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Kain Knight, a leader in the legal costs industry, is hosting a ‘best practice’ seminar on legal costs for solicitors handling Court of Protection work in the New Year.

The seminar, which is free of charge, will be held at the Crowne Plaza Hotel in the City of London on Thursday 16 January 2014, with registration from 8.00am.

Chairing the seminar will be Kelly Stedman, a senior Costs Lawyer from Kain Knight.

Expert speakers on Court of Protection work will be His Honour Judge Denzil Lush, and Katherine Scott from barristers’ chambers 39 Essex Street. Both speakers will be answering questions from the floor after their presentations.

Court of Protection cases have become a growth area for lawyers, driven by more people living into advanced old age, and by an increase in large personal injury pay outs.

To see the full details and to register for the seminar, visit the Kain Knight website www.kain-knight.co.uk or email Penny Ridoutt at penny.ridoutt@kain-knight.co.uk.

Clifford’s Calderbank offer failed to impress

The High Court has rejected jailed publicist Max Clifford’s attempt to limit his costs to only £5,000 in a privacy claim by making an “inadequate” Calderbank offer.

Richard Spearman QC, sitting as a deputy judge of the High Court, said it was “absolutely inevitable” that when the offer was made by lawyers for Mr Clifford that costs were “well in excess” of £5,000.

Deputy Judge Spearman awarded former royal butler Paul Burrell £5,000 in damages following a trial earlier this year, but, under costs budgeting, his costs were fixed at almost £129,000, and the defendant’s at just over £90,000.

The judge said that, at the time the Calderbank offer was made in January this year, the claimant law firm’s base costs were £9,800, its counsel’s fees £12,300, with an ATE premium of £13,500, not to mention the conditional fee uplift or cost of the claim form.

Judge Spearman said Mr Clifford’s offer was “inadequate” and “did not give the defendant protection”.

He went on: “To my mind, somebody making an offer of this sort who includes an offer for the costs to date has all the protection they could reasonably expect by reason of the assessment regime which will have regard to reasonableness of costs and proportionality.”

Delivering judgment in Burrell v Clifford [2016] EWHC 578 (Ch), Judge Spearman said Mr Burrell argued that costs should be awarded in his favour on the basis that he has succeeded in his claim.

He said that although Mr Burrell had put forward “greater value claims” in front of himself and Mr Justice Mann, “the fact is his claim had a value and he succeeded on it, and it could have been met by protection by Mr Clifford by an appropriate part 36 offer”.

Describing the claim as “one that the claimant was entitled to bring”, Judge Spearman said the possibility of transferring the case to the county court was rejected by Mann J on the basis that this was a “developing area of law” and claims for misuse of private information belonged in the High Court, “regardless of the fact that they may have a modest value”.

Judge Spearman said that although he was “very sympathetic” to a number of points made by counsel for Mr Clifford, “where somebody has a proper claim with a good foundation and they bring it in the proper court, it is not in my judgment reasonable that one should end up by saying: ‘Well, the value is very low compared to the costs, and therefore either you shouldn’t have your costs, or you should have to pay the defendant’s costs, or you should have a radical reduction in the proportion of your costs recoverable because of the disparity between the value of the claim and the costs’.”

He said the question of reasonableness and proportionality was “dealt with by the costs budgeting and costs assessment exercises.” He ruled that Mr Burrell was entitled to his costs.

Mann J rejected an application last autumn to strike out the claim on the basis that the level of likely damages meant it was not worth devoting costs or court resources to it.

Lloyd: plan puts consumers in the driving seat

The government is to introduce opt-out collective actions for competition law claims, but lawyers will not be able to handle them on a contingency fee basis, it announced today.

Law firms and third-party litigation funders will also not be allowed to initiate such cases.

There will be a raft of other safeguards to avoid the accusation that it is allowing US-style class actions, including strict judicial certification of cases, no treble or exemplary damages and maintaining the ‘loser pays’ rule. However, the CBI has still made exactly that claim.

Other changes announced by the Department for Business, Innovation and Skills (BIS) following last year’s consultation on private actions in competition law include making the Competition Appeal Tribunal the main court for competition actions in the UK, including a fast track regime, and promoting alternative dispute resolution.

The government said “there could be a risk of abuse if legal firms, funders or special purpose vehicles established solely for the purpose of litigation were allowed to bring cases”, with conflicts of interest a particular concern of respondents to the consultation.

Instead, only those who have a “genuine interest” in the case, such as genuinely representative bodies (such as trade associations or consumer associations) or those who have themselves suffered loss should be allowed to start litigation.

Groups of consumers or businesses will automatically be included in the action unless they opt out (although non-UK domiciled claimants will have to opt in). It will also allow for a collective settlement to reduce costs for the offending party.

Any unclaimed damages will be allocated to the Access to Justice Foundation, in line with the recommendations in the Jackson report and the Civil Justice Council.

BIS quoted consumer group Which? saying that in systemic cases of mis-selling, a collective action can offer a better resolution.

Competition minister Jo Swinson said: “Competition is one of the great drivers of growth; it keeps our prices low and our businesses innovating. This is why it’s important that where there are businesses who abuse their position in the market, those who have been affected can take appropriate action.”

Which? executive director Richard Lloyd said: “This will give consumers more power against unscrupulous businesses. In the small number of cases where this will apply, collective legal action and settlements will automatically include everyone who has been affected so more people should get redress and sooner.

“The proposals will help to put consumers in the driving seat and will also act as a meaningful deterrent to dodgy or dishonest firms. This is good for consumers, responsible businesses and the wider economy.”

However, the CBI immediately criticised the proposals. Katja Hall, its chief policy director, said: “The government has let the litigation genie out of the bottle by adopting US-style collective actions. By grouping potential claimants together indiscriminately, these ‘opt-out’ actions fail the growth test and will fuel a litigation culture in the UK.

“It is absolutely right that victims of competition law breaches are properly and swiftly compensated but there are better ways to do this than resorting to litigation, like using alternative dispute resolution.”

Deadman: only a matter of time before a ‘rogue’ operation enters the market

Posted by Chris Deadman, director of operations at Litigation Futures Associate Invicta Capital Funding

The comments by Lord Faulks QC last week that third-party litigation funding is “in danger of undermining the integrity of our much-admired legal system”, has been met with predictable howls of derision by those involved in the industry.

The issue of statutory regulation or licensing has been on the agenda for a while but the creation of the Association of Litigation Funders (ALF), with its voluntary code of conduct has gone some way to persuading the Ministry of Justice (before the election, at least) that this is not necessary for the time being.

Lord Faulks has expressed concern that the derisory penalties imposed by ALF on errant funders and the relative lack of sign-up by existing funders points strongly towards the need for statutory regulation.

The reason why some funders have chosen to eschew ALF is that there is a perception (wrong in my view) that the quality mark afforded by ALF membership is of limited value. Their failure to register is not due to the fact that they are engaged in shady business practices but rather that they don’t see ALF membership as conferring any benefits in the way that, for example, ABI membership does for the insurance industry. That’s not the fault of ALF – it’s just at the moment there is no compelling reason for some funders to sign up.

But I would argue that Lord Faulks QC is wrong when he says that the increase in the prevalence of third-party funding is in danger of undermining our justice system. There is simply no evidence to support that view. A funder’s litigation deed is carefully drafted to ensure that the basis of their involvement is clear to all parties and that there is no opportunity for the funder to exert control over the conduct of the matter in which they have invested.

Lord Faulks talks sniffily about funders concerning themselves with matters of profit rather than justice. Funders are absolutely concerned with investing in suitable matters in order to make a profit and there is nothing wrong with that. It is called capitalism and until we identify an alternative model, it is the system we have to work with.

