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Hudson: anger isn’t enough

Some law firms will undoubtedly go bust as a result of the civil justice reforms, the chief executive of the Law Society has admitted.

Des Hudson also said the civil justice reforms showed that the legal profession – and the Law Society – need to improve the way they make their case to the government and other policymakers.

Speaking at the launch of the society’s civil justice roadshows this week, Des Hudson said that on behalf of the profession, he was “angry that insurers’ advice to government seems to go unchallenged”.

He continued: “I’m angry that many solicitors who work hard for their clients are going to struggle – some firms will undoubtedly fold. But I am most angry that in all the spurious talk about fraudulent claims, many innocent victims with real, debilitating injuries will lose out. They will not get the redress they deserve; the individuals and companies at fault will have fewer incentives to correct their behaviour.”

However, he said that “anger isn’t enough. We have to learn, as a profession and as a Law Society, to explain better our role, to evidence the value we add, to our clients, to society, to justice.

“We have to redouble our efforts to engage with government and parliamentarians, and those others who influence policy.”

Mr Hudson predicted that firms were going to have to start deducting from damages to make a reasonable return for their work.

In addition to the roadshows, the Law Society will publish new and revised practice notes, while a work group is devising a new model conditional fee agreement and a model damages-based agreement, although it is not yet known whether these will be published before 1 April.

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Injury: Quindell comfortable with proposed EL fees

Quindell Portfolio has finally received its alternative business structure (ABS) licence and also predicted that it will be able to operate profitably within the new fixed fees and small claims structure put forward by the government.

In a trading update issued this morning, Quindell said it has now received approval from the Solicitors Regulation Authority in relation to Quindell Legal Services Limited’s ABS application, which takes in its acquisitions of three law firms: Silverbeck Rymer, Pinto Potts and The Compensation Lawyers.

The approval, which has no application specific conditions, is effective from 21 December 2012.

Quindell is building an end-to-end outsourced claims proposition for insurers, which has also included acquisitions of Accident Advice Helpline, Ai Claims, Intelligent Claims Management and Mobile Doctors.

Meanwhile, Quindell has welcomed the government’s recent proposals for a new fast-track fixed fees structure for all road traffic accident (RTA) portal claims, with the £1,200 fee for claims worth up to £10,000 set to be cut to £500, and a new fee of £800 for claims between £10,000 and £25,000. When the portal is opened up to employer’s and public liability claims, fixed fees will be £900 for cases up to £10,000 and £1,600 for cases up to £25,000.

Quindell cited the Law Society describing the proposed costs as “woefully inadequate” and saying the likely result will be that many solicitors will not be able to afford to carry on doing this type of work.

The company said: “In contrast, Quindell has put in place significant expansion plans over the next 12 months to drive the business forward via organic growth, creating over 300 new positions within Quindell Legal Services.

“Even in light of the most recent government announcement to enter a period of consultation regarding whiplash injuries and raising the small-claims track threshold from £1,000 up to £5,000, the board believes that Quindell is uniquely placed to operate post this suggested regulatory change, even at its extremes, and will continue to be able to operate a profitable business model during this period of significant industry consolidation.”

Rob Terry, the chairman and chief executive of Quindell, said: “With the changes to legislation within the UK insurance industry now fast approaching, our solutions and services-based proposition of maintaining income and competitive advantage for our insurance clients and reducing costs for the overall insurance market are proving to be highly attractive.

“Quindell welcomes any proposals that protect consumer rights and champion industry change. Above all else, the market needs clarity. Our combined model and diversified offering means we can still operate profitably within the scope of the new proposals whilst supporting lowering the cost of claims for the industry as a whole.”


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High Court: privacy cases may be on the wane

A drop in the level of libel litigation last year could be down to the phone-hacking scandal and celebrities switching to privacy injunctions, new research has suggested.

Sweet & Maxwell said the number of reported defamation court cases in the UK fell 15%, from 84 to 71, in the year to 31 May 2011. The number of cases where privacy arguments were made by high-profile individuals more than doubled, from nine to 24 in 2011.

“Public scrutiny following the eruption of the phone hacking scandal is leading to a lower appetite for risk for some media outlets,” said Korieh Duodu, a partner at media firm David Price Solicitors and Advocates and the author of Defamation: Law, Procedure and Practice.

“Media companies are concerned that the phone hacking scandal could lead to the imposition of a statutory media standards regulator, and they are have made every effort to put their own houses in order to avoid this. That will mean a more conciliatory, less controversial approach and fewer defamation cases.”

Mr Duodu said privacy injunctions have become “increasingly fashionable” as they can prevent damaging articles from ever seeing the light of day. However, he said tactics are changing as a result of recent rulings such as Giggs and Terry, which showed that it will in future be more difficult to get anonymity orders keeping the identities of parties confidential.

Only seven cases involved celebrities in the year, the lowest for five years, including Big Brother star Imogen Thomas, Welsh singer Charlotte Church, former Smiths frontman, Morrissey, and Nancy Dell’Olio.

Other high profile individuals involved in defamation court cases, including business people and politicians, included Lord Ashcroft, Russian businessman Boris Berezovsky and financier Nat Rothschild.

Sweet & Maxwell said the fall in defamation cases was led by a 36% drop in the number of cases against traditional media companies like newspapers and broadcasters, which reached a five-year low of just 27 cases.

Mr Duodu said another reason why the number of cases might have fallen is that it has become harder for defamation claimants to win. “Two important rulings in the UK’s appeal courts should mean that media companies now find it easier to run defences of ‘responsible journalism’ or ‘comment’. More claimants are being advised that their case may not be strong enough, even though it may well have succeeded previously.”

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Crash: liability was hard to dispute

The High Court has backed a costs judge’s decision to cut a success fee charged by Irwin Mitchell, acting for a pedestrian whose back was broken when a car reversed over her, from 75% to 30%.

The costs litigation followed a settlement in 2012, under which the Motor Insurers’ Bureau (MIB) agreed to pay the woman £1.6m.

Mrs Justice Slade – sitting with Master Campbell – said it was not “impermissible” for the costs judge, Master Rowley, to conclude that, in the light of the involvement of the MIB, that the prospect of the claimant winning but not being able to recover costs was “negligible”.

Further, Master Rowley’s decision that the MIB would be hard pressed to contest liability was “amply supported by what was known at the time of entering the CFA”.

Slade J agreed with Master Rowley that the main risks for Irwin Mitchell were the risk of a part 36 offer and the complications that might follow a finding of contributory negligence.

She said allegations of contributory negligence included the fact that the vehicle’s lights were flashing and that the “claimant had a lack of awareness of the approach of the vehicle because of her pre-occupation with her mobile phone”.

Slade J said the costs judge referred to a Court of Appeal judgment, C v W, in which the court substituted a success fee of 20% for the risk of failure to beat a rejected part 36 offer. He also said that not all cases should be taken as having a 50/50 chance of success when they get to court so as to justify a 100% success fee.

Dismissing the appeal, Slade J ruled that the costs judge did not err in his approach to assessing a reasonable success fee. The claimant was ordered to pay the MIB’s costs for the appeal.

The court heard in Bright v Motor Insurers’ Bureau [2014] EWHC 1557 (QB), that Carol Bright suffered a severed spinal cord in the accident, leaving her tetraplegic.

Counsel for the claimants argued that base costs, as well as success fees, were at risk if the claimant lost and that the MIB refused to admit liability, unlike the situation in C v W. He argued that the costs judge had erred in his approach to the staging of the success fee, which was set at 50% for the initial work.

However, Slade J said: “The decision on a reasonable success fee was reached independently of the decision of the master as to staging.

“Since the material issue is whether the requested success fee of 75% was reasonable whether it was staged or not, the observations made earlier in this judgment about the approach of the Master to the issue of staging do not affect the outcome of the appeal.”




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Hallinan: whole system legal reform needed

The price of clinical negligence claims have reached a “tipping point” and urgent reform is needed to bring them under control, the Medical Protection Society (MPS) has argued as it laid out a nine-point plan that included fixed recoverable legal costs for cases worth up to £250,000.

Launching a campaign called ‘Striking the balance’, the MPS – a not-for-profit organisation supporting 300,000 healthcare professionals worldwide – said there should be reasonable compensation for those harmed due to clinical negligence, but that “this must be balanced against society’s ability to pay”.

It said a full-time GP can now expect to receive two clinical negligence claims over a typical career – nine years ago, it was only one. The picture is similar for dentists.

The reform package was part of a three-pronged approach that also highlighted the need to “improve patient safety and the quality and reliability of care delivery”, and secondly “increase our understanding of the drivers of clinical negligence claims to help inform prevention strategies”.

The MPS said it was worried that “the fear of being sued is affecting the way doctors practise, their health and wellbeing, and how they see their future in the profession”.

An MPS survey found that 88% of healthcare professionals were increasingly fearful of being sued, with 72% saying the fear has caused them stress or anxiety. Three-quarters reported that it resulted in them ordering more tests or making more referrals, while 64% said it has made them consider their future in the profession.

Claims costs were rising even though official reports showed “no material deterioration in the quality and safety of primary care in recent years”, the MPS pointed out.

The government is working on a scheme for fixed costs in cases worth up to £25,000 – having flirted with the idea of £250,000 – while Lord Justice Jackson recently acknowledged the specific difficulty of trying to fix costs for clinical negligence cases worth more than £25,000 except in matters where liability and causation have been agreed.

The MPS argued that if spending on clinical negligence by the NHS continued to increase at the same rate as it has over the last five years, it could be paying out £2.6bn a year by 2022 – “a cost that risks becoming unsustainable for society without reform”.

From the £1.5bn paid out in clinical negligence costs in 2015/16, legal costs accounted for 34%, the MPS said.

