Future of costs drafting

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Tony Guise, director of GUISE Solicitors writing in Litigation Funding magazine:

“Costs management will mean that detailed assessment is in run off for most if not all cases. The future for costs drafting must be in question.”

What information needs to be served in support of a success fee

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I’ve uploaded an article to the Costs Law Articles Archive section of Legal Costs Central first published in the Solicitors Journal on the issue of what information needs to be served in support of a success fee where the CFA itself is not disclosed.

Legal costs mediation

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The other day I attended my first costs mediation concerning mediating costs of detailed assessment proceedings (ie not the costs of the substantive claim but the costs of the costs – claimed at close to £500,000).

I’m not a great fan of the concept of mediation.

Mediators like to talk about achieving a win-win outcome but the reality is that if both parties settle by moving from their primary position they have both lost. It is a lose-lose outcome. Surely it’s much better to expensively litigate all the way in the hope that there is one true winner.

More importantly, if the mediation succeeds I feel sorry for the poor hard-working Costs Lawyer who looses three lucrative days in court plus preparation time. And think of poor Master Campbell who gets deprived of listening to my dulcet tones for three thrilling days. He’d be gutted.

Mediation successful. Hearing vacated.

Don’t go to mediator Phil Hesketh unless you want a similar bad experience.

Costs Lawyer regulation

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The government has rejected calls for will-writing to be made a reserved legal activity despite there being clear consumer protection issues surrounding badly drafted wills. There is now absolutely no prospect of such a minority sport as costs drafting becoming a reserved activity.

As Costs Lawyer Jon Williams has observed, the Association of Costs Lawyers and Costs Lawyer Standards Board will hopefully take note before spending further time or money pressing for regulation.

Provisional assessment costs

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At the panel session at the Association of Costs Lawyers’ Annual Conference the inevitable question arose as to what the £1,500 maximum costs recoverable under the new provisional assessment scheme was meant to cover.

One of the costs judges said this issue had arisen at, I believe, a judicial meeting where they had been informed the figure was not intended to cover the court fee or the costs of drafting the bill. However, the view of the panel appeared to be that it probably did include VAT and any success fee. The later is uncontroversial (regardless of whether it is fair). But, the panel conspicuously failed to explain by what route of construction/interpretation the rule excludes any court fee or the costs of drafting the bill given this wording:

“The court will not award more than £1,500 to any party in respect of the costs of the provisional assessment.”

Court fees have always been treated as being part of the “costs” of a claim. That is the route by which court fees incurred in substantive litigation are recovered. Courts do not make orders along the lines of:

“The Defendant to pay the Claimant’s costs to be assessed if not agreed and the Defendant do also pay any court fees incurred by the Claimant”

If court fees are therefore treated as being part of the “costs” of substantive litigation, by what route do these cease to be “costs” when incurred in the course of provisional assessment?

And, if court fees are not part of the “costs” of the provisional assessment, under what jurisdiction does a judge undertaking provisional assessment have the power to order, when assessing a receiving party’s costs, that something other that “costs” should be paid?

In relation to the costs of drafting a bill, we have binding Court of Appeal authority in the form of Crosbie v Munroe:

“Until the time the substantive claim is settled, the ‘proceedings’ relate to liability and the amount of any compensation. After the substantive claim is settled, the ‘proceedings’ relate to the assessment of the costs the paying party has to pay. Although CPR 43.2 contains no definition of ‘assessment’ as such, the White Book comment on this rule accurately states that ‘assessment’ is ‘the process by which the court decides the amount of any costs payable’.”

That seems to unambiguously mean drafting the bill falls within the assessment proceedings.

It may well be the case this was not the intention of the Rules Committee (and who knows what, if any, thought really went into the issue of what the £1,500 was intended to cover) but unless and until there is an amendment to the rule I struggle to see how a judge can reach a reasoned decision that the £1,500 excludes the court fee or the drafting time.

Association of Costs Lawyers’ Annual Conference

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The Association of Costs Lawyers held their Annual Conference last Friday and Saturday and it was another spectacular event.

