Monthly Archives: July 2010

Defective ATE insurance certificates

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When After-the-Event insurance premiums became recoverable back in 2000, the Costs Practice Direction introduced the following rule as to what should be provided when serving a bill of costs:

32.5(2) – If the additional liability is an insurance premium: a copy of the insurance certificate showing whether the policy covers the receiving party’s own costs; his opponent’s costs; or his own costs and his opponent’s costs; and the maximum extent of that cover; and the amount of the premium paid or payable.

Other than some subtle changes to the wording, to make this gender neutral, the rule remains the same today.

So why is it that 10 years after this rule was introduced I still routinely see certificates served with bills of costs that do not comply?

The most common defect is a certificate that fails to identify what it covers.

Almost as common is a failure to serve any certificate at all but instead serve a consumer credit agreement in relation to the ATE policy that doesn’t itself come close to complying with the requirements of 32.5(2).

Given the consequences of failing to serve a compliant certificate (see CPR 44.3B(1)(e)) you would think ATE insurers would make a bit more effort. How hard can it be?
 

Jackson Report – Matthew Harman responds

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Continuing with our occasional series of responses to the Jackson Costs Review from the “great and the good” in the costs world is Matthew Harman.  Matthew is President of the Association of Law Costs Draftsmen, Costs Lawyer and Senior Partner at Matthew Harman & Partners. 

JACKSON – 6 MONTHS ON

The Jackson report was published amongst great fanfare on 14 January this year although it seems to have been around much longer. The report was the subject of much discussion and debate with the various conference companies reaping the benefits by putting on talks where the few who had read the whole report could pass on the key details to the great majority who had not.

From my perspective as a working Costs Draftsman there were obvious concerns about the impact of the recommendations on my day to day life. However, I have always felt that my job is one that evolves and I saw this report as another part of the evolution. Having said that, I did, and still do, have concerns for some areas of the profession. Certainly, the days of the kitchen table draftsman are numbered. However, this is more to do with the scandalous reductions in legal aid than the Jackson recommendations.

The big question remains some six months later as to whether the recommendations are going to be implemented. At the time of the report’s publication one very well connected member of the judiciary was asked the question and replied “two wars, one impending election and no money. What do you think?”

Well the election has come and gone so where are we now? A question was asked in the House of Commons on 29 June as to whether there would be legislation introduced to allow the implementation of the report. The response was typically political and could easily have been written by Sir Humphrey and went along the lines of: ‘We are taking urgent steps to consider the recommendations of Lord Justice Jackson’. Neither of the manifestos of our coalition Government included any reference to the report.

Given the massive problems that the Government are struggling with at the moment there has to be significant doubt as to whether the report will feature very highly in their thoughts save and unless the recommendations can be used to assist with the overall reduction of expenditure but even those savings would be relatively minor in the grand scheme of things.

Whatever happens I suspect that Sir Rupert will be disappointed on a personal level as he went to great pains to make it clear that his recommendations are all interlinked and should all be introduced as a sweeping change to the process of civil litigation.

My view, for what it is worth, is that some elements of his recommendations will be introduced but on a piecemeal basis. Some Judges may take elements of his suggestions and use them as part of their case management function. To an extent that is already happening. However, these are generally not amongst the key suggestions in any event and will not make a great deal of difference to life. There is also the fact that it took the judiciary two months to get their act together and appoint a Judicial Steering Group to ‘lead on judicial contributions to the implementation of the review’.

I simply cannot see that those reforms that require primary legislation will be implemented in the foreseeable future. The Government and the Ministry of Justice both have a great deal of more pressing work to get through before it will have the time or inclination to consider the necessary reforms in more detail. At least that means that the indemnity principle remains for the time being. Furthermore there are some of his recommendations which I believe will simply never see the light of day. The mooted 10% increase in general damages? Nah.

Overall then we are six months down the line and the initial interest and general furore has died down. There are less conferences talking about the report and one does not see a great deal in the legal press about Jackson. Ultimately, there are some good and sensible suggestions in the report but full implementation seems a very long way off at present.

