26 hour working day

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The Metro newspaper recently reported on the trial of a solicitor who allegedly claimed for 26 hours work in a single day as part of a plot to cheat Legal Aid out of more than £300,000.

Also standing trial was a legal executive, with the prosecution claiming: “He attended Leicester crown court from his home in the Midlands but they claimed as if he had commuted daily from London, and submitted forged taxi receipts’.

Also accused was costs draughtsman (sic) Robert Odong, with the prosecution saying: Odong ‘appears responsible for hand-written alterations to attendance notes and taxi receipts’.

I can’t understand why a solicitor should be put through this kind of indignity. Presumably the solicitor signed some kind of Legal Aid form to confirm that the claim for costs was accurate. That should be an end to the matter and it should be accepted without further ado that the 26 hours per day was accurate. We all know the importance to be placed on a signature by an officer of the Court (see Bailey v IBC Vehicles [1998] EWCA Civ 566).

As for a dishonest law costs draftsman, the very thought…

NHSLA warning on costs reforms?

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The Law Society Gazette recently reported:

“NHS lawyers warned the government before it published its bill on legal aid reform that scrapping legal aid for clinical negligence claims would ‘massively’ escalate NHS legal costs, and leave some seriously injured people unable to bring cases. … The body, which is responsible for handling claims against the NHS, said reducing legal aid would lead claimants to make greater use of conditional fee agreements (CFAs), which would increase the legal costs the NHSLA would have to pay when it lost a case”.

The article continued: “It said the proposed partial implementation of Lord Jackson’s recommendations, without the removal of recoverability of uplifts and after-the-event insurance premiums, would result in an overall increase in public expenditure”.

And therein lies the answer.

The NHSLA was presumably commenting, at the time, on the proposals for removing legal aid from clinical negligence claims. There were opposed to this change if Lord Justice Jackson’s proposals to end recoverability of success fees and ATE premiums were not implemented. However, given the government is pressing ahead with that change, one might think the headline “NHS lawyers warned government that reforms would escalate its costs” was somewhat misleading under the circumstances.

The article then gave a quote from Shadow Justice Minister Andrew Slaughter MP:

“On almost every occasion that the government is asked to justify its cuts to legal assistance in clinical negligence cases, it points to the cost to the NHS. Now we find the NHS’s own lawyers are saying it is immoral and economically misguided to prevent brain-damaged children and adults from getting justice. This government just isn’t listening.”

In fact, the government did listen to the NHSLA’s concern about removing legal aid from clinical negligence without also implementing Lord Justice Jackson’s proposals.

Regulating legal services

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The Legal Services Board is to investigate will writing after the board’s consumer panel found that solicitors and will writers were equally responsible for substandard wills. The LSB will consider whether to make will writing a reserved activity meaning it could be regulated.

There can be no doubt that will writing should be regulated but this largely misses the point. Solicitors are currently regulated but apparently their will writing skills are no better than those who are unregulated.

Regulation allows for complaints to be made if something goes wrong and, for the worst cases of clear negligence causing loss provides the opportunity of compensation via compulsory insurance. However, alone it does not address the underlying problem and trying to bring a successful negligence claim, even where there is insurance in place, can be a long and difficult task. It also fails entirely to deal with the substandard work where the client does not realise that it is substandard or has caused a loss. (How many people are unaware they should have been beneficiaries but for a negligently drafted will?)

The problem, which regulation alone, fails to address is poor standards.

In the legal costs field there are plenty of solicitors, barristers, legal executives, law costs draftsmen, costs lawyers and legal costs negotiators providing poor advice.

Some are regulated and some are not.

Regulation is not synonymous with, and no substitute for, high standards. That is where the focus should be.

Access to Justice Action Group: clinical negligence claims to increase

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I don’t want to sound like a stuck record, but the inconsistent, and often incoherent, anti-Jackson rhetoric shows no signs of abating.