The line-up of speakers and panel members read like a Who’s Who of the legal costs world including (not an exhaustive list):

The Hon. Mr Justice Ramsey
Robert Marvern
Andrew Hogan
Alexander Hutton QC
Professor Dominic Regan
Regional Costs Judge Ian Besford
Simon Browne QC
Judith Ayling
Master Peter Hurst
Master Colin Campbell
Master Andrew Gordon-Saker
Master Peter Howarth
Regional Costs Judge Christopher Lethem
Regional Costs Judge Simon Middleton

The event provided an invaluable insight into the massive changes currently happening in the area of costs law but two particular things struck me:

1. The cost of a large gin and tonic at the hotel bar. £17.10 (seventeen pounds and ten pence). Being a wealthy Costs Lawyer, this didn’t bother me but I felt sorry for someone less conspicuously wealthy, such as a Premier League footballer or a Russian oligarch, making the mistake of ordering a round of drinks.

2. The safe in my hotel room. This was a typical hotel safe just about large enough to hold an ipad. On the inside of the door was the warning: “Caution: Danger of suffocation”. Even the smallest of children couldn’t have fitted into this safe. At most, it might have been possible to fit a new born baby in. The mental image was therefore created of parents with a new born baby staying in the hotel and deciding they wanted to pop downstairs for a quick gin and tonic (total cost £34.20) and wanting to leave the baby behind in the room. Being responsible parents and wanting to keep the baby out of danger they decide that the best course of action would be to place the baby in the safe and lock the door till they get back.

Have lawyers and health and safety officers really reduced the country to the level where hotels need to place warning signs advising against the possible dangers of such a course of action?

The ACL Conference also marked the occasion of Chairman Iain Stark passing on the baton to Murray Heining. Iain has navigated the Association through choppy waters. Murray takes over as we sail into the maelstrom.

One of Iain’s main achievements during his period in office has been significantly raising the profile of the ACL. Much of this has been through the issuing of regular press releases, with the help of PR consultancy Black Letter PR, commenting on developments in legal costs and important costs judgments. Those who regularly read the legal press will have seen Iain being regularly quoted. Interestingly, this has been an area itself that has drawn criticism from some ACL members.

One complaint is that the Chairman should not express views that may not be shared 100% by all ACL members. This is not a view I share. Firstly, anodyne press releases along the lines of: “This is an important judgment that will help provide clarity in this difficult area of law” will not make their way into print and will defeat the purpose of the PR exercise. Secondly, and more to the point, it is entirely appropriate for the Chairman to express views that may not be shared by everyone else. I’ve not always seen eye-to-eye 100% with Iain but as a properly elected representative it is entirely appropriate for him to publically express his views on matters relating to cots and Costs Lawyers.

The second, related, complaint it that where he is quoted it should be made 100% clear he is expressing his views alone rather than speaking for the ACL as a whole. In fact, I don’t ever recall Iain purporting to speak on behalf of the Association as a whole when he has been quoted in the press. Rather, a quote will be given along the lines of “Iain Stark, chairman of the Association of Costs Lawyers, says…”. Readers of the legal press are presumably intelligent enough to understand the distinction between something said by a chairman and the views of the membership as a whole. Presidents of the Law Society or Chairmen of the Bar regularly make public comments that may not be shared by all their respective professions.

I don’t need President Obama to preface everything he says with “my personal view is x” to appreciate not all Americans may agree.

I trust Murray will continue where Iain left off when issuing press releases. Whereupon I will immediately pour scorn on anything he says.

Points of Dispute

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The note on the Ministry of Justice’s website explaining the new amendments to the CPR (this note does not appear to carry any authority itself) states:

“The rules relating to assessment of costs are redrawn to ensure that material presented to the court is relevant to the particular bill of costs and sets out any contentions clearly and concisely. Referral to authorities, quoting of well known judgments and explanations of and responses to individual points of dispute are discouraged.”

If there was one way to guarantee this will not happen what would that be?

The answer is to be found immediately below:

“The process for detailed assessment in which the costs claimed are £75,000 or less is amended. The court will undertake a provisional paper assessment of the bill, and the costs of the assessment will be limited to £1,500.”

If the Ministry of Justice is able to provide a list of the “well known judgments” it has in mind and confirm that all judges who will undertake provisional assessment have passed a test proving they are 100% familiar with the principles established from such judgments I might have rather more faith.

