Tag: costs lawyer leeds

Kenton v Slee Blackwell [2023] EWHC 2613 (SCCO)

ujjainimistryLeave a comment

Senior Costs Judge Gordon-Saker found that providing a ‘hopelessly inaccurate estimate’ and an inadequate risk assessment regarding a success fee will result in the claim for costs against the client being decreased significantly.

Background

In Kenton v Slee Blackwell [2023] EWHC 2613 (SCCO), the Claimant sued her previous solicitors who had acted for her in a professional negligence claim against another firm, ABC. They had entered into a Conditional Fee Agreement (CFA) in May 2018, with a success fee of 80% if the claim concluded before trial and 90% if it concluded at trial. After mediation, ABC agreed to pay Kenton’s costs in the sum of £138,000.

Slee Blackwell, subsequently, sent Ms. Kenton a bill which amounted to approximately £342,000, where approximately £90,000was payable to the Claimant after damages.

The Defendant’s did not adduce their own evidence or cross-examine Ms Kenton’s witness statement.

But this raised numerous concerns and questions by the Claimant as she had relied on the estimates provided by the Defendant’s, as well as the success fee outlined in the CFA. Judge Gordon-Saker addresses the two key issues of: reliance on costs estimates, and the risk assessment in creating the success fee. This blog will explore his reasoning and decision in turn.

Costs Estimate

Ms Kenton clearly relied on the estimates provided by the Defendant; it was one of the reaons why, she decided to proceed with them to act on her behalf. Slee Blackwell’s estimates outlined as follows:

£5,000 to £20,000 if settlement was reached before issuing of proceedings.
or
£30,000 to £50,000 if the case went to a contested hearing.

In addition to the above estimates, Slee Blackwell’s Ms Slade also explained how she was ‘yet to have a single case where [her] basic fees have been £100k […] the closest is £85k with a fully contested trial’. So, it was expected, from the Claimant’s point of view, that fees would not exceed this, especially since the case settled prior trial.

Unfortunately, the reliance on the estimates by the Claimant was heavily disputed by the Defendants, claiming that it would have been ‘unreasonable’ as it would not have accounted for the ‘unanticipated work required in considering the documents from ABC’. They argued that Ms Kenton did not complain about the original estimates after the costs exceeded £100k as per the costs spreadsheets that were sent to her 5 times over the period of the claim.

However, Judge Gordon-Saker found in the Claimant’s favour that the estimate was ‘inadequate’ and ‘a reasonable estimate of profit costs would have been about £50,000 before issue of proceedings’– not between £5,000 and £20,000. The Defendant’s did not provide a reason as to why the costs far exceeded the estimate and the Judge deemed it would be ‘reasonably expected for [the client] to pay a figure close to the estimate upon which she relied’’. He also added how the Claimant did not have the opportunity to ‘do something different’ as she had already signed the CFA and knew she would ultimately be liable if she tried to terminate it- ‘she could not escape it’. Therefore, £40,000 was the sum that the Claimant was expected to pay.

Success Fee

A risk assessment was carried out by the Defendant’s, which justified the success fees of 80% or 90% (as explained above). Mr Brighton, for the Defendant’s, argued to the Court that the success fees were reasonable and in accordance with the uncertainties involved and was given to the Claimant in an informed manner, to which she had approved. The Claimant contended this line of reasoning by stating these fees were unreasonably high.

Judge Gordon-Saker also agreed with the Claimants in this issue in that the risk assessment was ‘lacking’ and, therefore, there was no informed approval of the Claimant in accordance with CPR 46.9 (3) and (4). He points to paragraph 37 from Herbert v HH Law Ltd [2019] EWCA Civ 527 where informed approval means “that the approval was given following a full and fair explanation to the client” and Judge Gordon-Saker clearly states that the assessment was not a ‘proper assessment of the prospects of successes.’  The risk assessment that would be deemed reasonable and realistic would have generated a success fee of 50% of the basic charges; which was the final decision of the Court in this matter.

Summary

This case emphasises the importance of informed communication with the client, alongside the significance of correctly estimating figures and costs as the figures produced and presented to the client could be the last factor that contributes to the client’s decision in proceeding with the case. Solicitor’s should set out all estimates and charges in a clear format and any risk assessment’s should be undertaken with all factors of the case considered. 

Ujjaini Mistry is a Paralegal in Clarion’s Costs and Litigation Funding Team. You can contact her at ujjaini.mistry@clarionsolicitors.com or on 07436033368.