Alongside a blueprint to improve the prevention of accidents, its plan for legal reform proposed:

  • A limit on future care costs based on “the realities of providing home-based care” – a tariff would be agreed by an expert working party. This would avoid “the enormous differentials between costings proposed by care experts working for the claimant and the defendant”;
  • The use of national average weekly earnings to calculate damages awarded, instead of a patient’s weekly earnings – to avoid higher earners receiving more from the NHS in compensation than lower earners, for a similar claim.
  • The introduction of an ultimate 10-year limit between the date of an adverse incident and when a claim can be made (with judicial discretion in certain cases);
  • A minimum threshold for cash compensation relating to claims for minor injuries;
  • The court would have to allow a patient to withdraw from a claim less than 28 days before trial;
  • A fixed recoverable costs scheme for clinical negligence claims up to a value of £250,000;
  • Putting limits on claimant expert reports covered by after-the-event insurance, such as on the number of expert reports covered, or on costs;
  • Considering ways to reduce expert fees, such as capping fees or the number of experts that can be instructed; and
  • An increase in the small claims track threshold for clinical negligence claims  up £5,000.

Emma Hallinan, MPS director of claims, said: “We believe whole system legal reform is needed and this sits at the heart of our Striking a Balance campaign – we need a regime which achieves a balance between compensation that is reasonable, but also affordable…

“When considering the financial challenges facing the NHS and the change to the personal injury discount rate – which has increased the cost of compensation for clinical negligence, exacerbating an already challenging situation – there has never been a more pertinent time to tackle the root of the problem.

“Of course controlling the cost of clinical negligence once a claim is made, is just one component of a more sustainable system.

“Our report also explores the causes of adverse incidents, acknowledges the need for continued improvements in patient safety, and looks at the complex drivers of claims – from changing patient expectations, through to greater awareness about how to bring a claim.”

Helen Vernon, chief executive of NHS Resolution (the new name for the NHS Litigation Authority), welcomed the report and “the wide ranging debate the report should prompt on how best to address the rising costs of clinical negligence”.
She continued: “Our five-year strategy, Delivering fair resolution and learning from harm looks closely at the drivers of this cost and sets out our commitment to work with and through others to ensure that we learn from what goes wrong and challenge the existing models for delivering compensation.
“The launch of our strategy marked an extension of NHS Resolution’s role to be more involved in incidents at an earlier stage and we fully support the proposal by the MPS for research into why claims are brought so that we can better meet the needs of patients.
“This is how we will become more effective in preventing situations from escalating into unnecessary court action and in resolving concerns in ways other than by litigation.”

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CostsMasterWe are pleased to announce that CostsMaster Draftsman 5.0.44 is now available to download from our website. This version includes support for the New Format Bill, the Revised Precedent H and Precedent R, tasks, activities and expenses, the ability to import work tagged with tasks and activities and much much more.

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The government has pushed back implementation of the Jackson reforms and the referral fee ban to April 2013, it announced yesterday.

Government law officer Lord Wallace of Tankerness made the announcement as the House of Lords began scrutinising part 2 of the Legal Aid, Sentencing and Punishment of Offenders Bill, which contains the provisions.

It had originally been scheduled to take effect in October 2012, but speculation had been growing that the timetable was too tight to have everything in place. The government had already pushed back implementation of part 1, dealing with legal aid reform, to April 2013.

A Ministry of Justice spokesman 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 help us to move away from the current unacceptable situation where, for example, the NHS paid £200m to claimants’ lawyers for compensation cases in 2010-11 – around three times more than it paid its own lawyers.

“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. We will therefore implement the new measures, subject to parliamentary approval, in April 2013.”

Seamus Smyth, president of London Solicitors Litigation Association, said: “The Jackson consultation process took a long time, and highlighted a great deal of disagreement. Implementing his proposals, even as a whole, would have taken time and would not have been easy but tackling them piecemeal was bound to generate more disagreement and take even longer. It is no surprise that the timetable is being stretched. Let's hope the detail and drafting quality of the outcome justifies the wait.”

During the six and a half hours of debate, the government rejected all the amendments to clauses 43 and 45, which end the recoverability of success fees and after-the-event (ATE) insurance premiums, despite a particularly passionate plea on behalf of asbestos sufferers. Justice minister Lord McNally said: “To succeed, we will have to stand firm against some of these hard cases, I am afraid.”

He also questioned claims that the Dowler family would not have been able to take legal action were it not for the current regime. “I thought at the time, and I still think, that it is almost inconceivable that the Dowlers would not have been able to pursue their case under conditional fee agreements.

“The idea that they would have been powerless in the case that they had is perhaps countered by the fact that the matter was settled out of court – and if reports are to be believed, at a cost of £3 million to the offending company. I am not so sure that the argument that they would have been left powerless stands up in those circumstances.”

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Lord Wallace had earlier told peers that the reforms “can help businesses and other defendants who have to spend too much time and money in dealing with avoidable litigation – actual or threatened”. He added that they will promote competition among solicitors.

He said: “No doubt some firms of solicitors will get a reputation for taking on cases with very modest or no success fees, whereas other firms prepared to take on more risky litigation would have higher success fees.”

However, he acknowledged concerns among peers that some of the main Jackson reforms, particularly qualified one-way costs-shifting (QOCS), would be dealt with by the Civil Procedure Rule Committee with little involvement from Parliament. But he indicated that there would not be a “primary financial threshold” to apply QOCS.

Lord Wallace said: “We will, however, continue to work with stakeholders on the detail of a QOCS regime for personal injury cases. We acknowledge and are grateful for the expert stakeholder contributions that have been received. That work will resume in earnest once the details of this bill are finalised.

“However, there are some difficult issues which we are addressing, and which need to be got right for the hundreds of thousands of personal injury cases dealt with each year: what does ‘unreasonable behaviour’ mean? How can we balance certainty for the claimant with the need for the claimant to face at least some litigation risk, the absence of which is a major flaw in the current regime? How can we ensure fairness to all sides, and reduce the scope for satellite litigation?”

He said “there does appear to be broad agreement that it should not be a primarily financial threshold in personal injury cases, although that would not necessarily apply were, at some future date, QOCS to be extended to other categories”.

Lord McNally said later that the government will examine the experience of QOCS in personal injury claims before considering whether it should be extended further. “Different considerations apply in different types of case. Environmental claims, for example, typically involve more than one claimant who can contribute towards the costs. Before-the-event legal expenses insurance may be available in relation to the provision of goods and services.” He also pointed to the introduction of contingency fees as another option.

Lord Wallace argued that the insurance market will “respond positively” to the reforms. “It is easy to say ahead of an event that all sorts of appalling things will happen, but after 1999 the market certainly adjusted to the opportunities with ATE premiums, and it is not surprising that those who wish to maintain the status quo are making substantial representations to that effect.”

The only clarification of substance during the debate was that the 10% uplift in damages awards will also apply to bereavement damages.

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Carrington: insurers will be more willing to defend passenger claims

Carrington: insurers will be more willing to defend passenger claims

A recent county court decision on ‘fundamental dishonesty’ opens up a “new avenue for insurers”, leading defendant firm DAC Beachcroft has claimed.

According to counter fraud partner Anthony Carrington, the decision “rewrites the rulebook” for defending ‘bogus passenger’ claims.

The claim in Shahid v Puddick was made following a car accident in 2014. The defendant had indicated that only one of the three claimants was genuine, so insurers decided not to settle the genuine claimant’s claim as she had supported two bogus personal injury claims.

Mr Carrington recorded that the trial judge agreed, describing the entire action as dishonest. He concluded that two of the three claimants had not been present at the accident and then went on to dismiss the ‘genuine’ claimant’s claim, which was worth £2,000. The claimants were also ordered to pay the defendant’s costs.

Mr Carrington, said: “The decision is great news for the insurance industry and marks a significant shift in case law relating to ‘genuine’ claimants who support fraudulent claims. Before the introduction of the Criminal Justice and Courts Act 2015, insurers had little alternative but to settle ‘genuine’ claims.

“Insurers should take confidence from this outcome and not look to settle claims where the ‘genuine’ claimant is supporting bogus claims by individuals who were never involved in the accident.”

DAC Beachcroft said that in the last year, it has had more than 140 claims dismissed at trial or final hearing on grounds of fundamental dishonesty, saving insurers more than £1.4 million in damages and costs. Costs have been assessed in two-thirds of the cases, leading to costs orders totalling over £440,000 being awarded to insurers.

Mr Carrington could not say how many times the firm had claimed fundamental dishonesty and failed, but he said that as it only made the allegation at the end of a case when the facts were clear, they “generally succeed”.

An analysis of all the fundamental dishonesty findings obtained by the firm found that 43% involved fraudulent low velocity impact claims, while more complex frauds where accidents were induced or staged accounted for around 38%. Fewer than 10% of the fundamental dishonesty decisions related to bogus passenger claims.

“Now that the case law in defending this type of fraudulent claim has been so substantially altered, we expect insurers will be more willing to defend these cases in their entirety so bogus passenger claims will account for a greater proportion of fundamental dishonesty results in the future,” said Mr Carrington.

He added that checking a claimant’s social media activity was becoming increasingly important in tackling fraud.

“In a number of these fundamental dishonesty cases, our intelligence team’s investigations of the claimants’ own social media activity unearthed some gems of evidence, which contradicted what the claimants had alleged in their claims.

“In one case, the claimant alleged that his injuries came on within 24 hours of the accident and that he had been unable to go running but his social media showed that the claimant had, in fact, completed a 10km run the day after the accident, recording a personal best time. Following the cross examination at trial, the claimant discontinued and agreed to pay costs in excess of £10,000.”

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RPC: complaints reflect "aggressive approach to litigation"

RPC: complaints reflect “aggressive approach to litigation”

Complaints about misconduct made against solicitors by solicitors, barristers and other professionals have increased by a third in the past five years, it has emerged.

City law firm RPC said the Solicitors Regulation Authority (SRA) received over 2,500 complaints of this kind last year, compared to 1,850 in 2011.