Indeed, I have never been in the financial position to retain the services of Lord Faulks QC, but I daresay his fee notes also contain an element of profit.

Third-party funding continues to be an attractive vehicle for investors’ cash and it is only a matter of time before a ‘rogue’ operation enters the market. If we in the industry want it to flourish and become a mainstream option for clients wishing to defray the cost of litigation, then we should accept statutory regulation or some species of licensing as inevitable and to be welcomed.

External scrutiny will inevitably add costs to our business but the credibility it will give us will far outweigh the administrative downside.

Taussig: Broadhurst provided the answer

A successful part 36 offer in a provisional assessment removes the £1,500 costs cap, the High Court has ruled.

Overturning a decision of Master Whalan in the Senior Courts Costs Office, Mrs Justice Laing followed the reasoning of the Court of Appeal earlier this year in Broadhurst v Tan, when it ruled that a party who beat a part 36 offer in a case where fixed fees applied was eligible for indemnity costs,

The thus-far unreported case of Lowin considered whether CPR 36.17(4) – indemnity costs on beating an offer – dislodged the £1,500 cap set out in rule 47.15(5) for the costs of a detailed assessment that concluded at provisional assessment stage.

According to a blog by Gurion Taussig, a barrister at 9 Gough Square who acted for the successful party, the master agreed that her costs should be assessed on the indemnity basis, but ruled that the cap remained intact. He drew a distinction the Broadhurst case.

Mr Taussig, who was instructed by Boyes Turner, said that on appeal, Mrs Justice Laing held that there was a conflict between rules 36.17 and 47.15(5), because the latter derogated from the entitlement to costs on the indemnity basis conferred by part 36.

“In resolving the conflict, the scheme of reasoning contained in Broadhurst provided the answer. If the draftsman of the rule committee had wished part 36 to be modified so that the cap would remain, then that would have been stated. The court further stated that the dislodging of the cap would incentivise parties to accept reasonable costs offers because, if they did not, they would be at risk of adverse cost orders pursuant to part 36.”

The matter was remitted to Master Whalan to re-assess the appellant’s costs of the detailed assessment on an indemnity basis.

Mr Taussig added: “The decision represents an important extension of the Broadhurst principle, and one that potentially affects all cases that proceed to provisional assessment of costs in part 47 proceedings.

“Parties should indeed be incentivised to make reasonable cost offers, but equally they must be aware that a failure to accept a reasonable part 36 offer is likely to have cost consequences if the offeror achieves a better result on provisional assessment.”

Medical examination: call to restrict number of MROs doctors can work for

The MedCo portal system of commissioning medical reports needs to be transparent and uncomplicated, and eliminate any incentives that encourage those acting for claimants to ‘game’ the process, leading defendant firm Kennedys has told the government.

As part of this, the Ministry of Justice needs to ensure there is robust auditing of medical reporting organisations (MROs) in tandem with openly available management information of which law firms are instructing which experts, it said.

In its response to the Ministry of Justice’s call for evidence on the operation of MedCo, Kennedys said: “Unfortunately, it may always be difficult to prevent a minority of organisations or individuals from developing unhealthy practices around what they see as an opportunity to exploit a situation and generate revenue.

“This has been proven again and again in the context of whiplash claims. The low-value, high-volume nature of these claims has attracted bad behaviours – hence the ongoing need for robust and flexible regulation and policing.”

The response predicted that the market will continue to adapt to the introduction of additional safeguards, not least because of the adoption of alternative business structures that can be used to cloud the nature of relationships between different organisations in the supply chain.

It added: “Different payment levels depending on the size of MRO and nature of medical expert also risk over-complicating the process and creating incentives that can ultimately affect the quality of report.”

Niall Edwards, partner and head of Kennedys’ motor practice, said: “Until we have proper audit procedures in place and good management information, the danger is that unhealthy behaviours will go unaddressed. It is vital to consider MedCo’s operation against a background of an ongoing desire by claimant firms to maximise the reward for agencies linked to the claims process.

“There is a growing tendency to plead psychological damage in the claim notification form with an indication that agents will be appointed to assess and provide treatment in the absence of a seven-day response. In practice, treatment is often underway – effectively ambushing the defendant and denying an opportunity to respond in a meaningful or fair way and, at the same time, generating an additional level of costs.

“Like any system, the more complicated it is, the greater the risk that ways will be found to undermine its objectives and create undesirable effects. MedCo needs to be kept simple and have a mirrored auditing procedure in place.”

Kennedys also called for a requirement that MROs, when renewing their MedCo registration, should provide information about the number of instructions received from particular firms; law firms should have to keep similar records of who they have instructed.

It recommended reducing claimants’ choice of MRO from seven to three: “The smaller the number of MROs, the easier it is to track the activity between them and claimant firms.”

Similarly, accredited experts should be registered members of no more than one tier 1 MRO and one tier 2 MRO, the firm said.

Brexit: Domestic rules would come to the fore

The government has outlined the uncertainty that a no-deal Brexit would cause in civil cases that involve EU countries.

“We will seek to provide legal certainty for businesses, families and individuals who are involved in ongoing cases on exit day,” according to Ministry of Justice (MoJ) guidance issued today.

“Broadly speaking, cases ongoing on exit day will continue to proceed under the current rules.

“However, we cannot guarantee that EU courts will follow the same principle, nor that EU courts will accept or recognise any judgments stemming from these cases.

“Individuals with cases in progress on 29 March are encouraged to seek legal advice on how this may affect them.”

The guidance said that, in the event of a no-deal scenario, the government would repeal most of the existing civil judicial cooperation rules – including Brussels Ia, which provides rules to decide where a case should be heard when it raises cross-border issues between the UK and other EU countries, and the recognition and enforcement of civil and commercial judgments between EU countries.

It would instead use the domestic rules which each UK legal system currently applies in relation to non-EU countries.

“Businesses, individuals and legal practitioners would need to consider how these rules interact with the domestic rules of relevant EU countries to determine how jurisdiction in cross-border disputes should be established and whether any judgments should be recognised and enforced,” the guidance said.

“In certain cases, the interaction between these rules may not be clear and certain countries may not recognise judgments from UK courts. Businesses and individuals may wish to take legal advice about how these changes may affect your individual circumstances.”

The MoJ would retain elements of the current EU rules in some specific areas, where they either did not rely on reciprocity to operate or where they currently formed the basis for existing domestic or international rules.

“We would also continue to apply existing international agreements, such as the Hague Conventions, which in many areas provide alternative rules covering the same areas as the EU-specific instruments, although they are not always as comprehensive.”

The UK currently participates in the 2005 Hague Convention on Choice of Court Agreements and the 2007 Hague Convention on Maintenance because of its EU membership.

“We would make the necessary arrangements to continue to participate in these international agreements in our own right,” the MoJ said.

All parts of the UK would retain the Rome I and Rome II rules on applicable law in contractual and non-contractual matters, which generally do not rely on reciprocity to operate.

“This would ensure that businesses and individuals could generally continue to use the same rules as at present to determine which law would apply in cross-border disputes.”

The guidance also covers insolvency and family matters, and said the MoJ would repeal the EU Service Regulation and the Taking of Evidence Regulation, which cover both civil and family matters and rely on reciprocity to operate.

“However, we would apply the equivalent Hague Conventions in this area, to which the vast majority of EU countries are party. Finally, we would repeal the legislation implementing the Mediation Directive and the Legal Aid Directive.”

Talbot: springboard to achieve growth projection

Legal expenses insurer ARAG, a Litigation Futures Associate, is targeting growth in the fee protection insurance market after entering into a partnership with Jim Hoyle, formerly of HLI Insurance Brokers (part of the CCV/Towergate Group).

