Legal Cost Specialists

Posts made in June, 2009

Jackson Costs Review – Part 4 – Legal Expense Insurance and Success Fees

By on Jun 25, 2009 | 0 comments

Lord Justice Jackson’s Preliminary Report on Civil Litigation Costs reaches a “tentative conclusion” that: “It seems to me to be in the public interest to promote a substantial extension of BTE insurance, especially insurance in the category BTE1 [Before-the-Event legal expense insurance where insurers pay solicitors to act for the insured when a claim arises]. The cost of litigation in any year by the few insured who need to bring or defend claims will then be born by the many who do not”. The Report records the Bar’s CLAF Group proposal that BTE insurance should be compulsory for motorists (to cover themselves and anyone they may injure), employers and occupiers of buildings (again to cover themselves, employees, visitors or customers). Jackson LJ states that this proposal “merits serious consideration”. The impact of such a proposal if implemented would be, by implication, to largely kill off CFAs and ATE insurers. In a previous posting I wrote on the subject of Jackson LJ’s proposals for ending two-way costs shifting and moving to one-way costs shifting, at least for personal injury work. The Report comments: “It is, however, worth noting that if cost shifting against claimants were to be abolished, the main purpose of ATE insurance premiums would also disappear”. Jackson LJ’s expresses the view: “If any layer of activity can be removed from the process (and insurance against adverse costs liability is one layer of activity), it may be thought that this will serve the public interest”. ATE insurers have previously been very successful in lobbying to protect their place in the current costs system. They may well have their work cut out now to maintain the status quo. Even if costs shifting were to remain unaltered, Jackson LJ nevertheless is considering: “whether success fees and ATE premiums should continue to be recoverable under costs orders”. This would potentially return the position to the pre-April 2000 one where any success fee or ATE premium was payable out of the claimant’s damages. One option that Jackson LJ seems to be considering, and for which he asked for further assistance at the Sweet and Maxwell Conditional Fee Agreement Conference in May, is whether to increase damages to a level that enables a return...

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Multi track pilot

By on Jun 22, 2009 | 0 comments

Lord Justice Jackson’s Preliminary Report on Civil Litigation Costs gives details of the meeting he had with the Association of Personal Injury Lawyers (APIL) and the views that they expressed. This included: “APIL and FOIL have agreed a new code for handling high value personal injury cases. It applies to claims above £250,000. The code is currently being piloted (for 12 months from July 2008) and is working well. It is APIL’s experience that the claims handlers dealing with large claims are better and easier to deal with”. It is somewhat odd if this is the view being expressed by claimant representatives and is one being accepted by Jackson LJ as being accurate. One senior claims manager at a major insurer that we have been in touch with said: “It will probably come as no surprise to you to learn that I’m not aware of any cases under the Multi-track Protocol that have settled yet. One of the main reasons for this is that there are so few cases that are being dealt with under the Protocol! It’s my belief (and this is a belief that I know is shared by others) that claimant firms are not keen to use the Protocol as it restricts their ability to build up costs – though the lawyers would probably say that it restricts their ability to look after their client’s best interests. On the few cases where the Protocol is being used, our experience is that the firms concerned do the absolute minimum to ensure observance of the terms, are not really operating within the spirit of the Protocol and are trying to make sure that it fails from the...

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Jackson Costs Review – Part 3 – Cost Shifting