The firm said that during the same five-year period, the total number of misconduct reports remained static at around 10,900 a year.

RPC said that “rather than indicating worsening behaviour in the legal profession, the one-third rise may reflect an increasingly aggressive approach to litigation, with one legal team launching complaints against their opposition, often on the instruction of their clients”.

Common complaints included litigation behaviour, including delaying tactics, errors of fact – which could trigger claims of misleading the court but were “very unlikely” to rise to the level of misconduct – and “intemperate language”, where a “robust tone of correspondence” was perceived to be rude or threatening.

RPC said complaints were “often made at the request of clients who may misunderstand what constitutes misconduct, misconstrue the meaning or intention of the other party’s solicitor, or seek to exploit an opportunity for tactical advantage”.

Graham Reid, legal director of professional regulation at RPC, commented: “This is not about solicitors’ standards slipping. Litigation tactics are getting tougher. My experience is that more and more complaints appear to be filed in order to gain a tactical advantage in court cases.

“Major litigation can have millions of pounds at stake, and can be transformational for the businesses and individuals involved. That some might want to gain a small advantage through use of tougher tactics is understandable.

“However, it is questionable whether pursuing this tactic is actually a good idea for clients, especially if it increases their costs.

“Of course, solicitors remain under a conduct obligation to report to the SRA any serious misconduct on the part of another solicitor or firm. It’s not always easy to strike a balance between discharging this duty and client objectives.”

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Trood: “Proclaim will be fundamental to our success, providing a flexible single solution embraced by everyone at our 3 offices”

Bird & Lovibond Solicitors is implementing the Proclaim Practice Management Software Solution from Eclipse Legal Systems.

Based in Middlesex with branches in Uxbridge, Ruislip and Greenford, Bird & Lovibond Solicitors is a growing multidisciplinary law firm with a proud tradition of providing excellent service to both private clients and commercial organisations.

The Proclaim Practice Management solution will be rolled out to all staff, ensuring a secure and consistent approach across all matters. Eclipse will conduct a full data migration from the incumbent system, allowing integrated firm-wide financial management toolsets to be utilised including the Proclaim Credit Control Centre module – boosting efficiency and providing detailed analysis of the firm’s operations.

Bird & Lovibond will also take advantage of the Proclaim Compliance solution, ensuring effective risk management throughout the lifecycle of each matter. To streamline non-prescriptive work areas such as Employment and Matrimonial, the firm will adopt Proclaim’s Matter Management platform. Bird & Lovibond will further benefit from seamless digital dictation courtesy of Proclaim’s integration with BigHand.

David Trood, Partner at Bird & Lovibond, comments:

“It is crucial that we achieve our goal of staying ahead of the competition and strengthening our enviable reputation for outstanding client service. Proclaim will be fundamental to our success, providing a flexible single solution embraced by everyone at our 3 offices, guaranteeing a consistent approach for all our work areas. Efficiency will be transferred allowing us to take on more cases and spend less time on non-value adding tasks, freeing up more quality time for each client.”


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Dismore: flawed approach to fees

Any changes to fixed-costs rates should only occur when the decision on the small claims limit has been made and experience gained of what the personal injury landscape looks like afterwards, the Access to Justice Action Group (AJAG) has told the government.

It has also estimated that the Treasury will lose around £100m in VAT from the combination of lower fees and cases not being pursued.

In its response to the Ministry of Justice (MoJ) consultation on the proposed fee rates for the RTA portal and fast-track cases, which closes tomorrow, AJAG said it was concerned at the “piecemeal manner in which changes to the personal injury costs regime are being introduced” without taking into account the impact of potentially raising the small claims limit for PI cases to £5,000.

The MoJ said before Christmas that the decision to delay introduction of the revised portal does not affect this consultation.

The response, written by AJAG co-ordinator Andrew Dismore, said: “The lower-value, simpler-to-investigate on liability, cases form the bulk of the claims presently in the portal, and even after its extension to higher values would still do so, subject to the small claims limit proposals. The fee income generated from those cases in large part cross-subsidises the higher-value and more complex claims under the present portal arrangements and value limits.

“If these lower-value cases are taken out of the costs equation, at the same time (or soon after) as the overall portal value limits are dramatically increased, then even on the present fixed costs rates, there is a real risk that the portal system will be destabilised. With much lower rates such as are now proposed, it is a racing certainty… If the small claims limit is increased, then the fixed costs rates will have to be revisited.”

Mr Dismore argued that while law firms need to make a reasonable profit, access to justice is the bigger concern. “If lawyers cannot see a way to pursuing a case competently and having regard to their professional duties and obligations, they will not do so. Many claimants who presently are able to find a lawyer to represent them will in future find themselves unrepresented, as there will be a drive to the bottom. These fixed costs proposals will reduce access to justice for such injured people.”

He said the economic effects include the loss of revenue to the government from tax receipts – which AJAG put at £100m – and Department for Work and Pensions and NHS recoupment on the one hand, and the expected rise in unemployment in the legal profession on the other, with loss of personal taxation and the payment of out-of-work benefits.

The response strongly criticised the absence of any indication of how the proposed rates were calculated. “These rates were negotiated and worked out, based on the hours of work needed on average to bring the claim combined with the hourly rate for the level of fee-earner appropriate to the case. In particular, there was no provision in those calculations for any element for referral fees.

“We would suggest that the minister’s proposals would have a better chance of being seen as robust if, instead of just bald headline figures, the MoJ set out the hourly rates they consider should apply and how many hours are needed to deal with a claim competently, on average.

“The suspicion is that all the MoJ has done is take the existing, evidence based, figures, and knocked off an element that they consider represent referral fees. That is a flawed approach. Like any business, including the insurance market which spends millions each year on advertising, lawyers need to market. If it is not to be through referral fees, then they need to market in other ways (which will be more expensive), yet there is no provision in these proposals for an element to represent this.

“This approach is also flawed when comparing the different types of claim. Whilst referral fees may be common in relation to RTAs and some public liability cases, the use of referral fees in employer’s liability is more restricted, with a high proportion of claims passed to solicitors by trades unions with no referral fees paid, but with cross subsidy of other work, such as tribunal representation. To suggest that a referral fee in an RTA case is the same as the value of such arrangements is not evidence based and is wrong.”

AJAG also argued that whilst some RTA cases may be relatively straightforward, the amount of work needed to investigate EL and PL claims is significantly more, and cannot realistically be done properly for the rates suggested, especially higher-value matters. “For those cases that are accepted, the risk will be that the insurers will not be pressed as hard as they should be for a fair settlement: the temptation with low levels of costs will be to recommend earlier acceptance of lower offers than would be fair and appropriate.”


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Supreme Court: competence decision

The Supreme Court has been asked to decide whether the Welsh Assembly can introduce legislation that allows the NHS to recover the cost of treating asbestos victims from negligent employers or their insurers.

It is estimated that the Recovery of Medical Costs for Asbestos Diseases (Wales) Bill, a private member’s bill introduced by former Thompsons partner and now Assembly member Mick Antoniw, will raise around £1m a year.

However, the competence of the Welsh Assembly to pass the bill – which it did in November – has been repeatedly questioned by insurers, and this week Theodore Huckle QC, the Counsel General for Wales, announced his reasons for referring it to the Supreme Court to decide.

“Before the Supreme Court I will contend strongly that the bill is within the Assembly’s legislative competence,” he said.

“However, making a reference before it receives Royal Assent enables the matter of the bill’s competence to be determined without awaiting what I consider would be the inevitable challenge in potentially far more expensive court proceedings in due course, perhaps when substantial amounts of money had been recouped under the bill’s provisions and would quite likely be subject to repayment were the decision of the courts to be adverse.

“The litigation costs of a reference being made during the intimation period are likely to be less than the costs of any challenge brought once the bill is enacted under the usual judicial review procedure, as Supreme Court rules provide that orders for costs will not normally be made either in favour of or against interveners [such as the Association of British Insurers].

“It is in my view in the public interest for me to take the initiative in seeking the Supreme Court’s decision on the bill as it stands.”

The Welsh initiative has raised questions as to why the Westminster Parliament does not introduce a similar measure for England.

See blog: Justice for asbestos victims moves forward

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Thomas Jannakos, CFO, DAS UK Group

Leading legal expenses insurer, DAS has appointed Dr Thomas Jannakos as their Chief Finance Officer and board director.  He takes over from the recently retired CFO Paul Gibson.

Dr Jannakos joins DAS from parent company, Munich Re in Munich, where he was head of department corporate performance management.  He has worked for Munich Re since 2005.  Prior to this he worked for Karlsruher Leben a German life insurance company.

Dr Jannakos has over 14 years’ experience in the field of finance.

Dr Jannakos has permanently relocating from Munich to Bristol and reports directly to Paul Asplin, CEO of the DAS UK Group.

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Hudson: insurers’ promises to reduce motor premiums are likely to be unfulfilled

Representatives of thousands of personal injury lawyers have slammed the government’s whiplash proposals, arguing that the incidence of fraud is exaggerated and adopting proposals for the benefit of insurers will lead to injustices.

Responses to the government’s whiplash consultation by the Law Society, the Chartered Institute of Legal Executives (CILEx), the Motor Accident Solicitors Association (MASS), and Access to Justice Action Group (AJAG), among others, time and again raised the concern that the proposals will risk the victims of genuine accidents being penalised.

There was unanimity in the view that raising the small claims limit for PI cases would mean ordinary victims who represent themselves being faced by highly experienced opponents on an uneven playing field.

Respondents highlighted the absence of any guarantee that savings would be passed on to consumers in the form of lower insurance premiums, although the insurance industry would undoubtedly benefit if the proposals were adopted.

The widespread condemnation follows Association of Personal Injury Lawyers’ (APIL) research which found that the involvement of a lawyer in whiplash cases leads to much larger settlements than claimants are initially offered by insurers, and that raising the small claims limit could reinvigorate the claims management industry.