Mr Hoyle, a former chartered accountant, has been tasked with promoting ARAG’s ‘Total Fee Protection’ product to accountants.

Head of sales Andy Talbot said: “With the number of HM Revenue & Customs and tax investigations climbing each year, it is more important than ever for individuals and businesses to secure this insurance cover so that they are protected against the costs involved in such investigations.

“With Jim’s unique understanding of the accountancy market, he will provide ARAG with the springboard to achieve our growth projection.”

Total Fee Protection provides up to £100,000 to pay for professional fees that arise from HMRC full and aspect enquiries, VAT disputes and employer compliance disputes as well as providing access to Commercial Legal Services Online and the legal advice line.

Jackson: fund could flourish

The legal profession should create a not-for-profit third-party litigation funder to back both regular litigation and “deserving” cases which would otherwise not be attractive because of the level of damages sought, Lord Justice Jackson said today.

Seed funding could come from the government, the National Lottery or ‘quasi-debentures’ bought by individual lawyers and/or institutions.

Returning to a funding option he first looked on favourably during his review of civil litigation costs – but which has never gained traction in the 40 years since it was first proposed – Sir Rupert said a contingent legal aid fund (CLAF) could finally “flourish” in a market where for-profit third-party funders were now established.

Speaking at IBC’s Solicitors Costs Conference this morning, he called on the Law Society, Bar Council and Chartered Institute of Legal Executives to work together to promote the establishment of a CLAF.

“Unlike other funders, the CLAF would not have owners or shareholders creaming off the profits,” he said. “Instead it would plough all profits back into building up reserves and future litigation funding. The CLAF would be an independent body established by the legal profession in the public interest. Its function would be to promote access to justice.”

Seed funding has always been an issue for a CLAF, but Sir Rupert said that “if the governments and professions in other jurisdictions have managed to find seed-corn funding, surely England and Wales can do the same?”.

Possible sources included the National Lottery or charitable foundations, the government, or capital raised by means of ‘fixed interest coupons’ or quasi-debentures.

He explained: “Quasi-debentures would offer a more than average return on a bond but would expose the bond-holder to the risks of the CLAF being unprofitable, thereby sharing both risk and reward on the seed capital. I understand that such an arrangement would not prejudice the not-for-profit status of the fund.”

As to who would invest in a CLAF, the judge identified two possibilities. “Individual barristers, solicitors or other professionals may be willing to buy bonds of, say, £10,000 if they have confidence in the management of the scheme.

“They would note that investors in certain third-party funders have done well and the CLAF does not have any shareholders clamouring for dividends. In this way, the lawyers would be contributing to a much-needed scheme, while receiving a reasonable return for only a modest risk.”

Second, he said a bank or similar institution might assemble a ‘partnership’ of institutional type investors, such as pension funds.

“Each would put in money, buying a bond with a fixed lifetime and decent percentage annual return, in the expectation that after, say, 10 years the original capital would be returned because the fund would then be in a position to do so. Thus £50m could be raised by persuading 10 investors each to put up £5m.”

As to how the CLAF would work, cases could be chosen by experienced lawyers employed by the fund – or even by revived committees of solicitors and barristers who used to determine applications for legal aid – and importantly there would be no entitlement to support as of right.

Jackson LJ said whether the CLAF should be liable for adverse costs, or protected like the Legal Aid Agency, was a policy decision for others.

He noted that liability for adverse costs on normal principles would be an additional incentive “for the CLAF to choose cases wisely” – although there would have to be an agreement between the CLAF and the claimant as to what costs risk each was accepting – while giving it protection would require consultation and probably legislation, delaying the creation of the CLAF.

To protect itself from an adverse costs risk, he continued, the CLAF might take out block or case-by-case after-the-event insurance; alternatively it could self-insure “up to a point”.

Sir Rupert said costs management would make it “much easier” for the CLAF to assess the adverse costs risk, as would the adoption of his proposal last week for fixed costs for all civil cases up to £250,000.

He concluded: “The time for setting up a CLAF has come and I invite the Bar Council, Law Society and CILEx to consider taking forward this proposal.”

Curtis Law was founded in 2008, employing five staff to deal with personal injury claims. Since that time the firm has extended its reach into family law, conveyancing, probate and commercial areas and now employs 200 staff across the group.

Set up initially as a PI claims specialist, Curtis Law had strong ambitions to grow both in headcount and in the range of legal work managed.

Curtis Law initially needed a case management solution that would provide a flexible and future-proof environment – one that could be scaled out to multiple work areas, not just PI.

Following a detailed analysis of available solutions, Eclipse’s Proclaim Case Management system was selected. A solid track record in helping new start-up businesses to grow was a strong pull, as was the ability to add Practice Accounts at a later stage. Curtis Law took the opportunity to do just this – replacing the incumbent ‘bureau’ accounts system to create a fully integrated Proclaim Practice Management solution.

Proclaim is used across all work areas, providing a complete desktop productivity solution. Client care is top of the firm’s agenda; the ability to rapidly see where any file is up to – and provide feedback for clients – is a huge benefit. As a growing practice, managing finances is vital. Curtis Law has been able to monitor and analyse ongoing performance, using Proclaim’s integrated reporting toolset. This means that trends can be spotted, empowering the management team to quickly make informed operational and growth decisions.

Tasleem Riaz, principal, Curtis Law LLP said: “Proclaim provides a robust, scalable and flexible solution that is perfectly in tune with our commercial aims.”

Shenton: potential professional negligence issue

Commercial litigators are busting their budgets without seeking court approval to revise them upwards, new research has shown.

According to the survey by Just Costs Solicitors of 912 commercial litigation partners at the top 200 law firms, some 73% of respondents said they had prepared a Precedent H budget which was either agreed between the parties or approved by the court.

But even though every single one of them said they monitored the costs they incurred to ensure they remained within the budget for each phase, 69% said they had exceeded a budget at some point. This meant there are “obviously flaws” in the process, the survey said.

Of these, just 11% had made an application to revise the budget upwards. Six in ten said they did so because of significant developments in the litigation – which is what the rules specify as the reason for revision – 10% described it as “simple overspend”, and the rest cited both.

Paul Shenton, managing director of Just Costs, said: “This research suggests that the majority of solicitors are either unaware that a mechanism exists for budgets to be revised or believe that any such application will automatically fail so there is no point in pursuing it.

“It is very difficult for solicitors to recover an overspend without applying to revise the approved costs budget upwards. If clients are paying win or lose, this is a potential professional negligence issue – and if law firms are limited to what they recover then they are effectively working for free.”

In a judicial roundtable hosted earlier this year by the Association of Costs Lawyers, District Judge Chris Lethem – a member of the Civil Procedure Rule Committee and Judicial College trainer on costs – said he “hardly ever” saw applications to vary budgets.

He said: “I am deeply uneasy about that desert of applications, because either I have achieved a crystal vision which I thought I did not possess, or the parties are storing up a heap of problems later on down the line because they did not apply to vary, and when they get to the end of the process they are suddenly going to find they have overspent.”

However, Francesca Kaye, a partner at Russell-Cooke and immediate past president of the London Solicitors Litigation Association, said she was “positively avoiding” making applications to vary.

She said: “The risk of making an application to amend or vary a budget is firstly that the proposed amendment, depending on why you are applying to amend, might not be allowed; secondly, we have heard some horror stories of making an application to amend, and the judge taking one look at the budget that previously had been granted, and taking it as an opportunity to have another go at it.”

Laird Assessors to launch 'Sign on the Line'

Laird Assessors are one of the largest providers of automotive expert witness reports in the UK.  Since their inception in 2000 they have provided reports dealing predominantly with motor accidents; vehicle damage assessments through to forensic accident investigation.

