Costs muppet

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

Costs muppet n. someone who had the stuffing knocked out of them when they read the Jackson Report’s proposals in relation to fixed fees.

Jackson Report – An Overview

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The legal press and various other sources have been busy in recent weeks providing various summaries and commentaries on the final report of the Jackson Costs Review.  One of the best comes from specialist costs counsel Andrew Hogan of Ropewalk Chambers (although I don’t necessarily agree with all of his interpretations of the proposals or their possible consequences).

For those of you who have not yet read the full 557 pages of the report (shame on you) or feel you are not fully up to speed with some of the recommendations and implications, I can thoroughly recommend this.

The first newsletter provides an overview of the report, the second newsletter looks at it implications and proposals in relation to personal injury litigation and the third newsletter considers the practical difficulties thrown up by Lord Justice Jackson’s proposals.

Costs Law Reports

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In a previous post I commented on the unsatisfactory way that legal costs case law (see post) is scattered all over the place and the problems this causes trying to keep on top of developments.

One potential solution to this problem may come from the re-launched Costs Law Reports.  This is a publication that has gone through (to put it mildly) recent difficulties.  It is now in the hands of new publishers who are making a very serious attempt to make this the most comprehensive collection of costs case law available.  The service will officially re-launch at the beginning of March.  Further information can be obtained by emailing: 

There will still be a print service, but more interesting is an online service with a fully searchable database and an email alerting service.

More exciting still, I understand that the publishers longer term goal is to try to bring together on the online database a fully comprehensive collection of costs case law going way beyond those cases reported in the print version.  If this ambitious goal can be achieved then this will become an absolutely invaluable tool for those with any involvement in legal costs.  The Legal Costs Blog strongly supports Costs Law Reports in this endeavour.

Dr Friston’s Civil Costs – A short teaser

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I have recently been commenting on the forthcoming publication of Civil Costs – Law and Practice, a new book by Dr Mark Friston. To give you some idea as to the scope and ambition of this book have a look at this sample chapter (external link).

This chapter deals with the important topic of contracts made away from solicitors’ places of business.  If this looks like a difficult and obscure subject that you can ignore, think again.  If a solicitor’s paperwork is not in order their bill will be unenforceable.  In the current edition of Claims Management magazine, Andrew Twambley, managing partner at Amelans, wrote: “Well, I have a word from the dark side – from the deepest annals of defendant burrows, from behind the largest rock – that an attack is imminent.  Mark my words, brace yourselves and hope you are not the ones chosen by them, to be the receivers of test litigation”.

Legal costs case law

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BAILII is a wonderful, and free, resource and contains a section specifically devoted to recent costs law decisions.  These are usually mirrored in the excellent, free, Senior Courts Costs Office website transcripts section.  The downside with these sites is that the first does not provide case summaries and the second provides summaries for some cases but in another part of the website and those are not linked to the full judgments.  Further, with neither of these sites is there a way to obtain notification of new decisions.

Lawtel is a subscription service.  It does provide cases summaries and has some interesting decisions not reported elsewhere.  However, this service suffers from two problems (I am not talking now about their bizarre pricing structure).  It has a very useful daily update service that notifies of relevant new court decisions.  Unfortunately, the updates only seem to include recent decisions as opposed to older cases that have only just been added to Lawtel’s database.  Therefore, even if one subscribes to the updates, one can miss important and interesting decisions.  The only way to make sure that other cases have not been reported is to search through the whole database.

The second problem with Lawtel is that it does not report many of the cases that appear on the Senior Courts Costs Office site.  One is therefore stuck with having to visit that site on a regular basis to check for new cases and to skim read them to know what the case is about.

Surely there could be a one-stop solution to keeping up to speed on all costs decisions.  Sadly, time constraints do not enable me to offer such a service.  There is a ray of hope on the horizon to this problem and I’ll provide more information on this shortly.

Notice of funding problems

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I previously reported on the important changes to the rules concerning notice of funding (see link).  I understand that at a recent Civil Justice Committee meeting these rules were discussed.  It was reported that some firms are experiencing difficulties in implementing the new rules and concerns were expressed about satellite litigation and the draconian sanctions imposed by the rules.  (I find it somewhat hard to understand why the new rules should be more difficult to follow or be viewed as more harsh than the previous rules.)

However, of more interest is the fact that the Committee was of the view that the change was introduced without proper consultation as part of the changes made following the MOJ’s consultation concerning controlling costs in defamation claims and it was not clear how the change came to apply to all proceedings.  Apparently the Committee was looking to see if the change could be revoked.