Des Hudson, chief executive of the Law Society, said: “Different costs limits for some types of personal injury claim and other steps to place obstacles in the way of claimants will increase shareholder profits for insurers, while victims who have been injured in an accident are faced with little or no hope for justice.”

Meanwhile, raising the small claims limit “tips the odds in favour of the powerful and yet again unfairly promotes the interests of the insurance lobby whose promises to the Prime Minister to reduce motor premiums [are] likely to be unfulfilled”, he added.

CILEx described the consultation as “extremely one-sided and heavily influenced by the insurance industry, which ultimately has a vested interest in paying out less money”.

It pointed out that the Association of British Insurers’ (ABI) had itself estimated that proven fraudulent claims based on ‘staged accidents’ represented just one in 20 whiplash claims.

CILEx went on to argue that “there should be no change at all to the small claims track threshold”. Among other consequences, it would erode the principle of equality of arms and leave litigants in person “in a very vulnerable and unequal position”, it said.

MASS agreed the small claims limit should remain as it is. It warned that raising it “will severely hinder the operation of the portal system and protocol”.  The portal would be “marginalised and rendered obsolete” in most RTA cases.

The solicitors also charged that the proposal for new independent medical panels would be “expensive, bureaucratic and unnecessary” as existing panels perform the same function. “MASS does not regard the current system to be open to large-scale abuse,” it added.

A refrain of the responses was that the proposals could not be viewed in isolation and were planned to be introduced alongside wider reforms to civil litigation. “CILEx is concerned that such proposals are being made to deal with a perceived problem rather than an actual problem,” it said.

The proposals “come as part of wider package” and should not be rushed in “without fully assessing the impact of the current wave of reforms”, said MASS.

AJAG did not pull its punches. It said the proposals are “based on the partisan contentions of the ABI with no objectively tested data to back them up… Genuine claimants will again see their access to justice further restricted as a result of government intervention on behalf of big business as against the individual citizen.”

A PI law firm, Manchester-based Express Solicitors, was no less scathing. It backed APIL’s research, saying its final settlement figures have “substantially exceeded” offers to clients from insurers. There would potentially be more fraud in a system with a £5,000 small claims limit, not less, because claims management company-type operations would take the place of solicitors.

Express’s managing partner, James Maxey, joined with the others when he called for a “pause” to examine the effects of other changes, including the referral fee ban.

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Tony Dyas

Dyas: ups and downs

Posted by Tony Dyas, senior business developer at Litigation Futures Associate Allianz Legal Protection

Where does after-the-event (ATE) insurance go from here? If you asked most providers that question in 2013 in the lead-up to LASPO, then you could be forgiven for thinking that there wouldn’t be an ATE market in 2017.

If you asked ATE providers now, most would at best be cautiously optimistic about the future.

At ALP we were quick to recognise what LASPO would mean for our customers, and whilst this was the biggest change ATE market has ever seen, the future still looks rosy – if a little different.

So what is the key to making ATE successful? For us it’s simple – stop looking back and start listening to your customers. We are not going to have recoverable premiums for personal injury ever again and it’s a strong possibility that recoverability won’t be here for clinical negligence in a year’s time.

The reality of the ATE world is;

  • There is a move towards fixed costs, starting with clinical negligence and spreading to all types of litigation.
  • The costs for ATE insurers to insure are reducing. Apart from court fees, there appears to be a continuing downward pressure on disbursement costs as the cost of accessing justice reduces (some would say when accessing justice becomes harder).
  • Solicitors’ practices are consolidating; some firms will cease trading and others will get bigger.
  • If the small claims court limit increases as proposed by the government, there could be some cases where ATE is no longer appropriate.

So let’s look at the positives from these changes:

Fixed costs. This is an opportunity for ATE providers to develop new and innovative products. Markets change is not always a bad thing, so innovation is key to deliver for our solicitors and policyholders.

Reducing disbursement costs. This has to be good for our policyholders. At the moment, the costs we see vary hugely from firm to firm for providing the same service. The changes give us more certainty by gaining more control over costs. So there will be less premium but more certainty. Ask any reputable underwriter which they would prefer to have.

Consolidation. In my experience, this means that solicitor firms are becoming more expert. By more expert, I mean better at developing customer propositions, better at managing costs and more demanding of their ATE provider.

If they are more demanding, it means we have to up our game and provide better products. But those better products will have a longer shelf life as they are built around customer need.

The small claims court limit. OK, so no one has worked out the answer to this one yet. But my money is on an innovative law firm knocking at our door in the next few months with an idea that none of us have thought of.

So is there a downside to this? Yes – let’s face it, with change there will be some losers.

Will ATE be there for any type of dispute? Probably not. Let’s look at noise-induced hearing loss. A combination of increasing costs, low settlement values and having to issue proceedings on all cases means that it is almost impossible at the moment to have a proportionate ATE premium to support claimants.

This can’t be a good thing for claimants, but with a changing market comes innovation and the potential for new emerging models. So you can never say never.

Premiums will be lower. So there is less premium for the ATE provider for each policy. That’s inevitable, but against that there is less risk to manage. For ALP it’s how we diversify into new and emerging ATE markets whilst maintaining our leading position in personal injury and clinical negligence.

So what is the future? The simple answer is that we need to be better at what we do. It is also about working with the right solicitors who also have a compelling vision of the future.

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Leading legal expenses insurance provider ARAG plc has issued the following statement from Managing Director, Tony Buss, about recent media coverage of the Lord Chancellor’s decision to cut the discount rate applied to serious injury claims from 2.5% to minus 0.75%

“The cut to the discount rate applied to serious injury claims, announced by Liz Truss last week, came as a shock to almost everyone, and press offices across the industry immediately spun into overdrive.

If its lobbying appeared to have failed this time, the ABI PR team seemed to play a blinder, dominating comment in news stories, framing the argument and even, to some extent, dictating the language. But any sympathy or even recognition that the reform had been made to help those whose lives have been transformed by misfortune, was hard to find.

Many of the statements put out by insurers were careful to acknowledge that accident victims should be appropriately compensated, but the ABI’s focus on the “crazy” decision and the hike in premiums that would result, showed no apparent compassion and little acknowledgement of the seriously injured victims whose futures would be made marginally easier by the reform.

Maybe the formulae used to compensate victims are flawed and certainly the suddenness of the announcement doesn’t seem to have helped anyone. But the clamour to decry a decision that was made solely to make justice that little bit more just does not reflect well on our profession.

Time and again, key industry figures have spoken about a public perception of our industry, that sees profit coming before people, sales before service and claims to be declined wherever possible: All “Corporate” but not much “Social Responsibility”.

We know this is an easy falsehood that belies a far more complex truth, but such perceptions are harder to dispel when the industry is seen to fight so aggressively against the interests of those it claims to serve.

Sometimes, in the rush to protect the industry’s interests, it seems that its purpose is forgotten. Insurance is supposed to protect those most in need, at the expense of the more fortunate.

The people who will benefit from the discount rate reform are among the most vulnerable in our society. Children injured at birth and motorists left paralysed after an accident should now have the money to fund their care adequately, as they age.

By declaring the discount rate reform “crazy” because it will cost motorists an extra £75, the ABI has done nothing to improve public perceptions of insurers and left the impression of an industry that may be shallow, self-interested and heartless.”

Tony Buss, Managing Director, ARAG plc

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High Court: conditions imposed

A High Court judge has granted relief from sanctions despite finding that the non-compliance was non-trivial and deliberate, and that there was some delay in lodging the application for relief – using instead powers to impose conditions on the order.

The parties in Newland Shipping and Forwarding Ltd v Toba Trading & Ors [2014] EWHC 1986 (Comm) agreed to press ahead to the ruling even though the Court of Appeal is currently considering whether to issue fresh guidance on Mitchell, which has led to other cases being stayed in anticipation.

The application from one of the defendants was to set aside a default judgment, which followed his deliberate failure to acknowledge service. Mr Justice Males said it had been established at first instance, and was common ground between the parties, that this was an application for relief from sanctions.

He noted that CPR 13.3 on setting aside a judgment cross-refers to CPR 3.1(3), “thereby drawing attention to the court’s powers to attach conditions on any order which it may make to set aside a judgment”.

He continued: “This indicates, to my mind, that when considering the exercise of discretion under CPR 13.3, the court should bear in mind that the entry of a default judgment may operate as an extreme sanction and that justice may be done by making the setting aside of such a judgment subject to conditions… That may represent a more proportionate sanction.”

As well as the other failings, Males J said the prospect of the defendant being able to defend the claim was “borderline” so far as liability was concerned.

However, he said the claim involved serious allegations of dishonesty, meaning that “to maintain the judgment in default deprives him of any prospect of vindicating his defence and clearing his name, and importantly the judgment may well be for an excessive sum to which the claimant is not fully entitled”.

The judge noted that setting the judgment aside would have no real adverse impact on the overall progress of the action.

Males J ruled that in all the circumstances, it was a case where the “usual expectation” that the sanction would apply – as stated by the Court of Appeal in Mitchell – was not appropriate.

Instead he made a conditional order requiring a $4.75m payment into court within 28 days, and the payment of an outstanding costs order as well as the costs of the application within 21 days, failing which the default judgment would stand.

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Clinical negligence: call for calm

Clinical negligence: call for calm

Costs budgeting is starting to work in clinical negligence and government plans to introduce fixed fees in ‘lower-value’ cases worth up to £250,000 are moving too far and too fast, a Queen’s Bench Master has warned.

Master Cook said claims of more than £50,000 could not be classified as lower value and before extending fixed costs beyond that figure, “the current costs regime should be reviewed and its effects should be subject to proper scrutiny and research”.

He added: “The inevitable conclusion to be drawn is that there is now a very strong momentum perhaps an irresistible momentum towards the introduction of fixed costs in civil claims. But in my view change should not be driven on the basis of out of date statistics and the short-term financial interest of the NHS.”

