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Coming inside the budget does not prevent further cuts, says judge

Coming inside the budget does not prevent further cuts, says judge

The budgeting regime does not fetter the powers and discretion of the judge at detailed assessment even if the receiving party comes in within the budgeted figures, a regional costs judge has ruled.

However, in a significant decision, District Judge Lumb in Birmingham urged greater co-operation between parties so that a far more accurate budget is prepared in the first place.

The judge, who is also a specialist clinical negligence district judge, said that though there was no direct authority on the relationship between the two, there were numerous examples in the CPR and case law to support the contention that cost budgeting was not intended to replace detailed assessment.

For example, there were no wholesale changes made to CPR parts 44 and 47 when budgeting came in.

DJ Lumb said: “The amendment that was made was to CPR 44 was to include an additional factor (h) in the ‘pillars of wisdom’ under CPR 44.4 (3).

“The receiving party’s last agreed or approved budget is just another factor that the court will have regard to. No special weight is attached to that budget. The rules were not amended to say that ‘first consideration’ would be given to the budget or that it would be ‘of paramount importance’ which are familiar terms in family law when weighing up the interests of children.”

In Merrix v Heart of England NHS Foundation Trust, the successful clinical negligence claimant argued that if her costs were claimed at or less than the figure approved or agreed for that phase of the budget, then they should be assessed as claimed without further consideration – unless the defendant put forward a good reason to depart from the budget.

The defendant’s position was that the costs judge’s powers and discretion were not fettered by the budgeting figure, but that the budget was just one factor to be considered in determining reasonable and proportionate costs on assessment.

While DJ Lumb ruled that the assessing judge was not fettered by the budgeting regime – save that budgeted figures should not be exceeded unless good reason could be shown – he said the full answer was “more nuanced than the defendant’s position of ‘open season’ and complete discretion to attack a bill on detailed assessment and the claimant’s opportunistic attempt to impose a straight-jacket on the costs judge and claim a fixed figure”.

He explained: “There is some merit in elements of both parties’ arguments in the present case. At the same time, their entrenched positions illustrate why some observers consider that costs budgeting has failed to be as successful in practice as it ought to have been.

“The analysis in this judgment demonstrates that the preliminary issue question itself as posed was based upon a misunderstanding of the objectives and function of costs budgeting which is a different costs management tool from costs assessment.

“If the claimants arguments were correct and that for large sections of a parties costs the only opportunity to challenge those costs, absent ‘good reason’, would be at the CCMC, those hearings would be at risk of being far lengthier than they already are. That cannot be consistent with the overriding objective of dealing with cases expeditiously at proportionate cost.

“It is the duty of the parties to help the court to further the overriding objective by narrowing the issues between them. By adopting an ADR-like philosophy in negotiation and the preparation of budget discussion reports it should then be possible, in the majority of cases, to produce a proportionate budget that is so accurate when compared to the actual, yet still proportionate costs, incurred at the conclusion of the case that the difference between the parties should be so negligible that it would not be worth the time, trouble or risk to pursue a detailed assessment.

“To get to that ideal position requires a realistic engagement by the parties and by the case managing judge who has not only the experience of effective case management but also of the proportionate sums involved in the efficient conduct of the case. The benefits to all, if this panacea can be achieved, are obvious.”

A spokesman for Irwin Mitchell, which acted for the claimant, said permission to appeal was granted by the regional costs judge and the firm was considering its position.

He added: “There is a tension in the court rules between CPR 3.18 and rule 44 which needs clarifying by the courts. Last week it was reported that Master Rowley in the Senior Court Costs Office in a costs claim against Peterbrorough and Stamford NHS Trust had allowed various phases of a claimant’s anticipated costs budget as claimed without undertaking a detailed assessment of these costs.

“It appears that there is different judicial thinking at the moment on this issue.”

A spokesman for the NHS Litigation Authority said: “We are pleased with the court’s decision in this case. If CPR 3.18 were used by costs judges to ‘rubberstamp’ payment of costs budgets at detailed assessment hearings, this would result in a massive increase in the costs of litigation. The burden of this would ultimately be paid by the taxpayer in NHS cases.

“It would also be contrary to the primary intention of the Jackson reforms, which were implemented to control costs and promote access to justice.”




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Signature: Copied from another document

A personal injury lawyer who persuaded other employees to fake client signatures and lied about it in court has been struck off by the Solicitors Disciplinary Tribunal (SDT).

Lesley Dee Layton, based at Lance Mason Solicitors in Blackburn, also “directed the creation” of a claim form containing an accident date “which she knew to be untrue”.

Admitting all the allegations in an agreed outcome with the Solicitors Regulations Authority (SRA) and approved by the tribunal, Ms Layton said in mitigation that she had made “open and frank” admissions, “always co-operated” with the SRA and had a “previously unblemished career history”.

She went on: “I had always sought to uphold the rule of law and I am thoroughly embarrassed that it came to this”.

Ms Layton admitted that she had “caused to be created” two witness statements in which the signature of a client, referred to as GH, had been copied from another document.

She had been acting for GH in a personal injury claim and failed to obtain a signed witness statement from him by the deadline set by the court.

A few days later she “directed” an employee of the firm to copy GH’s signature from a different document onto a version of his witness statement, and emailed it to the solicitors for the defendants, BLM.

When BLM sent a letter saying that GH’s statement of truth “appeared to have been cut from another document and copied onto the statement”, Ms Layton created a second statement, directed another employee to fake GH’s signature, and sent it to the other side.

Responding to a request from BLM to see the original witness statement, Ms Layton “directed another individual” at the firm to “trace over the signatures” copied into her two witness statements with a ballpoint pen “in order to give the impression they were original signatures”.

GH’s claim was struck out in April 2015, but in a later statement for a costs hearing in September that year, Ms Layton claimed she had “acted appropriately and honestly throughout the matter”.

She insisted she had sent to BLM “what she thought were the original statements”, and could not explain the findings of an expert that “the signatures were copies which had been traced over with ballpoint pen”.

In a second matter, Ms Layton acted for KF in connection with a back injury he suffered working on a prison farm, but KF “could not recall the exact date on which the injury was sustained”.

By the time the three-year limitation deadline expired, in September 2015, Ms Layton had obtained a signed copy of the claim form, giving the accident date as “on or about the 24 September 2012”, but not the particulars of claim.

She sent a letter to the court on 29 September 2015, enclosing a claim form consisting of a second page signed and returned by KF in August and a first page which “she had directed the creation of”, and with a date for the accident of 30 September 2012.

Ms Layton admitted acting dishonestly by causing two versions of GH’s witness statement to be created into which signatures were copied, representing the statement as signed by GH and denying any wrongdoing, both to BLM and the court.

She also admitted acting dishonestly in respect of KF, by causing a claim form to be filed referring to an accident date which she did not believe to be correct and “which purported to have been signed by the client when she knew it had not”.

Ms Layton acknowledged that her actions led to the striking out of GH’s claim and had it been discovered by the court, there was a “high likelihood” that KF’s claim would have been struck out.

She agreed to be struck off of the roll and pay costs of £13,920.




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Ryder: digitisation accelerating process

England and Wales are heading towards a single administrative appeals court spurred on by digitisation and the court reform process, according to one of the country’s most senior judges.

Sir Ernest Ryder, Senior President of Tribunals, observed how the court reforms were speeding the move in a speech to the Administrative Law Bar Association entitled Justice in a modern way.

Sir Ernest pointed out that the Tribunals, Courts and Enforcement Act 2007, which gave the Upper Tribunal the same powers and duties of the High Court both generally and in terms of judicial review, accelerated the process of unifying administrative law across the courts and tribunals.

Since then, pilot schemes had helped bring claims that fell under more than one jurisdiction before a single judge, in a single hearing.

“We are moving to single jurisdiction solutions in property, housing, Equality Act and dismissal compensation claims. More will follow,” he said.

He continued: “The ultimate goal is to answer the question whether reform will enable us to move to a single jurisdictional venue both for judicial review and merits-based problem solving: a general administrative appeals court.

“The High Court and Upper Tribunal both have a judicial review jurisdiction. The same judges are hearing judicial review proceedings in both jurisdictions…

“In all but formal structure, we have for judicial review ‘One System, spread over two services’: tribunals and courts.”

Sir Ernest observed that the ongoing £1bn courts modernisation process was an agent for this change.

He said: “As the wider reform programme moves us more closely to the realisation of a single courts and tribunal judiciary, not least by the use of common procedures through the digitisation of process, we move – as part of the evolutionary development of the tribunals – towards the establishment of a single administrative law jurisdiction.

“In the long-term this may see the Upper Tribunal become a superior court in reality and not just in name.”

He said there were at least two possible ways it might be achieved. Firstly, a ‘Victorian option’ could “entail a formal merger of courts and tribunals”.

Secondly, a ‘2007 Act option’ could lead to “consolidation and full transfer of the jurisdiction in the Upper Tribunal”.

The long-term aim, he said, as set out by the Lord Chancellor, Lord Chief Justice and Senior President of Tribunals in autumn 2016, was “the merger of the courts and tribunals judiciary and the creation of one justice system, each with its own specialist ways of working and protections”.




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Gordon-Saker: insufficient advice

The Senior Costs Judge has ruled a law firm’s conditional fee agreement (CFA) unfair because it failed to ensure that its client – whose English was poor – fully understood what he was signing.

Setting aside the agreement, Master Gordon-Saker said the CFA was also unreasonable because of the high hourly rates it sought.

Having awarded costs the firm – West London Law (WLL) – of £20,000 arising from the assessment, the net result was that the firm lost £5,000, as it was only paid £15,000 for the work it did.