Proposals for change to Practice Direction on Interim Remedies and Security for Costs

Bethany CollingsLeave a comment

Introduction

At present, the Civil Procedure Rule Part 25 has two Practice Directions: Practice Direction 25A and Practice Direction 25B. The Civil Procedure Rule Committee confirmed within their most recently approved minutes (attached below) that a new shorter Practice Direction will be introduced. 

Agreed key points include:

  • Applications and evidence (Rule 25.3) should contain a signpost to Part 23 (general rules applications and court orders) to assist users;
  • Under evidence (Rule 25.7) it was noted that the reason why notice was given is a material fact and an obligation already exists, without the need for it to be expressly provided for in the rules;
  • There is a need for the supervising solicitor provision under the provision for service, timing and individuals involved (Rule 25.17) is to be redrafted;
  • Form numbers should be replaced with “approved form”;
  • Other drafting revisions as noted by the Secretariat, to be adopted for further review and resolution, prior to consultation; and
  • Remaining provisions within the Practice Directions that are not within the draft reformed rules, could be removed altogether because:
  1. the reference to out of hours contact details can be done by a signpost and appropriate web information;
  2. the reference to finding a Supervising Solicitor from the Law Society or London Solicitors Litigation Association can be removed, because it is in relevant Court Guides;
  3. the statement about privilege is a statement of the law and does not need to be repeated in a Practice Direction in this way; and
  4. the statement that applications for interim remedies in IP cases ought to go to the Chancery Division does not need to be made here because that is the effect of the relevant rules already.

Post meeting it was confirmed that paragraph 25.1(1)(p) (the reference to continuations subject to guarantees under Article 9 of Directive 2004/48/EC) can be removed because it is unnecessary. It was confirmed that the remedy is available in the courts irrespective of its being listed in that rule in that way and the reference to the Directive is potentially confusing.

There will also be a review of courts forms, specifically the:

  • N244 Application notice;
  • N16A Application for injunction;
  • N361 Notice of application for relief in pending action;
  • PF43 Application for security for costs; and
  • PF44 Order for security for costs.

Bethany Collings is a Paralegal in the Costs and Litigation Funding Team at Clarion Solicitors. You can contact her at bethany.collings@clarionsolicitors.com or on 07774951949.

CPR Committee MinutesDownload

Judicial Review issued in relation to October’s Fixed Costs reforms

Daniel MurrayLeave a comment

It has been confirmed that Judicial Review proceedings have been issued by Association of Personal Injury lawyers (APIL), against the Lord Chancellor, in relation to the extended fixed costs rules which are currently due to come into effect on 1 October. Our understanding is that a challenge has been launched in relation to four key grounds:

  • The failure to consult properly on the inclusion of some clinical negligence cases under the extended regime, and specifically when they will apply.
  • The lack of certainty regarding how additional costs incurred because of vulnerable parties is to be dealt with. Including, the fact that no uplift can be applied without an application at the end of a case.
  • The lack of certainty in relation to representation at inquests and how those costs are dealt with.
  • Concerns that the wording of the proposed new CPR 45.1 (3), and the apparent inability of parties to contract out of the extended regime.

All these issues are ones which attracted largely negative commentary in the build up to the implementation of the extended regime. In particular, the lack of clarity as to the timing as to when an admission of breach of duty and causation in a clinical negligence matter might limit a Claimant’s Solicitors to fixed costs. Certainty on all the above is welcomed prior to the implementation of any new rules. Most of the issues are ones which are currently under consultation by the MOJ, with responses to the consultation open until 8 September.

By agreement, the Judicial review proceedings are to be stayed until three weeks after the government responds to the MOJ consultation. Parliament is currently in recess until 4 September, and with just over 5 weeks until the new rules are implemented, there is a race against time to see whether the government pushes ahead with implementation, or perhaps wisely, takes the decision to postpone plans further until key issues are resolved.

For further information on the consultation, please contact Clarion’s Costs and Litigation Funding Department who can be contacted on any fixed costs issues, at our new dedicated fixed costs email addressatFRC@clarionsolicitors.com.

More bumps in the road for Fixed Recoverable Costs extension, as MOJ opens further consultation prior to implementation

Daniel MurrayLeave a comment

It was announced on Friday, that the MOJ has opened a consultation which will run to 8 September, with responses invited on a number of key issues which the draft rules either failed to address or were ambiguously drafted in the first instance. Any changes which follow the consultation, are to be introduced in April 2024.