Matthew Harman

Postscript: Since writing the above the Government, clearly having got wind of my piece, have now produced a Written Ministerial Statement on the subject. More consultation is promised but with a focus very much on CFAs and the very attractive prospect to the government of reducing costs by doing away with success fees. There is also the underlying threat of further reductions to the Legal Aid budget with promises to look at other alternative forms of funding. None of this will promote access to justice but will lead to savings for the Government.

 

 

What grade fee earner for drafting a bill of costs?

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What grade of fee earner can be justified for a law costs draftsman drafting a bill of costs?

Cook on Costs 2010, page 438, says this issue was discussed at a Costs Practitioners’ Group meeting at the SCCO “whose view was that while Grade D fee earners might be able to draw straightforward bills of under £10,000, all other bills ought to be drafted by a Grade C fee earner, since costs are a technical matter, and matters such as the operation of the indemnity principle need more experience than a Grade D fee earner is likely to possess.”

This suggests that the Costs Practitioners’ Group was of the view that it is acceptable for smaller bills to be drafted by fee earners who do not understand the indemnity principle.  It also suggests that student members of the ALCD who have had up to five years qualifying employment (and would therefore be the equivalent of a Grade D fee earner) might not understand the indemnity principle.  If true, something would have gone seriously wrong with the ALCD training and the previous five years work.

I’m still waiting to see a bill of costs that comes with a disclaimer that the person who drafted it does not understand the indemnity principle and no reliance should therefore be placed on the signature to the bill.  (Though no doubt routinely true even with very large bills.)

Cook on Costs does not identify which Costs Practitioners’ Group meeting is being referred to so the Legal Costs Blog did its own fearless investigative journalism.

The meeting referred to appears to be that of 8 March 2007.  The minutes can be viewed here.  Michael Cook is not listed as one of those present.

The minutes read:

“Mr Hocking [from the Association of Law Costs Draftsmen] outlined the current position. For run-of-the-mill cases in the provinces, bill drafting was normally allowed at grade “D” fee earner level, whereas advocacy was generally allowed at grade “C”. In larger and/or more complex matters, grade “C” might be achieved for bill drafting and grade “B” for advocacy which would be appropriate for Fellows of the Association of Law Costs Draftsmen, some of whom are also qualified solicitors or FILEX. The meeting agreed with this.”

There is absolutely no mention of a £10,000 limit.

Interestingly, the Supreme Court costs practice direction states:

” For a larger bill [over £10,000] the amount allowed for time reasonably spent in drafting the bill is calculated as a multiple of the relevant hourly rate for a Grade D fee earner (unless a claim for a higher grade is justified).”

Following on from my last post, and in anticipation of this post, one reader raised the question as to what rate is appropriate for the fee earner who “punches above his/her weight”. “Suppose the unqualified and therefore Grade C fee earner is actually highly skilled and routinely handles Grade A work. What rate should be paid then?”

A very good question. Almost the kind of question I would expect a member of the judiciary reading this Blog to anonymously post.

The full answer to that is a bit too long for this post. In relation to substantive litigation or advocacy at detailed assessment hearings I can see strong arguments for allowing a fee earner to recover higher hourly rates than their qualifications/experience strictly justifies, depending on their skill and the nature of the case being dealt with. However, when it comes to drafting routine bills of costs I just don’t buy the idea that this is ever anything other than Grade D work. 

Its very kind of Cook on Costs to try to pretend that anything other than the most complex bill of costs (and I mean complex rather than simply ones with a large amount of work claimed) justify anything other than a Grade D fee earner, but it is simply not true.  If your law costs draftsman is charging you Grade C rates or above for anything other than unusual claims you are being ripped-off.

Jackson Costs Report – “a matter of priority”

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I wonder whatever happened to that report.  What was it called again?  Oh, yes: Jackson LJ’s Review of Civil Litigation Costs.  Probably sitting on a shelf somewhere gathering dust.

Oh.  Just a moment.

What’s this Written Ministerial Statement just released today by Parliamentary Under-Secretary of State for Justice (Jonathan Djanogly MP):

I am today announcing the Government’s intention to consult in the autumn on implementing Lord Justice Jackson’s recommendations on the reform of funding arrangements in his report, Review of Civil Litigation Costs: Final Report, published on 14 January 2010. We will be consulting in particular on the reform of Conditional Fee Agreements (CFAs) which should lead to significant costs savings, whilst still enabling those who need access to justice to obtain it. The Government is therefore taking these proposals forward as a matter of priority.

