimed not just at solicitors but lawyers generally, claims that its website attracts over 34,000 users a month. Insurance Times, aimed at the whole insurance industry, claims over 45,000 users per month. Both websites have excellent and comprehensive content. The Gibbs Wyatt Stone website attracts over 12,000 users per month. The majority of this traffic is attracted to the Legal Costs Blog pages. Gibbs Wyatt Stone are a niche firm operating in a niche area of the law. These figures suggest one of two things. First, it may be that the figures quoted by the Solicitors Journal and Insurance Times are not as impressive as they first appear. Alternatively, the Legal Costs Blog is attracting a surprisingly high readership given the nature of its content. I'll leave readers to make up their own minds as to which of these it is.

It can safely be assumed that a large proportion of the readership are those who work within the English legal costs world. However, it appears that this blog has a wider reach. We have one subscriber from the High Court in Anguilla in the Caribbean. The other week I was contacted by a charming chap from the Czech Republic asking for book recommendations on the subject of legal costs as this was his "hobby" (and I thought I was the only one).

A comment recently added to one of my previous posts concerning the Jackson Costs Review complained that this was "a most biased defendant based blog". Well, yes. That's the point. Unfortunately, the comment was posted anonymously and so we will never know who expressed that view (although I'm sure there are plenty who share it). Strangely, a specialist costs barrister who had recently seen the blog suggested I should consider "making it more overtly for defendants". Goodness knows how some people would react if I did make it more defendant leaning.

On a related topic, it has recently been reported that Rupert Murdoch's News Corporation (whose publications include The Sun and The Times) is set to start charging online customers for news content across all of its websites. The internet has increasingly been viewed as a source of unlimited free information (in theory paid for by advertising). The tide may be starting to turn. You'll be pleased to know that we currently have no plans to start charging for the blog. Remember, you can subscribe to the blog by entering your email address in the box part way down the web page and receive posts straight to your inbox. If you get tired of receiving them, just unsubscribe.

Welcome to The Legal Costs Blog

Filed Under Uncategorized | Leave a Comment

Welcome to the new Legal Costs Blog. Although the blog is officially launching today, we have added some content already and some archive material to give you an idea of the kind of thing to expect.

Please browse around and leave a comment as to what you think and let us know if you have any suggestions for future topics.

Part way down the page, on the right hand side, you will find a box to enter your email address so you can subscribe and receive any future posts straight to your email inbox.

GWS partner Simon Gibbs has contributed two chapters on legal costs to the recently published Claims Handling Law and Practice - A Practitioner's Guide. Produced, and otherwise written, by leading defendant solicitors Kennedys, this practitioner’s desktop handbook is an invaluable tool for claims handlers. It covers all areas of general liability including motor claims, clinical negligence, health & safety, disease, abuse and housing disrepair. The previous edition of this book proved extremely popular (see link: Amazon review) and this new fully updated edition is sure to be similarly successful. For ordering details use this link: Publishers.
GWS partner Simon Gibbs acted as an expert witness in the field of the legal costs industry in the case of Andrew Reid v Capita Group. The case recently settled on confidential terms.
We are pleased to be able to announce that Simon Gibbs of GWS as been invited for the second year running to be a speaker at the prestigious CLT Annual Solicitors Costs Conference. He will be speaking on the subject of “Personal Injury – The New Claims Process”. The event will be held on 30th January 2009 in London. For a copy of the Conference Brochure use this link: Brochure.

We are able to arrange a 20% discount on the normal delegate fees to any of our clients. Please contact us if you would like to take advantage of this discount.
GWS were this year’s guest speakers at Munich Re’s prestigious Annual Claims Managers’ Seminar.
We are delighted to announce that Emily Fraser has joined GWS. She was called to the Bar in 2005 and was previously Costs Advocate with Legal Costs Negotiators Ltd. Emily has a strong background in dealing with technical costs matters and a broad range of advocacy experience, particularly in high value claims including clinical negligence matters. She represents a significant addition to the GWS team.

Since the CFA Regulations 2000 were revoked, on 1st November 2005, it should now be virtually impossible to enter into a defective CFA. Generally the only requirements for a CFA to be valid are that it is in writing and the success fee does not exceed 100%.

GWS were recently instructed to advise in relation to a claim funded by a post-November 2005 CFA. The agreement followed standard wording but the space in the document where the amount of the success fee was to be inserted had been left blank. Notwithstanding this, the Claimant’s solicitors initially claimed a success fee of 25%, this being an EL claim to which fixed success fees apply. The Claimant’s solicitors conceded the success fee at an early stage but maintained the claim for the balance of their costs.

GWS advised the Defendant that the CFA was defective because it is a requirement of s58(4)(b) of the Courts and Legal Services Act 1990 for a CFA which provides for a success fee to state the level of the success fee. It was clear from the CFA in question that it was indeed intended to provide for a success fee, but that amount had simply not been inserted. GWS drafted a detailed skeleton argument in support of the argument that the CFA was invalid and this was served on the other side. In due course the Claimant’s solicitors conceded that the CFA was indeed defective and dropped their claim for costs entirely.

Clearly the new CFA regime is still too onerous for some claimant lawyers. How soon before we hear demands for further simplification? Quite how much more simple it can get is hard to see.

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