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What the costs assessment will look like

What the costs assessment will look like

The Court of Appeal has upheld a decision to conduct a solicitor-own client assessment in private so as to protect legal professional privilege (LPP), even though the client had given a waiver to enable international law firm Dechert to defend its multi-million pound bills.

The court noted just how important the issue seemed to be to both parties, with no fewer than five QCs, including Lord Pannick, deployed in total.

In Dechert LLP v Eurasian Natural Resources Corporation Ltd [2016] EWCA Civ 375, the law firm was called in by Eurasian (ENRC) to handle an investigation into allegations by a whistleblower.

Dechert billed more than £16.3m over two years before the retainer was terminated. ENRC accused the firm of serious overcharging – which it denies – and applied for a detailed assessment under section 70(3) of the Solicitors Act 1974. The assessment will apply to at least £5m and possibly as much as £11m of the costs billed.

Dechert said that to defend itself properly, it would have refer to privileged material. ENRC did not want the Serious Fraud Office to be able to hear this by attending the assessment, and sought to have it held in private. The company made clear that if this did not happen, it would withdraw the application for assessment.

At first instance, Master Haworth refused to order a private hearing, saying that ENRC had chosen to bring the matters into the public arena and had to accept the consequences.

However, this was overturned by the High Court. Mr Justice Roth accepted ENRC’s argument that while LPP had, by implication, been waived to enable Dechert to contest the assessment, the waiver was limited to that particular purpose and did not constitute a general waiver.

Dechert had argued that once a waiver was granted, it was complete and there was no basis for finding a limited waiver in circumstances where the solicitor already had all the documents in its possession.

But Roth J ruled that it was in the interests of justice to preserve the confidentiality from any wider disclosure. A public judgment could vindicate Dechert’s reputation, if necessary, he said.

Dechert appealed, arguing that by commencing proceedings against its former solicitors, ENRC had waived any right to claim privilege in respect of any documents relevant to determining the claim, and that the implied waiver was general and for all purposes.

Giving the lead judgment of the appeal court, Lady Justice Gloster said she had “no difficulty” in upholding Roth J’s decision to hold the hearing in private.

“His conclusion that putting the material (whether subject to continuing LPP or not) into the public domain would prejudice ENRC as against the SFO in its criminal investigation cannot be faulted…

“Simply because there has, or might have, been an implied waiver of LPP does not mean that ENRC should be deprived of all protection for its previous confidential dealings with its solicitor. That is particularly so, where… in my judgment Dechert has no substantial legitimate interest in having the section 70 proceedings heard in public that could possibly outweigh ENRC’s entitlement not to incriminate itself through disclosure of confidential communications with its solicitor.”

However, Gloster LJ continued, ENRC did not argue its case on this basis and so she had to consider whether the company had waived LPP on a limited or absolute basis.

She said: “I find the answer a simple one. In my judgment the authorities clearly demonstrate that there is a concept of waiver for limited purposes and that this is clearly what happened in this case.”

Lady Justice King and Lord Justice David Richards agreed.

Dechert was represented by Mark Howard QC, Simon Browne QC and Tony Singla, instructed by Clyde & Co, while ENRC had Lord Pannick QC, Richard Lissack QC, Benjamin Williams QC and Tamara Oppenheimer, instructed by Signature Litigation.

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York: provisional assessment pilot


The Civil Procedure Rule Committee should this week sign off an unexpected tripling of the limit for provisional assessment to £75,000, it has emerged.

The change has been approved by the government, 9L0-006 a Ministry of Justice spokesman told Litigation Futures yesterday, although it is not yet clear why the increase in the pilot level of £25,000 – at which the national roll-out was also expected – has been made.

The rule committee meets this Friday, when it is also expected to approve a raft of other changes to the CPR.

The news has leaked out after a copy of a resource pack for a judicial training session shortly before Christmas entered into circulation.

Provisional assessment, a recommendation of Lord Justice Jackson’s, will allow for a district judge to carry out an assessment on the papers in respect of bills where the costs claimed do not exceed £75,000. Either party can then seek an oral hearing before the same judge if they are unhappy but will face costs consequences if a 20% adjustment in their favour is not made a result.

The draft rules in the resource pack say the court will not award more than £1,500 to any party “in respect of the costs of the provisional assessment”. Simon Gibbs, a partner at costs practice Gibbs Wyatt Stone, has expressed concern about the failure to separate out the court fee from this, saying it is “clearly a drafting oversight”.

Writing on his well-known blog, he pointed out that the current fee payable for requesting a detailed assessment for a bill where the costs claimed are between £50,000 to £100,000 is £980.

Mr Gibbs said: “Hearings for bills of that size can easily last a full day or more. Given provisional assessments take place on paper and with very limited (at least under the provisional assessment pilot) documentation before the court, the judicial time required to undertake a provisional assessment is a fraction of that for a full detailed assessment. Presumably the new fees will be set at an appropriately modest level…

“If the court fee is not reduced in time for April 2013, and VAT is included in the figure, that leaves £433.33 profit costs for dealing with bill of costs up to £75,000.”

The pilot began in October 2010 in Leeds, Scarborough and York. In the first year 100 cases proceeded to assessment, following which there were 17 requests for an oral hearing, but only two actually made it that far. In neither did the requesting party reach the 20% threshold, although one was successfully appealed.

Speaking last year, Lord Justice Jackson said the pilot had shown the process to be quick and simple – the two district judges (also regional costs judges) involved spent an average of 37 minutes per case, and estimated that the parties saved at least £4,000 per case by avoiding a half or full-day hearing.

However, he highlighted the importance of judicial training, given that more recent experience in the pilot showed that assessments carried out by district judges who are not regional costs judges took markedly longer.


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Thomas Jannakos, CFO, DAS UK Group

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

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

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

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

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Malla: claimants may stop settling their cases with PPOs

Malla: claimants may stop settling their cases with PPOs

Any change to the discount rate needs to reflect the Ministry of Justice’s own research that personal injury claimants do not simply put their damages into low-risk investments, leading defendant firm Kennedys has argued.

Responding to the news that the ministry will announce by the end of January 2017 its decision on whether to change the discount rate – on which it first consulted in 2012 – Kennedys said the government also needed to take into account the impact it could have on the public finances.

In 2001, the then Lord Chancellor set it at 2.5% by reference to index-linked government stocks (ILGS). However, the low return from ILGS in recent years has prompted calls from claimants to cut the discount rate and thus increase the damages they receive.

Kennedys said that, in reality, claimants want higher rates of return than can be achieved by putting all their damages into ILGS. So instead they select a mixed portfolio of investments – there are dedicated personal injury funds which offer a range of assets to invest in to this end. This was confirmed by research published by the Ministry of Justice in 2013.

It said the research also recognised that even a small reduction in the rate would have a significant impact on public bodies and insurers.

Christopher Malla, the partner who has led the firm’s work on the discount rate, said: “To assume a claimant only invests in ILGS is to ignore what actually takes place and this could over-compensate the claimant.

“Ultimately this could lead to higher costs for defendant bodies, such as the NHS and local authorities, and have a detrimental impact on already reduced public sector budgets.

“The reality is that claimants put their damages in a mixed portfolio of investments, and there is good evidence that claimants have been able to achieve real rates of return, net of tax, of up to and above 2.5% that way.”

Mr Malla also warned of the risk that if the discount rate falls and lump sums become more attractive as a result, claimants may stop settling their cases by way of a periodical payment order. “This is clearly the fairest and most appropriate way of ensuring adequate funds are available over what can be a very long period of time,” he said.

He cautioned too that the pending decision could hold up existing cases if claimants seek to adjourn damages hearings.

Mr Malla added: “Ultimately it is important to claimants and defendants alike that we get clarity from the government – a single figure, rather than several, that is then left alone for at least a decade thereafter.”

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Managing director, Zoe Holland is ‘delighted’ to be shortlisted

Zoe Holland, managing director of Zebra LC, has been shortlisted for the Entrepreneur of the Year award at this year’s Modern Law Awards.

Zoe is shortlisted against other legal sector entrepreneurs, including Karen Jackson, CEO of Roberts Jackson that recently attracted £15million investment from North Edge capital; a high profile deal in which Zoe advised North Edge’s investment board.

These national awards recognise innovative business leaders and those changing the face of business strategy and development, regulation management and client care throughout the organisation – for both short and long-term gain. Champions in ABSs, new legal entrants and pre-existing law firms that have successfully led engaging, relevant and new strategies for gold-plated services and business growth will be praised in the second of these national awards.

