Lord Justice Jackson TV – 1


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Barely a day appears to pass without further commentary or gossip as to the likelihood of the proposals contained within Lord Justice Jackson’s Review of Civil Litigation Costs becoming a reality.

Lets forget for the moment what others have to say about the Report and hear more from the man himself, courtesy of Mobile Doctors:

(If you receive the Legal Costs Blog via email you made need to adjust your security settings to view the video.)

RTA Claims Process – Another fine mess


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For some bizarre reason it appears that readers are still struggling with my previous question concerning the “simple” new road traffic accident scheme.  It’s almost as though I had asked a question that was impossible to answer.
 
Let me give you another question but, this time, also suggest the answer.  I am grateful to Keith Hayward at Victory Legal Costs Solicitors for this one.
 
Proceedings are issued under Part 8 under the new Practice Direction 8B paragraph 1.1(1)(3) because of limitation.  The case is then stayed in accordance with paragraph 16 to enable the claim to proceed under the new RTA claim process.  The claim then falls out of the process, for example, because of an argument over contributory negligence (Protocol 6.15(1)).  The claim is then settled amicably without the need for the stay to be lifted.
 
What costs apply?
 
Don’t just read on. 
 
Lazy.
 
Go and read the rules and see if you can work out the answer first.
 
The answer seems to be governed by the new CPR 44.12C process:
 
             (1)       This rule sets out the procedure where—
(a)        the parties to a dispute have reached an agreement on all issues (including which party is to pay the costs) which is made or confirmed in writing; but
(b)        they have failed to agree the amount of those costs; and
(c)        proceedings have been started under Part 8 in accordance with Practice Direction 8B.
 
The example seems to be caught by subparagraph (c).
 
The defendant can, and it will only be the defendant who wants to do this, apply under CPR 44.12C:
 
(2)        Either party may make an application for the court to determine the costs.
 
And what costs are then payable?  CPR 44.12C states:
 
(3)        Where an application is made under this rule the court will assess the costs in accordance with rule 45.34 or rule 45.37.
 
Note the use of the word “will”, not “may”.  The court has no discretion.  Rule 45.34 and 45.37 allow for costs in accordance with the new fixed costs for the new RTA process.  So, despite the matter not proceeding in the process, the process costs still apply.
 
This was obviously not intended but is another example of sloppily drafted rules.  If any serious attempt had been made at trying to produce simple rules then there would have been a greater likelihood that this type of error would have been avoided.  The Ministry of Justice is simply wrong to claim that the simpler the system, the more detailed the rules need to be.  The courts are going to be swamped with fresh satellite litigation trying to unravel this botched job. 
 
Of course, another reading of the rules might be possible and readers are welcome to suggest why the above analysis is wrong.  However, the point is that the rules should be crystal clear on a straightforward issue such as this.
 
It’s not too late for the Ministry of Justice to pull the plug and I’m not just talking about the new IT system.  

Detailed Assessment


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

Detailed assessment n.  a process whereby a receiving party seeks to recover the cost of work that was not actually performed and the cost of work that was performed but for which there was no need.  In turn, the paying party seeks to argue that the case should have been conducted in half the time, at quarter the cost and by the office cat, if at all.  The process is usually overseen by a court official with no interest in the outcome and no understanding of the rules.  An entirely arbitrary process elevated to a cornerstone of the English legal system.
 

"Quick and simple" road traffic accident scheme


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The Ministry of Justice issued a press release on Monday announcing a "quick and simple compensation scheme for road traffic accidents".  Do any readers have any further information about this scheme as it clearly can’t be referring to the new claims process for RTA claims.  Whether that scheme will be "quick" remains to be seen but I think we can all agree that the extra 80 pages of rules are anything but simple.  If they were then we would have had a winner for that bottle of champagne by now.

If you ever wondered how such a convoluted scheme managed to come into existence you can visit an open meeting of the Civil Procedure Rule Committee taking place in Central London on 14 May 2010 and observe the process.  Spaces are limited and you need to complete a short application form.  I’m not sure that will keep the pitchfork and flaming torch wielding mob out.   

ALCD seeks to ban Jeremy Morgan QC from costs proceedings


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Further to my post yesterday about becoming a Fellow of the Association of Law Costs Draftsmen, I want to write about a far bigger challenge facing the ALCD and others working in the field of legal costs.  For those not working in costs, look away now as this will be of little interest.
 
