A reader has pointed out that the Legal Costs Blog was recently nominated for best blawg (legal blog) in the “Best Legal Commentary” category over on the Law Actually blog.
Sadly the voting has already closed. If I had known I would have let readers know and you would no doubt have voted in your thousands leading to a landslide victory.
When the Association of Law Costs Draftsmen was reviewing whether to vote in favour of remaining an approved regulator it did some estimates as to the likely cost. This ranged from between £342.75 and £405.20 per member (in addition to current subscription levels). This was based on there being 269 Costs Lawyers who would share the cost.
By a happy coincidence, the number of Costs Lawyers by the end of this year is likely to be closer to 600 and the costs to each member will have therefore been more than halved.
A cynic might think that the recent decision to automatically upgrade Associates was in some way linked to the increased costs of regulation.
The Association of Law Costs Draftsmen is now advertising for the posts of Chairman and Chief Executive Officer for the new Costs Lawyer Standards Board as part of their steps towards meeting their requirements as an approved regulator.
For those interested in applying, the details can be found here: Chairman, Costs Lawyer Standards Board and here: Chief Executive Officer, Costs Lawyer Standards Board.
Continuing with our occasional series of responses to the Jackson Costs Review from the “great and the good” in the legal and costs world is Philip Hesketh. Philip is a Professional Mediator and former solicitor.
Like most commercial mediators I was eagerly anticipating Sir Rupert Jackson’s final report on his review of civil costs. Not because I thought it would be a cracking read (it wasn’t) but because I hoped finally our jurisdiction would receive the catalyst needed for mediation to move from esoteric mysticism into – to borrow Lord Clarke’s phrase – an integral part of the litigation toolkit. I wasn’t hoping for, or expecting, compulsory mediation but certainly strong encouragement that would lead to a significant increase in its use. I was to be largely disappointed. However there was one proposal which I felt was significant and that had the long term potential to do what I had hoped for – the proposal to allow contingency fees.
In paragraph 5 on page 133 Sir Rupert recommends :
“Both solicitors and counsel should be permitted to enter into contingency fee agreements with their clients. However, costs should be recoverable against opposing parties on the conventional basis and not by reference to the contingency fee.”
Contingency fees are only paid if the claim is successful. They are based on a percentage of the damages recovered. He suggests adopting the Ontario model (see paragraphs 61.2.5, 61.2.6, 61.4.3 and 61.4.4 of his preliminary report). The amount by which the contingency fee exceeds what would be chargeable under the ‘conventional basis’ would be borne by the successful litigant. The evidence from Canadian personal injury cases were that typical agreements allowed for costs to be charged at 20% of the damages. Costs awards against the paying party often amounted to around 15% of damages so the claimant would be losing about 5% of the damages. He says “This does not appear to be a source of general concern or complaint.”
The amount the solicitor receives would not be directly related to the amount of work done, although that would be relevant to the amount of costs recoverable from the paying party – the difference being made up by the client. It follows that an efficient solicitor will recover a better hourly rate. That rate will be not be fixed but calculated by the costs chargeable (lets say 20% of the damages) divided by the number of hours spent. The fewer hours it takes, the better the rate and profitability of the fee earner.
Why might this result in more work for mediators and coincidentally costs lawyers? One of the benefits of mediation for litigants is the way in which it can significantly shorten the time taken to resolve a legal dispute. I am often asked when is the right time to mediate and my answer is three questions. Do you want to settle? Are you ready to negotiate? Have other attempts to resolve the dispute failed? Answer all three in the affirmative and it’s time to try mediation. In other words if there are no more offers coming forward from either side the only conventional response is head down and prepare for trial and potentially a long wait for resolution. Mediating is a viable and often successful alternative. The client is happy because of the early settlement (not to mention the relief at not having to go court) and the solicitor’s hourly rate is not watered down by the extra hours that would have been spent in trial preparation. The old “Alarming Drop in Revenue” idea is reversed. Early settlement under a contingency fee agreement will increase profitability.
Of course this means claimants will be contributing to their lawyer’s fees so they will have an interest in costs recovered from their opponent. It is bound to lead to disputes on a solicitor and own client basis …
On a recent post were a number of comments from readers of the Legal Costs Blog. One said that they preferred the Blog when it is “informative”. Another responded by saying they preferred the Blog when it is “tongue in cheek and amusing”.
Frankly, I resent the suggestion that anything I write on the Blog is intended to be “informative”.
There are a growing number who subscribe directly to the Blog and receive this by email. This gives me a chance to take a rough snapshot of the kind of readers it has.
A number of email addresses are private (eg @gmail or @hotmail) and so gave no clue.