The award, which will be presented at the Modern Law Awards ceremony in London next month, recognizes the individual who has been able to identify a market opportunity within the legal sector and how they have utilised staff and resources to maximise that opportunity.

Since she started the company in 2012, Zoe’s pragmatic and commercial approach, together with her management board experience has won her numerous awards.  Zoe saw the opportunity to establish a business that would to thrive in a changing legal market. With new entrants, growing issues around professional indemnity insurance, and an increasing spotlight from mainstream banking about law firm funding, the opportunity to develop technical due diligence was tangible.

Zebra Legal Consulting (Zebra LC) was established in December 2012; a modern legal hub providing unique technical due diligence for the legal sector with a flexible business structure.

Zebra was named ‘new entrant of the year 2013’ at the Modern Law Awards. Earlier this year, Zoe was named ‘best new business’ at the Women in Business Awards held in Manchester by Downtown Manchester In Business.

Zoe commented: “I am delighted to have been shortlisted for this award and privileged to be nominated alongside a number of very strong entrants. Zebra has had a fantastic year this year.  We have carved a specialist niche in the new era of injury litigation and as a result we have been involved in some of the legal sector’s highest profile deals.”



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Getting the figures right: solicitors worried about the costs of costs management

Judges in the costs management pilot took an average of 14 minutes at the first case management conference to approve the parties’ budgets, it has emerged.

The final report on the pilot, run in the Mercantile and Technology and Construction Courts from October 2011 to 31 March 2013, said its findings suggest “that it is likely that the overall effect of costs management will be to bring down the total costs of the litigation”.

However, the short length of time spent considering budgets – given that they are likely to form the basis of the costs order in lieu of a detailed assessment – will be of concern to practitioners.

The large majority of judges were reporting on case management hearings and said that on average they spent around an hour preparing, of which 16 minutes was spent studying the budget – across all the judges the time spent on the budget varied from none to an hour.

The average hearing lasted 45 minutes, of which 14 was spent on the budget. Across all the reported cases, the variation was from no time to 75 minutes.

Over the course of the pilot 144 questionnaires were completed by judges and just 39 by solicitors and showed that the former were more enthusiastic about costs management than the latter.

The report said: “[Judges] generally seem to believe that the pilot encouraged proportionality of costs to the value of the claim, that the current scheme worked well and did not require much improvement. Other advantages included that it aided case management as well as controlling future costs.

“Feedback received from judges towards the end of the pilot was more critical in that the extra burden on case managing judges had become clearer, and that the costs management procedure adds significantly to time taken in case management. However, we would note that the majority of responses from judges came from a limited number of individuals and courts and accordingly any findings should be treated with caution.”

Solicitors’ views were more mixed, with particular concerns over the costs of the costs management process due to the time taken to comply with it. “This is despite the fact that the majority of respondents took between two and four hours to complete Form HB [the costs budgeting form in the pilot], and only seven out of 39 solicitors spent over five hours on the budget form.

“However, feedback from costs draftsmen and other sources has indicated that, in London at least, the process can take considerably longer, although this is not borne out by the questionnaires received under the pilot.”

Another concern was the difficulty of predicting costs accurately at the early stages of litigation.

“Having said this, solicitors interviewed seem to acknowledge that completing the budget form would become easier once familiarity with it increased… Most solicitors agreed that the pilot did assist with early attention to costs, that this allowed their clients better to understand their potential liabilities… and could also assist with settlement.”

The researchers suggested that some clients “might find to their surprise that their cost recovery is limited by a costs management order. However, many will no doubt welcome the importance now placed on the cost recovery implications and the increased information which provides for a better assessment of the settlement options during the proceedings, and generally more transparency about costs”.

The report was produced by the Centre for Construction Law at King’s College, London, led by visiting senior lecturer Nicholas Gould, a partner at City law firm Fenwick Elliott. The full report can be found here.

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Nash: positive solutions

Nash: positive solutions

The Association of Costs Lawyers (ACL) has called for greater use of specialist costs judges in county courts and a role for costs lawyers as part of the new breed of case officers who will be supporting judges, in its response to the interim report from Lord Justice Briggs’ civil courts structure review.

The ACL also warned that the current operation of Money Claim Online and the small claims mediation service needed close examination before they were used as a “benchmark for what is to come” in the development of online dispute resolution and use of ADR.

The ACL told Lord Justice Briggs that “by and large” it supported his programme for reform, but identified areas of concern.

Considering the report’s overview of the current court structure, the response said: “Legal costs is a highly specialised area. It is a fact that most solicitors and barristers do not embrace costs as a specialism whilst in practice, therefore it follows that as deputy or district judges, they do not have the knowledge at their fingertips. Legal costs is a learned skill and needs to be recognised as such.

“Some set about the learning process with deliberation and are skilled and interested in what they do. Unfortunately, that cannot be said for a large number, who have no interest in dealing with the issue of costs and quite often allow their dislike of the topic to cloud their judgment when making decisions. Members have reported instances when assessment costs have been increased by the intransigence of the presiding judge.”

Briggs LJ went on to highlight the need for judges to specialise in civil work, and within that to specialise in specific areas, which would be aided by consolidating court centres. The ACL said ensuring this applied to costs would most likely reduce “significantly” the inconsistencies in costs rulings in those regional courts where there are no specialist costs judges.

Briggs LJ backed the transfer of some of judges’ more routine and non-contentious work to supervised case officers. The ACL said that given the challenge of some district judges’ attitude towards costs work, “we recommend that costs lawyers be considered for appointment as case officers in costs-related matters”.

The ACL urged that further scrutiny of the current online system be undertaken. “Experience tells us that using Money Claim Online, for example, is not straightforward, even to someone with a legal background. To use a system which is not operating adequately as a benchmark for what is to come is, in our opinion, flawed. A full survey of users of the process should be undertaken, before that process is used as a template for what will be an expensive and time consuming exercise, if the exercise is not to fail.

“Secondly, we suggest that the move toward a less adversarial approach to litigation has to be the way forward. This means that the emphasis on ADR is a positive step in the right direction and one to be encouraged; however, experience of using the small claims mediation process has not been positive. Once again we would suggest a full survey of users should be undertaken.”

More generally the ACL said it was concerned that not enough attention had yet been paid to whether the changes outlined by Briggs LJ were technically feasible, and whether there were sufficient resources to plan, deliver and monitor the change.

The response also called for a rewrite of the CPR “so that they are easily read and understood” and to stage the introduction of the proposed Online Court, starting with cases worth up to £10,000 (Briggs LJ suggested £25,000).

ACL chairman Sue Nash said: “Costs are an integral element of the court process and in looking at the overall structure of the civil courts, Lord Justice Briggs has identified positive solutions that should improve the resolution of costs disputes. Putting the right people in the right roles is a feature of modern legal practice, and we believe that as case officers, costs lawyers could make a significant contribution to the justice system.”

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Dunn: demand is outstripping supply

Dunn: demand is outstripping supply

Harbour Litigation Funding has raised a new £230m investment fund adding to the £180m of predecessor funds it already advises.

Harbour Fund III will fund international arbitration, as well as litigation in common law jurisdictions.

Further, there are now no restrictions on the number of cases the company can fund internationally; it is already backing claimants in 12 jurisdictions, including eight class actions in Australia and two cases in New Zealand.

Harbour’s co-founder and head of litigation funding, Susan Dunn, said: “Demand for funding continues to outstrip supply of funding in the market. The fact remains there are still only a handful of funders in the world with access to meaningful sums available to fund disputes.”

In 2013 Harbour established its own after-the-event insurance syndicate and has recently launched a damages-based agreement product as well.

Meanwhile, Peter Rees QC of 39 Essex Chambers has joined Harbour’s investment committee. A solicitor for many years, he was previously legal director of Royal Dutch Shell, head of global dispute resolution at Norton Rose and a litigation and arbitration partner at US firm Debevoise & Plimpton.

The investment committee, which meets monthly to review and recommend Harbour’s cases for funding, is chaired by Sir Gavin Lightman and also comprises Blackstone Chambers’ Robert Howe QC, Hardwicke Chambers’ Nigel Jones QC and Harbour founder Martin Tonnby.

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RCJ: from here the costs world can be your oyster

The appointment process for the new Senior Costs Judge is set to begin next month, with current incumbent Peter Hurst due to retire later this year.

The Judicial Appointments Commission (JAC) said the recruitment exercise is likely to start on 3 April for a role that pays £130,875.

Master Hurst has been a costs judge since 1981 and took up his present role in 1992. He will retire on 30 September.