In Vilvarajah v West London Law Ltd [2017] EWHC B23 (Costs), the Ealing-based firm was instructed by the claimant to handle a claim for £20,000 in unpaid fees brought by another firm, Hodders Law.

The case was eventually transferred to the Senior Courts Costs Office, shortly after which the retainer was terminated. WLL billed the claimant £31,945.

The claimant sought a detailed assessment under section 70 of the Solicitors Act 1974 and also challenged the fairness of the CFA under section 61(1).

Master Gordon-Saker assessed the bill at £15,323, and set aside the CFA. He summarily assessed the claimant’s costs at £20,000.

This week he published his full reasons for setting aside the CFA, noting that there was “little recent judicial guidance on the application of section 61(1)”.

The CFA provided for a discounted hourly rate of £150 in respect of all fee-earners – payable whether or not the claimant succeeded – and a “primary” rate of £420 in the event of success, which was defined as reducing the amount of costs claimed in the Hodders Law claim.

If an award of costs was made against Hodders, the claimant would also be liable to pay a success fee of 64% of the primary rate – which would mean an hourly rate of £690.

If the agreement was terminated, the claimant was liable to pay WLL’s “normal charges for all work done until termination date at £420 per hour plus VAT”.

WLL provided a brief attendance note of a 30-minute meeting with the claimant to explained the CFA, and the fee-earner who took the meeting said in her evidence that it was “relatively obvious” that English was not the claimant’s first language and so she took particular care to explain it thoroughly.

Master Gordon-Saker ruled that it could not be said that WLL made an agreement with a client who fully understood and appreciated that agreement.

He was very critical of the lack of correspondence about the CFA, saying he would have expected to see a letter from WLL in advance of the meeting explaining the options clearly, and enclosing a copy of the CFA with an explanation of its terms.

“I would expect the solicitor to be able to produce an attendance note of the meeting at which the agreement was signed recording precisely what explanation she gave of it to the claimant. I would then expect to see a letter sent to the claimant after the agreement was signed enclosing a copy of the agreement and explaining the key points.

“I see many conditional fee agreements and by comparison with most this is a complicated agreement…

“There is no suggestion that any risk assessment was carried out before the agreement was entered into and nothing to suggest that the claimant was given any advice as to the prospects of success and thereby the likelihood that he would be liable to pay a substantial success fee on top of the primary rate.

“I cannot conclude that an explanation given in a 30-minute appointment, with no attempt at communication before or after, enabled the claimant fully to understand and appreciate the terms of the agreement and in particular the liabilities that he was assuming.”

Master Gordon-Saker continued that he had “no hesitation” in concluding that the CFA was unreasonable.

The Hodders case was straightforward and £420 was “an unreasonable rate for any of the fee-earners involved in this case… That is the sort of rate I would expect to see for a grade A fee-earner based in the City or Central London doing complex, high-value work. Obviously it is even more unreasonable for the junior fee-earners.”

Nor could the primary rate be justified by reference to the discounted rate payable in the event that success is not achieved. The broad definition of success meant it was “highly unlikely” that the claim would not succeed.

“It was therefore highly unlikely that the discounted rate would ever be payable.”

Further, the calculation of the success fee was “peculiar”. The master said: “It is based not on any assessment of risk, but on the proportion of the discounted rate to the primary rate. As these are arbitrary figures, neither of them reflecting the market rate, so the success fee is also arbitrary.”

There was also nothing to suggest that WLL advised the claimant that the primary rate was “unusual” or that “there was no prospect at all” that he would recover that rate even if he succeeded.




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Linetime200Freeths LLP has contracted with Linetime to implement their Liberate litigation software. The system will support the firms growing Commercial Recoveries team.

Freeths LLP have 700 staff operating from 11 cities, offering a wide range of services for businesses and individuals.

Graeme Danby, head of creditor services at Freeths, said: “We already had a system in place handling the core of our day to day case loads. As part of our plans to grow the business unit, we undertook a review of our supporting technology. After researching the leading providers we selected Linetime’s Liberate system. It will assist in the provision of a streamlined, efficient and consistent service for our clients.”

The team will benefit from greater systems support and clients will have online access via the Liberate web portal to real time case information.

Freeths Recoveries team acts for Invoice Finance Providers, Insolvency Practitioners, Local Authorities and Finance Companies.




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Chris Bogart

Bogart: “Very significant” growth expected in UK

The Jackson reforms are part of the reason for an increase of 89% in Burford Capital’s half-year profits, the global litigation funder’s chief executive said last week.

“The Jackson reforms have clearly raised the profile of litigation funding in the UK, resulting in increased volumes of investments and enquiries,” Christopher Bogart told Litigation Futures.

“We expect to see very significant continuing growth in the UK, US and other countries. Clients are looking to alternatives to paying hourly fees for litigation.”

Mr Bogart said that since it opened for business in 2009, Burford had made 65 litigation funding investments worth over £260m. He said these investments included both single cases and portfolios of cases.

In its financial results for the half-year ending on 30 June 2014, Burford reported an increase in profits from £6m to £11.2m.

Its income for the six months was £17m, a 40% increase on the previous half year, with 85% coming from “the litigation portfolio amid continuing increases in activity levels”.

Strong demand for funding was reflected in the £38m of new capital invested in the first half of this year, five times the amount invested in the first half of last year.

Mr Bogart said the biggest obstacle Burford faced in funding smaller cases in the UK was the cost of litigation. He revealed that Burford’s smallest investment in the UK was less than £200,000, but this did not involve covering all the fees and expenses.

Instead it was a question of “helping lawyers and clients bridge a gap that had opened”, whether that meant paying for counsel, funding experts’ fees or helping a previously self-financing client.

Burford said its after-the-event insurance business remained steady, contributing £4.6m of the profit. It said that “while still small compared to historical levels, we are seeing increasing demand for coverage as 2014 develops”.

The financial report continued: “It remains too early to tell what even the medium -term future holds, and we will continue to watch, wait and write sensible business. We are declining to follow some of our competitors, who in their attempt to retain volume are reducing prices and writing new policies at premium levels we consider inevitably loss-making.”

Burford Capital announced in July that it had raised almost £90m from a bond issue, pushing the third-party funder’s asset base beyond the half-billion US dollar mark. It raised the money by issuing bonds on the main market of the London Stock Exchange.

Meanwhile, litigation funder Vannin has announced the appointment of former High Court judge Sir Stephen Silber as chairman of its investment committee.

Sir Stephen, who retired earlier this year after 15 years as a High Court judge, said: “The portfolio of funded cases is already impressive, and I look forward to working together with the team to build a further pipeline of successful cases.”

He is joined by international arbitration expert Bernard Hanotiau, professor at the law school of Louvain University, Belgium. Paul Morris, consultant senior counsel at offshore legal services provider Appleby, has been appointed to the group’s board as non-executive director.




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Success fees under microscope

Success fees under microscope

The fact that competition over success fees has not developed, as Lord Justice Jackson hoped it would, is down to both consumer ignorance and solicitors’ reluctance to do it, according to the judge who last month cast doubt on the widespread personal injury charging model.

Giving his second judgment in A & Anor v Royal Mail Group, Birmingham Regional Costs Judge Lumb also ruled that a 100% success fee is not automatically reasonable because an “ill informed” client agreed to it.

The case concerned claims by two children through their father and litigation friend (known as MS) over injuries suffered as passengers in a car accident. They were awarded £2,115 and £2,065 in damages respectively.

Their solicitors, Scott Rees, sought to recover a 100% success fee – capped at 25% of the damages – and an ATE premium of £195 from the damages.

In the first ruling, District Judge Lumb refused to allow the premium to be deducted from the children’s damages on the grounds that there was no real risk of losing, but was unable to undertake a summary assessment of the success fee because Scott Rees had failed to provide all the documents required under PD 21, including a copy of the risk assessment, which had not been undertaken.

As he explained in the latest ruling ([2015] EW Misc B30 (CC)), rather than go to the expense of a full detailed assessment, he issued directions for Scott Rees to file a series of documents, including the case file, for a paper hearing.

The judge observed that Jackson LJ’s hope that the deregulation of success fees would lead to a competitive market between solicitors “has not transpired, at least not yet”.

DJ Lumb said: “This may be because the public have not been in a position to make an informed choice to shop around for the best deal.

“As I commented in my first judgment there is a professional obligation in the Solicitors Code of Conduct to discuss funding options carefully with the client and to advise the client in accordance with the client’s best interests. Until solicitors incorporate within their marketing an intention to be competitive with other firms concerning success fees, Sir Rupert Jackson’s aspirational forecast is unlikely to come to pass.”

M’s costs claim was for £4,682, including profit costs of £3,003 for 20.9 hours of work. A’s claim was £4,682, including profit costs of £3,045.50, for 21.4 hours of work. The success fee amounted to £430 for M and £440 for A. All figures were plus VAT.

MS’s total liability for costs was £10,460, of which £2,014 was recoverable for each claim, leaving a personal liability to Scott Rees for a shortfall of £6432.

“It is patently absurd that anyone should pursue damages claims totalling £4,180 at a risk of having to pay £6,432 for doing so,” the judge said. “However, that is the claim for costs as presented to the court by Scott Rees. Whether they choose to pursue the litigation friend for all or some of those costs is a matter between Scott Rees and MS.”

As a bill had not yet been delivered, the judge was not carrying out a Solicitors Act assessment and was instead looking solely at what would be an appropriate success fee to deduct from the children’s damages as a reasonable expense, reasonably incurred for the purposes of part 21.12.

Looking initially at the base costs claimed, he concluded that “for these extremely simple claims those levels of time spent are unreasonably high, particularly when one considers that there is an obvious substantial overlap in dealing with the two claims together.