Lord Justice Jackson was appointed by the then Master of the Rolls in January 2009 to review the rules and principles governing the costs of civil litigation and to make recommendations to promote access to justice at proportionate costs. Sir Rupert’s independent and comprehensive report makes a broad range of significant recommendations for reducing costs in the civil justice system in England and Wales. The Government is very grateful to Sir Rupert for his report.

CFAs have played a role in giving access to justice to a range of people. However, high costs under the existing arrangements have now become a serious concern, particularly in clinical negligence cases against the NHS Litigation Authority and in defamation proceedings.

CFAs are a type of ‘no win no fee’ agreements under which lawyers are not paid if they lose a case, but can charge an uplift on top of their base costs – otherwise known as a ‘success fee’ – if they win. Success fees allow lawyers to cover the costs of cases they take on which do not succeed. The success fee can be up to 100% of base costs. After the Event (ATE) Insurance can be taken out by parties to a CFA funded case to protect them against the risk of having to pay their opponent’s costs if they lose. Under the current arrangements, success fees and ATE premiums can be recovered from the losing opponent in addition to the base costs.

Sir Rupert recommends significant changes to the current arrangements for CFAs. He proposes abolishing the recoverability of both success fees and ATE insurance premiums; this would require primary legislation. In addition, to assist claimants to meet the cost of the success fees for which they would now be liable, he also recommends an increase of 10% in the level of general damages for personal injury, defamation and other tort claims; and a regime of qualified one way costs shifting in specified proceedings, including personal injury and defamation.

Our consultation in the autumn would also seek views on other related recommendations on funding arrangements such as whether lawyers should be permitted to enter into Damages-Based Agreements (DBAs) or ‘contingency fees’ in litigation. DBAs are also a type of ‘no win no fee’ agreements which allow a lawyer to take a percentage of the claimant’s damages for taking on the claim. DBAs are commonly used in Employment Tribunals but are not permitted in litigation before the courts. This consultation will take account of any relevant legal aid reform proposals on which we will also be seeking views in the autumn, as previously announced.

Work is also progressing on a number of other areas covered by Sir Rupert’s review, but will not form part of the Government’s consultation in the autumn. The Government is considering the recommendations on Fixed Recoverable Costs in the Fast Track, and on referral fees. The Legal Services Board is looking at the issue of referral fees, and their conclusions will inform the Government’s position. We will also consider Lord Young of Graffham’s conclusions from his “Review of Health and Safety Law and the Compensation Culture”. Separately, the Civil Justice Council will consult over the summer on a Voluntary Code of Conduct for third party funders, as recommended by Sir Rupert. Third Party Funding is an arrangement whereby a party not directly relevant to the proceedings agrees to fund the case in return for a share of the damages awarded.

A range of judiciary-led costs and case management work has been continuing since Sir Rupert’s report was published. For example:

• more robust costs management is being piloted in defamation cases and in mercantile, technology and construction cases;
• a streamlined process and scale costs in the Patents County Court will come into effect in October 2010;
• there will be a pilot of assessing disputed costs under £25,000 on the papers rather than at a hearing, in Leeds, Scarborough and York County Courts from October 2010; and
• a pilot to speed up and reduce the costs of expert evidence (through ‘concurrent evidence’) started in June 2010 in mercantile, technology and construction cases at the Manchester Civil Justice Centre.

A Judicial Steering Group is considering the priorities for further implementation of these recommendations.
 

One does have to wonder what the “consultation” part of the process is meant to achieve. Lord Justice Jackson has done that already, regardless of whether everyone was happy with the weight he gave their views.

Still, tighten your seatbelts.

What grade of fee earner is a costs lawyer or costs draftsman?

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What grade of fee earner does a costs lawyer/law costs draftsman fall into?  This is a different issue as to what grade can they justify on assessment, which I will deal with on another day.

I recently commented on the subject of who qualifies as a Grade C fee earner.

By way of a quick reminder:

Grade A and B fee earners are defined as follows:

A – Solicitors with over eight years post qualification experience including at least eight years litigation experience.