The post is open to solicitors and barristers in England and Wales with five years’ post qualification experience (PQE) and expertise in costs law, as well as existing costs judges and deputy costs judges.

According to the JAC, the Lord Chancellor “expects that candidates for salaried posts will have sufficient directly relevant previous judicial experience. Only in exceptional cases and if the candidate in question has demonstrated the necessary skills in some other significant way should an exception be made”.

This means candidates should have been sitting as a judge in a salaried or fee-paid capacity; for fee-paid judges, this should be for a period of at least two years or 30 sitting days since appointment.

The Senior Costs Judge has the day-to-day management and leadership of the costs judges, deputy costs judges and the Senior Courts Cost Office (SCCO). The most complex and/or high-value cases are assigned to the Senior Costs Judge.

The job description says the Senior Costs Judge will also be required to provide costs advice to judges “often at short notice”, as well as providing support and advice to cost judges and deputy costs judges “to ensure accurate and timely delivery of decisions”.

Also among the duties are sitting as an assessor with the Court of Appeal, when requested, in complex cases and with High Court judges on appeal, and sitting with the designated civil judge on county court appeals, as well as hearing assessments in the Supreme Court and Privy Council.

The Senior Costs Judge will also be expected to play a significant role in helping to implement the changes following the Jackson reforms.

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Brooke: MoJ showed its ignorance

A former senior judge has expressed alarm at the way the government is rushing to “neutralise” the impact of the Lord Chancellor’s decision to cut the discount rate to -0.75%, based on what he says is a flawed consultation and without considering the effect on injured people.

Sir Henry Brooke, former vice-president of the Court of Appeal and chairman of the Law Commission in 1994 when its set out the basis for the Lord Chancellor’s powers to fix the rate, also said that the Ministry of Justice’s consultation on how the rate should be set in future, published last week, did not allow enough time to gather the evidence needed to consider the issue.

Writing on his blog, Sir Henry – who now practises as a mediator from Fountain Court Chambers – said: “My overriding concern is that in the apparent rush to neutralise the main effect of the Lord Chancellor’s recent decision, sight will be lost of the fact that we are concerned with very seriously damaged people, for whom insurers have contracted for reward to provide a full indemnity for such injuries.

“They will have engaged solicitors to act for them in promoting their claim, but the damages they are awarded will not provide them with the ability to continue to retain those solicitors – not, that is, without reducing the size of the capital sum they have been granted for quite different purposes – still less to retain the services of independent financial advisers, whether to help them make their initial investments or to continue to help them for the rest of their lives, being the period over which their damages must be made to last.

“There is not a word about this very obvious need in the ministry’s consultation paper.”

Having explained how the 1994 report followed a period of “meticulous research and consultation”, Sir Henry said a new study was to be welcomed 25 years on “so long as it was conducted with the independence and thoroughness of a Law Commission study, supplemented by research of the quality of the study Professor Hazel Genn conducted for us all those years ago”.

Instead, there is a consultation that – “despite the complexity of the subject-matter and the fact that no similar in-depth research study has been conducted since ours” – has been reduced to six weeks.

“In the light of the breakneck speed with which this consultation is being conducted, one would have hoped that the ministry would have set out accurately the history of the discount rate issue,” he said, before going on to point out a number of mistakes in it and that the MoJ admitted to its “complete ignorance about important features of the personal injuries scene today” – namely, how claimants invest their awards.

“After admitting the scale of its ignorance, the ministry hopes to fill the gap not by commissioning rigorously independent research, as the Law Commission did 25 years ago, but by inviting respondents to fill all the gaps in their knowledge in a consultation period limited to 23 working days (excluding weekends and holiday periods).”

He continued that “the scale of the ministry’s ignorance” was further revealed by its statement that the assumption on which the current discount rate is based “was not derived from and was not intended to reflect actual claimant investment behaviour.”

Sir Henry said: “In fact the Law Commission made it crystal clear, and the same evidence strongly influenced the House of Lords in the leading case of Wells v Wells four years later, that it was basing its recommendation on Professor Genn’s finding that the recipients of very large damages awards tended to be the most risk averse of the entre cohort of claimants whose cases she and her team had studied.”

Meanwhile, the new discount rate is a major feature of the reasons given this week by AIM-listed Frenkel Topping, a specialist independent financial adviser and asset manager focused on asset protection for vulnerable clients, for considering a sale of the group.

Describing itself as the “market leader in an attractive and growing market segment with significant barriers to entry, which is set to be transformed by the recent [discount] rate ruling”, it told investors that “the scale of the opportunity presenting itself” was sufficiently large that it may require the group to combine with “a larger, strategic partner” to make the best of it.

“The announcement in February of the change in the Ogden discount rate has dramatically changed how compensation damages are calculated,” it said in its announcement to the stock exchange.

“The group estimates that the size of court damages will likely grow substantially (with an average potential uplift of c.80%) and there will be an increase in client preferences for lump sum amounts to be managed (as opposed to periodical payment orders). These factors are expected to increase the market opportunity significantly and result in a material uplift in the rate of AUM [assets under management] growth for Frenkel Topping.”

The company, which has around £750m of assets under management, is forecasting revenue of c.£8.5m and profit of c.£3.5m in its current financial year.

Finally, a survey of nearly 3,000 people by uSwitch found that 83% did not believe insurers should increase the cost of insurance premiums to cover additional costs brought on by the new discount rate. Nearly three-quarters (70%) also agreed that insurers should be responsible for paying the whole compensation sum to the victim of an accident, rather than a reduced rate that accounts for interest earned by investing the pay out.

However, with insurers saying premiums could rise by up to £300 for older drivers, three in five (58%) said they did not think the changes were a good idea.

The company said insurers should swallow the increased costs. Rod Jones, insurance expert at uSwitch, said: “Insurers must face up to the fact that compensation reform is overdue. The Ministry of Justice is right to protect the rights of claimants seeking full and fair compensation and we hope this latest consultation doesn’t see insurers shirking their responsibilities.

“Let us not forget that insurers have only just won a huge victory on recent whiplash reforms, which is likely to reduce the number of claimants who will receive a pay out. Passing on the cost of the amended discount rate would be a gross example of the insurers having their cake and eating it too.”

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inCase200Just over 12 months ago inCase hit the legal sector with its revolutionary mobile app, specifically tailored for law firms specialising in personal injury. Offering an effective communication tool for firms, early adopters began to see the advantage of their own mobile app as speed of securing instructions; enhanced client satisfaction and reducing overheads began to take hold.

Today, inCase has already been radically enhanced to offer a signature feature. Allowing firms to send documents and forms securely to a client’s mobile phone or tablet within seconds using PUSH technology and notifications, clients are alerted to take immediate action.

incase your overviewContinuing to reinvest knowledge and experience built up over the last year and previous 2 years from its original conception by founder and PI solicitor, Sucheet Amin, inCase has already released a model specific for the conveyancing market and it has plans to open into other sectors in the coming 12 months.

inCase mobile appFounder and managing director, Sucheet Amin said “it is such an achievement to be shortlisted in this category of Associated Industries. Whilst being among some long established and well respected businesses, inCase has demonstrated again that it is worthy of this recognition.”


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London lawyers: ruling not carte blanche for their use

The High Court has overturned a costs judge’s ruling that a radiographer based in Devon could not claim the cost of using solicitors in London.

However, Mr Justice Cranston – sitting with assessor Master Simons and solicitor Peter Todd – warned that the ruling “is no carte blanche for the instruction of central London solicitors in this type of case”.

In Acres v Royal Devon and Exeter NHS Foundation Trust [2013] EWHC 652 (QB), Margaret Acres, who worked as senior radiographer in the trust’s nuclear medicine department, developed repetitive strain injury and was medically retired. The Society of Radiographers, of which she was a member, typically instructed London-based Howard Kennedy for employer’s liability claims because the firm had built up specialist expertise on how its members worked.

In Mrs Acres’ case, however, the society advised her to consult the Plymouth branch of Thompsons, which decided there were not reasonable prospects of establishing liability. A second opinion was sought from Howard Kennedy, which believed there was a claim valued at £140,000. It eventually settled for £8,000, with Mrs Acres judged medically unfit to litigate the case. Costs were £79,000 and an argument over whether it was reasonable to instruct central London solicitors ensued.

Master O’Hare decided that it was not and to the extent that the case was out of the ordinary, the hourly rate could be up-rated (which he did, by 30%).

Mr Justice Cranston disagreed, finding the use of Howard Kennedy to be reasonable. He said Master O’Hare had failed to consider the reasonableness of the decision to instruct the firm in the light of Thompsons declining to act on the merits.