The Access to Justice Action Group (AJAG) recently issued a press release with the headline “Jackson reforms set to costs NHS £105.55 million”. Now, you’ve never seen such a selective and garbled use of statistics in your life for them to arrive at this figure but let’s take it at face value and accept entirely the claims made in the press release (and you can check that this is really what it says).

The methodology starts by giving their “robust estimate of a 25% fall in cases”. (It’s not quite clear what this is based on, or, indeed, where this figures disappears to in the following analysis).

It then proceeds to explain the “role of CFA funding (including success fees and ATE) in weeding out unmeritorious claims is well illustrated from the statistics for clinical negligence. … This demonstrates that the checks in CFA cases weed out a higher proportion of unmeritorious cases than other forms of funding. QOCS will not deliver that review, so even on these figures there could be at least 12% more unsuccessful cases under QOCS which the NHSLA would have to deal with at a cost to them, even if those cases fail to secure damages”.

So, we can expect a 12% increase in unsuccessful claims compared to current numbers.

They then continue:

“The impact assessment makes clear that its assumptions do not take account of the incentivisation of more cases being pursued under the Government plans for QOCS; or the proportion of cases funded by CFA, which has now been established at 2/3rds. If on a conservative estimate only half of those claims presently weeded out by ATE proceed, the potential increase in claims will be up to 1/3rd more, as 2/3rds of cases are presently funded that way. And even if only half of these succeed (and the success rate can be expected to be higher than that), then that will be an increase of just over 15% in costs on successful cases (4% more than predicted savings); to which can be added the additional 10% in general damages (c 1% of the overall total litigation bill). Defence legal costs under the present system are estimated in the impact assessment of the overall total at 9%. If there is an increase of 1/3rd in cases, that would represent an increase equivalent to 3% of current costs”.

Are you with them so far? They are confidently predicting an increase in clinical negligence claims of 1/3rd compared to current levels and that the “success rate can be expected to be higher than” 50%.

In case you think something has been missed here, the press releases makes clear the figures are arrived at by assuming: “there is an increase in the number of cases of 1/3rd as we predict”.

So, far from the Jackson reforms meaning that those injured through clinical negligence will no longer be able to find solicitors willing to represent them, the AJAG now inform us that more claims will be brought and more will succeed.

Perhaps the Bill should be renamed the Access to Justice Bill Mark II.

Perhaps the AJAG should stop issuing press releases before they do any more harm to their campaign.

Summary assessment

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

Summary assessment n. similar to detailed assessment but with the advocacy conducted by those with no knowledge of legal costs law and overseen by a judge with even less knowledge of the relevant law and no time to properly perform the task in any event. The outcome of which is less predictable than the winner of a race down a windowpane between two raindrops.

Hailsham Chambers Annual Costs Group Seminar 2011 – Champerty and Contingency Fees

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Another podcast from the Hailsham Chambers Annual Costs Group Seminar.

Here is the Champerty and Contingency Fees session:

No cap in non-PI cases

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We’ve been exploring some of the problems with the Legal Aid, Sentencing and Punishment of Offenders Bill and how this may reduce claimants’ damages by rather more than 25% in personal injury cases.

The situation becomes even more dire for non-personal injury claims. In relation to a professional negligence claim against, for example, an architect, there will be no cap on the success fee. Such claims are often strongly defended and it would not be surprising if any solicitor or barrister accepting such a case on a CFA basis would expect a 100% success fee. The costs of such claims can be significant and one would not be surprised to see base costs of a solicitor coming in at £100,000 if such a claim progressed to trial and, say, another £20,000 for counsel. That would leave the client with a potential success fee, to come out of any damages recovered, of £120,000 (plus VAT of £24,000). The claim would have to be worth at least £144,000 for the client to do no more than break even where the claim succeeds. In reality, if their damages are £144,000 they would be out of pocket to the tune of £144,000, even where the claim succeeds, as the recovered damages would disappear entirely paying the success fee. Indeed, the success fee payable may be far more than the damages recovered.

