Legal Cost Specialists

Posts made in March, 2013

Legal costs chaos

By on Mar 28, 2013 | 19 comments

Today is the last working day before the Jackson reforms kick in. Over the last few weeks I’ve been busy speaking at various costs conferences, giving in-house seminars to solicitors, recording podcasts, writing extensively on the new changes and speaking to numerous costs judges, costs lawyers, law costs draftsmen and specialist costs counsel. What has become clearer by the day is how much those at the coal-face of the reforms are struggling with the basics. And by “basics” I do not necessarily mean “simple”. Much of these reforms are tricky to get to grips with at even the most fundamental level with added difficulties caused by the transitional provisions. (See previous posts on issues such as Part 47.19 offers and costs estimates.) I’ve spoken to specialist costs counsel who had not even seen the new practice directions, much less had a chance to master them. At one conference I recently spoke at I very unfairly asked one of the costs judges from the Senior Courts Costs Office by what further margin after 1st April 2013 he would reduce a bill he had assessed at £100,000, applying the test of reasonableness and necessity, if the amount at stake was £25,000 and he was then to apply the new proportionality test. He candidly admitted he did not know. I am not surprised as no costs judge I have spoken to over the last year has been able to give me an answer to that question. Judges have been given just 4.5 hours of training, a quarterly newsletter and a podcast to prepare. The total spent on judicial training was around £114,000. Iain Stark, chairman of the Association of Costs Lawyers was quoted as saying: “If you divide that by the number of judges it means we’ve spent around £150 on training each judge – I spend more on an MOT for my car.” Chaos ahead. Have a restful Easter...

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Negotiating legal costs

By on Mar 27, 2013 | 25 comments

Negotiating legal costs is a complex and subtle skill that takes years of experience to perfect. But for younger readers I now offer a master class in cost negotiating. The following is taken from a genuine exchange of emails with a very well known firm of claimant lawyers. The underlying claim related to a case of food poisoning during a package holiday. Following settlement of the claim the Claimant’s solicitors presented a schedule of costs totalling £30,661.60. I made my opening offer: Without Prejudice Save as to the Costs of Detailed Assessment Proceedings Dear Sirs, I write further to the above matter where I have been instructed to act on behalf of the Defendant in relation to your claim for costs. The Defendant offers £9,000 in full and final settlement (to include interest, where payable, and assessment costs). I look forward to hearing from you. Yours faithfully, Simon Gibbs Note the detailed reasoning for the reductions proposed and the extensive references to costs case law. The Claimant’s solicitors responded: Dear Simon Thank you for your email and apologies for not responding sooner. I have been on annual leave for the last four weeks. I note that you are instructed to deal with the issue of costs on behalf of the Defendant. I confirm that the Defendant’s offer of £9,000 is rejected. However, I put forward a counter offer of £23,000 in a genuine attempt to bring the matter to a close. This offer is inclusive of interest, VAT and assessment costs. The offer will remain open for 21 days. I look forward to hearing from you. Kind regards, X At this stage any general members of the public reading this might be surprised that a firm of solicitors is prepared to write-off a quarter of their fees on the back of an offer without any explanation being given as to why the amount sought was deemed unreasonable. Obviously, negotiating costs is a two-way process. My initial offer was obviously just a speculative opener and now I will need to move from that: Dear X, I write further to the above matter and your email below. You offer is rejected. Given the difference between the parties it does not appear...