With a little over two months remaining until the planned extension of the fixed costs regime, the further announcement by the MOJ is indicative of the difficult road ahead for litigators and costs practitioners ahead of the implementation on 1 October.

The announcement comes following prior confirmation, that the rules would be amended on the same day that they are brought into effect, via Civil Procedure (Amendment No. 3) Rules 2023. The consultation focuses on the following issues:

  • whether costs on assessment should be fixed;

A streamlined cost assessment process, with a cap of £500 was an initial recommendation of Lord Jackson in his 2017 report, but something not addressed in the published draft rules in April of this year.

The MOJ now proposes to implement a regime, whereby the parties would initially attempt to agree costs, failing which, a short form claim form would be filed. This would be followed by replies, and an application for determination by the Court on papers. Costs of the determination would then follow the event, and be capped at £500, inclusive of any Part 36 uplifts.

Satellite costs litigation on the back of the extended regime, is something which is envisaged by most costs practitioners. Disputes regarding the appropriate track / banding when matters settle before allocation, and disputes in relation to disbursements as the regime covers larger cases, are just two of the areas where it is expected that issues will arise post settlement between the parties.

This streamlined regime may be a useful tool in settling disputes without a potentially drawn out process and oral hearings, but the proposals bring into question whether the proposed cap is sufficient to deal with the issues in dispute, especially if it were to be inclusive of a 35% uplift on fees. There appears to be no bite to a sensible Part 36 offer by parties prior to, or early in the process, and therefore no real deterrent for settling costs issues without a streamlined assessment.

If we are to look at the proposed fees for a case which will settle pre-allocation and could be captured in bands 2 or 3, typically a PI claim with liability and quantum in dispute. The difference in base costs between a band 2 case and a band 3 case, is £1,400. A proposed cap of £500 does not seem to be a sufficient deterrent for unjustifiably seeking to restrict a party to the lower fees, or alternatively, seeking the higher fees on borderline cases, and the reward seems to outweigh the risk.

One wonders whether the risks of paying costs on a standard basis would actually better achieve the apparent objective here, which is to deter this satellite costs litigation. The proposed order of steps is also questionable, with the paying party laying out their position first, with no opportunity to respond to the paying party’s submissions or replies. The process envisages a certain level of pre application communication between the parties, whereby the receiving party will already know the paying party’s stance before they serve a short form bill, whereas this will not always necessarily be the case.

  • whether there should be fixed costs for Part 8 (costs only) claims;

A capped fee of £300 is proposed for Part 8 costs only claims, which will be required when cases are settling pre-issue. Similar observations as to the effectiveness of the capped fee as a deterrent to satellite litigation are made here, as above.

  • the recoverability of, separately, (a) inquest costs and (b) restoration proceedings, and how this should be dealt with in the CPR;

Recoverability of inquest costs is a common dispute for those dealing with cases under Fatal Accidents Act 1976. It was recently decided in the case of Briley & Ors v Leicester Partnership NHS Trust & Ors [2023] EWHC 1470, that fees incurred dealing with pre-inquest reviews are recoverable on an inter partes basis.

The costs of attending such hearings, can be significant and greatly in excess of the fees which are to be recoverable on the new extended fixed costs regime. It is therefore proposed costs of attending inquests should be recovered separately on the fast and intermediate tracks, with costs being subject to assessment in the usual manner.

Currently, the only provisions for fees associated with restoration proceedings in the new regime, are in relation to NIHL claims, and are outlined in CPR 45.56. Solicitors will be able to claim an additional sum of £1,280, plus disbursements for carrying out this work. The consultation proposes that similar provisions are made for other cases in the new intermediate track.

  • the issue of providing for the recoverability of advocates’ preparation in the CPR, in cases which (a) are settled late or (b) are vacated; and
  • whether the fixed trial advocacy fees now in Practice Direction (PD) 45 of the CPR should be further uprated for inflation, and by how much;

The Bar Council has suggested that in cases settled or removed from the list on the day of trial, the full trial advocacy fee should be recoverable; and in cases settled or removed from the list within two working days of the date fixed for trial, 75% of the full trial advocacy fee should be recoverable. These proposals were not covered in Lord Jacksons 2017 report, but the MOJ considers these proposals have merit and invites stakeholder comment.

