Legal Cost Specialists

Posts made in October, 2012

Measuring costs budgeting success

By on Oct 16, 2012 | 6 comments

The aim of costs budgeting, that will be rolled out nationally from April 2013, is to control the level of costs that are incurred. There are a large number of unpredictable factors as to whether this aim will be achieved. However, let those make a couple of assumptions: 1. Claimants’ costs are currently reduced, by agreement or assessment, very roughly by one-third (obviously this masks an enormous amount of variation). 2. Come April 2013 claimants are able to produce accurate budgets that broadly reflect the level of costs that are currently incurred. (The likelihood of accurate budgets being produced is, of course, a very big assumption.) If the judiciary hopes to limit costs to no more than the levels currently been incurred they would need to reduce the budgets submitted by claimants by an average of one-third. In fact, if the aim of costs budgeting is to reduce the amounts allowed below current levels it would be necessary to go further than that one-third. Reducing the budgets submitted by an average of 50% would only produce a relatively minor reduction on current figures. Are judges really going to routinely reduce budgets by this margin? The danger is that judges may think they are being “jolly robust” reducing budgets by an average of 25%, and thereby avoiding the need for matters to proceed to detailed assessment, and conclude that costs budgeting has been a great success. The difficulty is that I have not seen any suggestion that the judiciary will have any accurate yardstick with which to compare the budgets being submitted with what might be deemed a “reasonable” allowance under the current system. I would certainly not suggest that the very small proportion of cases that proceed to detailed assessment are indicative of “average” figures, let alone “reasonable” figures, but at least that would represent a starting point. I have heard no suggestion that the time or resources needed to analyse the data from detailed assessment hearings is being spent to give judges a guide as to what to allow in the budgeting process. How is success therefore to be measured? A reduction in the number of cases that proceed to detailed assessment cannot be an adequate guide if...

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Costs budgeting

By on Oct 12, 2012 | 7 comments

I had a very enjoyable morning last week in Derby giving a training session to Geldards solicitors on the practicalities of costs budgeting. Costs budgeting is, of course, expected to become the norm for multi-track matters come April 2013. (Geldards is a firm that has lucked out having Nicola Mallen has a professional support lawyer. When I saw the quality of the training materials she had already produced on the subject of costs budgeting I almost cancelled. To increase the pressure, Professor Dominic Regan was speaking later in the day. I was just happy it wasn’t the other way around. Dominic is not an easy act to follow.) As part of the training session I raised the issue as to who should normally undertake the costs budgeting exercise. At this stage I am sure they expected the hard sell to begin. In fact, quite the opposite. I am far from convinced that the majority of Costs Lawyers or law costs draftsman are remotely suited to the job of day-to-day costs budgeting. It was therefore rather ironic when later that day I checked for updates on the Litigation Futures website to see Iain Stark, Chairman of the Association of Costs Lawyers, being reported as saying: “The Jackson reforms will put a far greater emphasis on dealing with costs pre-emptively rather than after the event. This means solicitors will need to bring in costs expertise from the start of a case to ensure that the budget they will have to submit to the court at an early stage is realistic and defensible.” I fear that costs budgeting will be to the cost profession what the PPI scandal was to the banking sector, only worse. The only thing I would suggest to those considering offering a costs budgeting service in this area, and who hope to remain practising in 5 years time, is to set aside at least 10% of your annual turnover for the next 5 years to ensure you have a sufficient reserve to pay for professional indemnity insurance once the claims starts coming...

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10% uplift revisited

By on Oct 11, 2012 | 1 comment

The Court of Appeal has amended its decision in Simmons v Castle by deciding that the 10% increase in general damages due to come into effect on 1 April 2013 should not apply to those claimants whose cases are funded by conditional fee agreements where the CFA was entered into before 1 April 2013. The Court accepted the ABI’s main argument that it would be unfair for such claimants to be able to recover success fee and ATE premiums after that date but to also benefit from the increase in general damages that was designed to compensate claimants for not being able to recover success fees and ATE premiums. As the court put it “it is hard to challenge that contention: such claimants would have the penny and the bun” (I’m going to have to start using that expression). On the other hand, the Court decided that those claimants whose claims are funded on a conventional should benefit from the increase regardless of when the claim began (which still seems to be very much the case of somebody getting a free bun). The Court noted: “If the amendment is rejected, there could be cases where a Part 36 offer was sufficient at the time it was made but was insufficient after the 1 April; no such difficulties would arise if ABI’s proposal was accepted. Similarly, if ABI’s proposal is rejected, there could be cases where defendants try to accelerate the trial and claimants try and delay it. We do not think that these problems are considerable, but they tend to favour ABI’s case.” If this is true of CFA funded claimants would it not equally apply to “conventionally” funded claimants? Hasn’t the decision to allow “conventionally” funded claimants the uplift, regardless of when the claim began, left open considerable scope for satellite litigation over whether Part 36 offers have been successful or unsuccessful? Given this potentially includes a very large number of claims funded by BTE insurance this is likely to come back to haunt the Court of Appeal. Bizarrely, APIL’s submissions to the Court included the argument that the ABI’s proposals would “lead to satellite litigation”. It has not been reported as to whether the advocate making that...

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Retrospective success fees

By on Oct 10, 2012 | 1 comment

The Costs Law Articles Archive section of Legal Costs Central has been updated with an article previously published in Solicitors Joournal on the extent to which retrospective success fees are...

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Jackson implementation

By on Oct 9, 2012 | 10 comments

The Government has been releasing further details as to how the Jackson forms are to be implemented. In relation to the 25% cap on success fees in personal injury cases, excluding damages for future care and loss, this 25% includes solicitors’ success fee, any barristers’ success fee and VAT. Imagine trying to split that particular pie between the solicitor, junior counsel and senior counsel (not to mention what would happen where there is a change in the firm of solicitors acting or a change in counsel). The lawyer will be required to provide clear information to the claimant on how the success fee has been calculated including showing the breakdown between solicitor and barrister (if appropriate), and the type of damages that the cap applies to (excluding future care and loss). This will be a new requirement for both CFAs and damages-based agreements (DBAs). That should be fun where settlement is reached on a global basis. In relation to damages-based agreements (DBAs), it has been announced that in addition to the 25% cap on the amount of damages, excluding damages for future care and loss, in personal injury cases that we already knew about, and the existing 35% cap on damages in employment tribunal cases, there will also be a cap of 50% on damages for all other cases under a DBA in civil litigation. It has been confirmed there will be a new rule on proportionality; the test is intended to control the costs of activity that is clearly disproportionate to the value, complexity and importance of the claim. This will come into effect on 1 April 2013. Of course, it won’t be until at least 12 months after that date that we will have the faintest idea as to how this test will work in practice. 12 months of absolute pandemonium in the costs world with probably not a single case capable of settlement. The extension of the RTA portal upwards to £25,000 and outwards to cover EL and PL cases appears to still be firmly on the agenda, although the rumours circulating on this issue seem to change by the day. The Government is still considering whether to increase the small claims limit for personal injury...

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