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Costs estimates transitional provisions

By on Mar 26, 2013 | 3 comments

The other day I commented on the fact the amended costs rules do not appear to have a transitional provision concerning the removal of Part 47.19 offers. I am therefore grateful to Dominic Swallow for pointing out that this is actually tucked away in the Transitional Provisions to the Civil Procedure (Amendment) Rules 2013 at s 22(1): “The provision made by rule 47.20(1) to (5) and (7) in the Schedule (liability for costs of detailed assessment proceedings) does not apply to detailed assessments commenced before 1 April 2013 and in relation to such detailed assessments, rules 47.18 and 47.19 as they were in force immediately before 1 April 2013 apply instead.” So far as I can see, this provision is not contained within the body of the CPR or the Practice Direction to the new CPR 47 (concerning Procedure for Detailed Assessment of Costs and Default Provisions). Nor is it contained within the Transitional Provisions section of the Practice Direction to the new CPR 48. It was no doubt sensibly decided that practitioners would find it unhelpful for the transitional provisions relating to detailed assessment proceedings to be located in the same place and it would be far more sensible to scatter them randomly around. Fortunately, District Judges undertaking provisional assessment hearings have all been given 4.5 hours of training, a quarterly newsletter and a podcast to deal with Jackson implementation and so they will all be fully up to speed with the contents and location of all the relevant rules and provisions. So the new rules will not apply to detailed assessments “commenced” before 1 April 2013. This is very important as Part 36 will be incorporated into detailed assessment proceedings by CPR 47.20(4). That section is expressly excluded from cases where detailed assessment is commenced pre-1 April 2013 (AFD) by the transitional provision above. I therefore read that to mean that for cases where detailed assessment has already been commenced pre-AFD, a party cannot make a Part 36 offer (or repeat a previous offer as a Part 36 offer post-AFD) and expect it to have the effect of a valid Part 36 offer. This will create yet more confusion. The new CPR 47.6(1) reads: “Detailed assessment proceedings...

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Part 36 offers in costs proceedings

By on Mar 25, 2013 | 11 comments

From 1st April 2013, Part 36 offers apply to detailed assessment proceedings. A receiving party who makes a Part 36 offer that is not beaten at assessment (provisional or detailed) is entitled to a 10% uplift on the costs awarded. Many claimant solicitors will be rubbing their hands in anticipation. Whoa there cowboy. Costs belong to the client. An award of the additional 10% is therefore an award to the client, not the solicitor. The solicitor has no right to retain the 10% uplift unless the retainer expressly allows for this. The current Law Society Model CFA certainly does not do this. Any solicitors caught sneakily pocketing the 10% uplift would be guilty of theft. I wonder if the new Law Society Model CFA, if and when it’s published, will deal with...

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Part 47.19 transitional provisions

By on Mar 22, 2013 | 9 comments

The new civil procedure rules, regulations, etc appear to have more transitional provisions than there are grains of sand in the Sahara. Understanding not just the rules but also the relevant transitional provisions is crucial. (See for example how the transitional provisions treat the new proportionality test.) Offers in detailed assessment proceedings are currently governed by CPR 47.19. From April Fools’ Day (AFD), Part 47.19 disappears and Part 36 applies to detailed assessment proceedings. What do the transitional rules say about a successful Part 47.19 offer made before AFD where costs come to be assessed after AFD? Absolutely nothing. There is no corresponding transitional provision. So what does a paying party who believes he has made a good Part 47.19 offer back in January do if the matter is not settled pre-AFD? Schoolboy Error No.1 is to repeat the offer as a Part 36 offer post-AFD. Acceptance of the Part 36 offer would immediately deprive the paying party of any right to any of their detailed assessment costs and would give the receiving party a right to all their assessment costs up to the date of acceptance (including those incurred after the reasonable offer was made). A paying party is probably best to leave the offer in place. The general presumption remains that the receiving party is entitled to their costs of the assessment proceedings. The new CPR 47.20(3) states: “In deciding whether to make some other order, the court must have regard to all the circumstances, including— (a) the conduct of all the parties; (b) the amount, if any, by which the bill of costs has been reduced; and (c) whether it was reasonable for a party to claim the costs of a particular item or to dispute that item.” The paying party has to hope a court is persuaded that “all the circumstances” includes a successful Part 47.19 offer made pre-AFD. But seriously? No transitional provision to govern this? (See correction following this...

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