B – Solicitors and legal executives with over four years post qualification experience including at least four years litigation experience.

A Grade C fee earner is defined as: “Other solicitors and legal executives and fee earners of equivalent experience”.

The Guide to Summary Assessment of Costs (page 1494 of the White Book 2010) states: “Whether or not a fee earner has equivalent experience is ultimately a matter for the discretion of the court.”

More specifically, the Guide states:

“Unqualified clerks who are fee earners of equivalent experience may be entitled to similar rates and in this regard it should be borne in mind that Fellows of the Institute of Legal Executives generally spend two years in a solicitor’s office before passing their Part 1 general examinations, spend a further two years before passing the Part 2 specialist examinations and then complete a further two years in practice before being able to become Fellows. Fellows have therefore possess [sic] considerable practical experience and academic achievement. Clerks without the equivalent experience of legal executives will be treated as being in the bottom grade of fee earner ie. trainee solicitors and fee earners of equivalent experience [Grade D].”

I’ll proceed on the basis that the costs lawyer/law costs draftsman was initially unqualified. For costs lawyers/law costs draftsmen who have previously qualified as barristers, solicitors, FILEX, etc, or possibly even possess just a law degree, different considerations will no doubt apply.

The Association of Law Costs Draftsmen has four classes of membership (or at least did when I was writing this post):

Students are registered with the Association and are required to complete one module of the training course within the first year of membership to remain as a student member. To enrol as a student applicants are not required to be employed in costs law.

Associates have completed the full training course consisting of three separate modules, attended the compulsory seminars and passed the examination of the Association at Associate level in addition they must have completed five years qualifying employment.

Fellows are full members of the Association who have qualified as Associates, passed the examination at Fellowship level and must have completed seven years qualifying employment.

Costs Lawyers are Fellows who have completed the Costs Lawyer course of the Association.

Although there is no clear-cut answer to the question, Fellows are probably about the equivalent of a Grade C fee earner, Associates arguably so. Students are obviously Grade D.

Beyond that, to be treated as the equivalent of Grade A/B fee earner would depend on the number of years’ PQE experience that had been gained.

What about law costs draftsmen who are not members of the ALCD and have not completed the ALCD training?  I would suggest somewhere north of 8 years’ experience to be Grade C status.

Costs Counsel v Costs Lawyer

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A recent edition of Costs Lawyer magazine contained an interview with the Association of Law Costs Draftsmen’s new chairman Iain Stark.

In the interview he argues for costs lawyers to reclaim advocacy work on the basis that: “We created the mini costs industry for barristers. That was our own fault, predominantly because we didn’t have our own rights of audience. … We’ve got members who should be out there competing against barristers for these big cases and saying to their clients, ‘Don’t instruct a barrister. I can do this’.” [Ironically, underneath this interview was an advertisement from a set of chambers specialising in costs. I wonder if they paid more or less to have an advertisement placed in that position.]

At the risk of being accused of being a contrarian (me?), I’m not sure I agree with this analysis of the growth of specialist costs counsel.

I’ll start by making two things perfectly clear:

1. Many costs draftsmen are highly accomplished advocates.

2. A formal background or training in the law is not a prerequisite to becoming a skilled costs draftsman. Many will have learnt on the job and many will argue that this is the best form of training.

The big costs cases of recent years have almost all found their way to at least the Court of Appeal (eg Callery v Gray [2001] EWCA Civ 1117, Hollins v Russell [2003] EWCA Civ 718, Claims Direct Test Cases [2003] EWCA Civ 136, Myatt v National Coal Board [2006] EWCA Civ 1017, etc). In fact, the rights of audience of costs lawyers extends only up to High Court Judge or Circuit Judge level. Costs lawyers still do not have the same rights of audience as barristers and have no automatic right to appear in the Court of Appeal in the “big cases”.

In the past, and long before law costs draftsmen obtained automatic rights of audience via the costs lawyer route, costs draftsmen happily appeared in the courts on detailed assessment. This was during a period when legal costs law was relatively straightforward. Most disputes came down to little more than arguments about the number of letters written or time claimed. The “traditional” law costs draftsman was more than happy to deal with this type of case.

The landscape then totally changed with the introduction of the Access to Justice Act and the dawn of the Costs Wars.