The judge accepted the submissions of Mrs Acres’ counsel, John Foy QC – using the factors outlined in the leading case of Wraith v Sheffield Forgemasters Ltd [1998] 1 WLR 132 – that the claim was of considerable importance to Mrs Acres since the case had a potential six-figure value, and there were the legal and factual complexities.

Mrs Acres was dissatisfied with Thompsons and so she had to seek help elsewhere, making it natural and reasonable for her to turn to her professional association’s usual and preferred solicitors, Mr Foy added.

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Lower profits: lawyers’ key LASPO concern

Lower profitability and the possibility of having to turn away clients pass4sure 70-298 are law firms’ main concerns ahead of implementation of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), according to new research.

The survey of 102 firms of different sizes also revealed that fewer than half pass4sure C2040-918 appear to be actively making changes to prepare for implementation of the Act next April, with only 5% saying they are fully prepared.

The poll, conducted on behalf of LexisNexis publication Cook on Costs and featuring respondents who bought the book, found that that 36% of respondents are negative about the impact of LASPO on their businesses, with 50% unsure or believing it will have no effect – 8% were ‘fairly positive’.

Asked about their particular concerns for their business, respondents highlighted lower profitability (29%), having to turn away certain clients (24%) and having to turn away certain business types (21%).

Little more than one in five could identify any benefits for their practice from the Act. A few expect improvements in cost control and efficiency, while a handful thought they may be able to pick up business that other firms will no longer handle.

Fewer than half of the firms appear to be actively making changes to prepare for the Act – 5% considered themselves fully prepared, 43% are ‘currently preparing’, and a further 24% are ‘planning action’. One in six of respondents believed they do not need to change.

The kinds of changes being made or contemplated are new compliance processes, greater internal efficiencies and new technology. The research added: “However, the Act may have more fundamental effects on the legal market in England and Wales. Nearly one in ten say that they have already changed their practice’s business structure, and one in four that they have planned this.  There may also be staff movements, although, on the positive side, more have taken on or planned to take on new people (18%) than have made or planned redundancies (12%).”

Unsurprisingly, most thought that LASPO will have a negative impact on the justice system, although there was some acknowledgement that clients will benefit from greater control of costs.

Cook on Costs spokeswoman Clare McMahon: “For lawyers specialising in civil litigation to express concern for people who need recourse to the law but may not be able to attain it, is worrying. In the coming years, it will be important to see alternative ways for helping the most vulnerable including pro bono work.”


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One of the unique features of the new launch is the 24 hour crisis communication service

Legal services specialist ARAG has completely remodelled its suite of commercial legal protection policies with innovative new cover and fewer restrictions and all excesses have been removed. The aim is to clearly highlight the market leading cover and remove any complexity.

The Essential Business Legal, Absolute Business Legal and Employment Practices Liability policies have been rewritten and upgraded following a record-breaking year which saw the number of businesses insured rise substantially to nearly 200,000. All previous benefits continue or are improved, including fees payable at Employment Tribunals and Appeals plus loss of earnings cover, while additional cover differentiates the policies from those of competitors.

Available now for all new quotes and automatically at renewal, cover newly extends to disputes arising from TUPE (Transfer of Undertakings laws) and over breaches of restrictive covenants by employees or ex-employees, with counselling services now extending to family members of employees. Furthermore, a unique service of Crisis Communications helpline and insurance cover has been incorporated into all three policies

Wider benefits also apply as appropriate with increased personal cover for business directors and partners, such as ID theft and motor defence, and there is access to a new redundancy approval service, to ensure fair selection procedures are followed.

“We recognise that our competitors tried to close the gap on our innovative cover but now they’re even further behind”, comments ARAG Head of Underwriting and Marketing, David Haynes. “Following extensive research from the market there is much wider and more relevant cover in the ARAG commercial policies, plus a wealth of advice and assistance from our specialist partners via helplines and online.

“By changing the presentation and simplifying the wordings we are making the broker’s job more straightforward. It is much easier to understand precisely what is covered and what is not. Removing excesses and inner policy limits is all part of that process”.

Extending cover to include employment restrictive covenants is particularly relevant in the era of social media because defending and pursuing claims has become more difficult with the greater visibility of information online. Inclusion of disputes which fall within TUPE laws and the offer of mediation services on all claims are also included in direct response to increasing demand from the market..

One of the unique features of cover is the 24-hour crisis communications service. This enables policyholders to respond to negative publicity or media attention following an event that could cause reputational damage. Previously trialled as an option for intermediaries to incorporate into their own cover this is now available to all ARAG commercial policyholders. Up to £10,000 of professional PR and crisis communications management services are available following referral from the helpline.

“The range of free or subsidised legal services we offer is continually expanding” adds Mr Haynes. “We can now arrange specialist advice to assist policyholders in planning redundancies so that a fair selection process is implemented.  Commercial legal protection these days is such an integral part of business management that all these advice services are on hand from Day 1 of cover”.


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RCJ: Jackson rulings

The first known High Court ruling on the new costs sanction payable when a claimant beats their own part 36 offer has come down in favour of the defendant.

Charles Hollander QC, sitting as a deputy High Court judge in the Chancery Division, found that it would be “unjust” to order the otherwise automatic penalty, which in this case would have been close to the maximum £75,000.

The sanction is calculated as 10% of the first £500,000 in awarded damages, and 5% of the next £500,000.

Rule 36.14(4) lays out the kinds of circumstances that can render an order unjust, such as the terms of the offer, the stage in the proceedings when the offer was made, the information available to the parties at the time of the offer, and the conduct of the parties in giving or refusing to give information for the purposes of enabling the offer to be made or evaluated.

In Feltham v Bouskell [2013] EWHC 3086 (Ch), Mr Hollander took account of three key facts: it was a last-minute offer that expired just before the trial began; the principal (but not only) ground on which he decided liability only became an issue when raised in opening; and important documents were only disclosed by the claimant on the eve of the trial.

However, the fact that the claimant only just beat the offer was not a relevant consideration, the judge said.

In light of these matters – particularly the second one – “I consider that it would be unuust to make an order for £75,000 and I decline to do so”.

Mr Hollander went on to say that but for this, he would have reduced the claimant’s entitlement to costs. However, he said it would be unfair to penalise her a second time over the same conduct.

In other Jackson-related rulings, Mr Justice Akenhead emphasised the importance of revised overriding objective in refusing permission for a claimant to re-amend its particulars of claim where it could have done so more than a year earlier.

Among the reasons he cited in Co-Operative Group Ltd v Birse Developments Ltd [2013] EWHC 3145 (TCC) were the likely prejudice granting permission would cause to the defendants and the impact on judicial resources.

In Kesabo & Ors v African Barrick Gold Plc & Anor [2013] EWHC 3198 (QB), Mr Justice Simon granted relief from sanctions “with some hesitation” after the claimant solicitors failed to serve the particulars of claim in time. He expressly did so by reference to “the overriding objective of dealing with cases justly, and particularly (by reference to rule 3.9) the need to conduct litigation efficiently and at proportionate cost, while giving due weight to the importance of compliance with the rules”.

As with Mr Justice Andrew Smith in the recent Raayan case, he said that some of the criteria in the old version of rule 3.9 “may be relevant to the exercise of the court’s discretion, although they should plainly not be applied in a formulaic way”.

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HarmansThe issue of costs budgets continues to occupy court time with The Honourable Mrs Justice Carr DBE the latest, and most senior, judge to give consideration to what, if any, weight an approved costs budget had when the bill of costs was the subject of a detailed assessment.

Merrix v Heart of England NHS Foundation Trust was originally heard on 13 October 2016 by District Judge Lumb sitting as a Regional costs judge.

The issue – “to what extent, if at all, does the costs budgeting regime under CPR Part 3 fetter the powers and discretion of a costs judge at a detailed assessment of costs under CPR Part47” ?

The argument – The Paying Party seeking to reduce the bill of costs on assessment was required to show good reason to depart from the approved budget and absent good reason there was no requirement to undertake an assessment

The outcome – The powers and discretion of a costs judge was not fettered by the costs budgeting regime save that the figures should not exceed unless good reason shown.

Irwin Mitchell for the Claimant appealed and the matter came before Mrs Justice Carr DBE 16 February 2017 with her judgment given 24 February 2017 [2017] EWHC 346 9QB).