What I have to say should be put in the context that I recently joined the ALCD, undertook the Fellowship examinations and have paid for the Costs Lawyer training course in May.
 
Since being granted authorised body status, which enables the ALCD to grant rights of audience and the right to conduct costs litigation to Costs Lawyers, it is now subject to and regulated under the Legal Services Act 2007.  Forthcoming changes being brought in by the Legal Services Board mean the ALCD will have to fundamentally restructure itself and undertake significant regulatory obligations.  All of this will cost money and membership fees will rise significantly.  The current fee for Fellow membership is £250 per year.  The rough estimate done by the ALCD suggests fees will have to rise to between about £600-£650 in light of any changes.  These estimates look somewhat low to me.  The estimated cost of a full time Chairman looks too low, certainly once national insurance and pension are taking into account.  I also suspect that very quickly there would be a call for another full time administrator/secretary to assist.  I would be very surprised if the cost of membership didn’t rise very quickly to somewhere in the region of £1,000.
 
If the ALCD does not discharge its duties under the Legal Services Act 2007 it will cease to be an authorised body and will no longer be able to grant rights of audience and the right to conduct costs litigation. 
 
The ALCD, or at least the Council, has proposed seeking protected body status (more of which later) and fulfilling its duties under the act.  This issue will be discussed at the ALCD AGM on 20 March 2010.  However, these proposals have had no real debate in advance and this is a very big topic for both members and non-members alike.
 
Why this is important for non-members, who obviously will have no right to vote on these proposals, and arguably more important for non-members than members, is the proposal to seek protected body status.  In the words of the ALCD this: “would mean that only approved members of the ALCD could represent parties in costs proceedings.  Effectively, this would require the unregulated part of our profession to either join the ALCD or be precluded from participating in costs proceedings”.
 
The ALCD recognises “success in this regard would by no means be guaranteed”.  You don’t say?
 
Lets analysis this further: “only approved members of the ALCD could represent parties in costs proceedings”.  So, poor Jeremy Morgan QC will no longer be able to attend detailed assessments or costs appeal.  Those firms of solicitors that specialise in costs, or have in-house costs departments, will no longer be able to act in costs matters unless the individual staff dealing with costs are also members of the ALCD.  Solicitors and FILEX will no longer be able to deal with recovery of the own costs in costs proceedings but will be forced to instruct ALCD members. 
 
This is self-evidently not going to happen and I am sure the ALCD does not mean literally what it has said.  It is somewhat more plausible that the law might be changed so only members of regulated bodies (eg the Bar, ALCD, Law Society) would be able to take part in costs proceedings.  But once that is recognised, the whole purpose of trying to obtain protected body status is shown to be somewhat empty.  It would not be membership of the ALCD per se that makes its members appropriate to conduct costs litigation.  Rather, it would be that the individual is regulated by a professional body that was the important factor.  Hold that thought.
 
Even if this more limited protected status was achieved, what would that mean in practical terms?  It would certainly not mean, at least in the way suggested, that non-members could not participate in costs proceedings.  The majority of RTA personal injury claims are probably now handled by unregulated paralegals.  By that, I mean large numbers of unqualified unregulated staff who work in solicitors’ offices overseen by a regulated solicitor. 
 
If the ALCD obtained protected body status it would make little or no difference to who handled much costs work.  Costs work generally falls into two broad categories.  The first category is the drafting of bills of costs, points of dispute and negotiation of costs.  The second is advocacy at detailed assessment.  There would be nothing to stop a firm of volume costs muppets employing one ALCD member who simply signed everything off in their name in relation to the first category, even if the work was conducted by non-members.  Much the same would happen in relation to advocacy.  Only a very small proportion of costs matters proceed to detailed assessment and even quite large firms could easily manage with only one or two who were authorised to do that work.  
 
It is this aspect of what would happen in reality that is the worrying part of this proposal.  I suspect the ALCD anticipates that gaining protected body status will bring new members rushing to join the ALCD and potentially reduce the cost per head of membership as there became more members to spread the cost.  I fear the exact opposite may happen.  At the moment a number of law costs drafting firms have a policy of having all their fee earning staff as members of the ALCD.  While the membership fees are relatively modest, this makes some sense.  If the fees rise significantly, even if only to the level anticipated by the ALCD, this will become far less attractive.  In addition to the direct membership fees are the further costs of Continuing Professional Development.  A number of firms are likely to reduce the number of fee earners who are members of the ALCD and keep the minimum number as members that they consider necessary to undertaken any advocacy work.  The burden of the cost of being regulated may fall on a smaller number of surviving members.  This would potentially push membership fees north of £1,000.
 
