Proportionality in costs

Even a stopped clock tells the correct time twice a day.

And so it has come to pass that even I have turned out to be correct on a couple of occasions.

Back in June, reporting in the Solicitors Journal on Master Hurst’s preliminary ruling on proportionality in Motto v Trafigura Ltd [2011] EWHC 90201 (Costs), I started by paraphrasing Humpty Dumpty:

“proportionality means just what I choose it to mean – neither more nor less”

It will be recalled that Master Hurst had relied on Morland J’s judgment in Giambrone v JMC Holidays [2002] EWHC 2932 (QB):

“For my part I do not accept that if a costs judge has ruled at the outset of a detailed assessment that the bill as a whole is not dispropor-tionate he is precluded from deciding that an item or a number of items are or appear disproportionate having regard to the ‘matters in issue’.”

Based on this passage Master Hurst had concluded:

“Therefore, in my view, there is no reason why a costs judge, having found at the outset on a global view, that the costs have the appearance of being disproportionate, should be precluded from deciding that an item or number of items are in fact proportionate, and thus that the test of necessity should not apply to them.”

I concluded the article:

“So we now, apparently, have the situation whereby:

1. If the costs overall are deemed to be proportionate, individual items will be allowed if they were reasonable even if not necessary, unless the court decides that individual items are disproportionate, in which case they may be disallowed if they are reasonable but not necessary.

2. If the costs overall are deemed to be disproportionate, individual items will be allowed if they were both reasonable and necessary, unless the court decides that the individual items are proportionate, in which case they may be allowed if they are reasonable but not necessary.

At this stage you may want to have a quiet lie down in a dark room. If a costs judge can allow or disallow individual items depending on whether they are individually deemed to be proportionate or disproportionate, what is the point of the global approach, as required by the Lownds judgment, at the outset of the detailed assessment? The courts have progressively managed to render the concept of proportionality entirely meaningless.”

The Court of Appeal reached a similar conclusion in Motto v Trafigura [2011] EWCA Civ 1150 when allowing the Defendants’ appeal from Master Hurst’s decison. They concluded that once a court has determined that the costs overall are disproportionate then the test of necessity must be applied to each item within the bill.

Free legal advice – at a cost

Bill of costs states:

“Prior to entering into the CFA, the matter was privately funded.”

So, no claim the CFA is retrospective in nature.

Quick visit to the solicitors’ website which states, under the heading “How much will making a claim cost me?”:

“Absolutely nothing, and that’s guaranteed!”

Also, in clear and unambiguous wording: “free legal service”.


“If you would like to speak to one of our personal injury Solicitors for free legal advice, call us now”


“Our service is totally risk and cost free, there are no catches, no fees, no deductions and no middlemen, win or lose you will not be asked to pay a penny.”

I wonder if their marketing department and costs department should speak to each other.

Costs management

Richard Langley, writing in the Solicitors Journal, commenting on costs management records:

Courts have always grappled with how to manage cases and had a variety of tools at their disposal for this purpose. In 1595, the Master of the Rolls decided in one chancery case that the pleading, at 120 pages long, was eight times longer than it needed to be. The remedy was to order that the pleader be brought into Westminster Hall at 10.00am the next Saturday, whereupon a hole be cut in the middle of the pleading so that it could be placed over the pleader’s head, who would then be led around “bare headed and bare faced” before being sent to the Fleet Prison until he had paid a £10 fine (Mylward v Weldon [1595] EWHC Ch 1).

Something similar needed for prolix Points of Dispute and Replies?

Costs law updates

If the Legal Costs Blog has seemed a bit quiet lately that is because I’ve been off sick with some kind of cold/flu virus for the best part of the last four weeks. To suggest I’m now a bit behind with work would be an understatement.

With all the recent costs developments, I’ve now got about six month’s worth of blog posts to write.

Until I’ve caught up can I ask the government to refrain from making any further costs related announcements, the rules committee from making any relevant rule changes and the courts from making any further costs judgments?

I did manage to stagger to the LexisNexis Costs and Litigation Funding conference on Thursday. A quick summary of some of the issues covered can be found on the Legal Futures website. This included costs judge Master Haworth predicting that the Jackson reforms are likely to lead to the costs war restarting with a new wave of satellite litigation. So, something good may come out of all the upheaval.

