Tag: clarion legal costs

A win, but hardly a windfall

Anna Lockyer1 Comment

The Belsner v Cam Legal Services Limited [2022] EWCA Civ 1387 appeal has been allowed in favour of the Solicitors.

Background

Solicitors, CAM Legal Services, originally brought a personal injury claim on behalf of Claimant Darya Belsner. The case settled in the RTA Portal at Stage 2 for £1,917 in damages plus £500 fixed costs plus disbursements. CAM Legal Services deducted a success fee of £321 from the damages (capped at 25%) as a contribution towards costs to supplement the £500 fixed costs recovered from the Defendant.

Checkmylegalfees.com

The Claimant later instructed ‘checkmylegalfees.com’ to query the Solicitors’ charging and issued a Part 8 application for a final statute bill. The Solicitors’ Bill came to £4,306, which was £2,523 higher than the settled costs amount.

High Court Appeal

On appeal by the Claimant to the High Court, Mr Justice Lavender found that informed consent had not been provided as it should be for contentious matters, applying section 74(3) of the Solicitors Act 1974 and CPR 46.9(2).

The judge subsequently decided that a success fee of only £75 (15% of the fixed costs amount) was payable and a repayment back to the Claimant of the difference was ordered.

Court of Appeal Decision

On the basis this case was unreasonable satellite litigation over very small sums and without economic risk to the Claimant the Solicitors challenged the High Court decision.

The Court of Appeal has now reversed the High Court decision and reassessed the Bill from scratch on the basis that:

-claims brought through the RTA portal without proceedings being issued are non-contentious and section 74(3) of the Solicitors Act 1974 and CPR 46.9(2) do not apply to all claims brought through the RTA portal without county court proceedings actually being issued;

-the judge was wrong to say that the Solicitors owed the Client fiduciary duties in the negotiation of their retainer;

-although the Solicitors were not obliged to obtain the Client’s informed consent to the terms of the CFA on the grounds decided by the judge, the Solicitors did not comply with the SRA Code of Conduct for Solicitors in that they neither ensured that the Client received the best possible information about the likely overall cost of the case, nor did they ensure that the Client was in a position to make an informed decision about the case;

-the term in the Solicitors’ retainer allowing them to charge the Client more than the costs recoverable from the defendant was not unfair within the meaning of the CRA 2015; and

-the court can and should reconsider the assessment on the correct basis, which is under paragraph 3 of the Solicitors’ (Non-Contentious Business) Remuneration Order 2009, which requires the Solicitors’ costs to be “fair and reasonable having regard to all the circumstances of the case”.

Although the judgment acknowledges that the Client ought to have to have been told of the level of fixed costs she would recover if the case settled in the RTA portal, this does not necessarily mean the Bill was unfair. Consequently, the repayment made following the High Court decision is now repayable by the Claimant.

Sir Geoffrey Vos, Master of the Rolls, asserted in his judgment that: “the whole court process of assessment of solicitors’ bills in contentious and non-contentious business requires careful review and significant reform” and told solicitors not to “suggest CFA or other fee arrangements to their clients that allow for fees that they would not dream of actually charging”.

Judgment in Karatysz v SGI Legal LLP [2022] EWCA Civ 1388

Reinforcing the condemnation of checkmylegalfees.com for bringing trivial claims for the assessment of small bills to the High Court is the judgment in Karatysz v SGI Legal LLP. Similarly, this was an appeal against a decision in relation to the assessment of costs following a solicitor’s deduction of 25%, which has now been dismissed by the Court of Appeal.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at costs.support@clarionsolicitors.com.

Requirements for the electronic file of papers

Casey McGregorLeave a comment

Once you have e-filed your bill of costs, you should receive an email of acceptance from the SCCO, which requires you to file your papers in support within 28 days of receipt of the acknowledgement. A file of papers is required by the SCCO for assessment, be it a paper file or a PDF file, this is so the Costs Officer can review the evidence of all work done in order to carry out their assessment, alongside the bill of costs. You have to select electronic bundle rather than the paper file when you are e-filing the bill of costs so that the SCCO know what file format to expect.

Electronic files of papers are only recently accepted, but as a result of the SCCO’s outdated software, they have particular requirements surrounding how it should be submitted. For that reason, if you are submitting an electronic file of papers, it is required to be an e-bundle.