Examined more carefully, the idea of getting protected body status is remote because of what it would actually mean.  Costs draftsmen, costs consultants, costs negotiators, costs muppets and others currently appear before the courts on detailed assessment because they are either employed directly by a firm of solicitors, and therefore have the same right to appear in hearings in chambers as any other solicitors’ employee, or because they are treated as being temporary employees of the solicitors for the purpose of the hearing.  That was the position before the ALCD gained the right to grant rights of audience and remains, normally, the position now.  The fact that Costs Lawyers also have independent rights of audience is of limited practical significance.  The only exception to this is on appeals to a higher court.  However, in reality, even this extra “right” is of limited importance.  I appear on a routine basis at appeals at Circuit Judge or High Court level.  The instructing solicitor writes to the court asking for permission and I have yet to have it refused.  On occasion, the Court of Appeal has granted permission for costs draftsmen, and not necessarily ones who are even members of the ALCD, to appear before them.
 
A large amount of advocacy in the lower courts, ignoring costs proceedings, is undertaken by fee earners whose right to be heard arises only through their status as solicitors’ employee.  How likely is it that the law will be changed to end the general right of solicitors’ employees to appear at hearings heard in chambers?  No chance.  What good reason would there therefore be to treat costs proceedings as such a special category that solicitors’ employees should be expressly excluded from acting?  This is in the context where it is inevitable that barristers, solicitors and FILEX would also be allowed to partake.  
 
Even on their own estimated figures, the ALCD admits: “the costs of compliance with the Act will probably be disproportionate to the direct benefits gained by LSB regulation in terms of the exercise section 27 and 28 rights by Costs Lawyers”.  Protected body status will not happen, or at least not in the way suggested by the ALCD. 
 
So what would ALCD members get for their money if not the Holy Grail of a “closed shop”? 
 
In the same breath as saying the costs of compliance will probably not be proportionate to the direct benefits, they say that losing the ability to grant rights of audience and the right to conduct litigation to Costs Lawyers “would have a significant impact for Costs Lawyers, those who aspire to become Costs Lawyers and the ALCD as a whole”.   Why?  If an increased membership fee of even only a further £350-£400 is not proportionate to the direct benefit, what is the “significant impact” that the loss would create? 
 
What extra work has been generated for costs draftsmen who have attained Costs Lawyer status?  What extra work is there in the system generated by the powers the ALCD now has compared with before 2007?  It may be that the ability to conduct costs litigation and take over some of the routine tasks has generated some small extra fees in volume work but we are now heading into post-Jackson territory.  Once fixed fee are introduced for fast-track personal injury claims the ability to conduct costs litigation becomes a tiny element of the remaining work handling multi-track claims.
 
The point the ALCD makes in support of the supposed benefits of LSB regulation is that “the wider benefits of status and recognition in the legal profession must not, however, be underestimated”.  I am far from convinced that such status or recognition exists.  In all the years I have been working in costs I cannot remember a single legal client, potential or otherwise, ever asking if I was a member of the ALCD, let alone a Costs Lawyer.  It is not a factor that has, in my experience, ever influenced solicitors when instructing costs draftsmen.  This may, in part, be because few solicitors probably even realise the current role of the ALCD or understand the distinction between regulated ALCD members and non-regulated costs draftsmen.   It is not so much a matter of “underestimating” the benefits of status and recognition, rather it is a question of identifying what these benefits actually are.
 
Wendy Popplewell, writing in Costs Lawyer magazine, states that the LSB’s rules are “intended to reform and modernise the legal services market place in the interests of the consumer”.  This is the crucial issue and what any changes to the ALCD should be focused on.  Professionals such as doctors, accountants and solicitors are regulated to protect the public consumer.  We are a relatively unique profession (although arguably similar in this respect to the Bar) in that the vast majority of the work we do is done for other lawyers or insurers (even if there is a member of the public behind them).  The consumer protection purpose of regulation is almost entirely absent from what we do.  Solicitors or insurers should be sophisticated enough to make an informed decision about the costs professionals they instruct without an expensive regulatory system in the background.  If they believe that ALCD membership provides an indication of professional standards then they can choose to use or employ only costs draftsmen who are members.  If they are content to use non-members then they are surely sufficiently informed to make that decision.
 