With regards to inflationary uplifts, The Bar Council and PIBA argue that there has been no uprating of the fixed trial advocacy fees since July 2013, and that the fixed trial advocacy fees in complexity bands 1-3 of the fast track (Table 12, CPR 45.44) should be uprated from then using the SPPI index.

It is also proposed that the trial advocacy fees in complexity band 4 of the fast track should be uprated by around 20%. The same uplift is suggested in intermediate track cases.   The MOJ does not see the merit in the proposed 20% uplift, but do propose that trial advocacy fees on the fast track, for complexity bands 1-3, will be increased via the SPPI to take into account inflationary increases between 2013 and 2016 (by 4%); and to inflate further for the 9 months between January and October 2023 all of the FRC figures covered by Lord Jackson, which would include the uprated fixed trial advocacy fee figures.  

(vi) whether to make explicit in CPR 26.9(10)(b) in respect of clinical negligence claims, that an early admission of liability must be made in the pre-action protocol letter of response.

This issue is one which in our view, required early address by way of satellite litigation once the new rules were in place, and its proposed review is one which should be welcomed.

Within Lord Jackson’s 2017 report, it was initially proposed that clinical negligence cases would only be captured by the fixed costs regime, where admissions of breach of duty and causation were made within the letter of response. With the Department of Health and Social Care’s 2022 consultation on fixed recoverable costs in clinical negligence matters, the inclusion of fixed costs in any clinical negligence matters was one which took a lot of people by surprise when the draft rules were published in April.

The absence that any admission should be made within the letter of response, was one which opened the door for significant work being incurred by Claimant’s Solicitors prior to allocation, in the belief the matter would be allocated to the Multi Track, which would not necessarily be remunerated if an admission were to be made prior to the allocation date.

It also brought into question, whether applications for re-allocation / assignment, would be made by Defendant’s if an admission was made after allocation. Under the proposed new rules, the effect of this reallocation would mean only the costs of the final allocated track would be recoverable for the entirety of the claim, leaving the Claimant with an even greater potential significant shortfall in recoverable costs.

It is proposed that there is now the added requirement for an early admission to be made in cases where the cause of action is 1 October or afterwards before a case can be allocated to the intermediate track. The MOJ point out that it is unlikely that any new clinical negligence claims, where the cause of action accrues on or after 1 October, will be subject to early admission and allocation to track in advance of 1 April 2024.

However, the fact that it remains a possibility, albeit a slim one, raises the question as to why the rule is not amended prior to 1 October.   Further Points: Inflation The MOJ has further announced that, whilst inflation remains high they will provide further exceptional uprating to the fixed costs regimes, with figures to be uplifted further to cover inflation since January 2023. Whilst this is a welcomed announcement, it raises the question as top why the same measures cannot also be applied for existing fixed costs figures in portal matters, which are also outlined in PD 45, and have not been reviewed since 2013, when they were decreased from existing figures.  

Final Comments

Overall, the consultation must be welcomed as it will address some crucial flaws in the draft rules. However, some of the proposals still require further revisions, otherwise they will not meet the goals they set out to achieve.

With this being the second acknowledgment that the rules are by no means fit for purpose in their current draft, following from the amendments announced by the Civil Procedure (Amendment No. 3) Rules 2023, it also raises the question as to why their implementation cannot be pushed back further, in order to iron out at least a few more of the apparent wrinkles. Readers are strongly urged to respond to the consultation and can do so by sending responses to FRCconsultation@justice.gov.uk by 8 September.    

The consultations will be discussed at our free fixed costs seminar on 6 September. The seminar will focus key issues in relation to the new rules, including practical guidance on the new banding and allocation rules. Click here for more information and to register to attend.

For further information on the consultation, please contact Clarion’s Costs and Litigation Funding Department who can be contacted on any fixed costs issues, at our new dedicated fixed costs email address at FRC@clarionsolicitors.com.

Failure to explain costs budget overspend prevents costs recovery from client

Robert PattersonLeave a comment

The recent case of JXC v NIS [2023] EWHC 1000 (SCCO) (21 April 2023) is an example of a solicitor who had successfully concluded a claim of the utmost severity, but went on to encounter difficulties in securing payment from their client of costs which could either not be claimed from the Defendant or were not recovered from the Defendant.