“The fixed recoverable costs under CPR part 45 equate to nearly 10 hours at the lowest guideline hourly rate of £118 for a grade D fee-earner, which would be the appropriate grade for these claims…

“Simply because an ill-informed litigation friend signs up to a CFA with a success fee of 100% does not automatically mean that a 100% success fee is a reasonable expense for the purposes of CPR 21.12.

“The court has to look at all the circumstances in judging what is reasonable and in my judgment the best way to do this is to continue to look at the risks involved for the solicitors as has hitherto always been the case.”

Scott Rees provided the judge with statistics that 62% of its children cases in the past year have been unsuccessful, but he found them “dubious probative value”. Lumb DJ said: “They certainly do not support their submission that ‘applying a commercial reality as 62% of cases are unsuccessful this supports a success fee of 25’.

“This appears to be an unintended shift of their position from a success fee of 100% to 25%. What it perhaps betrays is a true intention that the success fee should always equate to 25% of the damages as opposed to a percentage of the profit costs, a point which I dealt with in my first judgment.”

Noting that pre-Jackson the average success fee in settled cases was 12.5%, he said the risks here were less than average “and therefore a success fee in excess of 12.5% could not be justified”.

He continued: “In my original judgment I indicated that in these straightforward cases the risk element would be in the region of 5%. Adding together the risk and deferment elements my assessment of a reasonable success fee would be 10% of reasonably incurred base costs of £1,180 namely £118 plus VAT.”

He noted that this was in line with Jackson LJ’s expectation that the 10% uplift in damages would leave most claimants no worse off by being responsible for payment of the success fee.




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Nash: practitioners need to get their heads around budgeting

Southern England law firm McMillan Williams has become the first to go live with Omnia Legal Software, providing LASPO-compliant time recording and costs budgeting.

McMillan Williams, a multi branch hub and network based firm of solicitors operating from London to Devon, will be using Omnia across both personal injury, clinical negligence and general litigation.

Omnia, a Litigation Futures sponsor, is an online tool aimed at enabling solicitors to comply with the requirements of costs management – it also gives solicitors the ability to generate bills and schedules of costs, as well as internal reports to allow them to monitor their actual budget ‘spend’ by phase.

The software is designed to integrate seamlessly with firms’ existing practice and case management systems.

Managing partner Colum Smith said his firm needed a “best-in-class cost management solution for this crucial time of change in the field of legal practice”.

He continued: “We believe Omnia is the right tool to help us deal with the new costs management regime. We also needed a scalable Cloud-based solution to meet our substantial growth needs. As we continue our target to treble in size, we needed a partner who could grow with us.”

Sue Nash, costs lawyer and founder of Omnia Legal Software, said: “The reforms came into force amid a flurry of uncertainty but the reality for practitioners today is that they need to get their heads around the new system in order to benefit both their clients and their own businesses. I am delighted that we will be able to work with McMillan Williams to help them achieve this.”

McMillan Williams has handled many well-known cases, such as the Lakanal House inquest, phone hacking, police use of Tasers, plastic surgery clinical negligence work and maximum severity multi million pound personal injury cases.




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Marshall: one of three practising solicitors in group

Marshall: one of three practising solicitors in group

Lord Justice Jackson has unveiled a group of 14 assessors to help him with his review of fixed recoverable costs – including more practising barristers (four) than practising solicitors (three), along with one costs lawyer.

He also announced that the deadline for written submissions has been extended by one week, to Monday 23 January 2017, to assist respondents who are also submitting evidence to the government’s consultation on personal injury reform.

A statement from the judiciary added: “Lord Justice Jackson would also like to underline that written evidence should address the extension of fixed recoverable costs across civil litigation, the review is by no means confined to reviewing existing areas of law where fixed costs apply. In fact the main emphasis is likely to be on extending the regime to additional areas of litigation.”

His assessors are:

  • Sara Ashby, founding partner of boutique intellectual property firm Redd Solicitors LLP. She has experience of the capped recoverable costs regime in the Intellectual Property and Enterprise Court;
  • Nicholas Bacon QC, a leading specialist in costs litigation at 4 New Square and chairman of the Bar Council fixed fees working group and a member of the Bar Council;
  • Richard Disney, a professor of economics at the University of Sussex with experience of various pay review bodies;
  • Paul Fenn, an emeritus professor at Nottingham University Business School who has been involved in previous costs work, including as an assessor to Jackson LJ’s civil costs review;
  • Barbara Fontaine, the Senior Queen’s Bench Master, former commercial litigator, and a general editor of the White Book;
  • Senior Costs Judge Andrew Gordon‐Saker;
  • Richard Lander, property specialist at Kings Chambers;
  • David Marshall, managing partner of London firm Anthony Gold, past president of the Association of Personal Injury Lawyers and current chair of the Law Society’s civil justice committee;
  • HHJ Martin McKenna, designated civil judge for Birmingham and former head of litigation in the Birmingham office of Eversheds;
  • District Judge Simon Middleton, a course director for the Judicial College with particular responsibility for devising and delivering costs and costs management modules, and a co‐author of Cook on Costs;
  • Andrew Parker, head of strategic litigation at DAC Beachcroft, an executive member of the Civil Justice Council and another of Lord Justice Jackson’s costs review assessors in 2009;
  • Vikram Sachdeva QC of 39 Essex Chambers, who has appeared in some significant costs cases;
  • Nicole Sandells, an experienced Chancery commercial barrister at 4 New Square;
  • Iain Stark, chairman of the Association of Costs Lawyers and a partner and head of costs at Weightmans.

This article was amended on 24 November to reflect the addition of a further assessor.




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Carr: judgment within 10 days

A contractual dispute between an oil trader and a biofuels manufacturer has shown the “possibilities for swift and litigation” under the High Court’s shorter trials scheme (STS), according to the barrister acting for the defendant.

Richard Sarll, based at 7 KBW, said the ruling by Mrs Justice Carr followed “one of only a handful of trials” heard under the scheme.

Under the STS, the case is managed by a docketed judge with a trial date fixed for not more than eight months after the case management conference and judgment within six weeks.

The ordinary disclosure order in STS cases is for the production of documents upon which the parties rely. The maximum length of a trial is four days and costs budgeting does not apply.

In her ruling in Vitol SA v Beta Renowable Group SA [2017] EWHC 1734 (Comm), Carr J noted that proceedings were issued in the normal way in September last year, but on 20 January, after an application for summary judgment was withdrawn by the claimant, Mr Justice Blair directed that the claim should proceed under the STS.

Carr J said a two-day hearing was held at the High Court at the end of last month, “with limited disclosure and witness evidence”, and her judgment was handed down within 10 days of the end of the hearing.

Having awarded the claimant, Vittol SA, damages of $352,000 (£273,000), Carr J said total costs of the action for the claimant were estimated to be around £125,000 and for the defendant £63,000 (both excluding VAT).

The High Court heard that Vitol claimed over $651,000, or alternatively almost $352,000, from Beta for loss of profit following non-delivery of a consignment of bio fuels.

Writing on the 7 KBW website, Mr Sarll said the decision “serves as an example of the possibilities for swift and efficient litigation” under the STS.

The High Court approved the first application to transfer a case started in the normal way into the STS in February 2016.




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Edwards: clear way forward

Edwards: clear way forward

Litigation funders are eyeing up the insolvency market, with the LASPO exemption set to expire tomorrow, with one company saying their product was now the best option for insolvency practitioners looking to bring legal action.

Despite opposition from the insolvency industry, the government is bringing to an end the recoverability of additional liabilities from 6 April.

Augusta Ventures described litigation funding as a “cleaner, risk-free option” where the cost of the funding is correlated to the damages, rather than the lawyer’s fees.

Jeunesse Edwards, Augusta’s strategic engagement director, said: “Litigation funding has always been a viable option for insolvency practitioners, but this change in the law shines a spotlight on their decision making and the best way to secure the biggest sum for creditors. Litigation funding now provides a clear way forward.

“The new law was strongly opposed by the insolvency profession, amid widespread concerns that it will make it uneconomic for IPs to run sub-£1m cases. But we are confident that they can continue to do the best for creditors.”

Further, Augusta said, a recent High Court decision has given solid support to liquidators using funding even when a majority of creditors oppose it.

In Allen & Anor, Re Longmeade Ltd (In Liquidation) (Rev 1) [2016] EWHC 356 (Ch), Mr Justice Snowden said that the opposition of the two main creditors to using risk-free funding was for “extraneous” reasons and could be discounted.

So long as at least one creditor, however small, was either in favour of the claim being brought, or even just neutral, he said “it will be for the liquidators to take a commercial decision in the interests of the creditors as a whole as to whether to commence the claim and, if so, how to fund it”.

As we reported last month, the judge said that a decision to use litigation funding to pursue the claim at no financial risk – even though the flipside was a reduction in the damages recovered – was a reasonable one in the circumstances.

Meanwhile, also from tomorrow, people seeking to make themselves bankrupt will no longer need to apply to the court. Instead they will complete an online application which will be submitted to an adjudicator employed by the Insolvency Service (IS).

The IS said online applications would be less expensive – £130 rather than £180 when going to court – and, for the first time, could be paid for in instalments.

IS chief executive Sarah Albon said: “Seeking help to deal with problem personal debt is the key step to being able to move forward. Online bankruptcy applications will be easier for people to complete and will remove the perceived stigma of going to court, which we know stops some people from applying.

Creditor petitions will still have to go through the courts.

Finally, a two-year pilot of insolvency express trials started on 1 April, providing litigants in the Bankruptcy and Companies Court with a quick, more streamlined procedure, and an early date for trial of disposal of simple applications.




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As the dust settles following the Jackson Reforms, in effect since April 2013 — there are signs of progress. While the reforms have had a clear impact on the claimant solicitor community, opportunities to drive efficiency for improved profit per case are emerging. With fee caps, lowering cycle time and reducing solicitor involvement on manual tasks are crucial to success.