The only exception to this is where costs draftsmen act for litigants-in-person.  However, for practical purposes, the CPD 52.1 is drafted narrowly enough to limit the likelihood of non-ALCD members undertaking this type of work. 
 
I am certainly not aware of any clamour, either from consumer organisations or the judiciary, for a clampdown on unregulated costs draftsmen exploiting litigants-in-person. 
 
The proposed increases to membership fees may currently seem manageable, if disproportionate to the benefits.  However, they are based on a current understanding of what regulation will require. As Popplewell notes: “at the time of applying for authorised body status, we did not know and could not have known the implications of the act”.  Precisely.  In the highly unlikely event that the ALCD did acquire protected body status, there would then be no way to go back.  The ALCD would not be able to decide at some future date that the benefits no longer justified the costs and simply unregulate itself.  Once regulated under the Act, there is no way of knowing what may be demanded in the future.  Only a moment’s thought will reveal the LSB might demand almost anything at some future date.  Does the ALCD really want to lock itself into a regulatory system over which it would have no control?
 
The ALCD has found itself in an invidious position.  Having finally obtained proper recognition as a profession it is now faced with the choice of abandoning all it has worked so hard to acquire or go down an expensive and demanding regulatory road.  The ALCD Council, no doubt trying to act in the best interests of its members, wants to take the second route.  I think it has made the wrong call. 
 
Popplewell writes that their proposal will: “allow us to seek further opportunities for members, including providing training for judges, barristers and solicitors in relation to costs and to represent parties in costs proceedings and in the budgeting, quantification and assessment of legal costs”.  Which of these were members of the ALCD unable to provide before 2007?  The proposals add nothing to what we can now provide.  All they promise is increased cost for the small benefit of the section 27 and 28 rights and the highly remote possibility of achieving protected body status.
 
Moving into the post-Jackson world, costs professionals are going to have to up their game spectacularly to even stay in the game.  Now is not the time to start getting caught up in bureaucracy and red-tape.  The ALCD should take the far bolder step of walking away from approved body status and walking into the costs future with a confident stride focused on supporting and promoting its members. 
 
I will be voting against these proposals.  Others can comment here, in public, or over at the ALCD Forum, in private.

 

Association of Law Costs Draftsmen


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I recently became a member of the Association of Law Costs Draftsmen (ALCD) after passing their Fellowship examination.  I can now put FALCD after my name.  As you can imagine, this was the proudest day of my mother’s life. 

 
Some readers may be surprised to discover I was not previously a member of the ALCD.  Other readers may be equally surprised that I managed to pass the exam.
 
Let me explain further.  Any idiot can, and often does, refer to themselves as being a law costs draftsmen.  Wendy Popplewell, Chairman of the ALCD, recently wrote that “it is recognised that ‘law costs draftsman’ is not a title protected by law to those holding ALCD qualifications”.
 
The ALCD exists as a body to train, regulate and promote costs draftsmen.  However, membership is entirely voluntary.  The ALCD was recently granted authorised body status which enabled it to grant rights of audience and the right to conduct costs litigation to Costs Lawyers.  A two day training course bumps up Fellows to Costs Lawyer status and I am booked onto the next course in May.
 
For practical purposes, being a Costs Lawyer brings limited additional rights to what any costs draftsmen/consultant can do, whether as a member of the ALCD or not.  I’ll discuss this in more detail later, but not having automatic rights of audience as a Costs Lawyer, and not being a practising barrister, has never prevented me from appearing in court in costs matters, including appeals in the High Court and at Circuit Judge level (only Ahmed v Powell managed that feat on one embarrassing occasion).
 
The ALCD normally requires its members to complete what has become over the years an ever more sophisticated training programme in all things costs related.  I entered straight in at Fellowship level.  There is a little known, and possibly soon to be abolished, shortcut for those who have been practising in the field of legal costs for long enough (I think the current requirement is something like a minimum of 50 years) and who then pass the written exam.
 
