APIL does the Hokey Cokey on fixed fees


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I previously reported (see post) on the Association of Personal Injury Lawyers (APIL) walking out of talks on extending fixed costs in personal injury cases.  The latest news is that APIL is now back in.  APIL has explained its decision to rejoin the talks being due to the fact that the Civil Justice Council agreed to discuss matters of process, and not just the level of fixed fee, and that it had been offered the opportunity to make a final written submission on this issue to Lord Justice Jackson.  Nevertheless, APIL maintains it still has “profound skepticism” about the need to extend fixed costs.

In a further boost to Jackson LJ, the new Lord Chief Justice, in a recent interview with the BBC, expressed the hope that the cost of civil litigation would be "properly examined" following the publication of Jackson LJ’s report.  There is building up a virtually unstoppable momentum behind the idea that radical changes need to be made to control legal costs.  Whichever party comes to power after the next election (and at this stage it might be either the Conservative party or the Tory party) there is not going to be an injection of fresh public money to pay for the costs the current system creates.  Any change is going to be focused on limiting the costs that are incurred during the process or the costs that are recoverable at the end.

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qc oct 7 97

Not enough personal injuries occuring


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The following letter was published in the latest edition of the Law Gazette:
“Rhonwen Barraclough’s letter (8 October) complained about Lord Justice Jackson’s recent suggestion of increasing the small claims limit if a deal cannot be done on fixing legal costs in fast-track claims.  Among the various reasons put forward as to why this was a bad thing, the most desperate was:
‘There is also the prospect of losing even more high street practices, given the constant onslaught from professional indemnity insurance and farcical legal aid rates. Like it or not, personal injury is big business, with the majority of fee income going back into the economy in the form of taxes, VAT, wages and to other associated businesses. Has the practical impact of the reforms been considered in that context at all? Can the government really afford to lose the revenues generated by PI?’
Criminal behaviour is big business, keeping employed criminal lawyers, police, prison offices, security firms and so on, and generating various taxes as a result.  However, one would have to be going it some to argue that the government should be very cautious about trying to reduce crime.
What next?  The Association of Personal Injury Lawyers campaigning for more dangerous driving, unsafe work practices and more potholes in an effort to bail the government out of its current financial difficulties?
Forget high street practices, what about your average poor costs consultant if fixed fees are introduced? Now that is serious.
Simon Gibbs, Partner, Gibbs Wyatt Stone (defendant costs consultants), London

Jackson Costs Review facing first hurdle


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The Gazette (click link) reports that the Association of Personal Injury Lawyers (APIL) has walked out of talks on extending fixed costs in personal injury cases. This mediation was put together at the request of Lord Justice Jackson as part of his Costs Review. It seems inevitable that his final report will include a recommendation that fixed fees are introduced for all stages of the fast-track in personal injury claims and this mediation was intended to lead to an agreement as to the appropriate figures.

It is somewhat hard to interpret this new development. It may simply be initial posturing on the part of APIL. It is no secret that APIL opposes the extension of fixed fees; they said as much in their response to the Jackson Preliminary Report. If they simply wished to scupper the mediation, it would have made more sense to continue to play along and undermine the process from within. Without APIL’s involvement what will happen? It seems very unlikely that Jackson LJ will abandon this central part of his reform program simply because one interest group does not want to cooperate. On the other hand, will any figures now produced lack credibility? APIL runs the risk that the process will move forward regardless but they will lose the opportunity to influence the final figures.

Watch this space.

Changes to the assessment process


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At the end of July I attended the last of Jackson LJ’s Costs Review Seminars. This seminar focused on detailed assessments and explored various ways to try to improve the process. The majority of those attending were costs draftsmen, costs judges and other costs professionals.

What was interesting was the way that some of the ideas that emerged were met with virtually unanimous support from those present except for one or two individuals who clearly passionately believed that these very same proposals were either unworkable or entirely counter-productive.

