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The recent case of Javed v British Telecommunications plc [2011] EWHC 90212 (Costs) is an interesting example of claimant solicitors being penalised for issuing proceedings unnecessarily and prematurely.
The Master concluded:
“I am in no doubt that the Claimant was unreasonable in commencing proceedings when she did. By issuing the proceedings when she did, the Claimant was in breach of the pre-action protocols. It is clear from the correspondence that at the time proceedings were issued a settlement was still being actively explored by the Defendant. It is no answer for the Claimants to state that the lack of positive response to the Claimant’s Part 36 offer was a justification for issuing proceedings. No responsible advisors acting for the Defendant could have recommended any proper consideration of the Part 36 offer without the full disclosure of all the relevant medical evidence.
…This was a fairly standard, small road traffic accident claim. The only slight complication was the Claimant’s previous accident. Had the Claimant disclosed all the relevant medical evidence with her Part 36 offer, in accordance with the Pre-Accident Protocols, I have little doubt that this claim would have settled without the necessity for the issue of proceedings. Therefore my decision on the first issue is that the Claimant acted unreasonably in issuing proceedings.”
The Defendant argued that costs should be assessed by reference to the sums that would have been allowed had the proceedings not been issued. This is despite the claim settling by way of Part 36 and the existence of a Sealed Consent Order providing for costs on a standard basis.
The Master concurred with this line of argument:
“In my judgement, the Court can limit the costs to fixed recoverable costs, and in this case the court should limit the Claimant’s costs to fixed recoverable costs and the court is not necessarily obliged to carry out a line by line assessment of the Claimant’s bill of costs.”
The government is to defer implementation of its civil litigation reforms until April 2013, the Ministry of Justice confirmed yesterday.
Part two of the Legal Aid, Sentencing and Punishment of Offenders Bill, which incorporates the changes proposed in the landmark Jackson recommendations on ‘no win, no fee’ arrangements, were expected to be implemented this October. The 2013 implementation date was confirmed by Lib-Dem peer Lord Wallace of Tankerness in a House of Lords debate on part two.
Cuts to legal aid for most civil cases, included in part one, have already been put back until April 2013 to give the department more time to prepare for the change.
A spokesman for the MoJ said: ‘We are committed to reforming the “no win, no fee” system so that legal costs for reasonable compensation claims will be more proportionate, and avoidable claims will be deterred from going to court.
‘This will require changes to legal rules and regulations and we want to give sufficient time to get the complex details right. We are also conscious that legal businesses will need sufficient time to plan for the changes, alongside other forthcoming regulatory and funding changes to the industry.’
The correct choice and use of costs draftsman will undoubtedly become more important than ever in the new budgeting era. The changes have been with us since October 2011 following the successful pilot under Simon Brown QC in Birmingham.
They and you will need to have experience in not only predicting future costs and managing that budget but be able to liaise fully with you , your client ( who will be expected to take part fully in the process ) and the opposition throughout the process. The ability of being able to communicate effectively therefore is of paramount importance.
The court will be the final arbitrator of the costs and while you can vary the amounts at the CMOs the court will make that decision.
The advantage is that you have finality as to your costs, assessment is discouraged and you can advise the client more effectively.
However, the skill set required is different and the choice of draftsman will be of paramount importance.
The High Court in the conjoined cases of Germany v Flatman and Barchester Healthcare v Weddall [2011] EWHC 2945 (HC) has ordered a law firm to disclose the details of its funding arrangements with two clients so the successful defendants can work out whether the solicitors financially supported the cases and could be pursued for a third-party costs order.
Both cases were run by a Norwich based firm of solicitors under conditional fee agreements without after-the-event insurance. The defendants’ common insurer – which suspected that the claims were funded to some extent by the solicitors – successfully appealed a refusal to grant disclosure of documents outlining the funding arrangements.
The judge below, His Honour Judge Moloney QC, had said the impact of such orders “could be to undermine or perhaps even to destroy the workings of the CFA system”, but Mr Justice Eady ruled that the judge “overestimated the consequences of the defendants’ applications… These appeals turn largely upon the particular facts. Either GMS were the funders or they were not”.
