Legal Cost Specialists

CFAs

Part 36 clauses in CFAs

By on Jun 26, 2019 | 1 comment

The Law Society Model Conditional Fee Agreement contains the following clause: “It may be that your opponent makes a formal offer to settle your claim which you reject on our advice, and your claim for damages goes ahead to trial where you recover damages that are less than that offer. If this happens, we will [not add our success fee to the basic charges] [not claim any costs] for the work done after we received notice of the offer or payment.” The section in bold gives an either/or option as to the relevant consequence if the offer is not beaten.  The vast majority of claimant solicitors’ CFAs that I have seen have a similar clause. This clause is contractual in nature and therefore, if the “not claim any costs” option is taken, also impacts on the indemnity principle. This would not be a problem, subject to what I say below, for claimant lawyers if the normal costs consequences of CPR 36.17 were automatic (ie the claimant cannot recover costs from the date on which the relevant period expired if an offer is not beaten).  But CPR 36.17 simply sets our the default position.  The consequences of failure to beat a defendant’s offer are not automatic as the court may order otherwise if “it considers it unjust” to apply the default position.  However, if this standard clause is used, the solicitors are unable to charge their client a success fee (at best, if the first option is chosen) or recover any costs from the client or the opponent (at worst, if the second option is chosen) from the date of receipt of the offer or payment, regardless of whether the court limits the period for which costs are recoverable. In any event, the wording of the clause itself is somewhat strange: It refers to “the work done after we received notice of the offer or payment”. CPR 36.17 anticipates that the trigger point will be “from the date on which the relevant period expired”.  The clause therefore also prevents recovery of either any costs or the success fee at least 21 days earlier than CPR 36.17 anticipates. It refers to “formal offer”, not “Part 36 offer”. It is therefore arguable...

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Why are legal costs so high?

By on May 30, 2019 | 1 comment

I’ve uploaded an old article from April 2011 that originally appeared Litigation Funding magazine.  This was written in response to research commissioned by the National Accident Helpline that formed part of their response to the original Jackson consultation process.  At the time, an article based on this report appeared in the Law Society Gazette, written by the National Accident Helpline.  The thrust of that article (and the research) was to try to justify the continued recoverability of success fees and ATE premiums on the basis that the true cause of high legal costs was delay/unreasonable behaviour by defendant insurers as opposed to recoverable additional liabilities.  In fact, what the research seemed to show was that success fees and ATE premiums were set at excessive levels in light of the very high success rate of claims.  In the event, the research made no difference and the Jackson proposals were...

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Challenges to CFAs

By on May 10, 2019 | 0 comments

My office is in the process of being redecorated and this seemed like a good opportunity to have a general clear out. As part of this, I came across a couple of articles published in Litigation Funding magazine from February and April 2000. These show the dangers of trying to make predictions about the future of litigation. In one article, barrister Gordon Wignall was quoted as saying: “There is no reason now why either clients or unsuccessful defendants should not challenge the validity of their opponents’ lawyers’ retainers.  There are likely to be disputes over new-style funding arrangements for years to come.” In the other article, solicitor Kerry Underwood was quoted as saying: “Satellite litigation [over CFAs] won’t be a cottage industry it will be a palace industry. … Everyone who knows anything about this area knows how complicated it is.  There isn’t a hope in hell of district judges arriving at reasoned decisions.” 19 years later, I bet they both feel pretty...

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Automatic 100% success fees banned

By on Apr 4, 2019 | 2 comments

For many years, a large number of personal injury solicitors have automatically charged their clients a 100% success fee regardless of the risks of the case.  This has been a standard business model for many firms, with the reasoning being that this will usually lead to an automatic 25% cut of the client’s general and existing financial damages (as a result of the cap on the level of success fee in personal injury claims) in addition to any costs recovered from the other side. The Court of Appeal has now held, in the case of Herbert v H H Law Ltd [2019] EWCA Civ 527, that this will normally be inappropriate and that any success fee should reflect the actual risks in the case (here held to be 15% for a straightforward RTA) unless the client has given “informed consent”. In terms of CFAs already entered into, this decision is likely to open the floodgates to solicitor/own client challenges. Going forwards, it is likely to be an uphill struggle, when entering into new CFAs, to show that the average lay client has given informed consent to a success fee that does not fairly reflect the risks of the case. For a detailed summary of this decision, see Robin Dunne’s, junior counsel for the respondents in the appeal, article.  This also deals with the important issue of whether an ATE premium is a disbursement that needs to be included within a statute...

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Faisel v Lancashire County Council – Administration of solicitors

By on Aug 10, 2012 | 7 comments

The other day I posted a link to a website showing some case summaries of various first instance decisions. One angry reader commented: “I’m surprised this is publicised on the blog as useful case summaries – will we now all be submitting every DJ decision and taking it as Gospel?” I see no reason to interfere with the long-established tradition amongst law costs draftsmen and costs lawyers to treat a decision made late on a Friday afternoon by a Deputy District Judge, sitting in Worthing County Court, on the appropriate grade of fee earner to allow in a public liability tripping claim, as being binding on all other members of the judiciary for similar claims. Indeed, surely there is no need to even produce a copy of a judgment or transcript, one can simply tell a judge that: “Costs Officer So-and-So always allows me a rate of £200 per hour for this type of case” and the judge will be obliged to allow the same. Of course, aside from the issue of whether first instance decisions are binding or not, there are often no higher authorities on a given issue of costs law. Therefore these decisions can often throw useful light on the various arguments that can be run, and a well delivered judgment can provide an extremely helpful summary of what can otherwise be quite complex issues. With the above in mind, here is a link to the interesting decision in Faisel v Lancashire County Council, Preston County Court (25 May 2012) concerning the situation where the original firm of solicitors ceases to act following them going into administration. Where they are acting under a CFA, are their costs recoverable at the conclusion of a case? This issue usually comes down to a question of analysis of the terms of the CFA that deal with termination of the agreement before the successful conclusion of the claim and how the Court determines the agreement was ended. Here the District Judge appears to have concluded, although not exactly expressing himself in these terms, that it was the decision of the Claimant to terminate the original agreement (notwithstanding the fact that the original solicitors were already in administration), and the terms...

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LASPO amendments overturned

By on Apr 19, 2012 | 5 comments

The government has, unsurprisingly, overturned all of the House of Lords amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill and, in particular, the one that sought to exempt all EL industrial disease cases from the end to recovery of success fees and ATE premiums. It is a perfectly arguable position to adopt that all claimants should be allowed to litigate entirely risk free and keep 100% of their damages. It is also perfectly arguable that injuries of a certain level of seriousness should be exempt (eg those that will, or have, resulted in death). However, the position of the House of Lords’ amendment to exempt all EL disease claims (and why not non-EL disease claims?) was neither rational nor consistent with whatever it was that was trying to be achieved (unless it was simply pandering to the trade...

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