One of the suggestions was that the current format for bills of costs was inappropriate and should be replaced with a new format. Rather than, as now, largely focusing on a list of chronological items of work, the bill should be more focused on providing an explanation as to why certain work was necessary or why this work was unusually time consuming. This proposal received virtually unanimous support and a costs judge and a regional costs judge have been tasked with producing a new model bill to incorporate this suggestion.

Although understanding the logic behind this proposal, I was one of the very few who strongly opposed this idea. Preambles to bills are already often unnecessarily long and self-serving, trying to justify the level of costs claimed by highlighting the supposed difficulties in the matter. My concern is that any formal requirement to explain and justify at the outset the costs claimed will turn bills into pages of lengthy prose that serve little purpose other than to drive up costs. Worse, much of this may prove to be entirely wasted. Time will be spent seeking to justify work that the paying party may have had no intention of disputing. Hopefully the model bill and any changes to the rules will overcome my concerns.

A second proposal was to introduce provisional assessments for lower value claims for costs. These would be conducted on paper with an option to proceed to a full detailed assessment if a party was unhappy with the provisional assessment, though possibly with strict costs penalties if a party failed to do better at the full assessment. I shared the majority view that this was a sensible proposal. There were only two dissenters and these were, interestingly enough, a regional costs judge and a costs officer. Their concern was that the provisional assessment option would be so attractive to parties that it would lead to a far higher number of cases reaching the courts than currently proceed to detailed assessment. This would lead to the courts being swamped with work they could not cope with. Of course, given any proposals emerging from the Jackson Review will almost certainly include fixed costs for fast-track claims this concern may be somewhat misplaced. Based on the figures being discussed at the seminar, for cases to be eligible for provisional assessment, most multi-track claims would be excluded. There would be relatively few claims likely to qualify once fast-track claims are removed from the process. Further, the workload of the courts should significantly decrease, in terms of costs disputes, as a result of fixed costs.

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qc june3 1997

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Fixed legal costs for the fast-track


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Any remaining doubt as to whether Jackson LJ’s costs review will recommend fixed legal costs for all fast-track matters has been removed by the recent report in the Law Gazette that he has asked the Civil Justice Council to start work on setting the appropriate level of fees for this work. He has asked the Council to try to agree the figures by 12 November 2009 for inclusion in his final report.

At last week’s Costs Review Seminar held by the Costs Practitioners Group, chaired by Jackson LJ, the discussions proceeded on the basis that it was a foregone conclusion that fixed costs for fast-track cases would form part of the final recommendations.

All the madder then that others are pressing ahead with the new Claims Process (see previous post) with its own fixed fee regime. A lot of time and effort is going to have been wasted by one group.

New Claims Process – Details emerging


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Details are now starting to emerge as to the shape of the new Claims Process for RTA claims with a value of up to £10,000. Crucially, as reported in an article in the latest edition of New Law Journal, “three aspects remain confidential pending final consideration by stakeholders with the MoJ [including] the final cost matrix for the new work flow”.

The article confirms that fixed costs will be payable at the end of each of the three stages of the process. Nice and simple then? Not quite. The article states: “New timelines for responses at each stage will govern the process. Failure to keep up with the timetable will result in the claim exiting from the fixed-cost process”. Further: “Any other type of contributory negligence claim [except seatbelt issues] will be required to exit the system into the predictable costs regime”. Yes, the predictable costs regime really has survived the new Claims Process.

So it now appears we will have three different costs regimes applying to low value RTAs: fixed fees for cases within the new Claims Process, different fixed fees (ie predictable costs) for cases that fall outside the Claims Process but settle pre-proceedings and standard basis costs (presumably covering those cases where liability is not agreed and proceedings are issued. Costs in low value RTA claims appear to be about to become more complex. How will these various regime’s interrelate? (This is the question I raised in this post almost exactly one year ago.) We’ll hopefully discover very shortly.

A further oddity is that “when estimating the value of a claim no account is to be taken of credit hire or vehicle damage costs”. No doubt very sensible and this is clearly designed to avoid some of the excessive fees currently generated by “bent metal” claims. However, the predictable fee regime survives where these factors can be taken into account when valuing a claim. So credit hire and vehicle damage will count for one scheme but not the other. Are you keeping up so far?