The implications this Judgment may have on the ‘CFA system’ are yet unclear, however Mr Justice Eady continued and stated that it may be necessary to make an order for disclosure of documents to help a “vulnerable defendant, or for that matter his insurer” establish what exactly passed between the claimant and his solicitor. Whether, following disclosure, an application for a third-party costs order is made, “that is a matter for the future”.
With the introduction of Fixed Fees into Family Proceedings and the recent reduction in Legal Aid rates it is essential for Solicitors to accurately record all time spent working on a file in order to maximise the prospects of escaping the fixed fees and recovering their costs in full. The type of things which are often under-recorded are the time spent preparing file notes and attendance notes, perusing lengthy reports and statements, preparation of long letters, considering Court Orders and noting amendments to public funding certificates.
As preparation for Court hearings is included in the Advocacy Fee, it is also important to differentiate between time spent preparing specifically for the hearing and time spent preparing the case.
It is also essential to ensure that the FAS Family Advocacy Attendance Forms are sealed by the Court; otherwise the LSC will only pay the Unit 1 Fee for a hearing not exceeding 1 hour resulting in potentially a substantial loss in the fees recovered.
Once more the question of interest on costs and that of VAT is one that is still a puzzle to many.
However the guidance is clear and while there may be an appeal on Motto for now the direction is clear enough.
Interest on costs whether funded by way of a CFA or not is still at the discretion of the Costs Officer on Assessment ( CPR 48.3) and thus it is still worth claiming the same. Interest can of course amount to a considerable sum.
VAT is an elective decision and thus again should you wish to charge VAT at 20% throughout on matters where a CFA has been used the decision is practice by practice and not determined by years where the VAT was actually at a different rate.
Both these items can have a considerable effect on recovery and should be recovered.
We raised the spectre of Tesco Law or Co-Op as the alternative name. This week the Gazette and press is once more saying that firms are not prepared. But what else is happening in the law, the referral fee ban, reduction in hourly rates for Legal Aid and it would appear from many areas a general lack of passion. While we are all waiting for the reforms the fundamentals that are often missed must stay – Rule 2.03 advice still being something that causes issues on so many files of papers. That is where we can always assist – at the start of a case, not the end of a case.
So Jackson is almost upon us. From the beginning of October it would appear that the first courses on the proposed changes to come into force in October 2012 will begin.
So what does Jackson and the proposed reforms mean for us all.
In terms of the Dubbing Tesco Law perhaps we should actually be calling it Co-op Law, an already highly established player in the marketplace. Co-op have taken their turnover from zero to the millions within a number of years. The business model is effective. The Co-operative have 2 million attentive clients, 2 million people who use their accounts and trust the brand. Can we say that solicitors are trusted in the same way as the large
supermarkets, car manufacturers and even, dare we say it, the banks. The radical shake up of the Legal Services market could well have one of the largest impacts on the make up of the English Legal Services since the Reform Act of 1832.
It is not too late to start to change your business practise. Perhaps now bringing in Experts who can assist may be the way forward.
We highly recommend http://www.elitemriltd.co.uk/
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The Civil Procedure Rule Committee has now reversed the controversial ruling in Carver v BAA [2008] EWCA Civ 412.
Before 2008, a claimant avoided any costs sanctions so long as they the defendant’s Part 36 offer by any amount, or equalled their own offer. However, in Carver, where the claimant beat the defendant’s Part 36 offer by a mere £51, the Court of Appeal said that judges should take a broader view of whether the final outcome showed the case was worth the fight and that the judge in this matter was “entitled to take into account that the extra £51 gained was more than offset by the irrecoverable cost incurred by the claimant in continuing to contest the case for as long as she did.”
In his final report, Lord Justice Jackson said that Carver had introduced “an unwelcome degree of uncertainty into the Part 36 regime” and also “tends to depress the level of settlements” due to claimant’s being wary of taking the risk of going to trial.
The Civil Procedure Rule Committee have subsequently approved a clarification to Part 36.14 that says “more advantageous” means better in money terms by any amount, however small, and “’at least as advantageous’ shall be construed accordingly.” This clarification will take effect from 1st October 2011, when the 57th update of the Civil Procedure Rules comes into force.
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