Legal Costs Conferences

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Given the current economic climate, the prices being charges by some legal training conference providers looks rather optimistic, but there is certainly some competition emerging in relation to pricing.

The IBC Solicitors’ Costs Conference 2010, on 26th January, is priced at between £599 and £799 depending on when you booked (with a 20% discount for ALCD members).  CLT’s Solicitors Costs Conference 2010, also on 26th January, is £395 for CLT subscribers, ALCD and APIL members or £495 otherwise.  This year they were, at one stage, offering a very attractive two for the price of one offer.  Butterworth’s Costs and Litigation Funding conference, at the end of last year, was priced at £499.  If you don’t mind a trip to Liverpool, the Liverpool Law Society’s Costs Conference, on 16th March 2010, looks very good value at £199 for members and £249 for non-members.

In light of the Jackson Report, many may be wondering whether they will still have a job working in the field of legal costs and may decide none of these are worth the time, let alone the money.

Jackson Costs Report – The Dawn of a New World

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Many working in the legal costs industry will have gone to work last Thursday, the day Jackson LJ published his final report on his civil litigation costs review, wearing brown trousers.  Most of them will have been spending the weekend updating their CVs.  Those who thought the final report would probably turn out to be something of a damp squib will have had the shock of their lives.

From the perspective of the majority of those working in the costs industry this was about as bad as it could have been.  Short of recommending a total change from the current system to contingency fees, or a total end to costs shifting, it is hard to imagine how much worse it could have been.  This is not to suggest that any of his proposals are wrong given the scope of his remit. 
The majority of those reading this who currently work in the costs industry will be earning a living doing something entirely different in 2-3 years time.
The starting point, if you haven’t done so already, is to read the Final Report (click link) itself.  There are helpful summaries on pages xvi-xxiv and 463-471.  The legal, insurance and mainstream press has been busy writing about the report and a selection of articles can be found read here: Law Gazette, Solicitors Journal, New Law Journal, The Lawyer, The Times, Telegraph, Guardian, Insurance Times and Post Magazine.
For a useful introduction to the recommendations in the report, New Law Journal’s webcast on the final report can be found here: Jackson Webcast.  The New Law Journal was busily promoting this webcast last week and it seems they did a bit too good a job of it as the massive demand for the webcast caused their system to crash.    
So, let’s have a look at some of the key proposals and see what kind of an impact these will have on the legal costs industry:
  • Fixed costs for all stages in all personal injury fast track matters. – This is the big one.  This change does not require primary legislation and is therefore all but certain to happen.  Jackson LJ wants the new regime in place by October 2010!  Yes.  That quickly.  Fast-track personal injury work (with the limit now being £25,000) accounts for the vast majority of the civil costs work out there.  This will mean the end, at least in their current form, for most volume legal cost firms.  Although there will be a run-off period for existing claims, for fast-track matters this will not be long.  Firms are going to be starting to plan their redundancy programmes now.  Firms will be looking for mergers and management buy-outs for what remains of these businesses, if anything.  To make matters worse for employees, many of these firms will have no incentive to retain quality staff and will look to maximise profits for the short run-off period.  Await news of big changes to bonus structures. 
  • An end to recovery of success fees and ATE premiums between the parties. -  Although this will not have a direct impact on the nature of the work out there, it is likely to have two indirect consequences.  Many claimant lawyers will feel unable to charge their clients success fees if these cannot be recovered from defendants.  Even if they do feel able to charge success fees, the proposed new cap on success fees will dramatically reduce the amount lawyers can charge.  This may have an impact on the willingness of firms to accept risky personal injury claims.  Any reduction in new claims being accepted will mean a future reduction in costs work.  Secondly, it has been the amounts at stake as a result of the recoverability of success fees and ATE premiums that has done much to increase the importance of legal costs in litigation and generate the need for specialists.  Once additional liabilities are removed from inter partes bills, the amounts at stake will appear much more modest.  Lawyers and insurers may feel much more comfortable negotiating costs in these cases and not feel the need to involve costs experts.
  • Even if recovery remains in place, Jackson LJ not only wants to reverse the decision in Crane v Canons Leisure Centre [2007] EWCA Civ 1352, which allowed success fees to be claimed on work done by external costs draftsmen, but he wants recovery of success fees to be ended entirely in detailed assessment proceedings.  In recent years, detailed assessment proceedings have often been more profitable than the substantive litigation itself.  This will end and there will be less incentive for claims to be pushed to detailed assessment.
  • Jackson LJ wants new software developed that will enable time to be recorded on case management systems in such a way that schedules of costs and bills of costs can be generated automatically.  Yes, you did read that correctly.  The traditional job of a law costs draftsmen, drafting bills of costs (as the name implies), is to end.  The bread-and-butter work for claimant costs firms will disappear.  This proposal would take some time to put into place, and faces a number of problems, but does not make for happy reading.
  • Lengthy points of dispute and replies have become an industry in their own right and generated much work for the costs world.  Jackson LJ wants a radical change in approach and these pleadings to be much shorter.  Interestingly, the new model points of dispute (page 556 of the Report) are very similar to the kind I have been producing for years.  This recommendation is more one of guidance as to what the courts will expect to see rather than a fundamental change in the rules.  Although this change anticipates an actual amendment to the Costs Practice Direction, we can expect judges to want parties to implement the spirit of this change immediately.  Receiving parties will have to think carefully before preparing optional replies unless there is a point of principle arising or positive concessions are being made.  If they carry on producing replies along current lines they are unlikely to recover the costs of the exercise.  You heard it here first.
  • There is a proposal for a pilot scheme of a provisional assessment procedure for bills up to £25,000.  If fast-track cases become subject to fixed costs, this proposal is unlikely to impact on a large number of cases.
  • Jackson LJ recommends the introduction of qualified one-way costs shifting (in simple terms it means that defendants in personal injury claims will not normally be able to recover their costs when they win a case except where the defendant has succeeded on its Part 36 offer).  This will mean an end to the need for defendant bills of costs in most cases where a defendant wins on liability.  It will mean an end to the need for losing claimants to challenge such costs.
Are there any crumbs of comfort to come out of the report?  Not many.
  • The introduction of rules for costs management in cases is proposed.  At one stage it was hoped in certain quarters that this idea would generate significant new work and keep experienced costs specialists busy.  However, it is proposed that it will generally be in the discretion of the judge as to whether to order costs management and it is unlikely that it would be adopted much beyond the type of case that is currently considered appropriate for costs capping orders (ie virtually none).
  • Judges will be given a bit more discretion as to the circumstances where they are meant to summarily assess costs.  Basically, if they don’t want to, they don’t have to.  However, given fast-track cases will be caught by the fixed costs proposals this is only going to have limited impact on costs work levels.
  • The radical proposals for “proportionality” (which I’ll discuss in more detail on another occasion) seems certain to generate a flurry of satellite litigation initially, but this will probably be short-lived.
Don’t start complaining as to why you weren’t warned about all this before.  Given Jackson LJ’s opening comments to his Preliminary Report were: “My final report will generate protest from at least some directions and quite possibly all directions. … The personal injury litigation industry is populated by numerous interest groups and middlemen, all of whom have to meet their overheads and make a profit on top. If any layer of activity can be removed from the process … it may be thought that this will serve the public interest”, it should have been obvious what was coming.  I warned as much in a previous post (click link) and a recent article I wrote for the Solicitors Journal (click link).
If there is any comfort at all from this report it is that it may help separate the wheat from the chaff in the costs world.  For too long this has been an industry largely populated by poorly trained “costs muppets”.  With only a small number of higher value claims remaining in the system post-Jackson, it is to be hoped that those who survive are the genuine experts and what was an industry will become a true profession.
For the rest, happy job hunting.