To add to the fun we are told that “new Pt 36 sanctions are still being considered”.

Existing methods of funding the claim such as BTE, CFA and ATE will continue to be available.

The new Claims Process contains a streamlined court assessment of damages and the presumption is that this will be a paper hearing. To “preserve the claimant’s human rights” they can opt for an oral hearing. “Separate fixed costs have been agreed between stakeholders for either the paper or oral hearing”. If the costs for the oral hearing have been fixed sufficiently high to cover the additional work that is required can we expect to see a surprising number of claimants opting for the oral hearing?

My prediction based on the information available to date: two years of costs chaos.

I’ll comment further once more details become available.

Jackson Costs Review – Part 6 – The Political Element


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Lord Justice Jackson’s Civil Litigation Costs Review (see previous posts) raises the possibility of radical changes to the current system. However, how likely is it that his eventual proposals will ever see the light of day?

One of the most likely proposals he will put forward is a fixed fee regime for all stages of fast track cases. This, of course, is something very similar to the Ministry of Justice’s previous proposals, in the consultation paper Case track limits and the claims process for personal injury claims, to introduce a new claims process for all personal injury claims, except clinical negligence, and introduce a fixed costs regime to cover such cases. In the event, that was largely abandoned with no more than a limited new scheme for lower value RTA claims proposed.

Why did the Ministry of Justice back-down on its own initial recommendations? At the time, Stephen Haddrill, the Association of British Insurer’s Director General, commented: “And the exclusion of workplace-related claims, which take on average three years to settle, is illogical and bizarre. Trade union pressure must not be allowed to block change.” What is the interrelationship between trade unions and government policy? One theory is that the introduction of fixed fees to a wider category of claim and, in particular, EL claims would have had a downward impact on the fees that claimant solicitors were able to recover. If one accepts that a large proportion of trade union backed cases are “bought” by trade union panel solicitors, through referral fees paid to the trade union, any reduction in fee income would reduce the amount that solicitors could pay in referral fees. The trade union income generated by referral fees, and there is no reason to suppose this is not significant, enables trade unions to make political donations. These have traditionally been to the Labour Party. The (conspiracy) theory is that trade union pressure on the Government led to the change in policy. It would have been suggested that a move to fixed fees for EL cases would lead, indirectly, to a reduction in political donations to the Labour Party. The Legal Costs Blog is unable to comment on whether there is any truth in these allegations.

Is there any reason to suppose that the Ministry of Justice will change its mind, again, if Jackson LJ comes out firmly in favour of fixed fees for fast track claims when he publishes his final report in December? It seems unlikely. However, matters do not stop there. Jackson LJ’s final report is likely to be published shortly before the next general election. All the signs are that the new government will be a Conservative one. How willing will the Conservatives be to implement fixed fees?

There are three possible factors that will be at work. Firstly, a Conservative government is unlikely to have any reservations about introducing changes that might reduce a source of income to the Labour Party. Quite the reverse. Secondly, a Conservative government is likely to have some sympathy for insurers, and businesses that pay insurance premiums, who have previously been faced with disproportionate legal costs. Thirdly, any new government is going to face a serious public sector deficit and be looking for any areas where savings can be made. Any fixed fee regime is likely to reduce the total amounts paid out in terms of legal costs. This would have a positive impact on the budgets of the NHSLA, government departments and local authorities, all of which are funded directly or indirectly by the public purse. Jackson LJ’s final proposals, assuming they do include fixed fees, are likely to have a number of attractions to a new Conservative administration. The timing of the final report may be fortuitous for Jackson LJ.

Jackson Costs Review – Part 5 – Small Claims Limit


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Lord Justice Jackson’s Preliminary Report on Civil Litigation Costs revisits the thorny issue of whether the small claims track limit for personal injury claims should be raised from £1,000 to £5,000 (or somewhere in between). APIL, not surprisingly, expressed concern to Jackson LJ if this was introduced: “APIL’s membership survey suggests that almost 70% of all personal injury work consist of claims with general damages of less than £5,000. Solicitors firms that currently specialise in low value personal injury claims (i.e. below £5,000) would face a significant loss of business if the upper limit for small claims was increased. APIL suggests that the effect of the increase in the small claims limit in terms of lost business would be particularly acute in firms that specialise in Road Traffic Accident claims. APIL maintains that such firms would be ‘decimated due to the loss of a significant amount of business’. The reduction in the number of personal injury firms would create access to justice problems”.