Since the measures took effect in 2013, ISO has found that our automated claims settlement platform — PICAS Plus has further reduced the claim life cycle for smaller claims entering the Ministry of Justice (MoJ) process. During the first quarter of 2014, the time between stage two settlement pack and response improved by 60% — dropping to four days from an average of ten days — for claims passing through PICAS Plus. The average time between stage two response and settlement fell another 30% in the first quarter of 2014, from just over 11 days to just under eight. Settlement times in PICAS Plus have also dropped significantly. Many claims have settled in less than four minutes, if the initial offer or counteroffer is accepted.

In a market where claimant solicitor fees are expected to fall between 15 and 50 per cent, the efficiency gains ISO has observed become particularly important. Increasing efficiency has two important implications: First, solicitors can invest less time in each case, significantly reducing overheads and, therefore, increasing profits per case. Additionally, freeing solicitors from work loads traditionally associated with claim handling gives them more time to seek new clients or handle more cases per fee earner. By bringing in more business, firms can begin to recapture the absolute profits lost to the Jackson Reforms.

The key to success in the post-Jackson environment is to increase speed and service simultaneously. Automation facilitates speed, and improved efficiency enhances service. With solicitors spending less time occupied by manual processes for each claim, they can add more value to clients by focusing on areas of expertise — and spend more time winning new business.

 




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National providers: Number of tier 1 MROs has fallen

MedCo has for the first time revealed the number of medical reporting organisations (MROs) on its system following the recent annual audit programme.

It came as one of the legal challenges that has beset MedCo of late was published, in which On Medical failed in its bid to halt being downgraded from a tier 1 MROs – that is, a high-volume national provider – to a tier 2.

MedCo told Litigation Futures that, as at 31 December 2017, there were seven tier 1 MROs and 113 tier 2 MROs.

A MedCo spokeswoman said: “Numbers for previous years are not currently publicly available. The MedCo board is reviewing its policy on publishing retrospective data.”

We understand that the tier 1 firms are CL Medical, Doctors Chambers, Mobile Doctors, Premex, Premier Medical, Speed Medical and UK Independent Medical.

The number has shrunk over the past year and is now around the figure industry experts had expected at the time MedCo was set up.

The increase in litigation was one of the reasons cited by MedCo last month for hiking registration fees.

Last month we reported that a High Court judge threw out judicial reviews brought by two MROs against their suspension from the MedCo portal, and we are aware of other cases in which MROs have brought successful actions.

The ruling published yesterday, though handed down in November, saw On Medical seek interim injunctive relief to stop MedCo from downgrading it while it went through the ‘escalation procedure’, that requires MROs to engage in ADR before going to court.

On Medical, an offshoot of Newcastle law firm Winns Solicitors, told the court in Manchester that it acted for around 300 law firms and a number of insurers nationwide. It employed 61 staff, including about 25 dedicated medical legal staff, and has a turnover of about £10m.

It said having tier 2 status would reduce turnover to about £6m and cause an annual £1m loss.

On Medical argued that MedCo had no contractual entitlement to downgrade the claimant and that it did so without any proper notice, without providing any guidance to the claimant, and without any written warning.

It also said that it was unfair, and constituted inconsistent treatment, for MedCo to refuse to provide On Medical with a reasonable opportunity to submit evidence showing substantial compliance with audit recommendations.

In response, MedCo told the court that On Medical was found to have substantially failed to comply with the qualifying criteria applicable to tier 1 MROs and to be in partial non-compliance with the minimum qualifying criteria which all medical reporting organisations are obliged to meet.

His Honour Judge Hodge QC, sitting as a High Court judge, ruled: “Even if there is, as I say, an arguable claim by the claimant for breach of contract, it does not seem to me that the claim is a particularly strong one, or that its prospects of success are particularly high. The fact is that even on the claimant’s own case, there are continuing breaches of the qualifying criteria.”

While acknowledging the “serious financial and reputational consequences” of being downgraded, he said the grant of interim injunctive relief “would cause serious damage to the defendant, and to the system which it was established to promote and administer”.

HHJ Hodge said it had to be right that MedCo has the power to downgrade MROs if they no longer satisfy the tier 1 criteria.

“It does not seem to me that, pending the working through of the escalation procedure, the court ought to be interfering with the defendant’s decision.

“I take into account the presence of the escalation clause and also the impact upon users of the portal if the injunction sought were to be granted on an interim basis.

“I appreciate that, as a result, the claimant will suffer significant financial and reputational damage; but that, it seems to me, is the price that has to be paid by those who seek to be registered as users of the portal.”

The judge ordered On Medical to pay costs of £30,000.

Ian Scanlan, On Medical’s commercial director, told Litigation Futures, that the company and one other firm that was downgraded have elected to undergo a re-audit.

“We already have an audit date and will simply go through the process again. We are confident of re-instatement.

“On Medical were upgraded to tier 1 in August 2016 being the only agency to transition from tier 2 to tier 1. Following the revised qualifying criteria, we were audited again in April 2017. We heard very little from MedCo until 30 October, when we received a call advising a downgrade.”




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Furedi: call for no-fault compensation

A free-market think tank has delivered a broadside against the “litigation culture”, “ambulance-chasers” and “greedy lawyers”, arguing that they have led to professional best practice being judged by the absence of claims, to the detriment of “the ethos of public service”.

The Social Cost of Litigation was co-written for the Centre for Policy Studies – the research body founded by Margaret Thatcher’s mentor, Sir Keith Joseph – by well-known University of Kent sociologist Frank Furedi. It argues that the situation has “gone from bad to worse” in the 13 years since the academic wrote his book Courting mistrust: The hidden growth of a culture of litigation in Britain.

Fear of litigation in the education sector is now “comparable to the corrosive effect of litigation on the NHS,” and is harming children by inhibiting teachers from undertaking activities that involve risk, or the perception of risk, says Mr Furedi and his co-author and colleague at Kent, Jennie Bristow.

Meanwhile, in the NHS “arguably the most disturbing cost of litigation avoidance… is the extent to which clinical procedures may not be carried out, or medications not prescribed, because of the fear of litigation”, they say.

They continue: “The increasing fear of litigation is… extremely damaging to the professionalism of doctors, nurses and teachers: it erodes professional autonomy, stifles innovation, leads to defensive practices in both hospitals and schools and encourages greater bureaucracy. ‘Best practice’ is now defined as having checked all the boxes in a quality assurance form rather than doing what is best of the patient or pupil.”

The academics reserve some of their strongest criticism for “claims farmers”, which they complain have a “seedy… money-grabbing approach to litigation”. They add: “The central message is: ‘If you have a grievance, we can make you a fast buck’.” Legal mechanisms put in place to regulate the industry “provide a weak defence against the cultural power of the compensation culture”, they insist.

The authors argue that eliminating the “culture of litigation and litigation avoidance” requires looking “beyond ambulance-chasers and greedy lawyers” and “to challenge the expectation that professional best practice in the public sector should be measured by the absence of complaints or litigation”.

The report concludes that a “genuine return to respecting the principles of professional judgement would have a humanising effect on public services” and repeats an argument made in Courting mistrust: “It is important to separate compensation in the public sector from tort law. Policy makers need to consider how a scheme of no-fault liability can be devised to deal with those who have suffered harm or negligence.”




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Parliament: domestic violence vote a tie

The Legal Aid, Sentencing and Punishment of Offenders Bill (LASPO) effectively ended its parliamentary passage yesterday after one final effort by the House of Lords to force a government rethink over domestic violence failed by the narrowest of margins.

Three issues remained outstanding in the final stage of ‘ping pong’ between the two Houses, but peers were content with the concession offered on Tuesday to delay the application of the Jackson reforms to mesothelioma claims pending a review.

Lord Pannick reluctantly withdrew his amendment that sought to require the Lord Chancellor to ensure that people have access to legal services “that effectively meet their needs”, saying that peers had already given MPs the chance to rethink once.

Former Attorney General Baroness Scotland pursued her bid to make evidence of domestic violence more than two years old as acceptable for the purposes of legal aid eligibility – she said it should be six – and that evidence from specialist domestic violence organisations should count as acceptable proof of abuse. However, peers voted 238-238, meaning the amendment was defeated.

Justice minister Lord McNally insisted that the government had already moved a long way to protect the victims of domestic violence under the bill, and pointed to two “very important safeguards that will provide genuine victims with a route into legal aid even if they do not have the headline forms of evidence” – findings of fact of a court, and the exceptional funding scheme.

In the debate over the mesothelioma compromise, Liberal Democrat Lord Thomas suggested that, when the Jackson reforms are finally introduced for such claims, asbestos support groups should put together lists of law firms which have agreed not to charge success fees.

Lord Pannick was highly critical of the government’s “inflexible” approach to the bill, which he said “involved a failure adequately to assess the impact of the provisions before their implementation, a refusal to take on board the fact that many of the financial savings at which part 1 is aimed are illusory because the denial of access to legal services will result in other financial costs to the state for disadvantaged persons who will be denied the benefits to which they are entitled, and because of a refusal to recognise that the limits on the scope of legal aid imposed by part 1 will hit hardest the weakest and most impoverished sections of our society, often on complex questions of law such as are raised by immigration law”.

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Harrison: Best value for clients

A commercial firm based in St Albans, Hertfordshire, has invited litigation funders to tender for a panel, in a pioneering move to cut costs for clients.

Luke Harrison, head of litigation and dispute resolution at Debenhams Ottaway, said that cutting out brokers’ fees could make the difference in deciding whether a claim was viable.

Mr Harrison said a “plethora of intermediaries” had set themselves up to broke litigation funding, often those who had previously worked in the after-the-event insurance market.