His speech to a seminar at 7 Bedford Row in London came almost exactly a year after another lecture at the chambers in which he had expressed concern about the burden of budgeting in clinical negligence cases.

With a backlog building up, last year costs budgeting was temporarily disapplied for clinical negligence, and Master Cook said that following the appointment of one extra full-time master and four deputy masters, it will resume from the end of this month, with waiting times for first case management hearings “reduced to a few months”.

He continued: “The experience of the clinical negligence masters is that there are now signs that parties are adapting to the costs management process. We are seeing a significant increase in the number of cases where budgets are agreed or where a number of the phases are agreed.

“By requiring the parties to focus on the total budget per phase and requiring cash offers to be made where agreement cannot be reached the arguments are more focused. This leads to shorter hearings and in return enables more efficient use of court resources.”

However, there were also “some unwelcome signs”, such as an increase in the number of litigants in person. “I do not pretend that this increase in the number of litigants in person involves substantial numbers but it is something we have not really encountered before and to my mind it raises questions about whether these claimants are able to access effective legal advice.”

He said masters were also seeing a rise in the number of non-specialist firms attempting to move into the clinical negligence field, adding to the costs of the process.

Master Cook questioned the NHS Litigation Authority’s (NHSLA) apparent belief that fixed costs could save it more than a quarter of the costs it pays out to claimant solicitors.

“I don’t intend to submit these claims to detailed scrutiny. There is a respectable case to be made that the NHSLA has presented the statistics in a less than neutral fashion,” he said, referring the audience to Andrew Ritchie QC’s article last year on the NHSLA’s annual report.

“What I can say is that the figures used to support the NHS’s argument that claimant’s costs are disproportionate in lower-value claims are derived from the pre-costs management regime. Also left out of account as drivers of costs is the conduct of the NHSLA and hospital trusts.”

Master Cook noted that the Department of Health consultation on fixed costs, which was initially due last autumn, has still not been published, even though the planned implementation date of 1 October 2016 remains unaltered.

“It must also worthy of note that case for fixed fees was presented to the [Civil Procedure] Rule Committee by Mr Masterson of the commercial division of the Department of Health.

“I would suggest that such a state of affairs is profoundly worrying and does nothing to instill confidence in the proposals. What I find particularly concerning is how the NHSLA’s concern over disproportionate costs in ‘lower value claims’, that is claims valued up to £25,000, has morphed into a proposal to fix costs in cases up to £250,000.”

The process of running a clinical negligence cases “has a cost which means that establishing a low-value claim will always proportionally higher than a more substantial claim. I would certainly be slow to describe a claim worth £50,000 to £100,000 a low-value claim”.

This applied also to Lord Justice Jackson’s recent call for the widespread adoption of fixed costs, although he agreed with Sir Rupert that introducing fixed costs for clinical negligence on their own would lead to unhelpful “Balkanisation”.

He concluded: “My own view for what it is worth is that if this change is to come about: it must apply to all civil litigation; it must be gradual; we must start by extending the low-value part 45 scheme to all claims including the fast-track; there should be gradual extensions of fixed costs from £25,000 to £50,000 to say £150,000 and such extensions should be made in the light of experience; suitable uplifts must be agreed for difficult and complex claims such as clinical negligence, possibly in conjunction with some form accreditation scheme; alternatively, there must be some flexibility in rates (judicially controlled for difficult and complex cases); and there must be a robust and predicable mechanism to update rates paid to lawyers linked to actual costs in the real world…

“Unless fees are set at a level which make it economically viable to take on such claims, people will be denied representation…

“The past five years have seen an unprecedented period of change in the way in which civil claims are funded there has been much change in the legal market, there have been mergers and spectacular failures.

“In my opinion a period of calm is called for before more radical change. We do not have a system of justice that is worthy of the name unless people can get effective redress.”

An NHS Litigation Authority spokesman said: “We would agree entirely with Master Cook with respect to his comments on the entry of non-specialists into the clinical negligence market and the difficulties this creates in the resolution of claims.

“It is important that injured patients obtain access to justice at reasonable cost and that excessive costs are challenged appropriately in order to preserve NHS resources for patient care. This is why we have drawn attention to clear evidence of disproportionate costs being claimed, particularly on lower-value cases.”

Julie Say, a partner and head of clinical negligence at London law firm Hodge Jones & Allen, said: “It is heartening that the judiciary is contributing to the analysis of the current proposals for fixed fees in clinical negligence claims. Master Cook is echoing concerns about the flawed basis of the proposals together with ignoring cost management already carried out by the courts.”

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NIHL claims: insurer lobbying

NIHL claims: insurer lobbying

The Ministry of Justice has asked the Civil Justice Council (CJC) to investigate the number and cost of claims for noise-induced hearing loss (NIHL), it has announced.

There has been a concerted lobbying effort from the insurance industry to raise the issue, describing deafness claims as “the new whiplash” and as a “cash cow” for claimant lawyers.

A spokesman for the ministry said: “In response to ongoing concern about the number and cost of noise-induced hearing loss claims, we have asked the Civil Justice Council to consider the issue and to make recommendations.

“This builds on the recent substantial civil justice reforms designed to control costs and discourage unnecessary litigation while allowing access to justice for meritorious cases.”

According to figures published last month by the Association of British Insurers (ABI), NIHL claims notified to insurers increased by 189% between 2011 and 2014. It said that since 2012, more than 200,000 claims for NIHL have been submitted but less than a fifth have been eligible for compensation, “mainly due to the poor quality of evidence provided because the claimant’s hearing loss cannot be linked to the workplace. The flood of claims is slowing down the time it takes to get compensation to genuine claimants”.

The ABI, which has called for fixed costs in NIHL cases, argued that “excessive legal costs” meant that on average for every £1 paid in compensation to the successful claimant, £3 is paid out in legal costs to the claimant’s lawyers.

James Dalton, the ABI’s director of general insurance policy, said: “Today’s announcement by the Ministry of Justice is a positive development. The skyrocketing number and cost of industrial deafness claims is a significant issue that the insurance industry has highlighted for some time…

“The insurance industry looks forward to working with the CJC to develop a practical and deliverable framework that seeks to make legal fees more proportionate and ensure that genuine claimants receive fair compensation in a timely and efficient manner.”

Jonathan Wheeler, president of the Association of Personal Injury Lawyers, said: “We hope the CJC considers the amount of work involved for claimant lawyers to get these complex cases off the ground, and the importance of ensuring that the ability to perform that work on behalf of claimants is not restricted.

“Above all, any reforms must not compromise the rights of workers to investigate whether their former employers are responsible for their hearing loss. Members have suggested in the past that with multiple defendants often involved, co-operation from defendants is the key to a faster and more cost-effective process.”

Meanwhile, the CJC has set up a working group on property disputes chaired by Siobhan McGrath, president of the property chamber of the First-tier Tribunal, to explore further specific areas where the deployment of judges between the county court and tribunals would enable the proportionate resolution of disputes and the better use of judicial and administrative resources.

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Mortgage: default lead to small claim over costs

The ‘unreasonable conduct’ test for ordering costs in the small claims court is similar to that for wasted costs, the Court of Appeal has ruled, but said it would not want litigants to be “too easily deterred” by the risk of an adverse costs award.

Lord Justice Longmore and Lord Justice McFarlane gave a joint ruling in Dammermann v Lanyon Bowdler LLP [2017] EWCA Civ 269, in which the claimant sought to overturn a costs order made against him at the conclusion of a first appeal in a case which had been allocated to the small claims track.

Peter Dammermann defaulted on his mortgage and the receivers appointed by the bank retained Shropshire law firm Lanyon Bowdler to sell the property. Its bill became part of Mr Dammermann’s overall liability under the terms of the mortgage.

He sought to challenge the level of fees. Deputy District Judge Holden at Telford County Court held there was neither an agency nor any contractual relationship between Mr Dammermann and the firm and that, consequently, he had no standing to make the claim. He dismissed the claim but made no order as to costs.

His Honour Judge Main QC gave permission for but then dismissed an appeal. On costs, he ruled that under CPR 27.14(2)(g), the claimant had acted unreasonably, both by refusing an offer of £1,000 and by getting the law “obviously” wrong.

The second appeal to the Court of Appeal was allowed in part to provide guidance on what amounts to behaving unreasonably for the purposes of rule 27.14(2)(g).

Overturning the circuit judge’s ruling, the Court of Appeal said the claimant had not been unreasonable in pursuing the legal issue. The point on which he lost his claim was actually “somewhat intricate” and, when assessing whether he had behaved unreasonably, Judge Main should also have taken into account the fact that he had granted permission to appeal.

“We are, however, not persuaded that the judge was in error in the manner in which he approached Mr Dammermann’s rejection of the settlement offer of £1,000. The judge did not base his decision on unreasonable behaviour on this point…

“He was entitled by part 27.14(3) to take it into account and, in our view, he was justified in doing so. The fact that Mr Dammermann was prepared to settle for a substantially higher figure is, obviously, irrelevant to this consideration. If the appeal had turned on this point alone, it would not have succeeded.”

On what amounted to unreasonable behaviour, the appeal judges said they could not give “general guidance” because all cases “must be highly fact-sensitive”.

But they quoted Sir Thomas Bingham MR in Ridehalgh v Horsefield [1994] Ch 205, 232F in the context of wasted costs.

In that case, he said: “Conduct cannot be described as unreasonable simply because it leads in the event to an unsuccessful result or because other more cautious legal representatives would have acted differently.

“The acid test is whether the conduct permits of a reasonable explanation. If so, the course adopted may be regarded as optimistic and as reflecting in a practitioner’s judgment, but it is not unreasonable.”