By on Jun 17, 2009 | 0 comments

Lord Justice Jackson’s Preliminary Report on Civil Litigation Costs seriously considers whether the current two-way costs shifting rules should continue. He writes: “The first possible modification would be to introduce one-way cost shifting. One-way cost shifting means that when the defendant loses, he pays the claimant’s costs; when the claimant loses, each side bears its own costs. Such a system would self-evidently benefit claimants. Ironically, such a system would also benefit defendants in certain areas. A one-way cost shifting regime would be cheaper for defendants than a regime under which they recover costs when they win, but pay ATE premiums (as well as all the other costs) when they lose. A crucial consideration, however, would be the need to provide incentives for claimants to accept reasonable offers”. The Report goes on: “On looking at the data which has come in during Phase 1 of the Costs Review, it seems to me that a one-way costs shifting rule would (a) be cheaper for defendants than the present two-way rule and (b) reduce the burden on claimants. It is therefore necessary to look at this proposal and its implications in further detail. The proposal which I raise for consideration during Phase 2 is whether it would be more cost effective to remove the claimant’s liability for costs in respect of unsuccessful cases. … Whilst there are different arguments for cost shifting for and against claimants, it is appears that in most categories of litigation the case for retaining cost shifting in favour of successful claimants is a strong one. My working assumption is, therefore, that cost shifting in favour of claimants, in the sense that successful claimants should generally expect to recover their costs, should continue”. Michael Zander QC, writing in the New Law Journal, stated: “If I were a betting man I would put some money on there being a recommendation in the final report that in personal injury litigation we should move to one-way fee shifting (as existed under legal aid) so that the claimant would no longer need, and losing defendants would no longer have to, pay for the claimant’s ATE insurance cover”.These suggestions would have a major impact on two groups if they find their way into...

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Fixed fee deal surprise

By on Jun 11, 2009 | 0 comments

I have previously been predicting, and indeed recommending, that the introduction of the new claims process for low value RTAs be abandoned or postponed pending the publication of Jackson LJ’s Costs Review. Further, disagreement over how the fixed fee structure would work and how the new scheme would operate with the existing predictable costs scheme seemed certain to derail the introduction of the new claims process. It is therefore with no small sense of wonderment that we read in the Gazette that agreement "in principle" has been reached on the new process. Details of the scheme are currently under embargo pending approval by the Lord Chancellor. However, it is reported that the existing predictable costs scheme will remain in place for cases that fall out of the new process. Quite how this will work with "bent metal" claims remains to be seen. Further, it is suggested that the fees for claims that are in the new scheme will be "significantly less than the level of predictable costs". The new process is due to commence in April...

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Jackson Costs Review – Part 2 – Fixed Fees

By on Jun 9, 2009 | 0 comments

Lord Justice Jackson’s Preliminary Report on Civil Litigation Costs is, in general, careful to avoid reaching any final conclusions or making any firm recommendations. However, even from a cursory reading, it seems all but inevitable that the final report will recommend the introduction of fixed fees to all stages of fast track claims. Jackson LJ writes: “I have canvassed views from my panel of assessors and it is our unanimous view that we should take forward this work and try to achieve a fixed costs system in fast track cases”. This is as I previously predicted. Further, it is suggested that: “There appears to be a strong case for some method of applying fixed costs in fast track cases at all stages” and not just pre-issue as in the current low-value RTA scheme. This is supported by FOIL who the Report states: “believe that there should be fixed costs for all cases within the fast track”. The conclusion reached is that: “It should be possible to devise a fair system of fixed costs for all cases within the new fast track limit”. To avoid one of the perceived problems with the current fixed fee regime, he writes: “I would propose an annual review mechanism to be included in any such fixed costs regime”. Unlike other elements of his Report, he appears to have reached a clear view already on this issue. Good luck to those who try to persuade him to change his mind. Of course, the idea of extending fixed costs in fast track cases is not exactly new. That is what was proposed in the Ministry of Justice’s consultation paper: Case track limits and the claims process for personal injury claims. Those proposals were largely abandoned when the new claims process was announced. It remains to be seen whether the final report carries sufficient weight to persuade a (new) government to resurrect this idea. However, at the very least, this Preliminary Report does seem to finally kill off the new claims process. Or, more accurately, delay any implementation of the new claims process pending a decision being taken as to Jackson LJ’s final proposals. The Report states: “It may therefore be sensible to dovetail in the development...

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