Over recent years their range of services have widened to include locus reports, witness statements and injury photography, which are not necessarily related to road traffic accidents, but could be as a result of criminal proceedings, medical negligence, industrial accidents, etc.

With a solid reputation in the industry for professionalism, accuracy and efficiency, the company feels it has a concrete basis for expanding its range to include a document collection service.

They provide an explanation of legal documents to clients, collected relevant documents, ID and signatures and return them electronically within minutes of collection, with a hard copy following in the post or DX.

This service will be branded as Sign on the Line with its own dedicated website for automated online booking & document management system delivering the accuracy & speed existing clients have come to expect with the automotive reports.

Laird Assessors MD, Nik Ellis said, “We have been honing and perfecting our processes and service to ensure that it is the best it can be.  We have invested heavily in our staff members and IT to ensure that we have a platform that is second to none.  We have spoken to our customers, researched their needs and developed an offering that specifically suits their requirements.  All of this combines to create the perfect opportunity for us to introduce Sign on the Line.”

The new service offers document collection, intelligence-led investigation and interpretation services across the UK.  The new business focuses on having the best and most up to date technology to drive down turnaround times and improve efficiency for clients.  It ensures that all agents are qualified with unparalleled knowledge and expertise to maintain a competitive advantage.

Sign on the Line will also be hosting a launch party at the beginning of August to introduce its services.  It will be an interesting period for both Laird Assessors and Sign on the Line – definitely one to watch.  For more information, please call 0151 342 0670 or email direct to results@signontheline.co.uk.

Dyson: seeking comprehensive evidence-based recommendations

The guideline hourly rates (GHR) are set to undergo a fundamental review this year which could result in rates being set for specific areas of work in addition to seniority and geographic banding, it has emerged.

The new Civil Justice Council costs committee met for the first time last week to scope out its work and warned that it should not be assumed that an increase in the GHR will result.

The committee had been asked to report by January 2014 but it decided that this was not realistic “given the scale of the exercise and the impact of the numerous April 2013 reforms”, a synopsis of the meeting said.

Instead it is aiming to report by the end of March 2014, a delay agreed by the Master of the Rolls, Lord Dyson. In response to a letter from the committee’s chair, Mr Justice Foskett, Lord Dyson said: “Although I am keen for a new rate to be established, given that it has not been updated since 2010, my primary concern is that I have comprehensive evidence-based recommendations to assist me in determining the rate.”

The committee resolved that it needed to investigate the cost of work – that is, the expense of time – and not just charge-out rates (“important though that aspect was”, the synopsis noted). It emphasised the importance of confidentiality for its data sources as a high response rate was important for the committee to offer authoritative advice.

The synopsis continued: “Although personal injury cases remain a key element in the process, the committee has to look at setting a rate or rates across the whole spectrum of civil litigation. One proposal was that distinct sets of rates should be recommended for particular areas of law, eg, personal injury, clinical negligence etc.”

Seeking Lord Dyson’s views on this, Mr Justice Foskett said in his letter: “The rationale would be to reflect the reality of the way the market imposes different rates depending on the volume and complexity of a particular area of law…

“At the end of the day, of course, whether we could achieve recommendations of this nature will depend on the quality and extent of the evidence we receive and the resources available to evaluate the evidence.”

Lord Dyson said he was open to the idea: “I am happy to take advice from the committee. I will then reach a conclusion based on the strength of the argument and the weight of views expressed to the committee on the merits of the proposal.”

The names of those on the committee have yet to be released as the Law Society has not finalised its claimant and defendant nominations, while a consumer representative has not yet been selected.

Three academics will be helping the committee: Professors Paul Fenn, Neil Rickman and Steve Machin. Professor Machin, who is a new name to those in the costs world, is a professor of economics at University College London.

Costs: security would be ordered on basis of approved budgets

A party’s refusal to demonstrate that it would have the means to pay costs is not in itself enough to make an order for security for costs because it could simply be a litigation tactic, the High Court has ruled.

Mr Justice Andrew Smith also decided that a costs budget approved by another judge should form the basis of the order, even though he suspected the sums allowed to be too high.

Sarpd Oil International Ltd v Addax Energy SA & Anor [2015] EWHC 2426 (Comm) concerned a £1m claim that a delivery of gas oil did not meet the contractual specifications, with the defendant bringing part 20 proceedings against Glencore Energy as the supplier of the oil to it.

The defendant’s application for security for costs was on the basis that there was reason to believe the claimant would be unable to pay, because Sarpd had said nothing about its financial position and Addax had access to little information about it.

Smith J said the evidence was not enough. “Mr Lewis [counsel for Addax] described Sarpd as a ‘secretive’ BVI company, but there is nothing inherently ‘secretive’ about incorporation in the BVI, and Sarpd has filed such returns with the BVI companies’ register as are required.

“Nor am I persuaded that condition c [of rule 25.13(2)] is met because Sarpd has declined to demonstrate that it would have means to pay a costs order. It might be tempting to ask why, if it has means, should Sarpd not avoid the expense of an application for security by demonstrating them, and therefore to suppose that its refusal itself provides reason to believe that it will not be able to pay an order for costs, but that ignores the adversarial realities of commercial litigation.

“The amount in issue in these proceedings is some $1.5m [£1m], and the costs budgets of the three parties were in total some £1.5m. As far as I can see, the litigation involves no issue of collateral commercial importance for any of the parties and no question of law that any of the parties has an interest in having resolved.

“The commercial sense of settlement is obvious, and must be obvious to all the parties. It can only strengthen Sarpd’s hand in any negotiations if it leaves Addax in doubt about whether it will recover its costs even if it defeats the claim and with concerns that even then it might end up bearing its own and Glencore’s costs.

“The uncertainty may be awkward for Addax, but there is no reason that Sarpd should volunteer information to alleviate its difficulty. More importantly, this obvious explanation for Sarpd’s reticence about its financial position means, in my judgment, that on the evidence it is no reason to believe that it will be unable to pay an order for costs.”

Addax submitted that the practice in the Commercial Court is to order security for costs in circumstances such as these: where a claim is brought by a company that has not filed accounts that are publicly available, which has no discernible assets and which declines to reveal its financial position.

“I suspect that Mr Lewis might be right about that, but if such a practice has developed, I cannot think it justified and I decline to follow it,” Smith J said.

He went on to consider the other issues in the application “out of respect” for the counsel’s submissions.

On the issue of whether the court can order security for defendant’s costs in pursuing a part 20 claim, the judge said that, had he made an order for security, he would have assessed its amount having regard to Addax’s costs of bringing and pursuing the part 20 proceedings but disregarding its potential liability for Glencore’s costs if the claims failed.

On quantum, Smith J said that “were this virgin territory, my impression would have been that the amounts in the budgets of all parties are higher than proportionate”, but he was constrained by the fact that the budgets had been agreed and Mr Justice Blair approved, rather than just recorded, them.

Smith J said: “Accordingly, [they are] not to be departed from unless there is good reason to do so. Any doubts that I have about whether the budgeted costs are reasonable or proportionate would not be a good reason to depart from what Blair J approved: that would destroy the scheme of the new costs regime…

“I accept Mr Lewis’s argument that therefore the appropriate amount of security should be assessed on the basis that Addax’s budgeted costs are likely to be recoverable on a standard assessment.

“This conclusion, I think, applies to both costs that had already been incurred when the costs had been incurred and future costs that were estimated in the budget… I recognise that this understanding of the costs management regime might in some circumstances result in it inflating rather than reducing recoverable costs, but I cannot otherwise interpret it.”