Longmore and McFarlane LJJ said: “While we would not wish to incorporate all the learning about wasted costs orders into decisions under CPR part 27.14 (2)(g), we think that the above dictum should give sufficient guidance on the word ‘unreasonably’ to district judges and circuit judges dealing with cases allocated to the small claims track…

“The only other thing we can usefully add is that it would be unfortunate if litigants were too easily deterred from using the small claims track by the risk of being held to have behaved unreasonably and thus rendering themselves liable for costs.

“The rules could have provided that on appeal the normal rules as to costs should prevail, but part 27.14(2) applies in terms to costs relating to an appeal; an appellate court should therefore be wary of ordering costs on appeal to be paid if they were not ordered below, unless circumstances on appeal are truly different.”

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Unpaid fees: about half recovered by Bar Council

Barristers were left £2.7m out of pocket by solicitors who failed to pay their fees last year, new figures have revealed.

The Bar Council’s first ever annual report said that its fees collection unit received complaints from barristers about 2,315 fee notes unpaid by solicitors, representing £5.2m in unpaid fees. In the same year, £2.5m was recovered.

The way the Bar deals with unpaid fees is set to change significantly after the Bar Standards Board (BSB) won approval in July for amendments to its code of conduct to introduce standard contractual terms.

Currently, while increasingly barristers are seeking to agree contractual terms with solicitors and so mitigate the risk of non-payment of fees, they are not obliged to accept instructions on negotiated contractual terms. The BSB argues that this undermines the cab-rank rule.

Under the BSB’s scheme, if a solicitor seeks to instruct a barrister on its New Contractual Terms (NCT) or on the individual barrister’s own advertised terms, the cab-rank rule will apply. If they want to instruct them on any other terms, it will not. The BSB expects many barristers to use the NCT.

Further, if a firm of solicitors does not pay a barrister’s fees, and an award made by the joint Law Society/Bar Council tribunal remains unpaid, and/or a court has given judgment in favour of the barrister, the unpaid barrister can complain to the Bar Council under a new list of defaulting solicitors.

If the solicitors are placed on it, then the cab-rank rule will not apply to any barrister receiving instructions from those solicitors.

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Houses of Parliament

MPs concerned by “behind the scenes” deal

Lord Faulks, the civil justice minister, has denied that the government did a secret deal with the insurance industry on the handling of mesothelioma claims.

Labour MP John McDonnell told the justice select committee yesterday that the existence of a “heads of agreement” document between the government and the Association of British Insurers only came to light when it was sent to the committee, “probably misguidedly”, by the industry itself.

Mr McDonnell said the committee was not told about the document by the government or ministers and the industry later tried to withdraw it.

He questioned whether it could be a “pure coincidence” that after the industry’s discussion with the government, “quite a range” of its demands were implemented.

Fellow Labour MP Andy McDonald explained that under the deal the government would be rewarded for agreeing to remove the exemption for mesothelioma claims, inserted into LASPO during its passage through Parliament, allowing recoverability of success fees and insurance premiums to continue.

In return, he said the industry agreed to fund the special scheme for mesothelioma payments outlined in the Mesothelioma Act 2014 for victims cannot trace an employer or an employer’s insurance policy.

Mr McDonald said the document did not fill the committee with confidence that things had been done in “an open and transparent manner” and that no agreement had been reached “behind the scenes”.

Lord Faulks said he was not a minister at the time and had “no dealings” with the document. He said the document was “unusual” in having terms which were not implemented.

“If one looks at the government’s responses, they don’t actually agreed with all the industry required. I haven’t seen anything to suggest that any inappropriate bargaining was involved.

“This was a discussion with the industry, not a conventional contractual relationship between two commercial parties with interests which they are trying to compromise by way of an agreement.”

The minister said that the “heads of agreement” document was a list of bullet points in which “the parties came to a view on what they had agreed”. He accepted that it was “slightly unusual”.

Lord Faulks went on: “In my practice as a lawyer, I have not seen something like this quite before – not to say that it is inappropriate, but it is somewhat unusual”.

He added that the first payments under the Mesothelioma Act scheme would be made shortly, despite a judicial review hearing at the end of next month, challenging the consultation exercise carried out before the scheme was announced.


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Edward Pepperall QC: Home Office should have accepted offer

The High Court has made it clear that the additional 10% uplift on damages the courts can award for beating a part 36 offer means an uplift on damages plus basic interest.

Edward Pepperall QC, sitting as a deputy High Court, also said that the court’s focus under part 36 must be “upon the conduct of the litigation”, and not on “whether the claimant had led a blameless life up until the moment when a tort was committed against him”.

The High Court was considering the case of Abdulrahman Mohammed, a Somalian who Mr Pepperall described in the substantive judgment as a “prolific and violent offender”.

Mr Mohammed was awarded £78,500 plus interest for unjust imprisonment for a total period of 445 days. Mr Mohammed’s solicitors, Leigh Day, had earlier made the Home Office a part 36 offer of £70,000.

Considering first the enhanced interest he should award under rule 36.17(4)(a), Mr Pepperall said: “While judges are required to take into account ‘all of the circumstances’, it does not follow that each circumstance prayed in aid will necessarily be relevant to the exercise of the court’s discretion under part 36.

“As I explained in my main judgment, the fact that Mr Mohammed is a criminal who had been lawfully imprisoned on a number of occasions did not mean that he was not entitled to compensation for false imprisonment, but it did moderate the award.”

Delivering judgment in Mohammed v the Home Office [2017] EWHC 3051(QB), Mr Pepperall said that among the relevant matters in calculating enhanced interest were the Home Office’s own submissions on quantum, which valued the case “very much in the region of the part 36 offer”.

Mr Pepperall said Leigh Day’s offer of £70,000 should “always have been recognised as a reasonable offer that put the Home Office at risk under part 36 in the event that liability was established”.

Another factor was the time between offer and judgment, with over seven months elapsing between the deadline for accepting the offer and the trial.

Mr Pepperall said that despite Mr Mohammed’s criminal background, “through the skill of his legal team”, he prosecuted the claim reasonably. In contrast, the Home Office “should have recognised the weakness of its defence significantly earlier than 4.03pm on the afternoon before trial”.

Mr Pepperall said: “The judgment handed down by Hayden J on 3 March 2016 clearly demonstrated the difficulties with the Home Office’s case and should have led to an earlier concession of liability.

“Specifically, the Home Office should have re-evaluated this case on receipt of the part 36 offer. Had it done so, it should, in my judgment, have recognised that the offer should be accepted.

“That said, it is plainly more desirable that a party should undertake a last-minute reassessment and make a late concession of liability than that it should persist in a bad defence.”

The judge awarded enhanced interest on his damages award of £78,500 plus basic interest, at the rate of 6% over base from the date of the part 36 offer on March 23 2017 until judgment.

Turning to the 10% uplift, Mr Pepperall said the parties were in dispute over whether it should be applied to the gross award of damages for beating the part 36 offer or the net award.

He said a third possible approach to interest under rule 36.17(4)(d) was to apply the uplift to damages plus all the interest awarded, including enhanced interest under rule 36.17(4)(a).

However, Mr Pepperall said that his judgement, the proper construction was clear.

“In calculating the additional amount, the court should take into account the gross award that would have been made but for part 36. That is the sum that the court was about to award when taken to the part 36 offer.”

This included basic interest, whether awarded pursuant to contract or the court’s discretionary power, but excluded any enhanced interest awarded under rule 36.17(4)(a).

Mr Pepperall accordingly awarded an uplift of 10% on his damages award plus agreed interest under the Senior Courts Act 1981 at a rate of 2% p.a from service of proceedings to judgment.

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RTA: fraud allegation

RTA: fraud allegation

The fixed recoverable costs regime applies to low-value personal injury claims that start under the RTA and EL/PL protocols but then exit and proceed on the multi-track, a circuit judge has ruled in a decision which is said to have implications for the conduct of higher-value cases as well.

HHJ David Grant said the provisions of the CPR effectively realised Lord Justice Jackson’s ambition to introduce fixed costs into the lower reaches of the multi-track.

The case, Qader & Ors v Esure Services Ltd [2015] EWHC B18 (TCC), concerned a claim by three claimants for damages put at between £5,000 and £15,000, but the defendant insurer alleged that the driver had deliberately induced the accident by braking sharply.

A deputy district judge directed that the case be allocated to the multi-track, and listed it for a case and costs management conference, and also set a date by which budgets had to be filed.

The matter then came before District Judge Salmon, who ordered that CPR 45.29A fixed costs would apply to the claimant’s costs, and not costs management. Refusing permission to appeal, he said the rule was clear on its face that the determining factor was not track but value in respect of the operation of the fixed costs regime.

He also noted that CPR 45.29J allowed the court to depart from the fixed costs regime if there were exceptional circumstances, while CPR 3.12(c) “clearly contemplates costs on the multi-track being subject to fixed costs”.

HHJ Grant gave the claimants permission to appeal but then rejected their case.

He said: “I reject Mr Skeate’s key submission [for the claimants] that ‘there is no room whatever for doubt that the fixed recoverable costs scheme was implemented only in relation to the fast-track’.

“To the contrary: the effect of inserting section IIIA into part 45 was to implement a fixed recoverable costs scheme in low-value personal injury claims arising out of a road traffic accident, which start under the RTA protocol but no longer continue under that protocol or the stage 3 procedure, but instead now proceed on the multi-track…

“Insofar as it is necessary to do so, I also note that Jackson LJ expressly contemplated ‘the possibility of introducing a scheme of fixed costs… into the lower reaches of the multi-track’. For the reasons stated above, it would appear that by amendment to the CPR, such a scheme of fixed recoverable costs has indeed been introduced into ‘the lower reaches of the multi-track’, certainly as regards cases which began via either the RTA protocol or the EL/PL protocol.”

Despite the allegation of fraud, HHJ Grant ruled that it was still a low-value claim. He observed that it was “discernibly of a different nature from the types of allegation often made in cases of commercial fraud in proceedings in the Chancery Division, the Commercial Court, or the TCC”.