My firm cannot be alone in experiences along the following lines:

1. Despite the District Judge clearly having spent some time reading the relevant guidance in the Green Book in advance of the detailed assessment hearing, it still taking two experienced law costs draftsmen the best part of half-an-hour to explain how the old proportionality test works and what the consequences for the detailed assessment hearing would be if he made a preliminary finding the costs were disproportionate.
2. A judge asking, when referred to the “well known judgment” of Wraith v Sheffield Forgemasters, what the case says on the subject of hourly rates.
3. A Regional Costs Judge not knowing the approach to take following Hollins v Russell to the recoverability of disbursements where there has been a finding that the conditional fee agreement is unenforceable.
4. A case that included a dispute concerning whether the correct documents in support of an additional liability had been served with the bill. The matter listed for half a day. The matter having to be adjourned because the District Judge was struggling to find his way around the Green Book and couldn’t locate the Costs Practice Direction. Upon the matter being relisted the judge continuing to find the matter so taxing that he adjourned the matter again for written submissions. At this stage the parties gave up and compromised the case.

(Feel free to add your own examples.)

Those who believe all judges who will undertake provisional assessment will be fully aware of the rules (both new and old), the relevant transitional provisions and all relevant case law are living on costs cuckoo land.

In the past it might have been sufficient to raise a dispute concerning work done arranging an ATE policy thus:

“Not inter partes. Disallow.”

If the matter went that far, the law could be set out orally at a detailed assessment hearing and the relevant authorities referred to there.

It is now doubtful it is sufficient to say:

“These costs relate to funding. Such costs are irrecoverably as per paragraphs x,y and z of Motto v Trafigura Ltd [2011] EWCA Civ 1150.”

Is a District Judge unfamiliar with the case really going to go away, locate the case and read the relevant sections?

The following is now probably required:

“The Defendant objects to items claimed liaising with the Claimant’s legal expense insurer and refers to paragraphs 108, 114 and 145 of Motto v Trafigura Ltd [2011] EWCA Civ 1150:

“I do not agree with the Judge’s decision on this issue, so far as any costs in establishing and setting … the ATE insurance policy are concerned. …

I have reached the conclusion that the costs incurred by Leigh Day in discussing the progress of the litigation with the ATE insurers, and taking their instructions in that connection, are not recoverable from the defendants. The precise dividing line between recoverability and irrecoverability is, perhaps inevitably, somewhat blurred and subjective. However, as I see it, the cost incurred in having such discussions and taking such instructions was not so much a cost of the litigation as a cost which was collateral to the litigation, being a cost incurred to ensure that the claimants were not at risk on costs.

…Contrary to the Judge’s conclusion, I do not consider that the claimants can recover … any costs incurred in discussing the litigation with, or taking instructions from, with the ATE insurers”


Of course, this approach may mean some law costs draftsmen and costs lawyers have to go away and read the actual judgment to be able to quote the relevant section. Some may be surprised that the case they have always relied on as authority for a certain proposition is actually no such thing.

Similar considerations are likely to apply when referring to relevant sections of the CPR or corresponding Practice Direction. It may be sensible to quote the actual wording rather than trust the judge to find and read the relevant section, particularly in a year or two’s time where the old rules are relevant but have probably disappeared from the White/Green Book.

The relevant section of the Practice Direction does not actually preclude reference to authority. Rather it states Points of Dispute must be: “must be short and to the point”. That is a rather subjective concept and I rather suspect some District Judges will welcome concise Points of Dispute that nevertheless include sufficient authority for the proposition being put forward.

Statement of Costs

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The old Costs Practice Direction 45.3 used to read:

“No party should file or serve a statement of costs of the detailed assessment proceedings unless the court orders him to do so.”

I can find no corresponding provision in the new rules.

Presumably the normal default provision under the new Practice Direction 9.5(4) to CPR 44.6 therefore applies:

“The statement of costs must be filed at court and copies of it must be served on any party against whom an order for payment of those costs is intended to be sought as soon as possible and in any event—

(b) for all other hearings, not less than 24 hours before the time fixed for the hearing.”

Having said that, the Costs Officer at the Senior Courts Costs Office I was before yesterday didn’t take any issue with the statement being produced at the end of the hearing.