Pre-race – Team Kelse

A number of staff at Eclipse Legal Systems took part in the Great North Run on 13 September to raise funds for Martin House Hospice.

The group of runners participated as ‘Team Kelso’, a dedication to Dolores’ son, Kelso, who sadly lost his battle to cancer in 1993.

Despite the unexpected sun and soaring temperature, there were some excellent times posted by our runners, who all completed the half marathon in less than 3 hours.

• Tracey Longbottom (sales consultant): 2h 04
• Dolores Evelyn (sales director): 2h 29
• Kiran Gill (relationship manager): 2h 45
• Alex Haddy (project consultant): 2h 45

In order to show support for ‘Team Kelso’ all the staff at Eclipse took part in fantastic fundraising efforts – so much so, the original £5,000 target was increased to £6,000 – with special thanks to Claire Field (accounts consultant) for donating her time and baking skills to bringing in a variety of cakes to the Eclipse HQ, helping to raise £120 towards the overall target.

The fundraising total is now over £9,000 and continuing to increase, with all proceeds going to Martin House, a hospice for children, young people and their families from throughout the Yorkshire region.

Dolores Evelyn, sales director at Eclipse, comments:

“The support Team Kelso has received is overwhelming! We would just like to say a huge thank you to all who have donated as it truly makes a difference to the difficult lives of the children and families who rely on the Hospice.”

To show your support for our runners and the Hospice, visit the Eclipse Virgin Money Giving page.

Faulks: Evidence of parties playing the system now

A former justice minister has warned peers of discount rate ‘gaming’ under the new system of triennial reviews set out in the Civil Liability Bill.

Lord Faulks QC – who practises in clinical negligence and personal injury – said the problem with reviewing the rate every three years was that “parties to litigation will have a quite understandable tendency to try to guess the outcome of the determination of the new discount rate and to game the system”.

Speaking in the House of Lords last week during the bill’s committee stage, the QC described the three-year review cycle as “definitely too short”, and said he would have preferred seven years, but opted for a “compromise” of five years in his amendment.

“If any evidence is needed of the gaming of the system, it is apparent now. That evidence may be anecdotal, but there is such an accumulation of this anecdotal evidence that it simply cannot be ignored.

“Parties are either anxious to conclude their cases before the putative date of the variation of the discount rate or to delay matters. There is much speculation as to when this bill will become an Act.

“I fear that such manoeuvring will take place almost continuously if the three-year period is maintained.”

Lord Faulks said that unless the review was less frequent, there would be a “very real increase” in the number of claims that were not settled.

“Alternatively, there will be a number of applications to court to try to adjourn matters or accelerate them to reflect some perceived advantage to one side or another.”

Responding on behalf of the government, Baroness Vere said reviews on a three-year cycle “should lead to smaller adjustments in the rate on each review” than on a five-year cycle.

“This should reduce concerns about the size of any change in the rate as a result of the review, which should also reduce any temptation to distort the litigation process in the hope of benefiting from a significant advantageous change to the rate.

“We continue to believe that a three-year maximum review period represents a reasonable compromise between the different views held in this House and outside it.”

None of the ‘probing amendments’ proposed at the committee stage were voted on by peers last week and the government made no concessions.

Justice minister Lord Keen came closest when he suggested there might be a rethink on whether the expert panel which the Lord Chancellor must consult before setting the rate under the Civil Liability Bill should be involved in the first review.

Lord Keen said there might be benefits to using the established statutory consultees to apply the Bill’s new principles for the first time.

“I will certainly reflect on the views of noble Lords, although at present the government believe that the panel ought, if practicable, to be involved in the first review.”

Lord Keen said “preparatory work” on the setting up of the panel was already under way and the government would progress the appointment process as far as it could before the bill received royal assent.

He said the government would publish the terms of reference for the panel in time for the report stage, set for 12 June.

Lord Keen explained that, under the bill, the Lord Chancellor, when setting the rate, would make allowance for “investment management costs”, because these costs were not currently recoverable as a head of damage.

Responding to a number of amendments designed to increase the use of periodical payment orders (PPOs), the minister said “appropriate guidance” would be put in place by the end of this year.

“In addition, we are investigating whether current advice received by claimants on the respective benefits of lump sums and PPOs is effective, and whether there are any ways in which the use of PPOs could be increased within the present system.

“At present, we intend to complete this work by the summer of 2019.”

Sims: With the legal services sector becoming increasingly competitive, it is essential for us to stay ahead of the game

Eclipse’s Proclaim Practice Management solution selected in six-figure deal

Leading Essex law firm, Mullis & Peake LLP, has implemented the Proclaim Practice Management Software Solution from Eclipse Legal Systems.

Established in Romford, Essex, over 100 years ago Mullis & Peake LLP has grown into one of the area’s largest and most respected law firms employing over 50 staff. Providing a full range of legal services to both private and corporate clients, the firm boasts an enviable reputation for high quality legal advice at cost effective rates. To further strengthen this position, Mullis & Peake LLP is implementing the Proclaim Practice Management Solution firm-wide for all users.

The Proclaim Solution will be utilised across all work areas including commercial, property, elderly client, family, court of protection and employment. The personal injury team will adopt Proclaim’s direct integration with the RTA (Road Traffic Accident) Portal.

As an integral part of the core Proclaim solution, Mullis & Peake LLP will also be taking the Proclaim New Business Enquiries and Compliance toolsets to provide seamless marketing, file opening, and ongoing adherence to SRA regulations. Prior to implementation of the Proclaim Credit Control Centre, Eclipse will conduct a data conversion from the firm’s incumbent financial management system. Mullis & Peake LLP is also to benefit from seamless digital dictation functionality courtesy of Proclaim’s BigHand integration tool.

Nick Sims, IT Manager at Mullis & Peake LLP, comments:

“With the legal services sector becoming increasingly competitive, it is essential for us to stay ahead of the game and cement our proud reputation for superb client service by investing in technology. Proclaim, with its array of integrated client-centric toolsets, is the perfect platform for us to achieve this.”

Dan Bell, IT Manager at Chadwick Lawrence

Heavyweight Yorkshire practice, Chadwick Lawrence, has implemented the Proclaim Practice Management Software solution from Eclipse Legal Systems.

With 7 offices across the West Yorkshire region, Chadwick Lawrence employs 250 staff and provides a full range of legal services to both corporate and private clients.  Founded in 1840, the practice has a rich history and has expanded both organically and through acquisition to position itself as the go-to firm in Yorkshire.  To cement this position, and as part of a strategy to implement superior client service, Chadwick Lawrence is rolling out Proclaim for its personal injury and conveyancing teams.

A total of 70 staff will utilise Proclaim, including the practice’s financial accounting team.  To provide practice-wide management information, the firm will be utilising the Proclaim Data Warehouse.  The Data Warehouse tool enables Chadwick Lawrence to amalgamate Proclaim data with data from its other departmental software systems – to be manipulated and utilised as one core data repository.

As part of the solution, the personal injury team at Chadwick Lawrence will be using Proclaim’s direct integration with both the EL / PL (Employer and Public Liability) and RTA (Road Traffic Accident) Portals.  For client self-service, the firm has rolled out Eclipse’s FileView online matter tracking solution.

Dan Bell, IT Manager at Chadwick Lawrence, comments:

“In the current climate it is vital to build the very best levels of client service into our processes.  At the same time, building automation and standardising our matter management means that fee earners can really focus on value-adding work, without getting tied up in administration.”

Roth: no fundamental obstacle on human rights or EU law grounds

The Competition Appeal Tribunal (CAT) has rejected strenuous attempts to dismiss the first application to certify an opt-out class action under the new collective proceedings procedure.