“The litigation funding market is small – there are only a handful of players. I want to get best value for our clients by going to them directly.

“A broker will get a percentage commission on the return the funder is going to achieve. For claims from £500,000 to £1m, once lawyers’ fees are taken into account, things can be quite tight as to whether they are viable.”

Mr Harrison gave the example of a claim for £1m, which settled at £750,000 shortly before trial. With legal fees of £150,000 for solicitors outside London, a litigation funder might be looking for a return of between £300,000 and £400,000 – a “large chunk” of damages.

“We want to make claims more economically viable for clients. There is no additional benefit in going to a broker, and if we put a lot of cases through a particular litigation funder and they have a bigger basket, we could reduce the cost.”

Mr Harrison said Debenhams Ottaway sent out invitations to tender to more than a dozen funders this week.

The firm’s panel will be divided into three sections – the first for claims of up to £1m, the second for claims between £1m and £5m, and the third for claims of over £5m in value.

“The point of going through a procurement exercise is so clients can see we’ve put together a panel to give them better value,” Mr Harrison said. “We’ll be looking at adequacy of funding and procedures. We don’t want to have to reinvent the wheel every time a client needs funding.”

Mr Harrison said there was now more litigation funding in the market than there were cases, and it was no longer a situation where funders could cherry pick cases.

He described Debenhams Ottaway as a “boutique litigation team within the wrapper of a multi-service commercial law firm” and said it was growing rapidly, with 11 partners, a turnover of £8.5m and former City lawyers joining the litigation team.

He added that the firm carried out a mixture of commercial work, commercial and residential conveyancing, insolvency, IP and had a strong private wealth team.




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KainKnight200Please join us for a complimentary breakfast and update on the upcoming changes in Insolvency Law and some practical steps to ensure you are fully prepared.

Venue: South Place Hotel, 3 South Place, London, EC2M 2AF.

Date / Time: 23 February, from 8.30am – 10.00am.

We are delighted to have the following speakers:

  • Colin Campbell (former Costs Judge): CFAs – What have we learnt since LASPO was implemented?
  • Steve Ruffle (Temple Legal Protection): ATE – Pre and Post April?
  • Mitesh Modha (Kain Knight): Costs Budgeting in Insolvency: what does this mean?

Agenda

8.30am                 Registration, breakfast, tea & coffee served

9.00am                 Seminar starts

10am                     Seminar closes with a Q&A

If you are able to attend, then please could you e-mail Scott Jarrold at Kain Knight, call: 01279 755 552 or visit: kain-knight.co.uk/insolvency-law-breakfast-seminar/

We look forward to seeing you at the event.




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Lee Baty, engineering manager

Laird Experts are delighted to announce that our engineering manager, Lee Baty, has been shortlisted at the IMI Oustanding Achievers Awards 2014.  Lee has been shortlisted for the ‘outstanding management professional’ award and was selected from a very high standard of applicants.

The awards ceremony takes place on 23rd October at the Heritage Motor Centre in Gaydon and will be attended by HRH Prince Michael of Kent. The IMI is the professional association for individuals working in retail motor industry and the authoritative voice of the sector. IMI are also the governing body for Professional Register, IMI Accreditations (ATA) and the best source of automotive careers information, standards and qualifications.

Lee joined Laird in April 2013 and quickly took over as engineering manager.  He manages all our field and desktop engineers and is a real asset to the company.  We are very proud to have him as part of our Laird team.

 




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Elsom: Fee increases cannot be justified at any level

A body representing ‘tier 2’ medical reporting organisations (MROs) has accused MedCo of “cashing in” on its members after it announced significant hikes in fees.

It follows what Litigation Futures understands has been a culling of the 14 tier 1 MROs – the high-volume, national providers – during the recent auditing programme.

MedCo has set the 2018 fee for tier 1 MROs at £150,000 – double the previous level, which had itself been rebated last year to £57,500 because of the surplus the organisation held.

For tier 2 MROs – smaller, regional businesses – the fee has gone from £15,000 to £20,000. Last year, it was discounted to £11,500.

In a statement, MedCo said: “Whilst MedCo is a not-for-profit organisation, and its usual policy has been to abate fees using surplus funds from previous years, if there is significant risk of financial calls on the surplus this policy cannot be maintained.

“The board concluded that there is a significant ongoing risk of litigation resulting from the audit programme to implement the MoJ qualifying criteria.

“This, combined with uncertainty relating to the proposed personal injury reforms as well as increased operating costs and the review of the expert accreditation scheme has made it necessary to increase fees in April 2018.”

We reported earlier this week on a High Court ruling that threw out judicial reviews brought by two MROs against their suspension from the MedCo portal, which also mentioned in passing a similar action brought by another MRO.

We understand that there have also been cases brought by tier 1 MROs over the loss of their status.

MedCo has hitherto refused to release the number of MROs in each tier, but a spokewoman said they would be published next week.

She would not comment on whether the smaller number of tier 1 MROs was also a factor in the increased fees.

The chairman of the Confederation of Medical Agencies – a body set up a year ago that has 35 tier 2 MROs as members – said he would seek urgent meetings with MedCo and the Ministry of Justice over the fee increases.

Ben Elsom said: “These fee increases cannot be justified at any level. MedCo announced in its annual results in December that it had nearly £5m in surplus cash [it reported a £4.6m surplus for the 2016 financial year].

“To announce that due to the risk of litigation it needs to increase the fees to our members by up to 100% is absurd and incapable of justification.

“Whilst we are aware that some litigation has taken place it should not be the responsibility of our members to foot the legal bill for the mismanagement of MedCo by the current board of directors.”

He said the new fees equated to tier 1 companies having to undertake 833 cases and tier 2 111 cases per annum just to cover the fees.

Mr Elsom also argued that tier 2 MROs pay 66% of the fees MedCo received, even though tier 1 companies receive approximately 70% of all instructions through the portal.

“Our tier 2 members on average receive 1,000 instructions per annum, so effectively will be charged the equivalent of 11% per instruction they receive, whereas, tier 1 providers receive 40,000 instructions per year and will pay the equivalent of 2.08% per instruction.

“This clearly puts our tier 2 regional based members at a competitive disadvantage and should be addressed by the board of MedCo immediately.”

He called for fees to be based on each MRO’s income in the preceding year instead.




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Sir Ernest Ryder (l) and Lord Thomas: dedicated work

The senior judiciary is “very concerned” about the slow recruitment of judges from a black, Asian or minority ethnic (BAME) background, and the downward trend of new judges who are not barristers, new figures have shown.

In his introduction to the judicial diversity figures for the courts and tribunals at 1 April 2017, Lord Chief Justice Lord Thomas said: “Despite the leadership that has been demonstrated over the last year, progress is not as fast as we would wish.”

The report showed that in the three years to April 2017, the percentage of female judges increased from 18% to 24% (nine out of 38) in the Court of Appeal; 18% to 22% in the High Court (21 out of 97) and 24% to 28% in the courts judiciary.

The percentage of BAME judges increased from 6% to 7%, but for non-barristers, it has decreased from 37% to 34%.

Non-barristers made up nearly three-quarters of district judges, but hardly any higher court judges, except for posts like masters and registrars. As of 1 April 2017, there were no non-barrister High Court judges.

Non-barristers were in the majority in every category of tribunal judge except Upper Tribunal judge.

In the last four years the proportion of female judges in the tribunals has increased from 43% to 45%, and the percentage of BAME judges has increased from 9% to 10%.

The figures indicated, however, that the demographic changes in the legal profession were starting to have an effect on the make-up of the judiciary: 49% of court judges and 62% of tribunal judges aged under 40 were female.

Similarly, BAME representation was highest among those aged under 40, at 10% for courts and 14% for tribunal judges.

There were also regional variations – while 36% of court judges were women in the South East, it was just 21% in the South West.

Women were best represented in the lower courts, making up 38% of district judges in the county court.

Speaking also for Sir Ernest Ryder, Senior President of Tribunals, Lord Thomas wrote: “We remain very concerned about the slow recruitment of BAME judges and the downward trend of new non-barrister (solicitors and legal executives) judges, despite the dedicated work undertaken by the judicial diversity committee.

“The committee, formed in 2013 and chaired by Lady Justice Hallett, has each year pursued more initiatives to explore what might be done to accelerate progress. It has been strongly supported by judges from all backgrounds across the courts and tribunals in England and Wales.”

These include outreach events and application workshops; to attract more solicitors and legal academics to the senior judiciary, eligibility for the High Court application programme was extended this year to those without litigation experience.

There has been a continuing reduction in the number of magistrates, falling 36% from 25,104 to 16,129 over the five years to April 2017. Some 54% of magistrates were female, and 11% declared themselves as BAME.




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High Court: general public importance

The High Court has comprehensively rejected the government’s bid to overturn the grant of a protective costs order (PCO) in favour of campaigners for the reburial of King Richard III in York.

Today’s ruling by Mr Justice Haddon-Cave also exposed an embarrassing procedural error by the Treasury Solicitor’s Department, which wrongly sought to appeal an initial decision made on paper by the Administrative Court to the Court of Appeal.

Last month, in R (on the application of The Plantagenet Alliance) v Secretary of State for Justice and Anor, the judge granted the alliance – set up by a descendant of Richard Plantaganet, the third Duke of York and father of Richard III – permission to proceed with a judicial review of the burial licence granted by the Ministry of Justice to Leicester University.

He also granted a PCO to prevent the defendants recovering any costs from the claimant.

The Secretary of State of Justice challenged this on multiple grounds, but Haddon-Cave J dismissed them all, including the argument that the case did not raise an issue of “general public importance”.