In a detailed judgement which includes a helpful history of costs budgeting the Court addressed the three grounds of the appeal:

  1. The provisions of CPR 3. 18(a) and (b) shifted the burden to the paying party to show good reason at detailed assessment or summary assessment why the budget should not be departed from;
  2. The provisions of paragraph 7.3 of Practice Direction 3E related to approval of a total phase in order to enable the court to identify what was a reasonable and proportionate amount to spend on each phase of the litigation
  3. The consideration of a costs budget at a costs management hearing was not only to establish an individual fund, but to give the parties an indication as to what was reasonable and proportionate to spend prosecuting or defending their claim. Therefore what was reasonable and proportionate at a detailed assessment, unless the paying party could show good reason as to why it was not the case, should be in accordance with any costs budget set?

You can read the Judge’s conclusion here, along with the thoughts of Partner and Costs Lawyer Gary Knight.

To read more of Harmans’ Cost Brief click here.

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30 further jobs being created for Just Costs Solicitors

Just Costs Solicitors, the largest Solicitor’s practice in England specialising in costs, is to create a further 30 new jobs in Manchester, Chesterfield, London and Leeds.

The award winning firm – which provides expertise in costs solutions for other solicitors including a specialism in costs management and budgeting – is growing its 100 plus strong workforce with immediate effect, having already added 29 new members of staff over the last twelve months.

“We are driving the business forward through growth and creating job opportunities at every level,” said Managing Director, Paul Shenton.

“The costs market is buoyant at present and now is the time to kick on and explore the opportunities available to us.  Every aspect of the business is performing well.”

Just Costs Solicitors is currently enjoying the most progressive period in its history and has just agreed a £1.1 million funding package with NatWest.

Due to the nature of its business, Just Costs employs a number of non lawyers in the form of costs draftsmen – and having been granted an ABS licence last year, the firm is able to appoint non lawyers as directors of the business.

Concluded Paul Shenton:

“Our expansion drive will recognise and reward people right across the board – solicitors, costs draftsmen and non fee earning staff.”

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Bellamy: service-led culture

Bellamy: service-led culture

Legal expenses insurer Temple Legal Protection has opened its first branch office – in Bristol – after hiring Phil Bellamy, the former group underwriting, ATE and special risks manager at DAS.

Last week Mr Bellamy – now Temple’s underwriting director – spoke out about his departure from DAS after claiming that the company had breached a confidentiality agreement not to discuss it publicly.

The Temple office will focus in particular on building the commercial and clinical negligence litigation areas of the business. The Guildford-based company – which said it is responsible for underwriting more than £50m of legal expenses insurance a year – added that it was looking to recruit more legal expenses specialists to the office.

Managing director Chris Wait said: “We have strong relationships with law firms and brokers throughout the south-west region. As a company, we place a strong emphasis on working closely with our clients to help them get the best financial protection from our products.

“Our Bristol location gives us excellent opportunities to further develop our services in response to the needs of our clients in this area.”

Mr Bellamy said: “I had a number of interesting opportunities to explore but chose Temple as they have an excellent reputation among law firms for providing robust insurance products that enable companies and individuals to afford to litigate.

“What sets them apart from others is their service-led culture and their ability to adapt. I’m looking forward to being part of such a dynamic team, and joining their board. As a local man, I am personally delighted that Temple have chosen to expand into the south-west.”

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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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Grant: government does not wish to commit to a formal review

The government has no plans to assess the effect of next month’s changes to the RTA scheme before introducing further reform, justice minister Helen Grant has confirmed.

Meanwhile, the Law Society yesterday published its new model conditional fee agreement (CFA), although it is not yet clear when a model damages-based agreement (DBA) will be completed. 640-822 exam

Labour MP Meg Munn asked in Parliament whether there are plans to make an assessment of the changes being made in April 2013 to the RTA portal before introducing further reforms.

Ms Grant replied that there are no current plans. “The government is prepared to review and assess the effectiveness of the scheme should evidence be provided to demonstrate that this is necessary,” she added. “However, the government does not wish to commit to a formal review at this stage.”

Ms Munn also queried what steps have been taken to improve insurers’ use of the portal. Ms Grant said: “As part of the forthcoming extension of the RTA scheme, incentives have been provided for both insurers and claimants to keep claims within the scheme through to settlement.

“These include provisions in the pre-action protocols which will support the extended scheme, and the introduction of a revised and expanded scheme of fixed recoverable costs.”

The Law Society’s model CFA, accompanied by “interim” advice, came with a warning that it is “not a precedent for use with all clients and that it will need to be adapted/modified depending on the individual clients’ circumstances and solicitors’ business models”.

Asked at yesterday’s Law Society council meeting about the timing of publication so close to the start of the new CFA regime, chief executive Des Hudson blamed the delays in finalising the rules, but he accepted that the society could have done more to keep solicitors up to date on progress with the model CFA.

He said the society would consider doing this in relation to the work on the model DBA.

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High Court: judge failed to direct himself properly

A High Court judges has sent a strong message to county courts about dealing with applications for relief from sanctions in a case where “a wholesale and flagrant disregard” of directions occurred.

Mrs Justice Swift overturned HHJ Milton’s ruling where he granted relief and ordered the defaulting claimant to pay the costs arising from an adjourned trial on the indemnity basis.

Biffa Waste Services v Dinler & Ors [2013] EWHC 3582 (QB) – handed down last month but the full judgment in which has only just been released – saw multiple failures to comply with directions by the claimants, who were injured when the defendant’s refuse lorry hit them. The defendant admitted the collision but denied negligence, and also hinted at elements of fraud in the claims.

Among the failures were significant delays in serving witness statements and the pre-trial checklist, not applying for permission to adduce oral evidence, and making no effort to agree with contents of the trial bundle, serving it the day before trial. Further, the listing and hearing fees were only received the day after stated in an ‘unless’ order.

Swift J said: “The picture that emerges is one of a complete lack of recognition on the part of the claimants’ solicitors of the need to comply with court rules and orders.”

While acknowledging that the judge had faced various difficulties in dealing with the case, she still found that his judgment contained “a number of serious defects”, including that he failed to direct himself on the principles which he should apply when determining an application for relief from sanctions, neither party having drawn his attention to rule 3.9.

“In particular, there is no indication at all that he had in mind the need to enforce compliance with rules, directions and court orders, or the need for proportionality. Those needs are clearly referred to in the amended overriding objective.”

The judgment also revealed “no exercise of balancing the relevant factors”, she continued. The only explanation for his eventual decision was that he considered that an adverse costs order would do “sufficient justice”.

Swift J referred to a host of post-April cases showing a hardening attitude to breaches. She said that in all the circumstances and taking into account the post-Jackson emphasis on conducting cases at a proportionate cost and in a way that does not expend more than a proportionate amount of the court’s time and resources, “I am satisfied that this was a case in which relief from sanctions should have been refused”.

“The judge himself observed in his judgment that his decision was ‘a very close call’. It seems to me that if he had had regard to the principles to which I have referred, his decision would inevitably been different.”

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Tom Blackburn

Blackburn: “still not one mediation” with NHSLA

The NHS Litigation Authority (NHSLA) has once more been ordered to pay indemnity costs on detailed assessment proceedings after rejecting an offer to mediate.

Late last year Irwin Mitchell claimed have won the first-ever ruling punishing a losing defendant, the NHSLA again, for rejecting an offer to mediate the costs of a dispute.

Unlike the first ruling, Reid v Buckinghamshire Healthcare NHS Trust, where indemnity costs were imposed on the period after the offer to mediate was accepted, in the latest case – again involving Irwin Mitchell – they were imposed for the entire proceedings.

Master Simons said in Bristow v The Princess Alexander Hospital NHS Trust (case no. HQ 12X02176) that the parties “should be encouraged to enter into mediation, and if they fail to do so unreasonably then there should be a sanction”.

He said it took three months for the NHSLA to reject Irwin Mitchell’s offer to mediate, made on 1 April 2015, and “they gave no good reason other than the fact that the case had already been set down for a detailed assessment”.

Master Simons said he was not satisfied that the sanction should be increasing the interest they paid because 8% interest was already a “penal rate” and the defendant “has to bear this very high rate of interest and they are being punished already by their actions because this case could have been settled by mediation”.

He concluded that the “correct sanction” on the NHSLA was that the claimant should receive costs on an indemnity basis on the 80% awarded to it.

Irwin Mitchell had only received 80% of the detailed assessment costs because its original bill had been reduced by 43% to £135,000, with Master Simons finding it was “not accurate”, and included “significant amounts which should not have been included” because they related specifically to claims against general practitioners which were later discontinued.

The NHSLA said it did not enter into the mediation “because the parties were so far apart”, the master recorded.