However, it has not yet granted the collective proceedings order (CPO), as it is formally known, having adjourned the case to allow the claimant to reconsider issues raised during the hearing about the proposed methodology to assess damages.

Providing pointers for future CPO applications, the tribunal, led by CAT president Mr Justice Roth, also said the fact that the impetus for the action came from the claimant’s solicitors, Leigh Day, was not objectionable

Leigh Day represents Dot Gibson, the general secretary of the National Pensioners Convention, over the action against Pride Mobility Products, the largest supplier of mobility scooters in the UK.

She is looking to bring the class action to recover compensation for around 30,000 consumers whom she alleges were overcharged for a Pride scooter as a result of Pride’s breaches of competition law between February 2010 and February 2012.

The claim follows on from a 2014 decision of the Office of Fair Trading that Pride breached competition law by banning retailers from advertising prices online below Pride’s recommended retail prices for its scooters. Ms Gibson claims this made it harder for consumers to shop around for the best price and caused them to be overcharged.

The average loss, depending on the model purchased, is said to be either £40 or £195 before interest.

There are two statutory conditions which must be satisfied for the CAT to make a CPO: the claims must raise the same, similar or related issues of fact or law and be suitable to be brought in collective proceedings; and the proposed class representative must be authorised on the basis that it is just and reasonable for that person so to act in the proceedings.

Pride challenged the application on several grounds, including that it would infringe the company’s human rights and/or EU law, with the key argument being that, at the time of the infringements, the collection actions procedure was not law.

The CAT rejected this: “While such new procedures or mechanisms generally apply only from a specified date, the cause of action forming the basis of the claim subject to that procedure or mechanism could have arisen prior to the legislative or procedural innovation coming into force. These developments therefore involved no retrospective imposition of liability…

“It follows that there is no fundamental obstacle on human rights or EU law grounds to the making of an opt-out CPO in this case.

The tribunal was clear that the CPO application was “not a mini-trial”, and at this stage of the proceedings it was not its role to choose between the approaches of each side’s expert economists.

However, with a potentially more complex economic analysis to be undertaken by the claimant, the CAT said the question of suitability of the case for a CPO had to be deferred.

“The costs of pursuing the proceedings may increase; and in limiting the claim to the losses resulting from the infringements, the aggregate damages estimate may decrease.

“Rule 79(2)(b) of the CAT Rules 2015 provides that in determining whether claims are suitable to be brought in collective proceedings, one consideration to be applied is ‘the costs and benefits of continuing the collective proceedings’…

“Until a revised approach to assessment is carried out, it is impossible to assess what the total damages might be. We therefore only observe that the question of suitability may need further consideration.”

Though Ms Gibson herself was not a claimant, the CAT found her to be a suitable person to lead the claim, saying she would “act fairly and adequately in the interests of the represented class”.

She was an experienced campaigner and spokesperson supported by staff at the National Pensioners Convention,; Leigh Day has extensive experience of group litigation and had brought in counsel with competition law expertise, along with a US company, Signal Interactive Media, that has “extensive experience of class action administration”.

The CAT added: “Finally, in this regard, we do not regard the fact that the impetus for the collective proceedings came from Leigh Day as objectionable. This seems to us almost inevitable with collective proceedings in particular for consumers, most of whom would be unaware that it was practicable to bring proceedings of which the cost vastly exceeds the individual loss they suffered.

“The relevant question is whether the class representative is able to ensure that the proceedings are then conducted in the interests of the class and not of the lawyers.”

There was also a question about the ability to cover Pride’s costs. Ms Gibson has arranged, through Burford Capital, after-the event insurance underwritten by Great Lakes Reinsurance, for Pride’s costs up to £1.08m and her own disbursements in the event that the claim is unsuccessful.

Leigh Day confirmed that in the event that the indemnity in the policy was exceeded, it would give priority to payment of Pride’s costs over recovery of its own disbursements.

Pride has filed two detailed costs budgets: the first, for the CPO application, totals £477,000 (excluding a provision for costs of an appeal); the second, from the grant of a CPO to trial, totals £951,000. It argued that the fact this exceeded the ATE cover meant the CPO requirements were not met.

An application for costs management has been made and, without prejudging that, the CAT noted that Ms Gibson’s budget amounted to just under £1m. “It is not evident why the costs of Pride should exceed those of the applicant, particularly when Pride’s lawyers have already done a great deal of work in gathering documentation and responding to the inquiries made in the course of the OFT’s investigation, and the applicant’s solicitors are in London whereas Pride’s solicitors are based in Coventry where rates should be lower.

“Pride itself observes that at this stage there is ‘a high degree of uncertainty’ as to how the proceedings will develop. The applicant’s solicitor states that the chief risk officer of Burford has told him that Burford/Great Lakes are able to increase the insurance indemnity, depending on their assessment of the value and merits of the claim.

“Most immediately, the cost budgets are likely to be affected by any orders for costs that may be made following this judgment.

“Taking all this into account, we do not at this stage consider that the question of her ability to pay Pride’s recoverable costs is a basis for refusing to authorise Ms Gibson to act as class representative. This particular aspect can, if necessary, be considered further at the renewed application for a CPO.”

Jersey: funding not against Jersey law

The Royal Court of Jersey has endorsed the use of litigation funding on the island in a case funded by Harbour Litigation Funding.

It is the second case in which funding has been approved in Jersey, but the first where the issue was fully argued.

In Barclays Wealth Trustees (Jersey) Limited v Equity Trust (Jersey) Limited and Equity Trust Services Limited, Equity Trust tried to have the case struck out because of the funding agreement, but Master Wheeler did not accept that Jersey law prohibited such a contract as Equity had argued.

The judgment follows an earlier Royal Court judgment in another matter funded by Harbour which had endorsed litigation funding in Jersey (Re Valetta Trust in December 2011).

Master Wheeler referred with approval to the Valetta Trust case, where the Royal Court had concluded: “[Harbour’s funding agreement] cannot be said in any way to corrupt the purity of justice. On the contrary, it facilitates access by plaintiffs who would otherwise be unable to bring the proceedings because of a lack of resources.

“Importantly, the agreement provides that control of the proceedings will remain with the plaintiffs and their lawyers; the sole right of Harbour will be to be kept informed…. All in all, far from this agreement being contrary to the purity of justice, it fulfils the important role of facilitating access to justice without endangering the purity of that process.”

Master Wheeler added that had he been required to decide whether the agreement was champertous, he would have found that it was not.

Susan Dunn, Harbour’s head of litigation funding, said: “The Royal Court reached its conclusion having heard representations from both parties about funding and quite rightly, in our view, concluded that the fact a case benefits from litigation funding cannot be a basis for a defendant getting out of its potential liability. It would be an odd outcome indeed if defendants facing funded claimant with good claims were absolved on that basis alone.”

Equity Trust was the former trustee and manager of real property unit trusts which ran into financial difficulty in 2007. The case is being brought by the successor trustee and manager, Barclays Wealth, over allegations of breach of trust and breach of fiduciary duty. Equity denies the allegations.

Rowley: We provide an additional risk-based view

Posted by Steve Rowley, business development manager at Litigation Futures Associate Allianz Legal Protection

Two of the biggest frustrations for customers is receiving poor service post sale and not being understood. For a business, the hard work shouldn’t stop with securing the client but should continue to ensure that they see your business as a value add.

Regardless of which market you’re in, there’s always a great attention to detail in product development, driven through market insight and customer trends. Whilst the ‘tangible asset’ is of course extremely valuable to meeting client needs, often what is overlooked is the ongoing support and guidance that a client needs.

Products and services are designed by experts in a particular field who are already familiar and confident with their own business environment. For example, how many times have you been into a mobile phone shop only to be baffled by some of language and confusing tariffs available? They think they are being clear.