The guidance received from the SCCO states that it needs to be in PDF format, ideally with an index at the front so the SCCO can easily navigate. The SCCO specifically request that the uploaded files should be in the following format:

  • The file must be named with the SCCO case reference e.g. SC-2020-COP-001234 and the protected party’s surname.  If the bill is for General Management, please include the period covered.
  • All documents should be in chronological order from the oldest to the newest. Ideally, you should include an index and hyperlink.
  • If you upload your papers as more than one file, each file should be labelled so that the contents can be clearly identified by the Costs Officer e.g. SC-2020-COP-001234 file 1- Jan-Mar, SC-2020-COP-001234 file 2 – Apr-May.
  • The OPG102, OPG105, the client care letter and any invoices for disbursements or counsels’ fees should appear at the start of the file.

There are various different bundling software packages that are available to prepare your e-bundle, an example of a software that can be used is Bundledocs.

Please find the link for the HMCTS Document Upload Centre – Professional Users Guide for further information:

Click to access Document-Upload-Centre-user-guidance.pdf

If you have any questions, please do not hesitate to contact Casey Mcgregor at casey.mcgregor@clarionsolicitors.com

Summary of the updates from the SCCO regarding COP Assessment Delays

Stephanie KayeLeave a comment

Yesterday, the SCCO have released a further notice in relation to the ongoing delays with COP assessments.

In summary, turnaround is as follows at present:

  • Bills received at the beginning of March are currently being assessed
  • The Admin Team are processing the return of assessed bills received back from the Costs Officers in the first week of August
  • New filings for assessment received from the second week of August are being considered for acceptance/rejection
  • Certificate request filings received in the second week of August are currently being reviewed and actioned

Please see the link below for the full notice released:

Notice-to-COP-Customers-22-August-2022Download

You can find out more about our services here or you can contact the Costs and Litigation Funding team at costs.support@clarionsolicitors.com.

Optimising Costs Management: Part 1

Anna Lockyer2 Comments

You can listen to the blog here

2% Budget Process Provision

Once costs budgets are prepared, Precedent Rs and negotiations naturally follow.

Budget discussions can lead to agreement of budgets in full, allowing for the costs management hearing to be vacated altogether. However, very often only certain phases are agreed, narrowing the costs issues in contention at CMC. Whether agreed in full or in part, investing time in negotiations and strategy at this point will lead to a more beneficial outcome overall.

In addition to preparing an ordered schedule of incurred costs or a composite summary, the next step is to decide who should attend the CMC to ensure you are well positioned from a costs perspective going forward.

Precedent Rs, negotiations, breakdowns, summaries and attendance at CMC all have the potential to be captured in the 2% provision for budget process and be recovered from your opponent if successful.

The Costs Management Conference

When a great deal rests on the result of the CMC a meticulously prepared advocate should not be underestimated. A sound understanding of the case to date is also key when deciding who is best suited to make those all-important representations in respect of the budgets.

Our costs management team are well versed in CMCs the depth and breadth of the country and have extensive experience in obtaining the most advantageous scenario of approved budgets possible.  If costs specialist input is required, this is something we can provide. 

Monitoring Budgets and Avoiding Shortfall

Regular monitoring of budgeted costs not only highlights any requirement for budget revision but also provides opportunities for agreement to be reached with your clients in relation to overspend before it occurs. It is also worth noting that utilising phase, task and activity codes on your time recording system will improve efficiency in this task. It can also lead to effective legal project management of cases, which will be covered in another of these blogs.

Budget monitoring is now mandatory pursuant to CPR 3.15A and is a service offered by Clarion. As long as the 2% budget and cost management caps have not been exceeded this work can also be recovered from your opponent if you are successful. In an era where solicitor-own client costs disputes are rising, it is more important than ever to keep track of expenditure in costs managed cases.

Fixed Recoverable Costs – 9 months away?

Andrew McAulayLeave a comment

At the Civil Procedure Rules Committee meeting on 13 May 2022, it was confirmed that the extension of fixed recoverable costs (FRC) is planned for April 2023. Please follow this link for a summary of the meeting which provides updates on other topics as well as FRC.  