Irwin Mitchell partner Tom Blackburn said that despite the rulings in Reid and Bristow, the NHSLA had not changed its tactics. “We had this ruling at the beginning of November, and we’ve still not had one mediation.

“Insurers have been slow on the uptake, but have accepted mediations in some cases. They care about their bottom line.”

Mr Blackburn added that neither Reid nor Bristow had been appealed by the NHSLA.

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Thornton: financial certainty is vital

Three charities have launched legal proceedings against Lord Chancellor Liz Truss over new costs rules for environmental cases, which came into force yesterday.

Legal environmental pressure group ClientEarth, along with Friends of the Earth and the RSPB, argue that the rules – which allow judges to vary the cost cap in a case – are unlawful and have applied to the High Court for judicial review.

They claim the new rules weaken financial protection for people bringing a case, meaning they face unspecified legal costs in return for going to court to protect the environment. Judges will be able to increase the costs cap at any stage, “making it impossible to know how much a case will cost from the start”.

The environmental costs protection regime, introduced in 2013, capped the costs that a court can order an unsuccessful claimant to pay to other parties at £5,000 for individuals and £10,000 for organisations. Defendants’ liability for claimants’ costs were similarly capped, at £35,000.

The rules did not allow for variation in individual cases; however, the Ministry of Justice announced last November that it would allow for this, despite opposition from most of the 289 respondents to its consultation.

James Thornton, chief executive of ClientEarth, said: “The new rules spell disaster for the environment. With no certainty on costs, who will put their finances, perhaps even their house, at risk to bring a case?

“Individuals and campaigners need financial certainty before they bring a case in the public interest. After Brexit, this will become even more important, because the EU won’t be there to make sure our government is following its own environmental laws.

“It is ironic that we have to bring this case before the court rules change, because the financial risk introduced by the new rules is too high to bring it afterwards.

“The danger of the government’s plan is clear and it must be changed so people can still go to court to protect the environment.”

In its report on the reforms, the House of Lords statutory instruments committee, concluded earlier this month: “The requirement of article 9 of the Aarhus Convention is that, in relation to environmental matters, contracting parties ‘shall provide adequate and effective remedies, including injunctive relief as appropriate, and be fair, equitable, timely and not prohibitively expensive’.

“The MoJ has not provided a convincing case for changing from the previous standardised system of cost capping, which was well understood, to this more complex system which appears to have significant potential to increase both the costs for public administration and the uncapped litigation costs of the claimant.

“While asserting that the changes are to ‘discourage unmeritorious claims’ no figures are presented that illustrate the proportion of Aarhus claims that fall into that category…

“Although the MoJ states that its policy intention is to introduce greater certainty into the regime, the strongly negative response to consultation and the submission received indicate the reverse outcome and that, as a result of the increased uncertainty introduced by these changes, people with a genuine complaint will be discouraged from pursuing it in the courts.”

A report last week by a UN committee also found that the changes “would increase rather than decrease uncertainty and risk of prohibitive costs for claimants”.

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Lavender: Unsatisfactory approach

A High Court judge has thrown out judicial reviews brought by two medical reporting organisations (MROs) against their suspension from the MedCo portal.

Mr Justice Lavender said there was “obviously something unsatisfactory” about the approach taken by Med Chambers and Prime Medicals, using the dispute resolution procedure set out in MedCo’s user agreement – called the ‘escalation’ procedure – and judicial review simultaneously.

He went on: “The decision in each case was that they should be suspended because they did not meet the qualifying criteria.

“The claimants have each sought to challenge two aspects of that decision by two different routes, using the escalation procedure to challenge the decision that they did not meet the qualifying criteria, and using these applications to challenge the suspension decision.

“In some cases it may be necessary and appropriate for a claimant to pursue two different proceedings simultaneously, but it is generally inconvenient and undesirable.”

Delivering judgment in R (on the application of Med Chambers and Prime Medicals) v MedCo Registration Solutions [2017] EWHC 3258 (Admin), Lavender J said MedCo carried out detailed audits of the claimants in February 2017.

Having received the claimants’ responses to the draft audits, MedCo decided the claimants “did not meet the minimum qualifying criteria” and set out in decision letters sent in June last year a series of eight breaches of the qualifying criteria by each claimant.

Lavender J said that the decisions that the MROs did not meet the qualifying criteria were challenged by them under the escalation procedure set out in clause 10 of the user agreements and were not at issue in the judicial reviews.

Clause 10 provides first for representatives of MedCo and the MRO to try and resolve their differences. If this does not work, the matter is escalated to “senior” representatives on both sides. Failing that, 30 days later a party can refer the dispute to mediation overseen by CEDR.

A party cannot take legal action until 30 days after the ADR notice has been served.

The judge noted that the applications for judicial reviews were not filed until September 2017, “at the very limit of the time period specified by CPR 54.5(1)(b)”.

The MROs argued that clause 10 was not an “adequate remedy” because MedCo did not consider submissions which the claimants made within 14 days of the decision letters, in breach of its compliance procedure.

Lavender J replied that this submission “amounted to an argument” that MedCo would not take its obligations seriously to engage in the escalation procedure, but there was no evidence to support this.

The judge rebuffed the MROs’ second argument, that the escalation procedure was “far too slow” in taking up to 90 days.

“It took the claimants 92 days to commence these proceedings. In that context, it cannot be said that a process taking 90 days is too slow.”

Lavender J said the MROs’ third argument, that the MRO procedure did not “provide the claimants with the remedies of interim relief or damages”, was to “misunderstand the nature of the procedure”.

It was a negotiation and there was no reason why the parties could not agree to lift a suspension.

He responded to an additional argument, that a review by the decision-maker was not an adequate remedy, by saying this was what happened in homelessness cases.

“All in all, I do not consider that the arguments advanced by the claimants demonstrate that the escalation procedure was not a suitable alternative remedy in the present case. On that basis, I refuse permission to apply for judicial review.”

Lavender J added that even if he was wrong on the issue of alternative remedy, he would dismissed the applications for permission to apply for judicial review on the basis that they were not brought promptly.

His ruling also said that another MRO which failed to meet the criteria had brought a claim against MedCo but it had settled.

In that case, he said, the MRO had taken a positive approach to ensuring compliance, whereas the two claimants had taken a negative approach by disputing that any issues needed to be addressed.

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Miners: £3m paid out last year

Compensation payouts to miners suffering from noise-induced hearing loss (NIHL) are rising sharply, government figures have shown.

Responding to a freedom of information request, the Department of Energy & Climate Change – which is responsible for the liabilities of the former nationalised coal industry – said that in 2013/14 it paid out just over £3m in respect of 1,393 claims.

This compares with £2.2m paid out on 953 claims in 2012/13, and £827,065 on 366 claims the year before that.

The first four months of the 2014/15 financial year had seen £961,005 paid out on 435 claims.

The figures show the average payout to be around the £2,200 mark.

The number of claims paid is considerably less than the number received – 3,147 of the 11,230 received in the three and a bit years reported – but the department does not say whether the remaining claims have been rejected or are still being processed.

Though the number of paid claims increased by 46% between 2012/13 and 2013/14, the number of claims received fell 12% between those two years.

NIHL claims are becoming the new personal injury battleground. The Association of British Insurers last month argued that industrial deafness claims are “fast becoming the new cash cow for claimant lawyers” and their fees need to be curbed.

Bridget Collier, head of industrial disease at Fentons and a member of the Association of Personal Injury Lawyers’ executive committee, wrote on the association’s blog last week that “in the last three years more information about the right to claim for hearing loss has become widely available”.

She said: “I myself am driven mad listening to the radio advertisements and on social media that tell me what the symptoms are and that there might be a claim. But all this amounts to education. Without it, you might just carry on thinking that deafness is something that’s crept up and you cannot do anything about it. But on learning that it might be someone’s fault and not an unfortunate consequence of age, of course it’s fair to make enquiries.”

She said audiogram tests and an examination by an ear, nose and throat consultant can work out what is caused by excessive noise and what is caused by age or health issues. “With a test procedure with such specific results, a fraudster is obvious in several ways. We can surely rely upon on the evidence.”

As a result, Ms Collier said “the insurers’ accusations make us wonder if they are simply trying to avoid paying out by shaming people out of claiming”.

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In the current economic climate it is not enough simply to obtain a judgment – the real skill is in the enforcement process. This area should be at the forefront of all lawyers’ minds when they undertake any case involving money for a client.

April 2014 has seen the first significant overhaul for many years in the law of execution and it is very important for all those in the money recovery arena to be aware of the changes.