So how can you bridge the gap between being a trusted expert with technical competence but still deliver exceptional and valued customer service?

If you look at our product it isn’t tangible; it’s a piece of paper providing a promise that when needed can be used to cover some of the costs associated with bringing a legal action and that action subsequently failing.

What’s equally as important as the promise is the expertise of our people who are available to answer any questions or queries our business partners have.

Being able to listen to and respond with sound reasoning is a real skill which I think our customers need. As an insurer, we’re in business to recognise, understand and manage risk as well as provide financial protection.

For our solicitor partners, it’s important that we recognise each other’s strengths and what we each bring to the table, so we can positively utilise our respective skill sets for the good of our businesses and that of the customer.

We are not here to challenge or get into an intellectual debate around the legal merits of a case – our solicitor partners train for many years to be experts in their fields of law. What we bring is an additional risk-based view which may assist the lawyer in looking at a case in a different way.

Unfortunately, we’re not able to insure every enquiry that comes across our desks (where the authority to bind us to risk isn’t delegated), but what we do is listen to try and understand the case and explain clearly our rationale if we decide not insure the risk.

It’s impossible to be all things to all people, but at least our business partners have a clear route to finding an expert willing to listen, question and understand, even if the outcome isn’t always favourable.

Budgeting: sterile argument, says judge

The High Court has nearly halved a claimant’s costs budget after finding that it was so disproportionate to the sums at stake and complexity of the case that “something has clearly gone wrong”.

Mr Justice Stuart-Smith also said it was “hard to imagine anything more sterile than arguing about a grossly excessive costs estimate”.

He acknowledged that there has been disagreement about the extent of detailed argument that is appropriate when considering Precedent Hs.

“Experience in the TCC has shown that most costs budgeting reviews can and should be carried out quickly and with the application of a fairly broad brush. Only exceptionally will it be appropriate or necessary to go through a Precedent H with a fine tooth-comb, analysing the makeup of figures in detail.

“For reasons which will become apparent, however, this is an exceptional case which justifies a more detailed approach. The justification lies in the fact that the aggregate sum being put forward for approval is so disproportionate to the sums at stake or the length and complexity of the case that something has clearly gone wrong.

“The court’s interest in maintaining a robust and just approach to costs management requires an investigation into what has gone wrong for two reasons. First, to enable it to reach a figure which it is prepared to approve; and, second, so that the court’s determination to exercise a moderating influence on costs is made clear.”

He said the parties in GSK Project Management Ltd v QPR Holdings Ltd [2015] EWHC 2274 (TCC) – an £805,000 dispute over works done at the football club’s training ground – agreed that the approach adopted by Coulson J in March in CIP Properties was applicable. “I also agree, though Coulson J’s approach may better be seen as a guide rather than a straightjacket.”

The claimant submitted a budget for nearly £824,000, including £313,000 of incurred costs. The defendant’s cost budget was £456,000, but the judge said a straight comparison was not appropriate because of the widely differing hourly rates charged.

While the claimant’s solicitors, Manchester firm JMW, cited partner rates of £275-300, City firm Macfarlanes for the defendant was charging £575-600. The charge-out rates for associates were £175-200 for the claimant and £410-450 for the defendant. Macfarlanes charged out a trainee (£210) at almost the same rate as counsel was receiving (£250).

Stuart-Smith J said his starting point was that a case would have to be “wholly exceptional” to render such a budget proportional to what was at stake. But this case was straightforward, he said, and his initial reaction was that “good reason would need to be shown to justify more than about half that figure on proportionality grounds”.

He rejected a submission that the correct approach was to take the other party’s costs budget as a starting point, “because different parties to litigation have different roles and responsibilities which are likely to distort one party’s costs when compared with those of another…

“However, I do accept that the court should have regard to the other party’s costs budget because it may provide useful indicators about necessary resourcing of the litigation. And I bear in mind Coulson J’s observation that in the TCC the defendant needs to be on top of all the relevant material just as much as the claimant.”

Going through the budget item by item, Stuart-Smith J reduced it to £425,000, 52% of what had been claimed.

He was harsh on pre-action costs, saying the claimant had not justified 52 hours of partner time and 138 hours of associate time. He suggested that the firm could not have it both ways it had also incurred on issue/statement of case, including 96 partner hours, 429 associate hours and 163 hours of counsel.

“If a significant proportion of these [pre-issue] costs were incurred for good reason, then the claimant’s solicitors should have been well on top of the case by the time of issue. If, as the subsequent estimates for solicitors’ time suggest, little real progress was made, then 190 hours have not been reasonably or proportionately incurred.”

The judge was also particularly severe on witness statement costs, reducing them from £75,000 to £25,000 – “these hours are quite simply absurd for a straightforward case where the claimant intends to call two (or possibly three) witnesses” – and reduced the amount budgeted for settlement/ADR from £85,000 to £25,000.

He concluded that while the court may not approve costs already incurred, it may take them into account when considering the reasonableness and proportionality of all subsequent costs. But this rule did not make specific provision for the situation “where, as here, taking the incurred costs into account reveals a disproportionate level of expenditure with no consequential benefit being reflected in the estimate of future costs.

“I respectfully agree with Coulson J that there is no prohibition against saying what the court would have approved if presented with an estimate for future costs rather than the fait-accompli of incurred costs.”

In a post-script, he rejected the claimant’s justification for its level of costs on the basis that the litigation was “combative”.

Adopting Mr Justice Edwards-Stuart’s recent observations on the need to stop procedural squabbles, he added: “It is hard to imagine anything more sterile than arguing about a grossly excessive costs estimate. It does not go to the issues, it is wasteful of court and the parties’ time, and it offends against the obligation to keep costs to the reasonable minimum (both in the fact of the estimate and the need to whittle it down).”

Joy Kingsley, senior partner at JMW Solicitors, said: “Our task was to put before the court the costs that were necessary to pursue the claim. Our figures reflected the time and effort involved in what has already been a long-standing dispute which began in 2008.

“The court has wide discretion in terms of assessing any cost budget submitted. Mr Justice Stuart-Smith has chosen to exercise that discretion and we accept his decision.”

Litigation funding: Grandma knows best

Posted by Chris Deadman, director of operations at Litigation Futures Associate Invicta Capital Funding

Your dear old granny was full of wise sayings. ‘Look before you leap’, ‘If it looks too good to be true, it usually is’ and ‘Many a mickle makes a muckle.’ I have no clue what the last one means.

All of these pithy aphorisms could apply equally to the 100% conditional fee agreement (CFA) in the post-Jackson landscape. The days of receiving something for nothing have long gone.

It is time for claimants to grow up and face the fact that in the brave new world, they are going to have to pay for the services of their legal team. It is also time for lawyers to wean clients off the novocaine that is 100% CFAs for commercial claims.

To illustrate this point, I had a recent meeting with a very well-regarded firm that specialises in professional negligence claims. Whilst the firm acknowledges that it would benefit considerably from financing part of their fees and those of counsel for the purposes of cash flow, they were unable to agree a financing package because their clients expected them to take “all the risk”.

If the firm indicated that they were not prepared to take all the risk, their clients would simply seek the services of a potentially less competent firm that was prepared to conduct the work on a wholly conditional basis.

In the words of not just your granny, this is absolutely bonkers. For the long-term good of the profession, solicitors have a responsibility to wean clients off the ‘something for nothing’ culture and educate them in the ways of the post-Jackson world.

But what do you say to the client who hints darkly that they are tempted to take their stonking commercial claim down the road to a ‘no win, no fee’ firm?