In this case the solicitor represented a 19-year-old Royal Marines Commando, who sustained catastrophic head injuries when he fell 20 feet from an assault course, which had no safety netting installed. The claim, naturally enough, took a long time to conclude; the CFA was entered into in August 2013 and the award of damages, which had a total capitalised value of £14,000,000, was not approved until March 2021. At the conclusion of the claim, the solicitor presented the Defendant with a bill of costs in the sum of £1,300,488.44 and went on to secure a negotiated settlement amounting to £1,050,000. Subsequently the solicitor sought payment of the shortfall, which had been limited to £212,974.69.

The Court was therefore principally concerned with the nature of information provided to the client’s litigation friend as to base costs recovery from the Defendant and the costs budget.

Although the solicitor had informed the litigation friend that not all of their costs would be recovered and had indicated on 6 occasions between 2017 and 2021 that there would be a shortfall (even going as far as to quantify the shortfall at £245,000 in January 2021), the solicitor had not advised the litigation friend on anything to do with the Court approved costs budget. The client’s budget was first set by the Court on 27 January 2015 and was updated twice more in July 2018 and again on 22 June 2020. The solicitor went on to incur costs in excess of the approved budget which were calculated at £204,759.17.

The solicitor conceded that she had not asked the litigation friend to approve any of the costs budgets, had not given any specific advice to the litigation friend in respect of any budget overspend and had not advised on any corrective action that could be taken. It was nevertheless argued on her behalf that the litigation friend was aware that there would be a shortfall and that the shortfall would be approximately £245,000, which was higher than the claimed shortfall in any event. In other words, the advice given was sufficient to enable the litigation friend to make informed decisions notwithstanding the lack of specific advice on the costs budget.

The Court did not agree. In any solicitor/own client assessment, the solicitor is afforded a degree of protection by the presumptions in CPR rule 46.9(3)(a) and (b) that costs are presumed to be reasonably incurred and reasonable in amount if they were expressly or impliedly approved by the client. The Court found that the client had not been aware of the limits imposed by the costs management order, they could not have expressly or impliedly approved the expenditure. Accordingly, the solicitor was not entitled to rely on the presumptions in CPR rule 46.9(3)(a) and (b). Furthermore, the Court concluded that a budget overspend was not of itself unusual in nature for the purposes of CPR rule 46.9(3)(c), however the scale of the overspend was found to be unusual in amount.

As a consequence of the above, the budget overspend was considered to be unreasonably incurred and unreasonable in amount with the result that the solicitor could not recover any shortfall from the client because the budget overspend exceeded the total claimed shortfall.

In this case the Court was carrying out a detailed assessment under CPR rule 46.4(2) of costs payable to a protected party’s solicitor out of money belonging to the protected party. However, as such assessments involve consideration of CPR rules 46.9(3) and (4), the issues considered in this case should be of interest to any party involved in an assessment under the Solicitors Act 1974. The case also demonstrates the importance of giving appropriate advice at all stages of the costs management process.

For further information, please contact Robert Patterson, who is a Senior Associate in Clarion’s Costs and Litigation Funding Department and can be contacted at robert.patterson@clarionsolicitors.com.

Solicitors’ Duty of Care to their Clients (Forster v Reynolds Porter Chamberlain LLP)

Joanne ChaseLeave a comment

Introduction

Mr Justice Fancourt, Vice-Chancellor of the County Palatine of Lancaster, in the Business and Property Court in Leeds held that Reynolds Porter Chamberlain LLP (RPC) owed a duty of care to its client, Deborah Forster (‘the Claimant’). Specifically it had a duty to keep her informed of the ‘staggeringly high level of costs’ that were accruing throughout the retainer, with the commensurate risk of a shortfall in costs recovery that would erode any judgment she obtained.

By the time the case settled, the costs had reached £5m. The Claimant had agreed to pay these costs under the terms of a conditional fee agreement (CFA), however, she argued that RPC had been negligent in failing to keep her informed of the costs of litigation, and in failing to advise her on the risks of incurring high costs.

This case is significant for practitioners in the field of commercial litigation, as it clarifies the duties that solicitors owe to their clients under a CFA. The court’s decision in this case makes it clear that solicitors must keep their clients informed of the costs of litigation, and that they must advise their clients on the risks of incurring high costs, even if the client has agreed to pay those costs on a ‘no win, no fee’ basis.

As a separate point, the case highlights the importance of choosing the right expert in commercial litigation. The court’s decision in this case suggests that solicitors should advise their clients to use experts who are likely to be cost-effective, in addition to providing reliable and accurate evidence.

What are the practical implications?