He explained: “The central factual issue in the present case is simply whether the first claimant applied the brakes in such a manner that he induced a relatively minor road traffic accident to occur.

“While the claimants’ overall probity will no doubt be explored at trial, perhaps involving consideration of their conduct before the accident, at the accident, and indeed after the accident, and it may be necessary to consider some documents (such as relevant medical records), the overall nature of the case to my mind still answers the description of a low-value personal injury claim arising out of a road traffic accident, albeit proceeding on the multi-track.

“It does not therefore appear that the nature of the underlying proceedings is such that the implementation of fixed recoverable costs for such a claim would – of itself – cause affront to the overriding objective.”

Horwich Farrelly acted for the defendant and partner Paul Brandish said: “The application of the decision is wider than low value cases in which fraud has been alleged. There is a current tactic deployed by many claimant solicitors to submit claims through the portal even though the claim is likely to be in excess of £25,000.

“The behaviour seen by many insurers is that the claimant solicitors use the portal to obtain an early admission of liability then stonewall insurers’ attempts to progress the case whilst medical evidence is obtained without reference to the insurer. In these cases the first insurers often know of the full value of the claim is service of the medical evidence with proceedings. The judgment in Qader means that claimants adopting this tactic are now subject to FRC.

“Claims that are valued significantly in excess of £25,000 are likely to escape from FRC under 45.29J. There will, however, be an interesting counter argument as to conduct to be deployed against claimant solicitors who can be shown to consistently use this tactic. Further, if a claim is pleaded in excess of £25,000 but settles under that amount, then claimant solicitors could well find themselves bound by FRC.”

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Rowles-Davies: quadrupled funding facility

Recession-related litigation is growing, new figures have shown, with the number of contract claims in the High Court soaring by nearly half in 2011.

In all 982 contract claims were issued in the Chancery Division 2011, compared to 683 the year before, a rise of 44%, with breach of contract and debt the main causes of action, according to the Ministry of Justice’s recently published annual court statistics.

There were similar trends in other courts – breach of contract claims in the Queen’s Bench Division also rose 44% to 969, while breach of contract/agreement/debt claims in the Commercial Court rocketed 49% to 722.

The sharp rise compared with a more gentle 6% increase in Chancery Division cases overall (to 35,238). This hid significant variations, however, including a 19% jump in intellectual property litigation (to 667 claims) and a 10% rise in Bankruptcy Court applications (to 12,121), as well as a 17% drop in professional negligence cases (to 184), the majority of which were against solicitors.

There was overall a 16% fall in proceedings issued in the Queen’s Bench Division (to 13,928). Of those started in the QBD of the Royal Courts of Justice, a quarter related to debt and around one in five related to breach of contract.

Nick Rowles-Davies of leading third-party litigation funder Vannin Capital said the trends showed how recession-related litigation, such as debt and breach of contract, is playing an increasingly significant role in the courts.

“Our own experience – from the ever-growing number of approaches for funding we receive – matches the trends identified by these statistics. The kinds of disputes the courts are seeing are often caused by the difficult situations people find themselves in during a recession; this is compounded by the fact that, by definition, they struggle to get the money together to take their case to court.

“That, of course, is where we come in and the demand we are seeing is in part why we recently quadrupled our funding facility to £100m for the coming year. This is litigation funding providing access to justice for people who might very well not be able to afford it otherwise.”

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Master Matthews: “greater consistency in using the computer”

The High Court has approved the use of predictive coding in e-disclosure, for what is believed to be the first time in this jurisdiction.

Ruling in a case involving 3.1m documents, Master Matthews described predictive coding as a review “undertaken by a proprietary computer software rather than human beings”.

He went on: “The software analyses documents and ‘scores’ them for relevance to the issues in the case. This technology saves time and reduces costs.

“Moreover, unlike with human review, the cost does not increase at the same rate as the number of documents to be reviewed increases. So doubling the number of documents does not double the cost.”

The High Court heard in Pyrrho Investments and others v MWB Property and others [2016] EWHC 256 (Ch), yet to be published, that two claimant companies sued four directors and a property company in respect of payments allegedly made as a result of breach of fiduciary duty.

Master Matthews cited 10 factors in favour of the use of predictive coding.

He said that experience in other jurisdictions, although “limited”, had shown that predictive coding could be useful in appropriate cases.

“There is no evidence to show that the use of predictive coding software leads to less accurate disclosure being given than, say, manual review alone or keyword searches and manual review combined”.

The Master said there was some evidence from US and Irish cases to the contrary.

He went on: “Moreover, there will be greater consistency in using the computer to apply the approach of a senior lawyer towards the initial sample (as refined) to the whole document set, than in using dozens, perhaps hundreds of lower-grade fee-earners, each seeking independently to apply the relevant criteria in relation to individual documents.”

“There is nothing in the CPR or Practice Directions to prohibit the use of such software.

“The number of electronic documents which must be considered for relevance and possible disclosure in the present case is huge, over 3m. The cost of manually searching these documents would be enormous, amounting to several million pounds at least.”

Master Matthews said that, in his opinion, “full manual review” of each document would be “unreasonable” under the Practice Directions, “at least where a suitable automated alternative exists at lower cost”.

He said the estimates given for the use of predictive coding in the case ranged from almost £182,000 plus monthly hosting costs of £15,700 to £469,000 plus monthly costs of almost £21,000, which was “obviously far less expensive than the full manual alternative”.

The Master said that, bearing in mind that the value of claims in the case was “tens of millions of pounds”, the estimated costs of using predictive coding software were proportionate.

“The trial in the present case is not until June 2017, so there would be plenty of time to consider other disclosure methods if for any reason the predictive software route turned out to be unsatisfactory.

“The parties have agreed on the use of the software, and also how to use it, subject only to approval of the court.”

Since there were “no factors of any weight pointing in the opposite direction”, the Master concluded that the case was suitable for the use of the software, although “whether it would be right for approval to be given in other cases will, of course, depend on the particular circumstances”.

A spokesman for Taylor Wessing, which acted for the fourth defendant, said he hoped that “we have seen the birth of a new standard order that will be used in all cases where directions for the use of predictive coding are appropriate”.

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McCann: very important result for insurance industry

McCann: very important result for insurance industry

Insurance law firm Horwich Farrelly has secured what it says is the first finding of fundamental dishonesty under the extended provisions that took effect exactly a year ago.

Under section 57 of the Criminal Justice and Courts Act 2015, where a claim is found to be fundamentally dishonest in any part the court must now dismiss the whole claim – even if it includes a genuine element – unless to do so would cause ‘substantial injustice’.

Previously a finding of fundamental dishonesty simply resulted in the claimant losing the protection of qualified one-way costs shifting (QOCS).

The firm reported that in Hughes, Kindon and Jones v KGM, heard on 1 April at Taunton County Court, all three claimants alleged they had suffered injuries lasting 12 months, despite what was a “very minor incident” with the insurer’s policyholder.

At trial, a number of inconsistencies in the claimants’ evidence was highlighted, including the nature of injuries suffered, failure to seek medical attention and, in the case of one claimant, failing to mention the incident and injuries to their GP several months later.

Jones’s claim was struck out for failing to provide witness evidence, with costs awarded to KGM. However, Deputy District Judge Eaton-Hart found that the impact was sufficient to have caused injury to Hughes and Kindon, but only for a period of just two weeks, rather than the 12 months claimed. On this basis he initially awarded the pair £750 each in damages.

Seeking a declaration under section 57, Horwich Farrelly argued that it would be unfair that the insurer would still be liable for their costs, highlighting that during a medical examination six weeks after the accident, the claimants had stated they were still suffering from the injuries it caused.

The firm recorded that in striking out the claims in their entirety, the judge said the two claimants had “presented a deliberate inaccurate position to the medical expert for financial gain”. He also ruled that the claimants would not suffer substantial injustice from the decision.

The claimants automatically lost QOCS protection and were ordered to pay the insurer costs of £6,100. Permission to appeal was refused.

Ronan McCann, fraud partner at Horwich Farrelly, said: “This is a very important result for the insurance industry as a whole…

“Whilst we’re expecting to see the ‘substantial injustice’ clause of the Act tested in the coming months, this result sends a clear message that we will use the full range of tools at our disposal to tackle dishonest claims.”

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Jackson: greater flexibility

Jackson: greater flexibility

The new format bill of costs developed by the Hutton committee needs to be brought into use – perhaps from October 2017 – but should be decoupled from the J-Codes to make it more palatable to the profession, Lord Justice Jackson said last week in a bid to restart momentum towards one of the unfinished elements of his reforms.

It emerged in January that the Civil Procedure Rule Committee had said it was “too soon” to make the new bill compulsory, leaving the work of the Hutton committee in limbo.

But in a speech at the Law Society last week, the man whose recommendations led to the creation of the committee – originally chaired by Jeremy Morgan QC and now by Alex Hutton QC – said that while the CPRC was “right to be cautious”, there was now “a state of deadlock”.

He said: “We need practical proposals to break the deadlock and advance the discussion.”

Using the bill prepared by the committee, but without mandating use of the J-Codes, would allow “greater flexibility”, he said.

Jackson LJ said that though the J-Codes conferred “considerable advantages” on users, it was never intended to make them mandatory for the new bill of costs. “The Hutton committee took the view, correctly, that it would be beyond its remit to do so…

“Most – if not all – of the criticisms about the new format bill of costs are aimed at the J-Codes. There are strong views on both sides of the debate. As a result of the new format bill’s foundations being built on J-Codes, this has meant that the entire bill has been criticised rather than one discrete part of it.”

Instead, he said, the CPR should allow practitioners to prepare that bill in any manner of their choosing, whether with the assistance of J-Codes, automatically generated by an Excel spreadsheet or by hand.