Well, I’ve been doing costs for long enough to have passed the first requirement.  I only had to worry about the simple matter of passing the exam.  The previous year’s exam papers had 6 questions of which 3 had to be answered.  The pass mark was 65%.  For me, the 3 out of 6 was likely to be the problem.  Regular readers (God bless both of you) may think I know all there possibly is to know about legal costs.  In truth, I work in the limited field of civil costs and, usually, only inter partes costs.  I don’t do criminal, family, legal aid, employment, etc, etc.  My big worry was that I might be able to answer, say, only 2 of the questions.  Then, unless I managed to score a rather unlikely 100% in both of those questions, there would be no way I could pass the exam. 
 
A number of years ago I did write to the ALCD, and they published the letter in their Journal, suggesting that their training programme should be amended to recognise that many costs draftsmen practise in a limited field of costs law and that familiarity with all areas is not necessary.  In the same way, a barrister can become fully qualified without ever having studied family law.  The ALCD decided not to alter the range of subjects they expected those who went through their training to study.  Fair enough.  Their ball and they can decide who gets to play with it.
 
So I went into the exam with every expectation that I would take one look at the paper and have to walk straight out.  (You might, at this stage, suggest that I should have tried to learn some of the other subjects to give myself a better chance.)  In the event, the paper had 9 questions and I was therefore able to find at least 3 I could answer.  This made it, possibly, even worse.  Now, if I failed, I would have no excuse.  It would have been a rather embarrassing day for the Legal Costs Blog if I had failed the exam.  And, I must say, the exam questions were certainly challenging.  It was with no small sense of relief when I finally opened the envelope informing me I had passed.
 
I write all this not because I think the average reader has any particular interest in my career development but as an introduction to what I will be writing about tomorrow which has real importance for all those working in the field of legal costs, whether as an ALCD costs draftsmen or otherwise.
 

 

After-the-event (ATE) insurance policy


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

After-the-event (ATE) insurance policy n. a policy of insurance whereby the insurer seeks a large premium in respect of something which the insurer has assessed as carrying little or no risk.  In the unlikely event that a judge prefers the evidence of the defendant to that of the claimant, the insurer will void the policy on the basis of material non-disclosure and refuse to pay out.

Alan Titchmarsh tackles claims culture


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Following on from Tuesday’s post about the Channel 4 programme entitled Scams, Claims and Compensation Games the Alan Titchmarsh Show invited former FOIL President, Anthony Hughes, and Merish Lyons from APIL to debate the issues.  View here: The Alan Titchmarsh Show (relevant part starts at 24 minutes 40 seconds).

New RTA scheme rules and win a bottle of champagne


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A reader helpfully posted a comment on an earlier post mentioning the fact that the New RTA Claims Process start date as been put back to 30 April 2010.  I have received the same information from a number of other reliable sources.  The postponement appears to be due to problems with the electronic portal.  The MoJ website did not, at the time of writing, have any announcement on the subject.  The RTA PI Claims Process portal site has quietly changed the start date but made no specific mention of the change.  This is no doubt due to the ironic fact that the tag line at the top of the web page has the words: "Will your business be ready to meet the deadline…".  The ticking clock has also been wound back.  Oh, the irony.

Now, when the new scheme does finally start, it will be largely run by junior claims handlers at the defendant end and paralegals at the claimant end.  This is meant to be a simple scheme for low value RTA claims.  The new rules are therefore no doubt designed to be easy to understand.  If you have not seen them yet the draft rules can be viewed here: new rules for the RTA Claims Process.

Allowing for how simple these rules are meant to be, I’m going to pose a simple question.  If the claimant is a child, damages are not agreed, the matter proceeds to a Stage 3 hearing and the claimant has beaten the defendant’s offer, the costs recoverable by the claimant are governed by the new CPR 45.34.  So the question is: what costs are payable, and by virtue of which draft rule, to a claimant child where damages are not agreed, the matter proceeds to a Stage 3 hearing and obtains judgment for an amount equal to or less than the defendant’s offer?

First correct answer wins a bottle of champagne (but you won’t be able to win if you post anonymously).  Remember, this is a very simple scheme and I’ll be very disappointed not to have a correct answer within 30 minutes of posting.

Scams, Claims and Compensation Games


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Channel 4 broadcast a programme last week that, in the words of Radio Times, "opens up the seething can of worms that is the world of personal injury claims, and the charmless no win, no fee lawyers who operate there [surely that’s a bit harsh]".  View the programme here: Scams, Claims and Compensation Games .