He said: “The following points, in particular, are pertinent: (i) the fundamental question as to the final resting place of Richard III’s remains has aroused a great deal of strong public feeling in the country; (ii) it has led to a parliamentary debate; (iii) the Ministry of Justice belatedly sought to arrange a consultation meeting with national bodies, including the Church of England, the Catholic Church, and HM The Queen; (iv) the discovery of Richard III’s remains is ‘unprecedented’ and touches on our history, heritage and identity; (v) the discovery of Richard III’s remains engages interests beyond those of the immediate parties, and touches on Sovereign, State and Church.”

He went on described as “flawed and heretical” the argument that there was no public interest in the outcome of the judicial review, merely a ‘parochial’ interest by York sympathisers driving the claim. The MoJ submitted that that there is no need or public interest in having a judicial review because the interests of the public about where the remains of the former King should are “entirely served” by a public debate on the matter which is already going on in the newspapers.

This submission, the judge said, “ignores the fundamental need for the court to ensure that the due processes of the common law are adhered to. It suggests that amorphous ‘public debate’ in the press or on the web is somehow a substitute for the adherence by public bodies to the duty at common law properly to consult interested parties”.

Haddon-Cave J also set a £70,000 costs cap on what the claimant could recover from the defendants in the event of success, splitting the figures each side had submitted.

He rejected the suggestion that, given the nature of the case, the claimant should have explored getting entirely pro bono representation (its solicitors, Gordon, acted pro bono up to the point where the PCO was granted, but estimated costs of around £200,000 for the entire case).

“This submission runs counter to the time-honoured principle that people are entitled to instruct lawyers of their choice (within reason) and that lawyers are entitled to be paid a reasonable fee for work done,” he said.

On 5 September, the justice secretary lodged an appeal against the grant of the PCO with the Court of Appeal. “This was a procedural mistake,” the judge said. “It is impermissible to challenge a decision of the Administrative Court made on paper on an ancillary matter by way of appeal to the Court of Appeal without having first renewed the matter orally before the Administrative Court.”

The error was pointed out to the Treasury Solicitors by “an alert lawyer in the Administrative Court Office, Samantha Lovett”, 12 days later, but the MoJ pursued it and the Civil Appeals Office had to direct that the application for permission to appeal was premature and was to be closed in the Court of Appeal for want of jurisdiction.




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Rowley: Dicta in Lownds holds good

Master Rowley has become the latest judge to rule that a reduction in hourly rates for incurred costs is not a good reason to do the same to budgeted costs.

The fact the case settled for significantly less than had been claimed was also not a good reason, he found, as the claim was reasonable and not exaggerated.

Jallow v Ministry of Defence was a claim by a soldier over non-cold freezing injuries he suffered to his hands and feet that led him to leave the Army.

Liability was agreed on a 75/25 basis before proceedings began, but it continued over the issue of quantum.

Master Leslie reduced the claimant’s budget from £148,262 to £120,000 plus VAT and additional liabilities, and including the incurred costs. The estimated costs were £107,777, reduced to £78,505 by Master Leslie.

There was some disagreement about the value of the claim. While the defendant said the budget was set on the basis of the claim being worth £300,000, the claimant said it was put on two bases depending on what findings of fact the judge made in the final hearing in relation to the employment of the claimant.

There were therefore two alternative sums claimed, £185,000 or £312,000, he said.

Four weeks before the assessment of damages hearing, the claimant accepted a part 36 offer of £90,000.

On detailed assessment, the claimant sought £188,085 inclusive of additional liabilities. Master Rowley reduced some of the hourly rates in respect of the incurred costs.

The defendant argued first that the valuation of the case was a good reason to depart from the budget.

Master Rowley suggested that, in relation to the sums claimed being “rather higher” than the sums achieved, the Court of Appeal’s dicta in Lownds held good.

“The essence of the point is whether it was reasonable for the claimant to believe that his case was worth the sum that he claimed,” the master said.

“It is only if he could not reasonably have had that belief, because his claim was exaggerated in some way, that the budget might be considered to have been set on a false premise and as such should be departed from on assessment.”

That was not the case here, he continued. “In my judgment, the claimant did not exaggerate his claim. He put forward alternative cases as to quantum which demonstrates that he was alive to the issues surrounding the potential level of damages to be recovered.

“Therefore, the ultimate settlement of this claim did not falsify in any way the premise of Master Leslie’s setting of a budget in a case where the sums in issue were £300,000. Consequently, I reject the defendant’s argument that the valuation of the case is a good reason to depart from the budget.”

The defendant then said that the reduction in hourly rates was a good reason to depart, an issue upon which several judges have had their say in recent months – a ruling by Deputy Master Campbell was due to go to the High Court but settled a few weeks ago.

Master Rowley said the ‘good reason’ test came with a high threshold to pass and the fact that the hourly rates allowed at detailed assessment were different from those originally used in the budget did not reach it.

He acknowledged the tension between the need to allow reasonable and proportionate costs on an item-by-item basis in detailed assessments and the need for certainty of recovery as expected by the use of budgets.

However, he said the reality was that, if the party came within its approved or agreed budget, individually ‘unreasonable’ items turned into a reasonable and proportionate sum overall.

“My concern, and I suspect Master Campbell’s [in RNB], is that the lack of scrutiny at a detailed assessment of the hourly rates claimed will encourage parties to incur costs up to the budget set for each phase on the basis that they are unlikely to have to withstand scrutiny at a detailed assessment.

“As such there will be an inflationary element which is only kept in check by conventional detailed assessments. But this concern is something which has to yield to the aims of costs management in making detailed assessments shorter.

“For a long time, the work of the costs judge has been described as the compounding of “much sensible approximation” to achieve justice. Ultimately the use of CMOs is simply a further example of that pragmatism.

“Accordingly, I find for the claimant that there is no good reason to depart from the budget by virtue of the reduction to the hourly rates in this case.”

Sam Hayman, head of costs at London firm Bolt Burdon Kemp, who acted for the claimant, said the ruling provided clarity on the often-contentious question of a ‘good reason’ to depart from the budget.

He continued: “The judgment offered a helpful reiteration of the fact that once a budget is set, it is at the party’s election as to how the phase total is spent.

“To a large extent, the master upheld our submission that hourly rates and any other reference material beyond the front page of the Precedent H hold no special status in the costs management order.

“In this regard, the master also made plain that costs judges must give weight to the intentions and aims of Lord Justice Jackson’s report and allow costs budgeting and costs management orders to curtail the extent of detailed assessment in order to do justice to the reforms and will of Parliament.”




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inCase200The mobile app phenomenon that is inCase secured another law firm after impressing the partners with its simplicity, effectiveness and ease of use for clients and fee earners alike.

McHale & Co Solicitors, led by managing partner Andrew McHale recognised the need to adapt to their clients continual needs to see where their case is up to at any time of day.

Andrew believes that the app will simplify the process for clients. “We are responding to the way clients consume personal injury services by getting an app for their convenience.

incase your overview“With inCase, a client is automatically sent instructions how to download the App and if they choose to use it they can track their case with literally the touch of a button. This speeds up the process for both the client and solicitor. The client can still call up the solicitor if they want but in most instances they will not need to as they can find most of the information about their case and where it is up to online.”

inCase mobile appFounder and developer of inCase Sucheet Amin commented, “McHale & Co recognise the importance of mobile apps as part of their client offering. Even with a broad range of foreign clients, they know that their clients will get value from inCase as it gives the freedom and flexibility to not only find out what is going on but also provide instructions and sign documents with a real signature 24/7. That allows McHale’s fee earners to be more effective in the post-LASPO era but also right at the forefront of using mobile app technology.”




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Budget: judge took knife to counsel's fees

Budget: judge took knife to counsel’s fees

A £5m costs budget for a claim worth just over £7m has been ruled disproportionate, with the claimants told to return to the High Court with a new figure.

Mr Justice Morgan took a knife to counsel’s fees, in which one QC had sought more than £500,000 as their brief fee.

Group Seven Ltd v Nasir & Ors [2016] EWHC 620 (Ch) is the civil side of a fraud case that led to a man dubbed the ‘Pope’s banker’ for his claimed links with the Vatican jailed for 14 years, while a solicitor who was duped into helping him got a six-month suspended sentence.

Of the €100m that was defrauded from Group Seven, only €12m was dissipated, and further recoveries meant it was seeking to recover €9m (£7m) from the action, which is being case managed together with the similar claim by Equity Trading Systems (ETS), the now wound-up company used for the fraud and of which Group Seven is the principal creditor.

The judge observed that neither the rules nor the case law to date on proportionality provided much “direct help” when it came to the relationship between the size of the claim and of the budget. In so far as the case law provided any assistance, “they might suggest that a maximum combined costs budget for Group Seven and ETS should be of the order of £3.5m, which is about half of the claim made”.

A budget of £5m “seems to me to a disproportionate sum in relation to a claim for £7.08m”.

He further found the case not to be as complex as the claimants argued, while a possible lack of co-operation by the defendants could be dealt with in the contingencies.

The total for all of the parties’ budgets was £13.3m, but Morgan J said this was not the figure against which to test proportionality, even though there were circumstances in which one party might end up bearing all of the costs.

“However, what is principally required in assessing a costs budget is to consider the proportionality of the amount of the budget so that the court feels that it would be appropriate to award the budgeted sum to the receiving party and require it to be paid by the paying party.”

Though the two actions have some uncommon defendants, Morgan J was pressed to require Group Seven and ETS to submit a single budget, given that the resolution of a disclosure issue meant the two claims were aligned.

He ruled: “For the future, they will use one firm of solicitors and the allocation of work within that firm should not depend on whether there are two clients with two claims (which claims are aligned) or a single client.”

Though the position of counsel was “more troublesome”, he decided that the entire case was capable of being handled by one QC and one senior junior.