FRC for the whole of the fast track and ‘lower reaches’ of the multi-track were first proposed by Lord Woolf during the last century! No progress was made and the topic went stale. Lord Justice Jackson raised FRC in his reports ahead of the LASPO reforms in 2013. Since 2013, progress has been delayed due to Brexit and COVID-19, but the government are now firmly focused on ensuring that the extension of FRC is rolled out. I recently spoke to Dominic Regan who confirmed that he thinks implementation will be April 2023, whereas I am of the view that it will be October 2023.

Regardless of the implementation date, it is important that all law firms who undertake contentious work (with damages under £100,000) start to prepare for implementation. Fees recovered inter partes will be very different, here is an example:

  • Band 2 case under the expanded fast track
  • Pleaded value of £50k but settles for £25k
  • Settles at Stage 5 – Witness Statements and Experts Reports
  • No JSM or Mediation
  • L3 firm instructed (12.5% uplift)
  • Fee would be £9,500 plus 16% of damages (£4,000) plus 12.5%
  • Total = £15,187.50 plus any disbursements and VAT

The fee of £15,187.50 allows circa. 82 hours at £185 per hour (Grade C SCCO GHR for an L3 firm). Remember, the £15,187.50 fee is for the lawyer and Counsel except where Counsel are instructed using one of the ‘bolt-on’ fees. The ‘bolt-on’ fees are not factored into the calculation, but if they were then they would allow no more than £3,250 for external Counsel drafting of statement of case and for a written opinion and/or advising in conference. I suspect £15,187.50 represents grim reading for most litigators and is significantly lower than a litigator would expect to recover inter partes at present for a case with the above assumptions.

The extension of FRC will bring significant change to inter partes costs recovery and create further pressure on solicitor/own client relationships. However, FRC will create opportunities for many law firms but those firms will need to rely on increased economies of scale. Efficiency, efficiency and guess what? Efficiency will be key! The Costs and Litigation Funding team at Clarion has followed the topic of FRC extensively since 2013 and can provide training on the reforms for law firms.

Please do not hesitate to contact Andrew McAulay at andrew.mcaulay@clarionsolicitors.com or on 077645 01252 for further information or Rob Patterson at Robert.Patterson@clarionsolicitors.com or on 07961 875496.

Statements of Costs for Summary Assessment – Recent Developments

Bethany CollingsLeave a comment

Today, I presented at our annual commercial litigation webinar on the topic of Statements of Costs for Summary Assessment, where I covered the following:

  1. What is a summary assessment?;
  1. A review of the rules and practice direction;
  1. Recent case law and practical points; and
  1. What’s new?

Statements of Costs for Summary Assessment have been a somewhat ‘dry’ area of costs law for a long period of time, but over the last few years there has been a lot of activity and an increase in reported cases concerning breaches of CPR 44 CPD 9.5.  The Court has a fairly wide discretion when faced with such breaches by virtue of CPR 44 CPD 9.6 which states:

‘The failure by a party, without reasonable excuse, to comply with paragraph 9.5 will be taken into account by the court in deciding what order to make about the costs of the claim, hearing or application, and about the costs of any further hearing or detailed assessment that may be necessary as a result of that failure.’

The court should also apply the case of MacDonald v Taree Holdings [2001] 1 Costs L.R. 147 when considering imposing its power under CPR 44 CPD 9.6. The test set out in this case is:

“What, if any, prejudice has that failure to comply caused to the other party? If no prejudice, then the court should go on and assess the costs in the normal way. If satisfied it has caused prejudice, the next question is: how should that prejudice be best dealt with.”

The case law that I covered in the presentation was:

1. Kuznetsov v London Borough of Camden [2019] EWHC 3910 (Admin)

2. Mahandru v Nielson [2021] EWHC 2297 (QB)

3. Changing Climates Ltd v Warmaway Limited [2021] EWHC 3117 (TCC)

4. Vine v Belfield [2021] EWHC 3068 (QB)

The above cases are all examples of where the Courts were faced with breaches of CPR 44 CPD 9.5 and they all reached different outcomes.

If you have any questions on Statements of Costs for Summary Assessment or require assistance with the preparation of a Statement of Costs or help with challenging a Statement of Costs ahead of a hearing, then please do contact me at andrew.mcaulay@clarionsolicitors.com or on 07764501252. We also offer in person or remote/video training on this area of costs law.

