Reversal of Carver v BAA


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The 57th Update to the Civil Procedure Rules (who remembers the good old days of the 16th Update?) introduces changes in a number of areas. Most of these come into force on 1 October 2011.

The first one relevant to costs law is the amendment to Part 36 formally reversing Carver v BAA. The change being:

In Part 36, after rule 36.14(1) insert—“(1A) For the purposes of paragraph (1), in relation to any money claim or money element of a claim, “more advantageous” means better in money terms by any amount, however small, and “at least as advantageous” shall be construed accordingly.”.
 

Costs lawyer or costs draftsman urgently wanted


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The Civil Justice Council has announced the membership of an expert working party that will consider implementation of the Jackson reforms of civil litigation costs.

The working party will be considering proposals for qualified one-way costs shifting, Part 36 and the new proportionality test.

The members of the working party are:

• Chair: Alistair Kinley, head of policy development at the London office of national firm Berrymans Lace Mawer;
• Janet Tilley, managing partner at national firm Coleman CTTS;
• Mark Harvey, partner and head of the claimant division at Wales firm Hugh James;
• David Bott, managing partner at Cheshire firm Bott & Co and president of the Association of Personal Injury Lawyers;
• Don Clarke, partner and director of strategy at Bolton and Coventry firm Keoghs and vice president of the Forum of Insurance Lawyers;
• Judith Gledhill, head of personal injury at national firm Thompsons;
• Hardeep Nahal, litigation partner in the London office of US firm McGuireWoods;
• Graham Huntley, partner in the London office of Hogan Lovells;
• Nick Bacon QC, costs specialist at London chambers 4 New Square;
• Rocco Pirozzolo, solicitor and underwriting manager at insurance group QBE Europe;
• Howard Grand, senior solicitor at Aviva Legal Services;
• David Fisher, catastrophic & injury claims technical manager at AXA Insurance;
• Mandy Knowlton-Rayner, principal risk officer at Norfolk County Council;
• Hilary Homfray, solicitor at Birmingham City Council;
• Kay Majid, solicitor and senior counsel at Tesco;
• Kathryn Mortimer, solicitor and head of legal services at DAS Legal Expenses Insurance Company;
• John Usher, solicitor and legal advisor to the Union of Shop, Distributive and Allied Workers; and
• Colin Stutt, formerly of the Legal Services Commission.

Not a single costs lawyer, costs draftsman or costs judge amongst them. Other than Nick Bacon QC, one has to wonder what experience of detailed assessment proceedings any of them actually has.

And everyone will act all surprised when a totally unworkable definition of “proportionality” emerges.

You couldn’t make it up.

Success fee cap on damages


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A couple of recent Blog posts (“Success fee cap plus uncapped ATE?” and “No cap in non-PI cases”) commented on the potential reductions to claimants’ damages that we may see with the end to recoverability of success fees and how the suggested cap may operate.

Kerry Underwood has reminded me that he explored these issues all the way back in 1999 in his book No Win No Fee No Worries (well worth tracking down an old copy on Amazon).

The following sample letter was produced in the book as an example of what not to send to a client despite being compliant with the regulations as they were. In future, in non-personal injury claims with a 100% maximum success fee, but no cap, this letter may be quite useful:

“Dear Mr Jones,

I am pleased that the Judge found in your favour and indeed I have already received the damages cheque for £5,000.

My Firm’s costs total £6,000 of which I have recovered £4,000 from the other side.

You will recall that under the terms of the conditional fee agreement we agreed that I could increase my costs by 100% if you won. We agreed that figure because this was a risky case as shown by the fact that it went to trial.

The effect of increasing my costs by 100% is that they now total £12,000 and, as mentioned above, I have received £4,000 costs from the other side leaving a shortfall of £8,000, but I have applied the £5,000 damages and so the balance due to me from you is £3,000. To make this easy to follow I have prepared a little table.

£

My firm’s basic costs

6,000

Success fee

6,000

Total

12,000

Less costs from other side

4,000

Balance

8,000

Less damages applied to costs

5,000

Balance due to me from you

3,000

 

Please let me have your cheque in due course.

You will recall that for £85 we insured against you having to pay the other side’s costs and our own disbursements if we lost. This means that if you had lost it would have cost you nothing but as you have won it has cost you £3,000.

Never mind. It’s a funny old world.

I recall that you wanted the conditional fee scheme because you could not afford lawyer’s fees. A wise decision!

I will be pleased to act for you again in the future – after your forthcoming bankruptcy has finished.

Alternatively next time you are a passenger in a bus and you get injured you might find it cheaper just to admit liability.

Yours sincerely”

Even where there is a 25% cap in place, which will apply to personal injury claims, Kerry’s book gives the following example of the impact on damages:

“Cap on Success Fee only

£

Base costs

6,000

Less received from other side

4,000

Balance

2,000

Success fee (£6,000 but capped at 25% of £5,000)

1,250

Charged to client

3,250

Damages

5,000

Balance due to client

1,750

 

Actual success fee (£1,250 on £6,000) = 20.833%

Thus, in applying the 100% success fee and limiting that success fee to 25% in accordance with the Law Society’s agreement the solicitor actually takes £3,250 from the client’s £5,000. I have excluded VAT for the sake of simplicity (!) but you are entitled to add that to the £3,250 and thus:

£

 

3,250.00

VAT at 17.5%

568.75

Total costs

3,818.75

Balance to client

1,181.25

Total

5,000.00

 

You might like to undertake an exercise to compose a letter to Mr Jones explaining that his cheque for £1,181.25 out of £5,000.00 damages really does represent 75% of his damages and that the £3,818.75 taken by you out of his £5,000.00 really is a 25% cap on the success fee.”

Actually, with costs draftsmen and costs lawyers looking for the opportunities that Jackson may create, composing letters likes this to clients may be a nice little earner.

Many thanks to Kerry for permission to reproduce these extracts.