Of the balance, the readers broke down on the following lines:
17.5% – claimant solicitors
20% – costs draftsmen
42.5% – defendant solicitors
5% – local or central government legal departments.
2.5% – journalists
7.5% – insurers
5% – self-insured bodies
Obviously, this is likely to be somewhat misleading. A number who appear as defendant solicitors, for example, based on their email addresses may actually be in-house law costs draftsmen. Further I suspect a slightly higher proportion of claimant representatives sneak a cheeky peak at the Blog but aren’t prepared to subscribe.
I also know that there are a number of specialist costs counsel and costs judges who read this but don’t subscribe to receive it automatically. They are probably the ones who post the angry rants anonymously in the comments section.
Previously we considered whether the Leeds detailed assessment pilot (click link) would reduce the judicial and court time spent dealing with costs disputes. The new rules can be viewed here: County Court Provisional Assessment Pilot Scheme at Annex 2.
The next issue is whether provisional assessment will reduce the costs to the parties. Those costs practitioners worried that provisional assessment will reduce their fee income may not need to be too concerned just yet, even if the number of actual oral detailed assessments hearings reduces.
It will be recalled that Lord Justice Jackson was very clear that his proposed costs reforms were meant to be viewed as a complete package and should not be introduced on a piecemeal basis. The provisional assessment pilot is just such a piecemeal step.
Jackson LJ envisaged a much simplified bill of costs format. He envisaged different points of dispute and replies:
“Both points of dispute and points of reply need to be shorter and more focused. The practice of quoting passages from well known judgments should be abandoned. The practice of repeatedly using familiar formulae, in Homeric style, should also be abandoned. The pleaders on both sides should set out their contentions relevant to the instant cases clearly and concisely. There should be no need to plead to every individual item in a bill of costs, nor to reply to every paragraph in the points of dispute”.
The pilot scheme proceeds with these elements unaltered.
Such a scheme might have some chance of success in the Senior Courts Costs Office where, at least the full time, costs judges and costs officers are generally familiar with all the standard costs argument. It is less obvious that those judges sitting in Leeds, Scarborough and York County Courts will be as familiar with the intricacies of costs law. There is no suggestion that the provisional assessments will be conducted by any particular designated judge or regional costs judge. How knowledgeable are the district judges and deputy district judges who sit in these courts? This is not to suggest any shortcomings in the ability of these judges, but are they really all 100% up to speed on the minutiae of costs law?
I have been before judges on detailed assessment where they were convinced that “base costs” only refers to base profit costs.
I have been before a regional costs judge where the CFA in question was held to be invalid. I proceeded to explain that the consequence of this was that all disbursements would be disallowed except to the extent that they had been paid “up-front” by the claimant, whether personally or by way of a loan. The judge asked for the authority for this proposition. I referred the judge to paragraphs 113-116 and 223 of Hollins v Russell [2003] EWCA Civ. 718). The judge was not prepared to accept that this is what the relevant passages meant and adjourned the issue for detailed skeleton arguments to be served.
When much of the judiciary is not 100% familiar with every element of costs law – and why should they be expected to be? – the problems with provisional assessment become clear.
If I am faced with a claim for communications with an ATE provider I currently may deal with this in the points of dispute as briefly as:
“Not inter partes. Disallow.”
For the small number of cases that reach as far as detailed assessment I can worry nearer the time which authorities to wheel out in support of this argument.
If a matter might now be heard in one of the pilot courts by way of provisional assessment, is a costs draftsman/costs lawyer going to be content to draft such a concise dispute and hope the judge is already familiar with all the relevant case law (in the way one might expect in the SCCO)? Very risky.
Will it be sufficient to draft a dispute along the following lines referring to the relevant authorities:
“The Defendant submits that time spent discussing/arranging funding is not chargeable inter partes and refers to the cases of Re Claims Direct Test Cases [2002] EWHC 9002 (Costs), Masters –v- Hewden Stuart Heavy Lifting Limited, Leeds County Court, 18/3/05 and Woolley v Haden Building Services Ltd (No 2) [2008] EWHC 90111 (Costs). Disallow.”
With the provisional assessment process being envisaged to take approximately 45 minutes (apparently), can one expect a judge to take the time to track down various unreported decisions, quoted in points of dispute, and work his or her way through them to find the relevant paragraphs and extract the principle? Very unlikely.
Do those drafting points of dispute have any real alternative other than including lengthy quotes from the relevant authority on every point in case the judge is not familiar with the issue? What might have previously been a four word dispute may turn into a four page dispute.
When faced with points of dispute resembling skeleton arguments, is the receiving party going to decide they do not need to serve optional replies? Not a chance.
Are receiving parties going to be content to deal with the dispute above by simply saying:
“Not agreed.”