Not only did CFA challenges considerably raise the stakes (having a bill totally wiped out is on a totally different level to simply making some inroads into the quantum), but the law in this area became infinitely more complex. Indeed, arguably, much of the mini costs industry was created by the ingenuity of specialist costs barristers coming up with ever more complicated lines of attack. Many “traditional” costs draftsmen, particularly in the past, will have had no formal legal training and would have been totally incapable of grappling with some of the more complex costs arguments.

Has the position radically changed in recent years? I come across various costs draftsmen from time-to-time, some ALCD members some not, who are incapable of arguing serious points of law. Many arrive at court without a copy of the White/Green Book or any copy of the CPR. I am no longer surprised at the total inability of some costs draftsmen to understand what a judgement says or doesn’t say (Hollins v Russell – disclosure of CFAs and “genuine issue” anyone?).

It remains routine for specialist costs counsel to attend detailed assessments to deal with the “difficult” legal points and for a costs draftsman to also appear in the same case to deal with the rough-and-tumble of the rest of the assessment (doubling the cost). This has nothing to do with rights of audience. It is an acknowledgment that the barrister will be better able to deal with the “legal bits” and the costs draftsman deal with the rest.

The pattern becomes even starker in costs appeals. Other than appeals just to costs judge level, my opponents on costs appeals are invariably specialist costs counsel. Again, this has nothing to do with rights of audience. Not being a costs lawyer until recently, I did not have automatic rights of audience in higher courts. However, I have never previously found this to be a bar to appearing. The court invariably grants permission to appear.

On occasions, the reliance on counsel can be understandable on the basis that a claim can move into areas of law (say consumer credit agreements) that are not directly costs related. Those who practice solely in the field of legal costs may find themselves outside their comfort zone (myself included) when a totally new area of law arises. Counsel may be far more comfortable dealing with a combination of legal areas, not all of them costs related.

The second reason why reliance is placed on barristers, as opposed to costs lawyers, is no doubt due to their perceived advocacy skills. Again, although many “traditional” costs draftsmen may have been happy to appear in chambers before a judge making limited submissions as to the number of letters written or whether 36 minutes was a more reasonable period of time to spend reading a medical report rather than 48 minutes, the world of costs has moved on.

Regional Costs Judge, Chris Lethem, at the ALCD National Conference, discussed key skills for an advocate. Some of this guidance was repeated in Costs Lawyer magazine. The Senior Courts Costs Office, in advance of this talk, asked him to cover some of their bugbears. These included:

• You should address your submissions to the judge, not to each other; and
• Do not tell the court that you think the base costs are entirely reasonable, or anything prefaced with “in my opinion”. “Your opinion”, concluded Judge Lethem, “is irrelevant”.

The fact that these observations even needed to be made is revealing. Barristers have already been taught this kind of thing. They don’t need to be addressed on these issues at their AGM.

Of course, the impact of skilled advocacy on detailed assessment is often of limited value. Many cases are decided long before either advocate has opened their mouth and/or regardless of the submissions made. If cases were decided based solely on the quality of the advocacy, I may have won many cases I did not. (Conversely, I may have also lost a number I managed to win.)

Advocacy skill is therefore often largely irrelevant in routine disputes concerning time claimed, etc. However, once one moves into the area of difficult points of law, a skilled advocate can make a real difference.

I have now attended the ALCD’s two-day Costs Lawyer course. A whole day was spent on advocacy training. Enough for those who have no previous advocacy training to compete with the Bar?

None of this is to suggest that using specialist costs counsel is a necessary alterative to good costs draftsmen. The question will come down to the issues at stake, the skill of the individual and the relative cost compared with instructing counsel. The idea of many costs draftsmen (up to and including many costs lawyers) saying “I can do this” in big cases fills my heart with dread. Some can. Most probably can’t and fortunately don’t pretend otherwise.

The ALCD has already made huge advances with its training programme. I have previously commented on the high standard of the Fellowship examination. To properly compete with barristers, the ALCD (whose members of course now include a number of practising barristers) needs to be confident that its members (at least at costs lawyer level) are as skilled, both legally and in terms of their advocacy, as barristers. That is indeed a challenge for the new chairman. There is no reason to suppose the task is out of reach but it will require some brave decisions.