Legal costs sense at an insane price

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Amazon are taking pre-publication orders for Dr Mark Friston’s Civil Costs: Law and Practice (see link) at the discounted price of £56.25 (with free postage).  This would be an insanely low price for any legal text book. I really can’t believe that the price is so low for this book.  Don’t be fooled into thinking the low price means you won’t get something of serious substance.

Jackson Costs Report – The Headlines

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So, are the proposals contained in the final Jackson Report as dramatic as some were expecting?  Oh, yes.

These include:

  • Success fees and after the event insurance premiums to be irrecoverable between the parties (this would mean the end for most ATE insurers);
  • To offset the effects of this for claimants, general damages awards for personal injuries should be increased by 10%;
  • Referral fees should be scrapped (this would mean an end for claim management firms);
  • Qualified ‘one way costs shifting’ – claimants would not usually be liable for a defendant’s costs if a claim is unsuccessful (as long as they have behaved reasonably), removing the need for after the event insurance (and the need for some costs drafting work);
  • Fixed costs to be set for ‘fast track’ cases (those with a claim up to £25,000) to provide certainty of legal costs (this would mean an end for many costs negotiators and costs draftsmen);
  • Allowing lawyers to enter into contingency fee agreements, where lawyers are only paid if a claim is successful, normally receiving a percentage of actual damages won.