MBL’s brand new one hour webinar will look at these changes and how they affect the client who is seeking to make a successful enforcement. It will give very practical advice on the positive and negative parts of the changes and guide you through the new process.

For more information on this webinar, including costs, or to make a booking please email quoting Litigation Futures.

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Sue Nash, managing director of Litigation Costs Services, explains how the costs management regime is meant to work, and the effect that last week’s Henry ruling will have on it

Dyson: surprise absentee from Henry bench

Lord Dyson MR has said that “it is not an exaggeration to say that, from my perspective, costs management is the key to the Jackson reforms” and also that “if costs management succeeds, the reforms will succeed”.

Given this, the Court of Appeal judgment in Henry v NGN has been eagerly awaited. Following Master Hurst’s ruling that there was no good reason for a departure from the budgeted costs, the case was leapfrogged to the appeal court and heard on 4/5 December 2012, but the subsequent early judgment failed to materialise and it was only last Monday that it was handed down.

Before analysing the judgment, it is necessary to look at the background and why it is so important.

The Woolf reforms

The main thrust of these reforms was supposed to give the courts the power to manage cases so as to give effect to the overriding objective (CPR 1.1), which states:

“(1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly.

(2) Dealing with a case justly includes, so far as is practicable –
(a) ensuring that the parties are on an equal footing;
(b) saving expense;
(c) dealing with the case in ways which are proportionate –
(i) to the amount of money involved;
(ii) to the importance of the case;
(iii) to the complexity of the issues; and
(iv) to the financial position of each party;
(d) ensuring that it is dealt with expeditiously and fairly; and
(e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases.”

In chapter 7 at paragraph 20 he stated: “My recommendations, together with the new rules, are intended to ensure that litigation is conducted less expensively than at present and to achieve greater certainty as to costs.”

The Jackson report

The problem is that the Woolf reforms either did not go far enough or have not been implemented properly (it depends on your perspective). Paragraph 6 of Lord Justice Jackson’s final report stated: “The present project is, essentially a matter of building upon Lord Woolf’s work and proposing reforms where (after ten years’ experience) these appear to be appropriate.”

And at 3.3 he said: “Case management by the court, with the assistance of the parties, was one of the cornerstones of the Woolf reforms.”

Part of case management is the control of costs of the case. Indeed, to Jackson LJ, the two are inextricably linked. He went on to deal with costs management in chapter 40, although there were references to it throughout his report. In chapter 40 (1.4) he said:

“The essential elements of costs management are the following:
(i) The parties prepare and exchange litigation budgets or (as the case proceeds) amended budgets.
(ii) The court states the extent to which those budgets are approved.
(iii) So far as possible, the court manages the case so that it proceeds within the approved budgets.
(iv) At the end of the litigation, the recoverable costs of the winning party are assessed in accordance with the approved budget.”

The Law Society broadly supported the proposals in principle agreeing with Jackson LJ’s proposition that:
(i) Litigation is in many instances a ‘project’, which both parties are pursuing for purely commercial ends.
(ii) Any normal project costing thousands (or indeed millions) of pounds would be run on a budget. Litigation should be no different.

(iii) The peculiarity of litigation is that at the time when costs are being run up, no-one knows who will be paying the bill. There is sometimes the feeling that the more one spends, the more likely it is that the other side will end up paying the bill. This gives rise to a sort of ‘arms race’.
(iv) Under the present regime, neither party has any effective control over the (potentially recoverable) costs which the other side is running up.
(v) In truth both parties have an interest in controlling total costs within a sensible original budget, because at least one of them will be footing the bill.
(vi) The parties’ interests may, in truth, be best served if the court (a) controls the level of recoverable costs at each stage of the action, or alternatively (b) makes less prescriptive orders (e.g. requiring notification when the budget for any stage is being overshot by, say, 20% or more).

How it will (or should) work

District Judge Chris Lethem – charged with judicial training on costs management – has described costs management thus: “[It] will involve the production of a detailed costs estimate… [which] the court will then use… as part of the case management exercise leading to an order that will limit the parties costs.”

Mr Justice Ramsay, who is responsible for the implementation of the reforms, gave the 16th lecture in the Jackson Implementation series of lectures at the Law Society last May (a ‘must read’ here). The new rules are appended at CPR 3.11 to 3.18 and PD3E.

At 3.12(2) the purpose of the rules is set out: “The court should manage both the steps to be taken and the costs to be incurred by the parties to any proceedings so as to further the overriding objective.”

Costs management will apply generally to all multi-track cases commenced on or after 1 April 2013 in a county court, the Chancery or Queen’s Bench Division (except the Admiralty and Commercial Courts) unless the court otherwise orders and to any other proceedings where the court so orders. Unless the court otherwise orders, all parties except litigants in personmust exchange cost budgets within 28 days after service of the defence. In default the budget will only comprise applicable court fees.

The budgets cannot be exceeded where a costs management order (CMO) has been made save by agreement with the other side or with the permission of the court (there is provision in the rules for either party to apply to vary their budget). Where no CMO has been made, an amended version of CPR 6.5(a) states that where the costs claimed are more than 20% over budget, the court may limit the costs to “such sum as is reasonable for the paying party to pay in light of that reliance, nothwithstanding that such sum is less than… the costs reasonably and proportionately incurred”.

The Henry judgment

In Henry v NGN [2013] EWCA Civ 19 the receiving party’s failure to comply with the practice direction governing the defamation costs management pilot led Master Hurst at first instance to rule: “The fact is that the claimant has largely ignored the provisions of the practice direction and I therefore reluctantly come to the conclusion that there is no good reason to depart from the budget.”

The appeal was the first test of the Court of Appeal’s approach both to the importance and the application of the new costs management regime and it is perhaps of some surprise that the Master of the Rolls did not chose to sit on it himself (as he has indicated he will do concerning any challenges arising out of the Jackson reforms).

It is certainly a matter of regret that the judgment does not provide the clarity that all practioners had hoped for; instead it has opened the door to challenges (by either party) that there may be ‘good reason’ to depart from a budget.

At paragraph 18, the court sets out the matters to be considered: “Whether there is good reason to depart from the approved budget in any given case… is likely to depend on, among other things, how the proceedings have been managed, whether they have developed in a way that was not foreseen when the relevant case management orders were made, whether the costs incurred are proportionate to what is in issue and whether the parties have been on an equal footing.”

There are certainly likely to be arguments that the new rules governing costs management from 1 April 2013 do not differ in any material sense from Practice Direction 51D which governed the defamation pilot, despite what is said on this point in the final paragraph of the judgment. Therefore, whilst the judgment is good news for the claimant solicitors in this case, it is bad news for the future of the new costs management regime. It will lead to uncertainty and, probably, to the satellite litigation so abhorred by the courts.

What it means in practice

Despite the judgment, it is clear that firms will have an uphill struggle to justify any departure from their budgets so it is essential that firms put in place systems not only to record but to monitor their work by each phase of the litigation (the draft budget forms that have been being used in the pilot schemes identify 10 phases).

Firms will already be working on cases that will become subject to costs management once issued so preparing for the new regime is something that all firms should be looking at (and working on) now.

Litigation Costs Services is a Litigation Futures sponsor

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Haynes: LEI market is not working effectively for non-panel firms

Posted by David Haynes, head of underwriting and marketing at Litigation Futures sponsor ARAG

A survey carried out by the Employment Lawyers Association (ELA) in conjunction with the Law Society, Association of Personal Injury Lawyers and Motor Accident Solicitors Society has confirmed that non-panel firms suffer detriment when legal expenses insurers exercise their right to appoint panel firms to deal with claims.

This right is available to insurers until it becomes necessary to issue proceedings, and where (for example, when defending employment claims) the insurer is exposed to paying civil compensation, unless there is a conflict of interest. The survey was completed by nearly 700 people, 48% of whom were employment lawyers.

It is of obvious concern to members of the ELA that 90% of respondents had experienced problems when conducting claims under LEI;

Only 14% of respondents said that it was viable for a solicitor to issue proceedings and run a tribunal case at an hourly rate of £100 plus VAT, which according to the survey is the rate commonly paid under LEI policies. This reduced to 8% for associates, 7% for senior associates and to only 4% for partners.

Some 52% of respondents stated that they had (frequently or always) lost instructions from a prospective client in favour of a panel firm, while 42% of respondents said that the LEI policy terms frequently or always limited the rate payable to non-panel solicitors.

There is no evidence from this survey that ELA’s concerns translate into consumer detriment and the survey found that actual complaints to the Financial Ombudsman Service (FOS) were rare, with firms being deterred from complaining because of alleged delays by the ombudsman in resolving complaints.