“This conclusion does not itself determine whether Group Seven and ETS should prepare a single budget. However, as the budget (or budgets) will relate to the work of one firm of solicitors and a single team of counsel (a QC and a junior) I would expect that the budget for Group Seven and ETS for the future could take the form of a single budget.

“However, if those preparing the budget (or budgets) thought there would be greater certainty produced by preparing separate budgets, I would not regard that as wrong in principle.”

Morgan J went on to review the hourly rates proposed for the parties’ solicitors, and again cut the claimants’ figures most deeply. Group Seven had put forward a grade A fee of £425, and ETS of £550-575; the judge reduced these to £365.

He said this was not a case that required City solicitors. “The case does not involve complicated matters and in particular does not involve anything sophisticated in the way of financial services or banking, even though one of the defendants is a bank. I do not think that it is necessary for Group Seven and ETS to instruct a City firm and, indeed, they have not done so.” Mishcon de Reya is acting for them.

He was unhappy with the counsel’s fees for the claimants and one of the defendants. The fees for trial preparation and the trial in Group Seven’s budget were £793,100 (QC) and £468,650 (junior), including brief fees of £567,500 (QC) and £335,400 (junior). For ETS, it was £345,000 (QC without a junior), with a brief fee of £250,000. For the defendant, the fees were £487,000 (QC) and £319,000 (junior).

The claimants and defendant submitted that these figures were reasonable as they reflected market forces, and that the clients were prepared to agree them.

However, Morgan J said that even if this was the case, “the sums being claimed are a major reason why these parties’ budgeted costs give rise to sums which are disproportionate”.

Instead, the judge built “the ingredients of what would be reasonable fees for trial preparation and for the trial for these parties”, given that an eight-week trial was anticipated, concluding:

  • Claimants’ QC: brief fee of £200,000 plus refreshers of £5,500 per day for 36 days, making a total of £398,000;
  • Claimants’ junior counsel: brief fee of £100,000 plus refreshers of £2,750 per day for 36 days, totalling £199,000;
  • Defendant’s QC: brief fee of £125,000 plus refreshers of £5,000 per day for 25 days, meaning £250,000 in all;
  • Defendant’s junior: brief fee of £65,000 plus refreshers of £2,500 per day for 36 days, making a total of £155,000.

In so far hourly rates were used, he approved maximum sums of £500 and £275 for leading and junior counsel respectively.

Morgan J concluded by telling the parties to submit revised budgets within 14 days for a final review, which he indicated would likely take place by telephone or in writing.




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Ben Moody

Moody: court has sent a “very clear message”

Southport injury firm Fletchers claims to have secured the first judgment ordering defendants to make an interim costs payment based on the new version of the rules which came into force in April 2013.

District Judge Baldwin said the firm complained, in its submissions at Liverpool County Court, of frustration that defendants sought to “throw any obstacle in the way of any early payment of any part” of an admitted costs liability.

DJ Baldwin said counsel for the claimants argued with “clarity and force” that CPR 44.2(8) provided a “positive obligation for the court to consider making an order for the payment of a reasonable amount on account of costs”, unless there was good reason not to do so.

The district judge said counsel stressed that the change to the old interim payment rule “changed the emphasis markedly from a discretionary ‘may order’ to a qualified mandatory ‘will order unless’” and this should lie behind the court’s approach.

Delivering judgment in Travers v Poole Hospital NHS Foundation Trust (case no. C00LV184), DJ Baldwin, a regional costs judge, said the medical negligence claim was settled for £1,500 in October 2015, on the basis that the defendant paid reasonable costs and disbursements.

He said the claimant sent an informal bill for £14,164 the following month, but agreement was not reached. The firm made an application for an interim costs payment of £7,780 in December, amounting to just under 55% of the final bill.

DJ Baldwin said the NHS Litigation Authority (NHSLA) argued that the application was “misconceived and premature” and it was only after a provisional assessment that such an application should be entertained.

However, the district judge said he disagreed and that CPR 44.2(8) was engaged. “I am satisfied on the information before me that £7,780 is prima facie no more than a reasonable amount, not being an excessive or unrealistic proportion of the bill as claimed.”

DJ Baldwin said neither the defendant’s skeleton argument or submissions “sought to raise any positive reasons arising out of fundamental objections to the costs sought on an interim basis”, beyond procedural matters.

He concluded that there was no good reason not to exercise the court’s power under CPR 44.2(8) and made an order for the defendant to pay the interim costs sought by the claimant.

The firm described the ruling as a “major victory” and would be used throughout the personal injury sector by claimants seeking interim payments – it provided “clear guidance” that it was for defendants to present valid reasons as to why a request was unreasonable.

Benjamin Moody, advocacy manager at Fletchers’ in-house costs firm, Ultimate Costs, said: “For too long, defendants have strenuously objected to providing interim payments, putting off that dreaded day when costs must be paid.

“The court has now sent a very clear message that the rule change is to be interpreted in the claimant’s favour. The defendants should now have to prove that there is a genuine reason not to provide an interim payment at an early stage, which will no doubt prove difficult in the majority of cases.”




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West: Collaboration will accelerate pace of change

Three leading law firms are collaborating with an Israeli legal tech start-up to develop and test a litigation platform that uses artificial intelligence (AI) to automate legal research and argument assessment in relation to High Court applications.

LitiGate, which describes itself as a ‘claims analysis solution’, said it approached Taylor Wessing, Baker McKenzie and Mishcon de Reya because of their “extensive experience in dispute resolution and continued investment in technology”.

The company said its platform “uses state-of-the-art machine-learning algorithms to autonomously review arguments, suggest counter arguments and fall-backs, and recommend preferred procedural steps”.

Nimrod Aharon, CEO of LitiGate, said: “These are exciting times revolutionising legal research as we know it. Our partners do not settle for ‘our lawyers are smarter than the ones across the street’; they take proactive actions to reduce fees and find innovative ways to deliver top-tier legal services to their clients.

“Together with our partners, we have formed a unique community of highly ranked global law firms, investing their expertise and resources to provide the first AI arguments analysis platform.”

Taylor Wessing partner Laurence Lieberman said: “We are constantly looking for innovative solutions that will maximise efficiency to ensure the best outcomes for our clients, and reduce the overall cost of litigation.

“Collaborating with LitiGate is a perfect fit for us, and forms part of our wider commitment to investing in technology. We are excited to be working with the LitiGate team and other partner firms, to help explore the benefits of this potentially game-changing product for our disputes and investigations team.”

LitiGate is one of five start-ups to have joined Mishcon de Reya’s incubator MDR LAB this year. Nick West, the firm’s chief technology officer, said he was looking forward to collaborating with Taylor Wessing and Baker McKenzie.

“We think that collaboration amongst firms can only help to accelerate the pace of change in legal.”

The second cohort for MDR LAB was announced this week following a pitch day in March, where 16 companies presented their products and ideas.

Over 10 weeks, LitiGate and the others will have access to Mishcon de Reya lawyers and other business experts from inside and outside the firm for advice, mentorship and education.

The other four are:

Thirdfort: London-based ThirdFort is at product development stage with its product: a web-hosted software platform facilitating exchange of money in property transactions.

DealWIP: Based in New York, it has a user-stage product – an integrated legal workspace platform for transactional lawyers.

Digitory Legal: Based in San Francisco, it has a user-stage product – a pricing prediction and management tool for litigators. Using historical data and industry trends, it helps customers understand what legal matters cost and why.

LawPanel: This London company is also at user-stage with its online trademark management platform, designed to allow firms to deliver more of their services online.




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CFAs: Solicitors not sticking to obligations

An increasing number of solicitors do not accept a contractual obligation to pay counsel’s unrecovered fees in personal injury and medical negligence cases, the Bar Council has complained.

The grievance came in its response to the Ministry of Justice’s (MoJ) review of part 2 of LASPO, and in other responses the Forum of Insurance Lawyers (FOIL) argued strongly against any relaxation of the rules on damages-based agreements (DBAs).

The Bar Council said “anecdotal evidence” suggested that, following LASPO, there had been a “significant decline in income” for barristers undertaking personal injury work.

“Measuring the effect of recoverability on income is problematic because of the impact of other reforms; in particular, the introduction of fixed fees in the fast-track and the expansion of the portal, which has resulted in a decline of work to the Bar, particularly at the junior end.”

FOIL argued that although there may have been a “slight drop-off” in claims as a result of LASPO, volumes were “largely unaffected” and medical negligence claims “continued to increase after LASPO and have only recently begun to stabilise”.

The Civil Justice Council’s (CJC) response said: “Claimant lawyers point to the loss of some law firms and a reduction in access to justice and parties receiving less in damages as their lawyers recover more in fees.

“Defendant lawyers and insurers would say that large numbers of cases are still being brought with CFA funding and the overall numbers of claims have not fallen post‐LASPO.”

The Bar Council said most of the personal injury and medical negligence work carried out by barristers was under the Association of Personal Injury Lawyers/Personal Injuries Bar Association (APIL/PIBA) conditional fee agreement.

Although the agreement provided an option for counsel to be paid success fees, anecdotal evidence suggested that “many, and probably most, solicitors do not agree for counsel to be paid a success fee”.

The Bar Council said that under the APIL/PIBA agreement “in the event of success, any of counsel’s fees not recovered inter partes” were paid by solicitors, but law firms “differed widely” in their approach.

“The essential problem is that payment of any of counsel’s unrecovered fees will have to come either out of solicitor’s profit costs or the lay client’s damages.

“An increasing number of solicitors do not accept a contractual obligation to pay counsel’s unrecovered fees. In these circumstances, counsel’s entitlement to costs is limited to inter partes costs recovery: ‘an eat what you kill agreement’.”

On qualified one-way costs shifting (QOCS), the Bar Council said: “There is a concern that allegations of fundamental dishonesty are being made in inappropriate cases, causing unnecessary additional time and expense in response.”