FOIL were reported as believing that the small claims limit for personal injury claims should be raised to about £2,500, so long as there is an overhaul of the fixed fees that go with the present regime.

The Ministry of Justice only very recently reviewed this same issue and decided against changing the limit. It is therefore fascinating that Jackson LJ is willing to reopen this can of worms. He is clearly prepared to consider all options, regardless of who he upsets in the process.

Jackson Costs Review – Part 2 – Fixed Fees


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Lord Justice Jackson’s Preliminary Report on Civil Litigation Costs is, in general, careful to avoid reaching any final conclusions or making any firm recommendations (see Part 1). However, even from a cursory reading, it seems all but inevitable that the final report will recommend the introduction of fixed fees to all stages of fast track claims.

Jackson LJ writes: “I have canvassed views from my panel of assessors and it is our unanimous view that we should take forward this work and try to achieve a fixed costs system in fast track cases”. This is as I previously predicted (see previous post). Further, it is suggested that: “There appears to be a strong case for some method of applying fixed costs in fast track cases at all stages” and not just pre-issue as in the current low-value RTA scheme. This is supported by FOIL who the Report states: “believe that there should be fixed costs for all cases within the fast track”. The conclusion reached is that: “It should be possible to devise a fair system of fixed costs for all cases within the new fast track limit”. To avoid one of the perceived problems with the current fixed fee regime, he writes: “I would propose an annual review mechanism to be included in any such fixed costs regime”.

Unlike other elements of his Report, he appears to have reached a clear view already on this issue. Good luck to those who try to persuade him to change his mind.

Of course, the idea of extending fixed costs in fast track cases is not exactly new. That is what was proposed in the Ministry of Justice’s consultation paper: Case track limits and the claims process for personal injury claims. Those proposals were largely abandoned when the new claims process was announced. It remains to be seen whether the final report carries sufficient weight to persuade a (new) government to resurrect this idea. However, at the very least, this Preliminary Report does seem to finally kill off the new claims process. Or, more accurately, delay any implementation of the new claims process pending a decision being taken as to Jackson LJ’s final proposals. The Report states: “It may therefore be sensible to dovetail in the development of the new claims process with whatever implementation programme may be put in place following completion of the 2009 Costs Review. The introduction of two different packages of reforms addressing the same subject matter may be unsettling for both practitioners and court users”. I have previously reported on the problems the new claims process has been facing. The sooner an announcement is made to, at least, put into hibernation the introduction of the new claims process the better. To see how bizarre the whole issue has become read this article on the RTA claims process (external link) from Anthony Hughes, President of the Forum of Insurance Lawyers.

What impact would Jackson LJ’s proposals have if fixed fees are rolled out to all stages of fast track cases? The new fast track limit is £25,000. The Report gives details of “a substantial firm of claimant personal injury solicitors” who informed Jackson LJ that 92% of all personal injury cases which they undertake fell within the bracket £1,000 to £25,000. This would therefore catch the vast majority of such personal injury claims. In addition to impacting on the revenue of claimant solicitors (for better or worse) it would wipe out a large proportion of law costs draftsmen and other costs professionals. This proposal has massive implications.

 

New claims process stumbles


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As anticipated, the new RTA claims process will not be ready by the original date of October 2009 due to problems agreeing how the scheme will work. A new date of April 2010 has now been set. 

This latest news coincides with Lord Justice Jackson’s recent comments commending the German costs recovery model. With his preliminary report on the future of legal costs about to be published it seems increasingly likely that some form of extended fixed fees will be recommended. That, in turn, is likely to have an impact of the new claims process. (Read more.)

Expect further delay and uncertainty.

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qc nov 26 96
 

www.qccartoon.com