In the main (and I am here to be shot down in flames), a firm acting on a 100% CFA is unlikely to allocate it 100 hours of partner time a week. In all probability, the case will be parked with a pretty junior fee-earner who will give it just enough attention to keep the matter live in the hope of securing an early offer of settlement. And that makes perfect commercial sense. Why would you throw the kitchen sink at a case when you aren’t being paid?

The key message to give the client is that if you want a senior fee-earner to run your case properly, you are going to have to pay for it. Paying a senior fee-earner by way of a financing arrangement ensures that the lawyer is properly resourced to run the case effectively. Counsel is similarly remunerated.

Avenues can be explored. Evidence can be collected. Proper strategies can be devised. In short, the legal team can prepare the case in such a way as to maximise its prospects of success.

For the claimant, this can often mean a higher settlement and, crucially, a shorter timescale to conclusion. Obviously there are never any guarantees with litigation, but having a properly resourced legal team can make a significant difference to both the quantum realised and the time in which it can be achieved.

This is a far more compelling argument for the would-be claimant than simply caving in or losing the work all together. Inevitably there will be occasions when the client is simply seduced by the promise of something for nothing and goes elsewhere. When that happens, it is best to recall one of granny’s other sayings: ‘You don’t miss what you’ve never had.’

Payment: impossible to say in advance whether default would be deliberate

The “more stringent regime” for obtaining relief from sanctions means that courts should be more cautious about the sanctions they attach to orders where they have that freedom, a deputy High Court judge has said.

N Strauss QC said that since the sanctioned party may find it difficult to obtain relief from anything other than a trivial breach, “the court should consider in advance whether the sanction will be a proportionate response to a breach of the order in all foreseeable circumstances”.

In Porter Capital Corporation v Zulfikar Masters, the successful claimant applied for an interim payment pending the taking of an account. The judge was also asked to order that, in the event of default, the claimant be allowed to enter judgment for the whole amount or, alternatively, the defendant be debarred from defending the proceedings on the account.

Having highlighted the need for caution in attaching sanctions to an order – unless, of course, the order was built into the CPR, as it was in Mitchell – Mr Strauss that where an order requires the payment of money, as opposed to compliance with a procedural direction, “a breach may not be deliberate or in any sense blameworthy, but due just to a lack of funds”.

In the case before him, he said the order sought was “wholly inappropriate” for a host of reasons, including that there had been no prior default justifying “a stringent order or any order other than the usual one”, and that it was “impossible to say in advance whether a default would be deliberate or otherwise blameworthy”.

The judge concluded: “While the courts now adopt a more rigorous approach to compliance with their orders than formerly, this is still some distance from the ‘one strike and you’re out’ regime implied by the order sought in this case, which even in its milder form would in my view be inconsistent with access to justice principles and probably with article 6 of the European Convention on Human Rights.”

Assignment: deal between law firms effective

The assignment of conditional fee agreements (CFAs) is under the spotlight yet again after a costs judge ruled that one had been validly made.

Master Leonard agreed with HHJ Wood’s recent ruling in Jones v Spire Healthcare that the leading authority in the area did not require there to be a relationship of personal trust and confidence between a particular solicitor and client to allow an assignment.

Azim v Tradewise Insurance Services Ltd [2016] EWHC B20 (Costs) concerned the detailed assessment following the claimant’s acceptance of a £3,500 part 36 offer for a road traffic claim.

The transfer of the case from TLW Solicitors to Russell Worth Ltd on 23 July 2014 was under scrutiny. The two firms reached an agreement to transfer various claims over on that date, and TLW wrote to the claimant the same day, saying: “We have recently received an influx of new work as a resulting (sic) of securing a new contract, however unfortunately have been unable to replace a couple of key staff who are currently on maternity leave. This means that existing staff have more cases to deal with than we would normally wish.

“Rather than have this impact on the quality of service which you receive or cause any delays to the settlement of your claim, we have put in place arrangements to pass over the handling of your case to another firm which specialises in cases such as yours.” The letter emphasised that the claimant was free to go elsewhere.

The court had to decided whether the retainer with TLW had been terminated, whether the CFA could be assigned in this way, and whether, if so, it was effective.

Master Leonard distinguished this case from other recent cases, such as Budana and Webb, because here the assignment occurred before the claimant was informed about it. There was “no real basis for concluding that the TLW CFA had been, or was, terminated at the point that TLW entered into its 23 July 2014 transfer arrangement with Russell Worth Limited”.

As to the legality of the assignment, the only binding authority is Mrs Justice Rafferty (as she then was) ruling 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.

In his much-discussed Jones ruling in May, HHJ Wood ruled that 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.

Master Leonard said: “That is reasoning with which I respectfully agree. It seems to me that Rafferty J found limited assistance in the authorities to which she had been referred in applying a principle, which may be said to exist for the benefit of the non-assigning party, to circumstances in which the non-assigning party had every reason to (and did) accept an assignment.

“Nonetheless she applied established principles in coming to the conclusion that a CFA could be the subject of a valid assignment, and she expressly stopped short of any finding to the effect that a relationship of personal trust and confidence between a particular solicitor and a particular client was a prerequisite to that.

“For the reasons given by both District Judge Besford [in Budana] and HHJ Graham Wood QC the imposition of any such prerequisite would in my view be inappropriate.

“In summary I can identify no obstacle, in the principles governing assignment of the benefit and burden of contracts, to the validity of a bona fide, arms-length CFA assignment in the circumstances of this case.”

He went on to find the assignment effective and that, as a result, a novation had not taken place.

Master Leonard concluded: “It follows that the indemnity principle does not operate to prevent the recovery of the costs incurred by the claimant and payable both to TLW and Russell Worth Limited under the terms of the TLW CFA.”

Rowley: human error is no longer to be regarded as a good reason

A costs judge has refused relief from sanctions despite his “qualms” at the nature of the penalty for the breach involved.

Master Rowley – the newest member of the Senior Court Costs Office – ruled this week that through the Mitchell ruling and then Durrant, the Court of Appeal had been clear about the approach judges should take.

In Long v Value Properties Ltd & Anor, the claimant was in breach of section 32.5 of the Costs Practice Direction by failing, during detailed assessment proceedings, to serve the paying parties’ solicitors with copies of the conditional fee agreements involved and a statement setting out the details of the success fees.

The claimant’s solicitor said this was an “inadvertent omission” and sent the documents on when the issue was raised in the defendants’ points of dispute.

Master Rowley said that throughout the hearing he had been troubled by the ‘one strike and you’re out’ nature of the default – having failed to serve the documents, “unless the claimant’s solicitor recognised his error before the points of dispute were served (and even then it may have been too late), he had breached the rule and oversight would not be sufficient to bring him back into play however promptly an application was made”.

The position was made all the more stark by the sanction, he continued. He contrasted the situation with a failure to serve a notice of funding, where a notice could be served late and the success fee recoverable from that point; there is no similar provision for a failure to provide information at the start of detailed assessment proceedings and “as such it is all or nothing”.

Master Rowley suggested that this seemed “strange” given that “the complete absence of knowledge to the opponent caused by a failure to serve the N251 always seems to cause more prejudice than a failure to serve information regarding a CFA whose existence is already known”.

Nonetheless, he ruled that the non-compliance here was not trivial as defined by Mitchell and the claimant was not able to provide a good reason for it now that “oversight or human error is no longer to be regarded as a good reason”.

The judge said Durrant “makes it clear that the Court of Appeal’s general view is clear on applications of this sort”.

He concluded: “Therefore, whilst I may have qualms about the nature of the sanction imposed for a breach of this particular provision of the CPR, I am clear that I need to take that as being the correct sanction and simply concentrate on whether the breach was trivial and if not whether there is good reason for granting relief. Both of those questions are to be answered in the negative in this case.”