Will they be content to respond simply by referring to the names of the authorities which go the other way?
When faced with comprehensive points of dispute the receiving party will respond in kind.
Even if the paying party initially keeps their points of dispute relatively brief, when faced with the inevitable weighty tome served by the receiving party they will feel obliged to serve amended lengthy points of dispute in response. The automatic right to amend points of dispute and replies (CPD 40.10) remains in the provisional assessment process.
CPD 4.5 states:
“The background information included in the bill of costs should set out:
(1) a brief description of the proceedings up to the date of the notice of commencement”
As things stand, there are those who struggle to keep the description “brief”. With a provisional assessment there will be no chance to orally explain any particular problems with the way the claim proceeded. There will be no way of knowing to what extent the judge will read the papers in detail, if at all. One of Lord Justice Jackson’s proposals, in his final report, was for bills of costs to “provide more transparent explanation than is currently provided about what work was done in the various time periods and why [emphasis added]”. I previously expressed my concerns about this change to the bill of costs format (click clink). I can see this provisional assessment pilot encouraging much more of the “why” without any of the corresponding costs saving that Jackson LJ envisaged.
There is about to be an arms race in relation to the length of preambles to bills of costs and the complexity of points of dispute and replies, and all in the name of reducing the costs of assessment.
Would a law costs draftsman/costs lawyer who fails to comprehensively plead every single point available open themselves up to a negligence claim? Would they be negligent if they failed to serve amended/supplemental pleadings in light of lengthy points pleaded by the other side?
This is going to be a costs building bonanza for those involved in costs until the pilot scheme is hastily amended. Would claimant solicitors kindly ensure they issue all their cases out of Leeds, Scarborough or York for the foreseeable future?
Many of you will now be returning from your holidays and going back to the legal costs grindstone.
For some of you it may not have been quite the dream holiday you had been hoping for (delayed flight, rubbish hotel, lost luggage, food poisoning, etc). If this sounds like your holiday console yourself with the fact that it could have been worse. Going through some old holiday photographs the other day I came across some from one memorable trip. Now, sensible people always make their excuses and rapidly leave when someone else suggests sharing their holiday photographs, but stick with me on this one.
To put these pictures into some context, we were close to our final destination (ironically, given what happened, the Venetian Lido).
The coach in the picture still had some useful holiday items on board, such as my passport, my wallet, my revision papers for an exam I was due to sit shortly after my return from holiday, etc.
And no, these are not outtakes from an episode of Only Fools and Horses.
Of course, I can laugh about it now.
(If you receive the Legal Costs Blog by email you may need to adjust your security settings to view the pictures or view online: www.gwslaw.co.uk/blog)
Yesterday we examined what amounts to a “competent” law costs draftsman from the receiving party’s perspective. Today we will look at this from the paying party’s view point.
From the paying party’s perspective, the key criteria are similar as for a receiving party’s costs draftsman:
1. The ability to recognise that there may be problems with the retainer. Although a paying party will have less to work with, the scope for potential challenge is vast, with the various complex rules and regulations that surround this area. If a law costs draftsman fails to spot a potential breach, that would have meant all costs might have been disallowed, can they be described as “competent”?
2. The ability to identify all the potential “routine” challenges. For those who do not work in the field of legal costs it is probably hard to imagine quite how endless these can be. At the last ALCD examination, one of the questions required the drafting of points of dispute based on a sample bill of costs. From memory, the receiving party was meant to be a limited company. As such, VAT was wrongly claimed in the bill. Costs Lawyer magazine, commenting on the examination results said:
“many candidates (Associate and Fellowship) missed the VAT point. [This point was] fundamental to the job we do as costs draftsmen and costs lawyers. … An understanding of VAT is therefore vital to any successful costs draftsman or costs lawyer.”
The article did not go on to detail whether any of the candidates who failed to spot this issue were nevertheless passed at Associate or Fellowship level (shortly, if not already, to be granted Costs Lawyer status). Failing to spot this issue in real life would almost certainly lead to a professional negligence claim. “Competent”?
3. The same level of advocacy skill as should be expected from a receiving party’s costs draftsman. The irony of this test of “competence” is that there will be costs draftsmen who wouldn’t on any proper test be described as “competent” but nevertheless routinely “win” detailed assessments because the quality of the submissions made are often irrelevant to the outcome.
4. The ability to recognise when a bill of costs has been drafted in a fundamentally flawed manner. This will be particularly important in relation to the difficult areas of apportionment and division. How often is it not even recognised that such an issue arises?
The Association of Law Costs Draftsmen will need to think carefully as to what it means to be “competent” and how this is to be measured for those now being granted Costs Lawyer status.