FOIL disagreed, describing the “doctrine of fundamental dishonesty” as a “key feature” in the effective operation of the QOCS regime, which had “bedded down” and was working well.

However, FOIL mentioned noise-induced hearing loss claims as one example where QOCS had increased “unmeritorious litigation”.

It said claimant lawyers had developed a business model “based on the fact that claimants with low incomes are exempted from court fees, which together with QOCS removes the risk to the claimant and the legal adviser to such a degree that almost any case is worth running on the basis that the insurer may be tempted to make a nuisance payment in settlement”.

The problem with QOCS highlighted by the Bar Council was that, since interlocutory costs awarded against successful claimants could still be recovered by defendants, claimant lawyers were “unwilling or unlikely to make applications” which risked costs being taken from clients’ damages.

The CJC restated its belief that there was “a strong argument in principle” to extend QOCS to actions against the police.

The Bar Council said there had been “no real take-up” of DBAs since LASPO, and because a finding of unenforceability meant that no costs at all were recoverable by the barrister, “very few barristers are prepared to risk of entering into a DBA even if the case is deserving”.

It went on: “This is not an acceptable state of affairs. The Bar Council has been urging the government to undertake reform to this area ever since the DBA regulations were first promulgated.

“It is very disappointing that still no reform has come about. The message from the Bar Council, supported by the senior judiciary, in calling for reform has gone unanswered.”

FOIL argued that, in paving the way for DBAs, Lord Justice Jackson believed that a market would develop, with claimants shopping around, resulting in competition in the litigation market and lower costs.

“That has not proved to be the case. If DBAs, or hybrid DBAs, were to be introduced which weakened the current regulatory framework or allowed the sums recoverable from damages to be increased, it is unlikely that claimants will be able to control the market and the sums deducted from damages would be likely to increase.”

Referring to its 2015 report on the DBA regulations, the CJC said: “Usage of DBAs remains small, and the CJC remains of the view that the regulations should be reformed.

“As things stand, the objectives of the legislation are not being fulfilled given the limited use of DBAs.”

FOIL added that it did not believe that the current ban on personal injury referral fees was effective, basing its views on a 2017 survey for the Solicitors Regulation Authority which found that claims management companies were “encouraging non-compliance by law firms”.




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Budget: get it right and get your costs

The benefits of coming in within budget have been demonstrated in a case where the trial judge on summary assessment made a costs order for £351,000, to be paid within 14 days of his ruling.

Budgeting pioneer HHJ Simon Brown QC in Birmingham Mercantile Court said a detailed assessment had become “otiose” in the case.

Slick Seatings Systems & Anor v Adams & Ors [2013] EWHC B8 (Mercantile) saw HHJ Brown award £4.4m, with the claimed costs of £351,000 coming in under the approved budget of £359,000 – a sum which he said was proportionate to what was at stake.

The claimants have laudably kept within that budget and exercised due control over their activities and expenditure in an exemplary fashion… In my judgment [the amount claimed] is a sum which is, looking at each of the phases, is within the budget that was set and the claimants are to be commended with controlling their budget throughout this particular period.”

It was a case where, due to the defendants’ conduct of the case, indemnity costs were appropriate, which HHJ Brown said meant that in fact the costs budgeting, even if the claimants had exceeded the budget, “would not have come into play as far as this is concerned because it would be upon the defendant to show that the costs they had incurred, whether within or above the budget, were unreasonable”.

Writing recently for the New Law Journal, HHJ Brown noted that the case showed that “if you are successful at trial and are awarded costs on a standard basis, you stand a good chance of obtaining an order for payment of your costs within 14 days of judgment if you can demonstrate that you are within budget for each of your phases of work…

“There will be no need for the delay and expense of a detailed assessment. Your costs lawyer will be redundant at the end of the case and will have proved his worth for his involvement in accurate budgeting at the very beginning. Job done!




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Cummings: substantial increase in claims costs

The Association of British Insurers (ABI) has today set out its terms for agreeing to end the controversial practice pre-medical offers to whiplash claimants.

Senior policy adviser Rob Cummings said that if the changes to medical evidence introduce “a greater degree of rigour” and the fee for the report is incorporated into the Civil Procedure Rules, “the industry is willing to consider stopping pre-med offers”.

Speaking to Manchester Law Society’s personal injury conference, Mr Cummings noted that the vast majority of pre-med offers are for low-value whiplash claims, and “some insurers rightly question the benefits of asking for a medical report on an injury which has no objective test, which has little chance of coming back with a negative diagnosis and which will add over 10% to the cost of the claim”.

This was even more so when a number of these reports are for claims that could be months, if not years, after the accident “and where the doctor has nothing more to go on than the subjective word of the claimant”.

He said: “If the reforms to the medico-legal reporting framework are not introduced properly or are watered down to protected vested interests, simply banning pre-med offers will achieve little. In fact, it would only serve to add additional costs for personal injury claims which would ultimately lead to increased premiums.”

The government said last month that it was “attracted to introducing a rule to ensure that a medical examination and report is completed before a claim can proceed”.

On referral fees, the banning of which the ABI supported, Mr Cummings acknowledged that “it was a major self-inflicted blow for insurers to participate in a personal injury claims market involving a merry-go-round of referral fees and other unnecessary costs”.

He continued: “Given the financial rewards that were to be had from referral fees, it comes as little surprise that people across the market continue to look at new and innovative schemes; or whether there are gaps in the law or between regulators, to get around the ban.

“People should be asking themselves, not whether these practices are within the letter of the law, but whether they are in the spirit of the LASPO reforms. The government banned referral fees not to stop honest claimant lawyers from marketing their services but to stop the increasing number of frivolous and exaggerated personal injury claims.”

Mr Cummings said that while – at least for now – claims frequency is reducing, the cost of claims “has not seen a corresponding reduction”.

He explained: “Fixed fees have reduced but at the same time as awards for general damages have increased. The Judicial College Guidelines and the Simmons v Castle decision have together driven up general damages awards by around 20%. Insurers are also reporting significant increases in the number of rehab referrals and psychiatric reports since the reduction in fixed fees was introduced. Overall then, there has been a substantial increase in claims costs.”

Continuing to push the case for an increase in the small claims limit for personal injury to £5,000, he said there needed to be three safeguards to ensure access to justice for genuinely injured claimants is not undermined:

  • Improved education and awareness so that claimants know how to file a claim for compensation in the new system and what their rights are;
  • The mandatory use by claimant and defendant representatives of independently regulated software-based damages calibration tools to assess general damages awards in all cases, litigated or not; and
  • The claims portal employing a small number of staff to process paper-based claims from those who are not able to file a claims notification form online.



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Etherton: no reason to distinguish between LLPs and partnerships

A law firm LLP which acted for itself in legal proceedings is not a litigant in person for the purposes of the CPR, the Court of Appeal has held.

The Master of the Rolls, Sir Terence Etherton, said that the common law principle established in 1884 that a solicitor who acts for himself can recover his profit costs, continued to hold good.

The ruling in Halborg v EMW Law LLP [2017] EWCA Civ 793 is the latest in a series of decisions since 2013 over a dispute between EMW Law, a commercial firm based in Milton Keynes, and Leicestershire solicitor Scott Halborg over EMW’s claim for unpaid agency fees.

In 2014, Master Campbell summarily assessed EMW’s costs at £17,600 and an appeal was dismissed the following year by His Honour Judge Purle QC, sitting as High Court judge of the Chancery Division.

Sir Terence, giving the ruling of the Court of Appeal, traced the history of this issue to the Court of Appeal decision in The London Scottish Benefit Society v Chorley, Crawford and Chester (1884) 13 QBD 872.

He summarised this as saying that a solicitor who acts for himself as a party to litigation can recover not only his out-of-pocket expenses but also his profit costs, but he cannot recover for anything which his acting in person has made unnecessary.

“The reason is not because of some special privilege but on the purely pragmatic grounds that (a) there has actually been an expenditure of professional skill and labour by the solicitor party, (b) that expenditure is measurable, (c) the solicitor party would otherwise employ another solicitor and, if successful, would be entitled to recover the costs of that other solicitor, and (d) since he cannot recover for anything which his acting in person has made unnecessary, the unsuccessful party will have the benefit of that disallowance and so would pay less than if the solicitor party had instructed another solicitor.”

Sir Terence said the Chorley principle was applied after the introduction of the CPR in Malkinson v Trim [2002] EWCA Civ 1273.

What was then rule 48.6(6)(b) said: “For the purposes of this rule, a litigant in person includes… (b) a barrister, solicitor, solicitor’s employee or other authorised litigator (as defined in the Courts and Legal Services Act 1990) who is acting for himself.”

In Malkinson, Lord Justice Chadwick said this had to be read subject to paragraph 52.5 of the Costs Practice Direction, which said that a solicitor who, instead of acting for himself, was represented in the proceedings by his firm or by himself in his firm name, “is not, for the purposes of the CPR, a litigant in person”.

Sir Terence said: “The current CPR provision governing the assessment of costs awarded to a litigant in person is CPR 46.5…

“It is not in identical terms to the former CPR 48.6 which was the subject of the Malkinson case, but its derivation from that earlier rule and paragraph 52.5 of the then Costs Practice Direction is clear, as is the intention to continue to apply the Chorley principle as applied in the Malkinson case.”

The MR continued: “There is no discernible reason why the Chorley principle, and the rationale underlying it, should be applicable to a traditional partnership but inapplicable to an LLP.”

He went on to dismiss the submission that EMW was a LiP as defined by CPR 46.5(6)(a) – “a company or other corporation which is acting without a legal representative”.

Giving that provision “a purposive interpretation”, he said EMW should be regarded as acting with a legal representative.