* This post was written before the ALCD announced its decision to automatically upgrade Associates to the status of Fellow.
 

Legal Costs Blog branded t-shirts

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Last week I attended a couple of functions hosted by chambers that specialise in legal costs. The first event was Hailsham Chambers Annual Costs Group Seminar. The second was 39 Essex Street’s Summer Garden Party.

At the first event I met a perfectly charming young lady who said, and I’m obviously paraphrasing for comedy effect, “Oh my God! You’re Simon Gibbs who writes the Legal Costs Blog. I can’t believe I’m really talking to you”.

At the second event I met another perfectly charming young lady who said, and this time I don’t need to paraphrase for comedy effect, “Oh my God! You’re Simon Gibbs who writes the Legal Costs Blog. I can’t believe I’m really talking to you. You’re a guru of the legal costs world”.

Now, I don’t know what surprised me most:

1. That there appear to be as many as two people who regularly read the Legal Costs Blog; or
2. That I have somehow managed to acquire groupies.

I guess there’s a surprisingly fine line between something being flattering and something being just a little bit creepy.

Anyway, given the massive popularity of the Legal Costs Blog, the next logical step is to make available t-shirts so fans can show their support. We’ve put together the following selection. Unfortunately, we’re still working on the online ordering system so you’ll have to email to enquire about sizes and pricing.

The t-shirts have our brand new Legal Costs Blog logo on the rear and one of the following slogans on the front:

"I ♥ THE LEGAL COSTS BLOG"

"I instructed specialist costs counsel to attend the SCCO and all I got was this lousy t-shirt"

"Costs Lawyer v Accountant. That’s a slap fight I’d pay to see"

"I spend 90% of my life drafting bills of costs and reading the Legal Costs Blog. The rest is just wasted"

"Pay peanuts, get costs monkeys"

"Those law costs draftsmen who think they know it all are an annoyance to those of us who do"

"Two costs draftsmen in the same room is a detailed assessment. Three is a party"

"I’m also authorised to administer oaths"

"That reminds me about a really interesting story about a costs case I once had…"

"Bring back the Conditional Fee Agreement Regulations 2000!"

"What do I do for a living? I’m glad you asked me that…"

"I think you’ll find that would be a breach of the indemnity principle"

"I hvae no pbmolers dartnifg atarcuce blils of ctsos aeftr dkniinrg tne pntis of lgraer"

"1st November 2005: The day a little something in me died"

"Satellite litigation rocks!"
 

 

£191m legal costs bill

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The Saville Enquiry into Bloody Sunday lasted 12 years, sat for 434 days and cost £191m.

On the subject of whether it was worth it, Michael Mansfield QC, who represented some of the families of the victims, is reported to have said: "Absolutely, it’s been worth it".  Well, he would say that. The Northern Ireland Office records that he billed the taxpayer £743,421 for his work for the tribunal (and he was far from the highest billing).

It was not reported as to whether he managed to say this with a straight face.

Given the Enquiry was a token gesture as part of the Northern Ireland peace process, one does have to wonder whether it wouldn’t have been better to give £14m to each of the families of the 13 people shot dead or given the money to a local charity rather than waste it on lawyers’ fees.  However, I’m sure Michael was worth every penny.

Joshua Rozenberg, who was covering legal affairs for the BBC at the time Lord Saville was appointed to the Enquiry, remembers that Lord Saville was seen as a "whizz-bang judge – not an old fuddy-duddy but somebody who could really get to grips with this rather challenging Inquiry".  Given the total failure of such an experienced judge to control the process or legal costs in this Enquiry it does make one wonder whether Lord Justice Jackson’s dream of a future where judges in the lower courts effectively case manage and costs manage claims is really realistic.

Defective costs drafting software?

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Costs Practice Direction 4.9 states: "Each item claimed in the bill of costs must be consecutively numbered".  It has contained this provision since the CPR was introduced.

So why does one major costs drafting software programme not automatically do this but instead just numbers disbursements?

The reason this is a particular bugbear of mine is that it makes it much easier to draft points of dispute if you can simply refer to an item number rather than need to use a description, especially if you are raising the same dispute in relation to items spread across the bill of costs.