“A digital copy of the bill should be served on the court and the paying party along with an electronic spreadsheet, which clearly and accurately details the work done in the course of litigation, following the Precedent H stages. This should be in the same format of phase/task/activity and adopt the Precedent H guidance for what work falls in a given phase.

“Time entries can either be generated automatically by time-recording software or inputted manually by those who prefer to record their work done on paper. For those using J-Codes, the Hutton Committee spreadsheet provides an excellent tool for preparing the bill.”

The judge laid out three reasons to commend this approach: “The new format bill integrates with costs budgeting and Precedent H. It can be generated automatically by time-recording software. It provides a framework for software providers to create tools for the professions.

“Secondly, it makes good use of the excellent work of the Hutton committee. Indeed, it would not be possible without it. While revising the proposals will mean that the current version of the spreadsheet and the J-Codes are not an essential part of the scheme, their value will be preserved for those who adopt J-Codes… the professions should give serious consideration to them.

“Thirdly, it sidesteps much of the criticism which gave rise to the present delays. The print version of the bill and the accompanying spreadsheet are not radical innovations. Nor do they involve significant cost. They require only a basic level of computer literacy and an understanding of how to present information clearly.”

One of the major objections to the Hutton committee’s work was the fear that retrospective application of the new format bill and of J-Codes would increase the cost of bill preparation dramatically.

Jackson LJ’s “complete solution” to this was for the CPRC to choose a future date for the implementation of the new bill, and only work done after this date would have to be done in the new format bill.

“May I suggest that the new form bill of costs should be mandatory for all work done on or after 1 October 2017? The voluntary pilot under PD 51L could be extended until that date.”

The judge also mooted fixing or capping the recoverable costs of preparing the bill.

“The receiving party should only expect to recover up to a certain amount for the preparation of the bill – possibly expressed as a percentage figure of the total value of the assessed bill.”

He also argued that the new format bill was required even if fixed costs were introduced for the multi-track.

Jackson LJ published a “possible preliminary draft of the new bill”, adding: “Regardless of whether this particular proposal is accepted or not, one thing does need to be kept in mind: the status quo is of no benefit to anyone.

“Investment decisions on time-recording software are being deferred. The work of the Hutton committee has been left to lie fallow. Most egregiously, we still have a bill of costs that was identified as being seriously deficient many years ago.”

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Costs: judge takes knife to partner time

Costs: judge takes knife to partner time

The High Court has more than halved a successful party’s costs on summary assessment on the basis of proportionality, with the fees charged by the partner running the case hit particularly hard.

Mr Justice Akenhead’s ruling in Savoye and Savoye Ltd v Spicers Ltd [2015] EWHC 33 (TCC) is one of the clearest applications of the new proportionality rule to date.

Savoye sought costs of £201,790 after successfully enforcing an adjudicator’s decision worth nearly £900,000 in its favour. The only issue at trial revolved around the proper meaning of a term in the Housing Grants, Construction and Regeneration Act 1996.

There were in total four hearings – three of which concerned a claimant application for summary judgment – lasting seven hours in total. The main elements of the costs claim by Savoye’s solicitors, Reed Smith, were 111 hours of partner time at £520, 223 hours of associate time at £370, and counsel’s fees of £27,800.

Deciding that while useful to others, the case could not be considered a test case, the judge said the court proceedings involved a re-run of the same arguments and evidence as in the arbitration, “albeit I do accept that the later proceedings went into somewhat greater detail and in some respects had a different emphasis”.

He continued: “This context would lead to the inference that the costs of the court proceedings could have been relatively modest, taking into account that the legal team knew exactly what the issue was about and what evidence needed to be deployed in the court proceedings to counter the likely jurisdictional challenge.

“In the light of the foregoing, I am led to the inevitable conclusion that a costs bill of over £200,000, albeit in relation to a claim worth just under £900,000, must be considered to be disproportionate.”

Akenhead J said that if only the headline costs figure had been available, he would have been minded to rule that half of the costs claimed as proportionate.

But on a summary assessment he took into account other factors “which should reduce the figure claimed very substantially in any event”.

He said it was clear that the partner did “much more than simply supervise a competent associate and liaise with the client; he got involved in drafting pleadings and witness statements. It cannot be reasonable or proportionate for Spicers to have to pay anything like 111 hours’ worth of partner’s time at partners’ rates. I would have thought that something like 20 hours was justifiable at that rate”.

The total amount of solicitors’ time equated to about nine weeks. “It is not reasonable or proportionate for anything like that to be payable by Spicers, particularly when the basic issue had already been ventilated and investigated in the adjudication,” he said.

The judge continued: “Just on time alone, I would have assessed as reasonable and proportionate a total of about half of this. For instance, the spending of up to about 150 hours on witness statement evidence seems to be excessive (particularly, when one looks at the relatively short witness statements and the fact that the ground covered was not new); it is not reasonable to expect Spicers to have to pay for the attendance at all four hearings of both partner and associate solicitor; the spending of some 43 hours preparing the claim form, particulars of claim, summary judgment application and witness evidence can properly be said not to be reasonable and proportionate particularly for experienced construction lawyers who seek to justify large hourly rates.”

He also thought counsel Anneliese Day QC’s £12,000 brief fee for the final trial, “given her extensive involvement beforehand”, could well be considered as too high for it to be reasonable and proportionate for the defendant to have to pay, and said half would be reasonable.

Akenhead J reduced the recoverable partner time to 20 hours, the associate time to 160 hours and counsel’s fees to £18,800, with the total coming in at £96,465.

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Gibson: content with outcome

Gibson: content with outcome

An insolvent firm of solicitors could validly assign conditional fee agreements (CFAs) to another law firm, a circuit judge has ruled in a much-anticipated case that is expected to end up in the Court of Appeal.

Jones v Spire Healthcare deals with the fallout from the collapse of Southport firm Barnetts in January 2014, after which its personal injury book was bought by SGI Legal in Liverpool.

Though SGI has concluded many of the cases without challenge, the defendant here disputed the validity of the assignment, even though the claimant had entered into a specific deed of assignment alongside the general one SGI had with Barnetts’ administrators.

At first instance, District Judge Jenkinson ruled that while the benefit of the retainer inherent in the CFA was validly assigned, the burden was not, which meant SGI could recover the costs incurred by Barnetts, but no subsequent costs it incurred because there was no valid retainer.

Further, whilst the assignment was a novation based upon the original, pre-LASPO terms of the CFA, it was not enforceable because it did not comply with the post-LASPO CFA regulations.

The claimant appealed against the disallowance of the post-assignment costs, and the defendant against the allowance of the pre-assignment costs.

HHJ Graham Wood QC noted: “The court has been made aware that this is an appeal of some significance, because the claim involved is one of several hundred which were pursued under CFAs with the now defunct firm, and in respect of which the point has not previously been taken for those bills already assessed, but which might be taken in respect of future assessments.

“Insofar as SGI Legal LLP paid a significant consideration to acquire the work in progress, referred to under a generic deed of assignment, it stands to lose out substantially if costs cannot be recovered for that work both pre-and post-assignment. There are also other cases awaiting my decision, and it appears that a higher appellate court may become engaged on the grounds that this is a matter of public importance and wider ramification.”

The claimant’s appeal turned on the decision of Mrs Justice Rafferty (as she then was) in Jenkins v Young Brothers Transport Ltd [2006] EWHC 151, which established a narrow exception to the rule that a personal contract could not be assigned, saying it could be where a client was following his solicitor to another firm.

Allowing the appeal, HHJ Wood ruled: “Rafferty J was not seeking to qualify the exception to the general rule against the assignment of the burden of a contract to specific situations where personal trust and confidence could be established, so much as to set a context in which it applied to the facts of the case…

“It was open to the judge to conclude that the personal trust and confidence was a necessary element where the contract was a personal one, as opposed to a compelling context, and without it the assignment would not be valid. She did not go so far as to say that, and in my judgment the ratio of her decision was not so qualified.”

This meant DJ Jenkinson was wrong to proceed on the basis that the court had to establish the same context of trust and confidence, HHJ Wood said.

The court, he continued, could not ignore what was intended here. Rules restricting burden assignment were “clearly devised to protect the non-participating counterparty”, but here the claimant had entered into a separate deed of assignment. “It would be an unduly restrictive and overly legalistic approach to deny the parties the effect of what they intended.”

Further, “if the efficacy of an assignment depended upon a qualitative assessment of the degree of trust and confidence, this would generate considerable uncertainty, leading to potential satellite costs litigation whenever a retainer is challenged on the basis of purported CFA assignment, with the court being required to investigate in every case the nature of the relationship between the client and the solicitor.

“It is axiomatic that case handling these days is conducted at a distance, and it would be very difficult to identify those cases where a particular client had been insistent on the continuity of a specific fee earner. Of course every case depends upon its own particular facts, but in my judgment it would be wrong to qualify this particular exception to the general rule based upon an inextricable link between burden and benefit, by making a finding of trust and confidence a pre-requisite.”

However, HHJ Wood did not allow the defendant’s appeal, ruling that the CFA “allowed the contingent debt, referable to an ascertained amount and an ascertained point at which it would be paid in the future, assuming success, to be classified as a present chose in action capable of assignment”.

Simon Gibson, managing partner of SGI Legal, told Litigation Futures that he was “content with the judge’s interpretation”. Acknowledging that it raised “interesting points of law”, he said the firm would be keeping a “watching brief” for any appeal.


The misleading claims behind the campaign to lower the discount rate

Matthew Best Temple Legal Protection

A coalition of organisations which represent the NHS and health professionals has made strong claims in a letter to justice secretary David Gauke that the legal costs of clinical negligence claims are crippling the NHS. Similar comments were made by the National Audit Office (NAO) in September last year and yet the case doesn’t hold water. The letter was signed by the NHS Confederation, Academy of Medical Royal Colleges, British Medical Association, Family Doctors Association, Medical Protection Society, Medical Defence Union and the Medical and Dental Defence Union of Scotland.

February 9th, 2018