NEW update from the SCCO on COP assessment delays

Stephanie KayeLeave a comment

Yesterday, the SCCO have released a further notice in relation to the ongoing delays with COP assessments.

In summary, turnaround is as follows at present:

  • Bills received at the mid-December 2021 are currently being assessed
  • The Admin Team are processing the return of assessed bills received back from the Costs Officers in the first week of June
  • New filings for assessment received from the first week of May are being considered for acceptance/rejection
  • Certificate request filings received in the last week of May are currently being reviewed and actioned

Please see the link below for the full notice released:

Notice-to-COP-customers-13-June-2022Download

You can find out more about our services here or you can contact the Costs and Litigation Funding team at costs.support@clarionsolicitors.com.

Behave unreasonably in litigation and pay the price. A reminder from the High Court

Daniel MurrayLeave a comment

The High Court has delivered an important reminder to parties, of the potential repercussions in respect of costs if they act unreasonably throughout the litigation.  

In VV v VV [2022] EWFC 46, Mr Justice Peel stated “I am satisfied that it is appropriate for W to make a contribution towards H’s costs. It does not seem to me to be unfair to invade her needs based award to an extent. She should not be entirely protected from costs consequences.”

The case was a divorce dispute, for which the default position in respect of costs is usually that the parties should bear their own costs. Pursuant to section 28.3 (6) FPR however, the Court may make a costs order against one, or both parties. The factors to be taken into consideration when making any potential awards are listed in section 28.3 (7) FPR and are as follows:

(b) any open offer to settle made by a party;

(c) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue;

(d) the manner in which a party has pursued or responded to the application or a particular allegation or issue;

(e) any other aspect of a party’s conduct in relation to proceedings which the court considers relevant; and

(f) the financial effect on the parties of any costs order.”

Rule 4.4 of Practice Direction 28A states that:

“The court will take a broad view of conduct for the purposes of this rule and will generally conclude that to refuse openly to negotiate reasonably and responsibly will amount to conduct in respect of which the court will consider making an order for costs. This includes in a ‘needs’ case where the applicant litigates unreasonably resulting in the costs incurred by each party becoming disproportionate to the award made by the court”.

Following the division of assets, H sought an order for costs from W in the sum of £450,000. £400,000 of W’s costs had already been paid by H, and a lump sum payment of £750,000 which was awarded to W meant that the net outcome of the judgement was that H would have covered in full the costs incurred by W.

After considering the facts of the case, H was awarded £100,00 towards costs, to be offset against the lump sum payment to W of £750,000. The judge was critical of the fact W had fell short of her financial proposal by over a figure of £5 million and had failed to succeed on 2 key evidential points. One of which had cost H significant sums.

It was stated that this costs award would have been higher had it not been for H’s own unreasonable conduct, which included a failure to fully disclose financial assets.

The case serves as an important reminder to parties, that their behaviour can have a significant impact on their costs recovery, regardless of whether or not your opponent has also acted unreasonably.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.  

High Court swapped budgets for estimates

Anna LockyerLeave a comment

In Collins and Others v Ticketmaster UK Ltd v Inbenta Technologies Ltd [2022] Costs LR 123 costs estimates were ordered in place of costs budgets consequential to an application made by the claimants and Part 20 defendant which sought costs management after budgeting had previously been dispensed with.

Decision at first case management conference

Even though the claim fell within the bracket for budgeting, the general consensus at the first case management conference had been that costs budgeting should be disapplied. At this point the parties submitted that costs management was neither necessary nor appropriate. A further order mirrored this stance when the Part 20 defendant was joined to the matter, keeping a consistent pattern between the claims.

Basis for application

A change of heart by the claimants and Part 20 defendant was brought about by the defendant incurring considerable costs with no control by way of costs budget. HHJ Pearce (sitting as a judge of the High Court) described how he was:

“drawn to an invoice dated 6 January 2020 from a law firm acting for the defendant to the defendant itself giving legal fees for that month discounted by 20% at a figure of just shy of $300,000, some way in excess of £200,000. As the applicants say, if that kind of cost is being run up regularly on a monthly basis, then the total costs for the defendant could easily be £5 million or, indeed, more.”

Defendant fees were quite clearly substantial.