FOS data for the period April to December 2013 shows that 507 legal expenses insurance complaints were received, of which 40% were upheld in favour of the customer – around 270 complaints if we annualise the figures. Of these complaints we do not know how many are connected with freedom of choice but we suspect very few (if any), as in most cases disputes arise because of a disagreement over the operation of policy cover.

Our own position is that we adopt a flexible approach in negotiating suitable terms with non-panel firms where policyholders wish to exercise their right to choose their own solicitor; but the use of panel firms works well for our policyholders. In the main policyholders are happy to use the services of panel firms as they realise that the service standards that we demand of panel firms are beneficial and claimants remain fully protected from paying legal costs.

Policyholders can opt to pay the difference where a non-panel firm will not accept instructions at rates that we deem to be proportionate and reasonable given the nature of the claim.

We are confident (without conducting a survey!) that our panel firms would not report problems in conducting claims under our policies and the success rate of panel firms is significantly higher than non-panel firms.

Waiving our right to control the appointment of non-panel firms has a bearing on the fortunes of policyholders who make a claim. Moreover, a lack of capacity to control costs would also result in significant increases to legal expenses premiums across the board at a time when there is government support for legal expenses insurance for individuals and businesses as an affordable means by which to access justice.

What this survey makes clear is that the LEI market is not working effectively for non-panel firms because it does not deliver the rewards they seek. This is very different from a market that does not work effectively for consumers. We would question how the ELA has been able to come to the conclusion that the LEI market is not working well for consumers by conducting a survey which was not targeted at consumers but at its own members.

The ELA’s position seems somewhat delicate as it has exposed itself to debate about the true motive in conducting such a survey. Surely a survey which purports to be in the interest of consumers would not focus on the ELA’s own members?

The ELA is to publish the second part of the survey soon, which will include more detailed evidence of the problems experienced (by their members?) when conducting cases under LEI policies.

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NHS trusts: warned on high risk and uncertainty

NHS trusts: warned on “uncertainty and high risk” of private insurer option

Global insurance broker Lockton has held talks with 17 NHS trusts interested in insuring themselves privately and leaving the NHS Litigation Authority (NHSLA), it has emerged.

Mark Riley-Pitt, senior vice-president of global insurance brokers Lockton, told Litigation Futures that private insurance “could be cheaper”, although the trusts’ liabilities under the current scheme would have to be dealt with.

“Monopolies aren’t good,” he said. “They stifle competition and innovation. Innovation, and providing solutions to problems is something the insurance industry is good at.”

Mr Riley-Pitt said France had its own version of the NHSLA, which continued to exist. However, French hospitals had been allowed to insure themselves privately for the last few years and some did, including in London.

“Insurers make a profit by managing risk,” he said. “I’m not overly impressed by the way the legal community gets a hammering on the litigation aspect of risk.

“Someone has to represent these clients. The length of time taken for people to get redress is something that everyone is responsible for. Even when liability is not disputed, there can be terrible delays in agreeing quantum.

“There are some cases where fees are disproportionately high, but there is normally a reason why. If we were more robust in tackling delays, it could make a significant difference financially.”

Mr Riley-Pitt added that the Department of Health’s plans to cap fees for medical negligence cases was “potentially a knee-jerk reaction”.

A spokesman for the NHSLA said: “We are aware that brokers who wish to break into the clinical negligence market will actively market alternatives. We do not know whether and how this may be backed in the long term.”

He said the NHSLA understood that the cover currently being marketed by was “not on a like-for-like basis” and came with conditions, limits and costs which were not a feature of the non-profit making and state-backed clinical negligence scheme for trusts (CNST).

“We are committed to working with our members to make sure that their indemnity cover and the services we provide meet their needs,” he said.

“CNST works on a pay-as-you-go basis, which ensures that money is not tied up in reserves for future claims or diverted to insurer profits and additional costs such as insurance premium tax.

“Members benefit from a state-backed scheme which removes the uncertainty and high risk associated with an insurer who may or may not remain in the clinical negligence market.”

In a separate development, well-known medical negligence specialist Hudgell Solicitors has published detailed facts and figures challenging the Department of Health’s plans to impose fee caps for low-cost cases.

In one case a client suffered cuts to her mouth and tongue when she attended hospital for adjustment of a brace. The firm sought an admission of liability and a £2,500 settlement for pain and suffering.

Senior solicitor Simon Wilson said it took 15 months of legal proceedings before the trust involved offered a settlement of £1,000 to the client, which was accepted. Mr Wilson said the total cost to the public purse was £13,800.

In another case, a patient developed skin issues after treatment on a cyst on her hand. “Less than two months after proceedings were served – but more than two years after the initial letter of claim was sent – the trust involved finally made an offer of £8,000 compensation, before settling at £10,000 after further representation.”

Mr Wilson said the total legal costs over two years included fees of £32,500, including counsel’s fees of £4,300 and insurance costs of £7,650.

“This was one of the relatively low-value claims that the government is claiming is down to ‘excessive charging’, but this was clearly not the case.

“Had the trust settled early on, the only costs would have been a records fee of £100, a liability and causation report fee of around £1,150 and a condition and prognosis report of £450. You are looking at thousands of pounds worth of avoidable costs.

“Interestingly, in that particular case, the offer of settlement was actually made before a defence was ever filed, evidence in itself that it was always going to be a difficult case to defend, so why drag it all the way through a legal process until proceedings are served. It basically suggests they were hoping the claim would simply go away and the patient give up.”

Mr Wilson added: “There is a lot being said about excessive charging and capping the legal costs in medical negligence cases, but there is a real danger here that the NHS will simply be able to deny all allegations they face, knowing it won’t be worth the time for solicitors to take on cases due to limitations on how much investigation they can put into a case.”

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medical reports

Ministry of Justice : “leading work on reforming the arrangements” for ATE insurance

The Ministry of Justice (MoJ) is considering changing the rules on recoverability for ATE premiums in medical negligence cases, Litigation Futures can reveal.

An e-mail from a civil servant at the MoJ links “reforming the arrangements” for ATE insurance to the Department of Health review of fees in medical negligence cases. The department is expected to launch a consultation on fees in October.

The e-mail – issued by the MoJ’s civil litigation, funding and costs team – states: “This government is building on the substantial civil justice reforms of the last Parliament. These followed Lord Justice Jackson’s report and are intended to control costs and discourage unnecessary litigation while allowing access to justice for meritorious cases.

“You will be aware that the government is considering reforms to control the costs of clinical negligence cases. Work on a new fixed recoverable costs regime is being led by the Department of Health.

“The Ministry of Justice is leading work on reforming the arrangements for after-the-event insurance where premiums remain recoverable for clinical negligence expert reports. The MoJ intends to discuss ATE reform with key stakeholders over the summer, with a view to consulting formally later this year.”

The e-mail ends by inviting insurers to a “stakeholder event” in August, and Litigation Futures understands that this will take the form of a series of one-to-one meetings throughout the month.

Under section 46 of LASPO, and the Recovery of Costs Insurance Premiums in Clinical Negligence Proceedings Regulations 2013, premiums paid to fund expert reports on liability and causation in medical negligence claims remain recoverable.

A senior source at one leading ATE insurer said the meetings were part of a “double-pronged” attack by the government, with fees being targeted by the Department of Health while the Ministry of Justice targeted insurance premiums.

He said that “just when the market was approaching some kind of normality”, there “appeared to be another attack on access on justice and injured people”.

The source said that under the current regime, the “biggest part of clinical negligence premiums” were still recoverable.

However, a senior source at another leading ATE insurer took a more positive view.

“I’m keeping an open mind on this. The Ministry of Justice has a position and we have a position, as a company and an industry.

“It’s too early to say that the end game will be a substantial decrease in the availability of premiums which would deny people access to justice. We don’t know enough about it.”

A spokeswoman for the Ministry of Justice said: “The government has announced its intention to tackle the high costs of litigation in clinical negligence claims in order to save the NHS money which would be better spent on patient care. The cost of after-the-event insurance will be considered as part of this work.”


The increasing appetite for third-party funding in Europe

Ross Nicholls

Although investors in common law jurisdictions have for sometime recognised litigation as an asset worth investing in, litigation funding remains less prominent in the civil law jurisdictions of mainland Europe. However, the European appetite is beginning to shift in favour of litigation funding, and many large dedicated funds active in common law jurisdictions such as the US, UK and Australia are starting to provide third-party capital to claimants with strong cases.

April 10th, 2018