Worse, in non-personal injury claims, although LJ Jackson suggested that qualified one-way costs shifting might be introduced, the government currently intends to implement this only for personal injury claims. That would mean that as well as facing an unlimited deduction from damages by way of success fee if the case is won, claimants will also face the prospect of an adverse costs order if the case is lost. In the past this could be dealt with by way of an ATE policy, the cost of which was recoverable from the defendant. In future, this will not be recoverable from the defendant. Claimants will therefore have to fund this potentially significant cost themselves.

The alternative funding method that will, in future, be available for all types of claim is a contingency fee agreement (damages-based agreement). However, again, it will only be in personal injury claims that a 25% cap applies. It might, in theory, be possible for claimants to negotiate a cap of, say, 25%. However, in reality, will solicitors or counsel be prepared to act on this basis? Taking the above example (£120,000 base costs), currently the solicitors and counsel might expect to recover legal costs of £240,000 (plus VAT) if the case is won once a 100% success fee is taken into account. Would they now be prepared to accept the case with a 25% cap if the expected damages were, for example, £100,000? Recovering legal costs of £25,000 (inclusive or exclusive of VAT) as against £240,000 (plus VAT) is not an attractive proposition.

Hailsham Chambers Annual Costs Group Seminar 2011 – Fast Track Costs Issues

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Another podcast from the Hailsham Chambers Annual Costs Group Seminar.

Here is the Fast Track Costs Issues session:

Success fee cap plus uncapped ATE?

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We looked the other day at the problems that might arise post-Jackson trying to instruct counsel to act under a CFA if there is a 25% damages based cap on the success fee that must be split between the solicitors and counsel.

This might create a market for ATE premiums to cover own counsels’ fees for the small number of cases that go to trial, to ensure representation.

However, the ATE premium would now come out of the client’s final damages cheque, in addition to the 25% success fee cap. And, of course, there has been no suggestion that ATE premiums will be capped.

This would create the situation whereby if both solicitor and counsel act under CFAs, 75% of the client’s damages are protected (assuming the cap applies to both). However, if the solicitor acts under a CFA and the client needs to instruct counsel to act using an ATE policy to cover counsel’s fees, there is no corresponding cap on the total that may be taken from damages. It would be 25% (for the solicitor’s fees) plus an uncapped amount for the ATE policy.

We may see claimants losing much more than 25% of their damages with these funding changes.

Abuses in RTA claims portal

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Back in January 2010, I raised some concerns about the upcoming new RTA claims process. I wrote:

“Much has been made of the fact that the level of fixed fee is set below the average amounts recovered by claimant lawyers under the current rules. Good news for defendants. But, and it may be premature to start looking for problems before we have seen the final rules, one issue looks likely to cause defendants problems unless expressly dealt with in the small print of the new rules.

Under the current predictable costs regime, recovery of costs is governed by the level of damages actually agreed. If a case settles at a level within the small claims track the predictable costs scheme does not apply. However, under the new claims process the fixed fee of £400 for stage one, providing notification of the claim to the defendant, is payable at the point when liability is admitted. At this point there will be no medical evidence. The scheme is only meant to apply where the personal injury element of the claim is at least £1,000. The Ministry of Justice’s report recognises that some claims may be valued at the outset as having “reasonable prospects” of exceeding £1,000 but it later becoming clear that they do not. At that stage the claim will leave the process. However, I can see no mention of defendants getting their £400 back. Am I being incredibly cynical in thinking that there will be a very high number of claims that claimant lawyers value as having reasonable prospects of recovering over £1,000 only for these claims to undergo a surprising downwards revaluation or even disappear entirely after the £400 has been paid? There is no time limit under the scheme for obtaining a medical report and defendants may only discover several years down the road that they have been stitched-up in tens of thousands of claims.”

Now, FOIL is reported in the Law Society Gazette expressing the following concerns:

“FOIL also blamed claimant lawyers for causing delays in the portal process, and called for time limits to be introduced for claimants between stages 1 and 2.

It added that insurers should not have to pay stage 1 costs until after completion of the second stage, to avoid payments being made on cases that are not progressed beyond stage 1.”

It seems as though my concerns about the risk of legal costs leakage have proved to be justified.