New bill of costs format

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I previously commented (see post) on the possibility of a new bill of costs format emerging as a result of the Lord Justice Jackson’s Civil Litigation Costs Review.

The Senior Courts Costs Office Costs Practitioners Group recent minutes (see link) provided an update:

Proposals for a new format for bills of costs
As a result of the seminar, a working party comprising Master Simons, District Judge Besford and Mr Harman had been set up to look into the format of bills of costs and how improvements could be made. They had consulted with the Costs Judges, the Association of Law Costs Draftsmen and the Regional Costs Judges, who had all provided feedback. The conclusion they had reached, which was to be their recommendation, was that the items claimed as part of the Documents item in a bill of costs should be subdivided according to subject matter, instead of being listed in chronological order. For example, there should be separate subheadings to show the time spent on preparing pleadings, witness statements, preparations for trial etc. This had been put to the firms who prepared software for bills of costs, who saw no problems with this format. The meeting welcomed this proposal as an improvement on what we presently have. However, Mr O’Riordan spoke up on behalf of those who thought that this improvement should go further: the “block time” method could be applied to the whole bill, thus doing away with the need to count individual letters, emails and telephone calls. Where most time was now recorded by solicitors on computerised time sheets, he thought it an anachronism that individual letters, which were sometimes little more than a couple of lines, should be remunerated as a 6 minute unit, when the time sheet would record the actual time spent in any event. Master Simons said that it was the intention of the working party to recommend that email communications were dealt with in this way, but that for routine letters, he felt that showing the total amount of correspondence with a party (i.e. by letter count) was still a useful way of determining whether the amount of work done with that party was reasonable and proportionate or not.”

This recommendation seems likely to be accepted by Jackson LJ.  And the waiting is almost over…

Responses to Jackson Costs Review

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It is obvious how much work has been put in by Lord Justice Jackson and his team in relation to his preliminary report on his Review of Civil Litigation Costs and his forthcoming final report (due for publication on 14 January 2010). However, others have also put a lot of time and effort into this process.  The preliminary report generated a large number of responses from interested parties who produced detailed submissions in the hope influencing the final report. 

To recognise that work I have put together links to a number of these responses.  These can be viewed here: Jackson Costs Review.  The list is not complete and was based on a trawl of the internet and some other investigations (but does include the response from Gibbs Wyatt Stone).  I will be happy to add others if you send me a link or a copy of the document.

Jackson webinar

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As the excitement about the publication of Lord Justice Jackson’s final report on his Review of Civil Litigation Costs builds to an uncontrollable frenzy, an event to place in your diary is a live webinar panel discussion on the key proposals in the report on the same day as publication (14 January 2010) over at the New Law Journal website. 

Legal costs and referral fees

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The Law Society recently announced a change of policy with a call for the reintroduction of a ban on referral fees.  The Legal Services Board said it will look at this issue as priority.

The subject of referral fees is not, in theory, one directly related to legal costs but does seem to keep cropping up.  I first became aware of the issue in the context of the sadly missed Claims Direct and Accident Group schemes.  Readers will recall that these schemes, and other similar ones, required payment by the solicitor of an “investigation fee” in respect of each case referred.  These fees were then claimed by claimant solicitors as a disbursement.  I remember the countless arguments I used to have with claimant solicitors (often senior partners) who claimed, despite all the evidence to the contrary, that these were not thinly disguised referral fees.  Such fees were indeed subsequently held to be unlawful (and therefore irrecoverable) referral fees in the Claims Direct Test Cases – Tranche 2 [2003] EWHC 9005 (Costs) and Accident Group Test Cases [2004] EWCA Civ 575.  I was always somewhat surprised that when the referral fee ban was lifted claimant solicitors didn’t start to try to start slipping these fees through again in their claims for costs, but this didn’t seem to happen.

Another link between referral fees and legal costs has recently come to the fore in relation to claims that the former drives up the latter and whether this is the explanation for the 20-35% gap between the amount charged by claimant and defendant lawyers (see article).  This same issue has been highlighted by Lord Justice Jackson in his review of Civil Litigation Costs.

The impact of any return to a ban on referral fees will be entirely dependant on whether it is properly enforced; something which never previously happened.

Guideline Hourly Rates 2010

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Will there be an increase in the Guideline Hourly Rates for 2010?  The latest news is that the Master of the Rolls has decided to wait until after publication of Sir Rupert Jackson’s report of his review of Civil Litigation Costs before deciding whether to make any changes to the current Guideline Hourly Rates. That report is due to be published on 14 January 2010.  My prediction: no change.

Click image to enlarge:

6 10 98

A worrying legal costs development

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The decision in Crane v Canons Leisure [2007] EWCA Civ 1352 means that solicitors can outsource work but then charge for this work as though they had done it themselves (with a higher hourly rate than that paid to the agent) and claim a success fee on top.  Therefore, in the case of detailed assessments, solicitors can outsource the bill drafting and advocacy at a rate of, for example, £100 but then claim a rate of, for example, £130 plus a success fee of up to 100%.

Lord Justice Jackson’s preliminary report on his Review of Civil Litigation Costs quoted the view of FOIL that this decision was “iniquitous and further increasing costs”.  Jackson LJ viewed the decision as an example of the rules creating “windfalls for claimant lawyers” and raised the possibility of reversing this decision through primary legislation.

It is therefore unfortunate that news emerges of a change to the way barristers’ fees can be treated.  According to a recent report in the Law Gazette, solicitors will for the first time be able to profit from instructing barristers following rule changes agreed last month by the Bar Standards Board.  It will enable a relationship with solicitors that will allow the solicitor’s firm to treat the barrister’s fee as a cost that they can mark up when billing the client to generate a profit (and therefore, equally, an unsuccessful defendant).  Previously a barrister’s fee was treated as a disbursement.

Traditionally, outsourcing certain work to barristers has been one of the few factors that works to limit the level of legal costs incurred.  It is not uncommon to see a barrister in a claim charging an hourly rate of, say, £150 while the instructing solicitor is charging £250 per hour plus a 100% success fee (ie £500 per hour).  If it becomes common practice for counsels’ fees to have a mark-up added this will be a worrying legal costs development.  Just as others are looking to reduce the disproportionate level of legal costs incurred in litigation, so the Bar has taken a step in the other direction.  This looks likely to lead to the next round of the costs war.