The chair of the conference, His Honour Michael Cook, quoted from the article I wrote for Solicitors Journal on the unresolved issue of whether VAT is included within the proposed 25% success fee cap in personal injury claims. Despite that article being written back in July we seem to be no closer to an answer.

In other news (I’m trying to cram in as much as possible here), the Association of Costs Lawyers has released Modernising Bills of Costs – First Report of the Jackson Working Group. This report has been based on work by a number of key stakeholders and can be expected to form the basis for the inevitable changes to bill format that will follow Jackson implementation.

Above the law

I recently received, from a well-known firm of claimant lawyers, a set of Replies. In support of the Replies and the refusal to disclose the conditional fee agreements was a statement from the managing partner of the firm. This explanation included the following:

“Defendants’ request for early disclosure of our CFAs is made in an attempt to avoid their obligations to pay costs on a technicality. I find this approach utterly wrong and certainly not in the spirit litigation should be conducted.”

I suppose the “technicality” referred to is what some of us like to refer to as “the law”.

Only lawyers who make their living holding others to account to the full extent permitted by the law would believe that the law is something that applies to everyone but themselves.

Fixed fees to be reduced

Jonathan Djanogly has confirmed that the Government intends to reduce the fixed fees in RTA claims once the ban on referral fees comes in.

Can we also expect a reduction in Guideline Hourly Rates, which haven’t been increased this year?

A nicely balanced piece on the subject of RTA claims was published in the Daily Mail.

Motto & Others v Trafigura – Court of Appeal

Court of Appeal judgment in Motto & Others v Trafigura [2011] EWCA Civ 1150 out.  Summary of leading judgment:

“i) Proportionality: I would allow the defendants’ appeal, and would hold that it follows that any item on the Bill is only to be allowed if it was necessary;

ii) Vetting costs: I agree with the Judge’s conclusions, save that the necessity test must be satisfied before any item is recoverable, and any specific (as opposed to generic) item can only be recovered if it falls within the grasp of the relevant claimant’s CFA;

iii) Pre-Action Protocols: I would dismiss the defendants’ appeal against the Judge’s finding that there should be no disallowance or reduction in respect of any sum claimed in the Bill on the ground of the claimants’ failure to comply with any protocol or the PDPAC;

iv) Medical reports: Subject to the point that the cost of these reports should not be recoverable if it was unnecessary to obtain them, I would uphold the Judge’s conclusion on this issue.

v) Abandoned claims: Subject to satisfying the requirement of necessity in relation to an item, the claimants can recover costs in respect of the “abandoned claims” in so far as it was reasonable and proportionate to plead, investigate and pursue them;

vi) Settlement and distribution: I would uphold the Judge’s conclusions, save I would discharge his imposition of the 26 October 2009 cut-off date;

vii) Cost of funding: Contrary to the Judge’s conclusion, I do not consider that the claimants can recover the costs of preparing and advising on the CFAs, nor do I consider that they can, recover any costs incurred in discussing the litigation with,, or taking instructions from, with the ATE insurers;

viii) Success fee: I would uphold the Judge’s determination of 58% uplift for both Leigh Day and counsel;

ix) ATE premium: I would uphold the Judge’s decision to fix the premium of £9,677,554 by reference to a 65% prospect of success.”

Much to mull over.  Something for claimants and something for defendants.

Risk assessment

A further definition from The (Alternative) Legal Costs Dictionary:

Risk assessment n. document that identifies the litigation risks of the case which is prepared prior to there being sufficient evidence available to identify the litigation risks of the case. A document carefully and methodically drafted to suggest a level of risk such as, if it actually existed, would mean the lawyer would not touch the case with a ten-foot bargepole but which will hopefully persuade a judge several years later to allow a 100% success fee.



Over-charging by City firms

An interesting article from costs draftsman Jim Diamond on legal costs overcharging by City firms recently appeared on the Legal Week website. This included the following example:

“The partner of a major law firm who was invited to a client’s corporate golf day. The partner subsequently charged the client eight hours at his full charge-out rate. The purchase of a pair of £80 golf shoes on the day was also charged, to the client’s chagrin.”