The case has a number of practical implications for practitioners in the field of commercial litigation. First, it clarifies the duties that solicitors owe to their clients. Under a CFA, a solicitor agrees to represent a client on a ‘no win, no fee’ basis. This means that the client does not have to pay their solicitor’s fees unless the client wins the case. However, the client is still liable for the other party’s costs if they lose the case.

The court’s decision makes it clear that solicitors must keep their clients informed of the costs of litigation. The court also held that solicitors must advise their clients on the risks of incurring high costs, including the risk that the client may be unable to recover their costs from the other party if they lose the case.

Second, the case highlights the importance of choosing the right experts in commercial litigation. The court’s decision suggests that solicitors should advise their clients to use experts who are likely to be cost-effective, and who are likely to provide reliable and accurate evidence. Practitioners will need to be more mindful of the risks of incurring high costs, and they will need to advise their clients on how to mitigate those risks.

Overall, the decision is a reminder to all practitioners of the importance of managing costs in litigation and keeping their clients informed of the costs of litigation and risks of incurring high costs.

What was the background?

The Claimant, Deborah Forster, was a director of a company called Stayput Solutions Ltd. In 2008, two other directors, Kate Bleasdale and John Cariss (the Opponents) acquired overall majority control of the company and then caused it to sack the Claimant. The Claimant brought a claim against the Opponents for fraudulent misrepresentation, and for relief under section 994 of the Companies Act 2006.  

In October 2011 the parties agreed, by way of Tomlin Order, that the Claimant would receive £350,000 compensation and 80% of her costs of the claim and the petition. However, only £50,000 of this was paid by the Opponents, who were eventually made bankrupt on the Claimant’s petition in 2015. Nothing more was recovered from them.

The Claimant’s subsequent claim for damages from RPC was essentially for loss of the opportunity to enforce the Tomlin Order promptly and thereby recover more of the agreed sums. The Tomlin order should have been converted to a judgment debt and then enforced against the Opponents’ assets in late 2011 and 2012. The issue of the solicitor’s breach of duty also then arose as part of this claim.

The main issues before the court were therefore:

  • whether the Claimant suffered loss as a result of RPC’s negligence
  • whether RPC owed a duty of care to the Claimant to keep her informed of the costs of litigation
  • whether RPC was negligent in failing to advise the Claimant on the risks of incurring high costs
  • if so, what damages should the Claimant be awarded?

What did the court decide?

The court held that RPC owed a duty of care to the Claimant to keep her informed of the costs of litigation. The court also held that RPC was negligent in failing to advise the Claimant on the risks of incurring high costs. The fact that the claim was funded under a CFA did not mean costs were not a matter for the client. There remained a risk to the Claimant of being liable to pay the shortfall between chargeable fees and disbursements and the costs recovered from the Opponents.

Whilst that was a breach of duty, it had caused no loss. However, the Claimant had suffered a loss of chance regarding enforcement of the settlement due to a conflict between the solicitors and funders who had made a loan to the Claimant. Judgment was entered for £192,500. 

Analysis

The court’s decision in Forster v RPC is significant for solicitors, as it clarifies their duties to their clients when acting under a CFA:

  • solicitors have a duty to keep their clients properly informed of the costs of litigation
  • this duty is not limited to cases where the client is paying the costs of litigation themselves
  • solicitors must keep their clients informed of the costs of litigation, even if the client is being funded by a third party
  • solicitors must take reasonable steps to ensure that their clients understand the costs of litigation
  • solicitors must warn their clients of the potential for significant costs in litigation
  • solicitors must take steps to mitigate the risk of their clients incurring significant costs

The court’s decision is therefore likely to have implications for the way that CFAs are drafted and used. Solicitors will need to be more mindful of the risks of incurring high costs, and they will need to advise their clients on how to mitigate those risks. Solicitors will also need to be more transparent about the costs of litigation, and they will need to ensure that their clients are fully aware of the risks before they agree to a CFA.

Should you have any questions, you can contact the team at CivilCosts@clarionsolicitors.com

If you have any queries, please contact us for a more in depth discussion.

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

Guideline Hourly Rates are the starting point not the finishing point

Robert PattersonLeave a comment

Arguments concerning solicitors hourly rates have always been a central issue in the assessment of costs, regardless of whether there is a detailed assessment or a summary assessment. Those arguments can be particularly important in cases where the rates claimed exceed the guideline hourly rates. Indeed, those who represent paying parties will deploy numerous arguments to achieve reductions, but one argument that is becoming increasingly common is the suggestion that an hourly rate in excess of guidelines should not be awarded unless a ‘clear and compelling justification’ has been given.

