Legal Cost Specialists

Posts made in July, 2009

Advising on success fees

By on Jul 28, 2009 | 0 comments

Advising clients on the level of success fee that might be allowed in any given case is an inherently difficult task given the unpredictability of the courts. Another reason why it is difficult to advise is due to the method by which success fee are normally calculated. The courts generally accept, as a starting point, the “Ready Reckoner” (see for example paragraph 4 of Atack v Lee [2004] EWCA Civ 1712). This allows for a calculation that, based on the prospects of success fee in any given case, produces the correct level of success fee to reflect that risk. The difficulty with the figures produced by this method is that a tiny change in the prospects of success can produce a radically different success fee. For example, a case with a 50% chance of success produces a 100% success fee. A case with a 60% chance of success produces only a 67% success fee. Therefore even a very small difference in a judge’s assessment of the prospects of success can radically alter the amount that can be allowed on a bill. How can one accurately advise a client as to what a judge is likely to allow? Gibbs Wyatt Stone were instructed in relation to a case concerning a claimant who had tripped over a defective paving stone. This type of claim is generally recognised as not being straightforward due to the availability of a s58 statutory defence. However, the typical difficulty still arose as to what figure to recommend in relation to the level of success fee. In the event, GWS advised that the Defendant’s offer of £14,500, made prior to a formal Bill being served, provided reasonable protection. A formal Bill was served and the matter proceeded to detailed assessment in the Supreme Court Costs Office. The matter was heard by Principal Costs Officer Lambert. He assessed the prospects of success at 65% and, using the “Ready Reckoner”, allowed a success fee of 55%. Taken together with the other reductions made, the Bill of Costs was reduced from £35,150.50 to £13,991.83. The Defendant therefore succeeded on its offer and was awarded the costs of the detailed assessment proceedings. The Claimant was unhappy with the success fee allowed...

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New Claims Process – Details emerging

By on Jul 24, 2009 | 0 comments

Details are now starting to emerge as to the shape of the new Claims Process for RTA claims with a value of up to £10,000. Crucially, as reported in an article in the latest edition of New Law Journal, “three aspects remain confidential pending final consideration by stakeholders with the MoJ [including] the final cost matrix for the new work flow”. The article confirms that fixed costs will be payable at the end of each of the three stages of the process. Nice and simple then? Not quite. The article states: “New timelines for responses at each stage will govern the process. Failure to keep up with the timetable will result in the claim exiting from the fixed-cost process”. Further: “Any other type of contributory negligence claim [except seatbelt issues] will be required to exit the system into the predictable costs regime”. Yes, the predictable costs regime really has survived the new Claims Process. So it now appears we will have three different costs regimes applying to low value RTAs: fixed fees for cases within the new Claims Process, different fixed fees (ie predictable costs) for cases that fall outside the Claims Process but settle pre-proceedings and standard basis costs (presumably covering those cases where liability is not agreed and proceedings are issued. Costs in low value RTA claims appear to be about to become more complex. How will these various regime’s interrelate? (This is the question I raised in this post almost exactly one year ago.) We’ll hopefully discover very shortly. A further oddity is that “when estimating the value of a claim no account is to be taken of credit hire or vehicle damage costs”. No doubt very sensible and this is clearly designed to avoid some of the excessive fees currently generated by “bent metal” claims. However, the predictable fee regime survives where these factors can be taken into account when valuing a claim. So credit hire and vehicle damage will count for one scheme but not the other. Are you keeping up so far? To add to the fun we are told that “new Pt 36 sanctions are still being considered”. Existing methods of funding the claim such as BTE, CFA and ATE will continue...

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Jackson Costs Review – Part 6 – The Political Element

By on Jul 10, 2009 | 3 comments

Lord Justice Jackson’s Civil Litigation Costs Review raises the possibility of radical changes to the current system. However, how likely is it that his eventual proposals will ever see the light of day? One of the most likely proposals he will put forward is a fixed fee regime for all stages of fast track cases. This, of course, is something very similar to the Ministry of Justice’s previous proposals, in the consultation paper Case track limits and the claims process for personal injury claims, to introduce a new claims process for all personal injury claims, except clinical negligence, and introduce a fixed costs regime to cover such cases. In the event, that was largely abandoned with no more than a limited new scheme for lower value RTA claims proposed. Why did the Ministry of Justice back-down on its own initial recommendations? At the time, Stephen Haddrill, the Association of British Insurer’s Director General, commented: “And the exclusion of workplace-related claims, which take on average three years to settle, is illogical and bizarre. Trade union pressure must not be allowed to block change.” What is the interrelationship between trade unions and government policy? One theory is that the introduction of fixed fees to a wider category of claim and, in particular, EL claims would have had a downward impact on the fees that claimant solicitors were able to recover. If one accepts that a large proportion of trade union backed cases are “bought” by trade union panel solicitors, through referral fees paid to the trade union, any reduction in fee income would reduce the amount that solicitors could pay in referral fees. The trade union income generated by referral fees, and there is no reason to suppose this is not significant, enables trade unions to make political donations. These have traditionally been to the Labour Party. The (conspiracy) theory is that trade union pressure on the Government led to the change in policy. It would have been suggested that a move to fixed fees for EL cases would lead, indirectly, to a reduction in political donations to the Labour Party. The Legal Costs Blog is unable to comment on whether there is any truth in these allegations. Is there any...

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Late settlements

By on Jul 8, 2009 | 0 comments

Those of us who work in the legal costs world have countless stories of last minute costs settlements where the other side crumbles at the last moment. In fairness, both claimants and defendants are probably equally to blame. Naturally, the closer a matter gets to a final hearing the more it focuses the parties’ minds. The same behaviour can be seen in substantive litigation with door-of-the-court settlements. However, in costs matters, this problem is usually due to a failure by someone appropriately experienced to consider the merits of a case at an early stage. Instead, a proper analysis is often only undertaken very late in the day. The following recent example is by no means the worst case I have seen. A personal injury claim was settled in June 2007 and the Claimant subsequently presented a schedule of costs totalling about £21,000. The Defendant offered £7,800 in August 2007. The Claimant made a counter-offer of £13,500 in September 2007. The Defendant made a final offer of £8,500 in November 2007 which was rejected. A Bill of Costs was served totalling about £23,000. At this stage Gibbs Wyatt Stone were instructed to act for the Defendant. We advised against increasing the Defendant’s offer and drafted Points of Dispute requesting disclosure of the Claimant’s CFA. These Points of Dispute were served in December 2007. In January 2008 Replies were served which declined to give disclosure of the CFA. After further communications the CFA was eventually served in March 2008. It was clear that there were serious issues as to the validity of the CFA. Supplemental Points of Dispute were served in April 2008 challenging the validity of the CFA. The Claimant made a further settlement proposal of £12,300 in May 2008. In February 2009 the Claimant served Replies to the Supplemental Points of Dispute that claimed the CFA was valid. In March 2009, having paid a court fee of £600 for the privilege, the Claimant requested a detailed assessment hearing. The Court issued directions requiring the parties to hold a joint discussion to narrow the issues. The parties undertook the joint discussion and prepared a joint statement identifying the issues still in dispute. The Court listed the matter for a pre-hearing...

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