Response of the Defendant

The defendant contended that the application was:

“in the manner of an abuse of process” and “whilst it is true that the Civil Procedure Rules give the court a wide power to vary orders, the authorities show that the parties are not at liberty simply to come back before the court to refight battles that have already been determined.”

The defendant also resisted the application on the basis that the litigation had been proceeding for quite some time now and even though a number of phases had still not commenced, considerable costs had been incurred, particularly in the disclosure phase, citing:

“the true purpose of costs management which is the court’s exercise of its powers to control costs that have yet to be incurred.”

Court’s scope to revisit decision and the overriding objective

Despite the application being unsuccessful the court partially agreed with the grounds for application insofar as there was no reason why it could not revisit its decision on whether or not to make a costs management order. HHJ Pearce elaborated further by stating:

“It would be different if there had been a contested hearing on that issue and the court had reached a reasoned conclusion as a result of submissions. It therefore follows that, as a matter of principle in my judgment, the applicants for this order do not need to show a change of circumstances in order to justify the court making an order.”

However, the court took account of the overriding objective, in particular the costs of complying with the costs management regime in circumstances where the benefits of a costs management order would be far less than if one had been sought earlier.

Decision

A compromise of costs estimates from all parties, which were ordered in respect of those phases that either had not yet begun or only had limited costs incurred so far, was deemed “sensible” by the judge who opined that the claimants and Part 20 defendant were entitled to know where the defendant was going in terms of likely costs.

The content and layout of the ordered estimates would essentially highlight the same costs as the estimated sections of a costs budget. HHJ Pearce concluded that the estimates would:

“give the court the power to express an opinion as to the reasonableness and/or proportionality of any costs that it was estimated were to be incurred in the future. That is not to encourage any party to invite such an expression of opinion but it is, it seems to me, an available power that I could, if necessary, exercise.”

Estimates replacing budgets going forward?

The way this case ran its course and the initial disapplication of costs management is fairly unusual which suggests that costs budgets are likely to remain the default position when the relevant criteria are met.

Arguably there are lessons to be learnt from this failed application; being too hasty to dispense with costs budgeting can come back to bite the parties eventually.

Capturing costs between budget and CCMC: practical guidance

Anna LockyerLeave a comment

It is not unusual to incur substantial costs in the run up to CCMC after costs budgets have been submitted.  

Recovering these costs will be important to the receiving party, but often filing and service requirements of costs management documents can mean a bespoke approach is best adopted on a case-by-case basis, to ensure capture is maximised.

There are however some general steps that can be taken.

If a delay exists between budget and CCMC, either because the budget had to be advanced with the Directions Questionnaire or because the CCMC was adjourned post-filing and service, the budget may need to be brought up to date in respect of incurred costs. Updating the budget is particularly important if the incurred costs do not represent all costs up to and including the CCMC.

Alternatively, a schedule can be produced which sets out by phase the incurred costs since the budget and anticipated costs up to and including the CCMC. It should not be assumed that the anticipated costs relate solely to the CMC phase. Work relating to issue/statements of case, disclosure and ADR/settlement phases is very often being undertaken at this stage in the litigation.

On occasion, it may be appropriate to prepare both an updated budget and a schedule depending on the amount of costs in question, the length of any delay and any additional direction from the court.

In the absence of an order stating otherwise, the budget should be re-filed and re-served not later than 21 days before the first case management hearing. The schedule can be made available to the CCMC advocate to hand up to the Judge so that the costs are properly captured and reflected as accurately as possible on the approved version of the budget. The court can then be left to concentrate on setting the budget going forward. 

This approach not only accords with CPR 3.17 (3) (a) but also the case of Discovery Land Company, LLC & Ors v Axis Speciality Europe SE [2021], in which it was determined that work done but not yet billed, including disbursements, should be treated as incurred costs even if those costs cannot be quantified with precision. This decision provides for a degree of flexibility if the costs incurred immediately before the CCMC later turn out to be more or less than anticipated.

If the opponent attempts to challenge the level of incurred costs at this point in the litigation, reference to 3.17 (3) (a) should not only be made in relation to the fact the court may not approve costs up to and including the costs management hearing, but it may also be beneficial to refer to the fact that the Judge in the Discovery case said it was unhelpful for the court to comment on incurred costs at the CCMC stage. As the receiving party, avoiding recorded comment adverse to costs recovery later down the line is worth making the effort for.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.