This particular line of argument derives from the case of Samsung Electronics Co Ltd & Ors v LG Display Co Ltd & Anor [2022] EWCA Civ 466. In that case the court was faced with a summary assessment involving hourly rates ranging from £801.40 to £1,131.75 for a Grade A and £443.27 to £704 per hour for a Grade C. The justification provided for those rates was that it is almost always the case the rates will exceed guidelines in competition litigation. Rates in excess of guidelines were not allowed and Males, LJ that:

“[…] If a rate in excess of the guideline rate is to be charged to the paying party, a clear and compelling justification must be provided. It is not enough to say that the case is a commercial case, or a competition case, or that it has an international element, unless there is something about these factors in the case in question which justifies exceeding the guideline rate.”

Males LJ made a similar finding in Athena Capital Fund SICAV-FIS SCA & Ors v Secretariat of State for the Holy See [2022] EWCA Civ 1061 when faced with rates well in excess of the guidelines.

Although the above decisions are frequently relied on, the point made by Males LJ may not be applicable in all cases. This is because in both Samsung and Athena, the court was dealing with a summary assessment rather than a detailed assessment and the two types of assessment are conceptually different. That difference was recently explained Master Rowley in Various Claimants v News Group Newspapers Ltd [2023] EWHC 827 (SCCO):

“70. I also accept the argument that the GHR may be a useful starting point in a detailed assessment as well as in a summary assessment. I do not, however, consider that the guidance given by Males LJ regarding the need for a “clear and compelling justification” for exceeding the GHR extends with any great force to this particular situation.

71. The GHR are provided predominantly to assist judges who do not specialise in costs cases to deal with a summary assessment of costs when faced with the successful party’s summary assessment schedule and competing arguments from the advocates.

72. The relevance to the GHR being a starting point in detailed assessments is no more than a reflection of the scarcity of any other starting point. Expense of time calculations or other potential starting points, as is demonstrated here, are invariably absent. But a starting point by its very name does not suggest it is the finishing point and that is particularly so where the court has the opportunity for the parties to address it in detail in respect of the CPR 44.4 factors.”

The Master went on to allow hourly rates in excess of guidelines. Accordingly, the decision in Samsung does not represent an additional test for receiving parties to overcome and detailed submissions in respect of the eight pillars of wisdom in CPR rule 44.4 are likely to be more effective in securing hourly rates in excess of guidelines.

Robert Patterson is a Senior Associate in Clarion’s Costs and Litigation Funding Team, and can be contacted at robert.patterson@clarionsolicitors.com.

Estimated time or pure imagination?

Helen ApplebyLeave a comment

In Ikin -v- Shawbrook Bank Limited (2023) the judgment of Senior Costs Judge Gordon Saker looks at the issues surrounding estimated time and contains many points for litigators to take on board. Remember, the responsibility lies not just with the person preparing the Bill but with the Solicitor certifying the accuracy of the Bill.

Brief background

This case involved several Claimants, who brought claims of misrepresentation by finance companies regarding the installation of solar panel systems. 9 Claimants were represented by the same Solicitor. One claim for costs was assessed (at nil) by Regional Costs Judge Baldwin, “The Kinder Claim”. The remaining 8 claims were transferred to the SCCO, to assess counsel’s fees, the expert’s fees and profit costs.

In 2 of the bills (Ikin and Walsh), there were identical generic time entries claimed (18 in total). They were identical in both wording and time claimed.

Part 18 Requests were served, requesting clarification as to whether any time within the Bills was estimated. The response was bland and the Claimants were asked to provide a schedule of estimated time – this was never produced.

On Assessment

The first Bill to be assessed, Scott, was found to be riddled with issues. No time recording ledger was provided and it was evident that no time had been recorded within the substantive action. In truth, almost all the profit costs claimed had been estimated by the Costs Draftsman, some of which were not supported by the file of papers.

The Judge requested an explanation from the Claimants’ Solicitor. A Witness Statement from the conducting Solicitor confirmed she “had no experience of dealing with costs in this type of claim and so had instructed KE Costs (“KEC”), a firm of costs lawyers, “who indicated they had experience of dealing with similar costs arising out of solar claims in the North East”. Miss Wall said that she had assumed “that the descriptions given [of the work recorded in the bill] were fair representations of the work that had been done”. When checking the bill before signing it, she made sure that all the disbursements had been included and “that each stage of the case has been accurately identified”. However she did “not sit there and look at every single line individually and check the accuracy of every single line, because that just seems disproportionate”. She had relied on the expertise of the people she was instructing.

