Legal Cost Specialists

Posts made in January, 2010

VAT increase and solicitors' bills of costs

By on Jan 20, 2010 | 1 comment

A number of visitors to the Legal Costs Blog have been searching for clarification of how the change in the VAT rate impacts on solicitors’ fees and how VAT should be dealt with when drafting bills of costs.  This post will try to cast some light on the issue.  The main sources of information on this point are the not overly helpful HMRC website (see link) and the far more helpful VAT practice note on the Law Society website (see link).  The examples below are partly based on those given in that practice note.  The notes states: “the Law Society will not accept any legal liability in relation to” its practice notes.  The same applies here.   This guidance is concerned with the limited issue of the appropriate rate to be claimed between the parties in civil litigation claims.  Entirely different rules may apply in other situations.  This is an idiot’s guide designed to be as easy to understand as possible (no use of terminology such as “basic tax point”).   Prior to 1 December 2008 the VAT rate was 17.5%.   Between 1 December 2008 and 31 December 2009 VAT was reduced to 15%.   VAT returned to 17.5% on 1 January 2010.   In a number of situations a solicitor can elect whether to charge VAT at 15% or 17.5%.  However, we are concerned with the position of costs recovery between the parties.  The Costs Practice Direction reads:   “5.7      Where there is a change in the rate of VAT, suppliers of goods and services are entitled by ss.88 (1) and 88(2) of the VAT Act 1994 in most circumstances to elect whether the new or the old rate of VAT should apply to a supply where the basic and actual tax points span a period during which there has been a change in VAT rates.   5.8       It will be assumed, unless a contrary indication is given in writing, that an election to take advantage of the provisions mentioned in paragraph 5.7 above and to charge VAT at the lower rate has been made. In any case in which an election to charge at the lower rate is not made, such a decision must be justified to...

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Legal Costs Conferences

By on Jan 19, 2010 | 1 comment

Given the current economic climate, the prices being charges by some legal training conference providers looks rather optimistic, but there is certainly some competition emerging in relation to pricing. The IBC Solicitors’ Costs Conference 2010, on 26th January, is priced at between £599 and £799 depending on when you booked (with a 20% discount for ALCD members).  CLT’s Solicitors Costs Conference 2010, also on 26th January, is £395 for CLT subscribers, ALCD and APIL members or £495 otherwise.  This year they were, at one stage, offering a very attractive two for the price of one offer.  Butterworth’s Costs and Litigation Funding conference, at the end of last year, was priced at £499.  If you don’t mind a trip to Liverpool, the Liverpool Law Society’s Costs Conference, on 16th March 2010, looks very good value at £199 for members and £249 for non-members. In light of the Jackson Report, many may be wondering whether they will still have a job working in the field of legal costs and may decide none of these are worth the time, let alone the...

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Jackson Costs Report – The Dawn of a New World

By on Jan 18, 2010 | 3 comments

Many working in the legal costs industry will have gone to work last Thursday, the day Jackson LJ published his final report on his civil litigation costs review, wearing brown trousers.  Most of them will have been spending the weekend updating their CVs.  Those who thought the final report would probably turn out to be something of a damp squib will have had the shock of their lives. From the perspective of the majority of those working in the costs industry this was about as bad as it could have been.  Short of recommending a total change from the current system to contingency fees, or a total end to costs shifting, it is hard to imagine how much worse it could have been.  This is not to suggest that any of his proposals are wrong given the scope of his remit. The majority of those reading this who currently work in the costs industry will be earning a living doing something entirely different in 2-3 years time. The starting point, if you haven’t done so already, is to read the Final Report (click link) itself.  There are helpful summaries on pages xvi-xxiv and 463-471.  The legal, insurance and mainstream press has been busy writing about the report and a selection of articles can be found read here: Law Gazette, Solicitors Journal, New Law Journal, The Lawyer, The Times, Telegraph, Guardian, Insurance Times and Post Magazine. For a useful introduction to the recommendations in the report, New Law Journal’s webcast on the final report can be found here: Jackson Webcast.  The New Law Journal was busily promoting this webcast last week and it seems they did a bit too good a job of it as the massive demand for the webcast caused their system to crash. So, let’s have a look at some of the key proposals and see what kind of an impact these will have on the legal costs industry: Fixed costs for all stages in all personal injury fast track matters. – This is the big one.  This change does not require primary legislation and is therefore all but certain to happen.  Jackson LJ wants the new regime in place by October 2010!  Yes.  That quickly.  Fast-track...

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Legal costs sense at an insane price

By on Jan 15, 2010 | 0 comments

Amazon are taking pre-publication orders for Dr Mark Friston’s Civil Costs: Law and Practice (see link) at the discounted price of £56.25 (with free postage).  This would be an insanely low price for any legal text book. I really can’t believe that the price is so low for this book.  Don’t be fooled into thinking the low price means you won’t get something of serious...

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Jackson Costs Report – The Headlines

By on Jan 14, 2010 | 0 comments

So, are the proposals contained in the final Jackson Report as dramatic as some were expecting?  Oh, yes. These include: Success fees and after the event insurance premiums to be irrecoverable between the parties (this would mean the end for most ATE insurers); To offset the effects of this for claimants, general damages awards for personal injuries should be increased by 10%; Referral fees should be scrapped (this would mean an end for claim management firms); Qualified ‘one way costs shifting’ – claimants would not usually be liable for a defendant’s costs if a claim is unsuccessful (as long as they have behaved reasonably), removing the need for after the event insurance (and the need for some costs drafting work); Fixed costs to be set for ‘fast track’ cases (those with a claim up to £25,000) to provide certainty of legal costs (this would mean an end for many costs negotiators and costs draftsmen); Allowing lawyers to enter into contingency fee agreements, where lawyers are only paid if a claim is successful, normally receiving a percentage of actual damages...

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