Amended Bills were lodged with the Court where by the descriptions to the time had been updated, however, the sums and time claimed remained unchanged. The amended Bill in Ikin was claimed at £29,774.90 and assessed at £9,250.00.

Ruling and Conduct point

The judge considered the issues relating to the Claimants’ Solicitor’s conduct.  In particular the importance of the Solicitor’s signature on a bill of costs. In this case, there was a clear misconduct point, the Judge found the bills were not accurate and claimed costs the Claimants would not have been liable to pay to Parkerwall (their instructed Solicitor). The Judge imposed two sanctions. The assessed costs were reduced by 60% and the Claimant’s Solicitor was ordered to pay 75% of the Defendant’s costs of the assessment on the Indemnity Basis.

Civil Procedure Rules

“This is an appropriate case in which to disallow costs under r.44.11(2)(a). The Claimants’ legal representatives have claimed costs which their clients were not entitled and have attempted to mislead the Court. In Gempride Ltd -v- Bamrah (2018), the Court of Appeal substituted an order that one half of the profit costs otherwise payable under Part 1 of the Claimant’s bill should be disallowed. That followed findings that the Claimant Solicitor had certified a bill which claimed an hourly rate in excess of the rate that she was obliged to pay and had wrongly stated in her replies that BTE insurance was not available to her. There was no finding of dishonesty.

It seems to me that the present cases are comparable. Eight bills have either been reduced significantly or have been agreed in significantly reduced amounts as a result of the misleading entries and the overestimation of time. As the parties have agreed global figures for profit costs and disbursements in the six unassessed cases, rather than disallow one half of the profit costs I would disallow a smaller proportion of the total figures.”

Costs follow the event

The Judge’s attention then turned to the costs of the detailed assessment. “Clearly this is a case where the court should make a different order to the usual order that the paying party pays the costs of the receiving party (CPR 47.20(1)). The conduct of the receiving parties’ solicitors reasonably required investigation. That led to a significant lengthening of the detailed assessment hearings. But for that investigation, the hearings might have been avoided completely. The conduct has been found to be wanting, and the bills have been reduced substantially.

Without an order under r.44.11(2)(b), the appropriate order under r.47.20 would have been that the Claimants should pay at least a proportion of the Defendants’ costs of the detailed assessment proceedings. As between the Claimants and their solicitors, the latter should bear those costs.

Some time was spent investigating the fees of counsel and the experts, which, in the event, did not lead to significant reductions. Whatever apparent irregularities there were in billing, the work had been done and the Claimants were entitled to recover the costs of that work. The Claimants should be entitled to the costs of those issues, but they were a relatively small part of the whole. The appropriate order under r.47.20 would have been that the Claimants should pay 75 per cent of the Defendants’ costs.

The fault, however lies, at the door of the Claimants’ Solicitors, rather than the Claimants, and so the appropriate order is that the Claimants’ Solicitor should pay those costs under r.44.11(2)(b). On any view the conduct of the Claimants’ Solicitor has taken these cases “out of the norm” and it is appropriate that the costs should be assessed on the indemnity basis.”

Summary

This brings home the importance of accurate time recording and certification by Solicitors. It remains the Solicitors responsibility to ensure that the certificate of accuracy guarantees the accuracy of the costs claimed.

Helen Appleby is an Associate in Clarion’s Costs and Litigation Funding Team. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Analysis of the Proposed Implementation of the Extended Fixed Recoverable Costs (FRC) Regime

Joanne ChaseLeave a comment

Introduction

Fixed costs are costs that are awarded to a party in a civil case, regardless of the amount of work that their legal representatives have done. At present this applies to many cases with damages worth up to £25,000, with several exceptions.

The Civil Procedure Rules Committee has confirmed that from 1 October 2023, fixed recoverable costs (FRC) will be extended to cover cases with under £100,000 damages that are not particularly complex. The fast track will remain with several changes, and a new intermediate track will be created for matters worth £25,000 to £100,000.

The extension to FRC is the government’s response to Sir Rupert Jackson’s 2017 report which set how fixed costs could apply to higher-value claims.

There are several key issues to consider in relation to the extension of FRC in light of the draft rules published on 20 April 2023. These rules are still in draft form, and it is possible that some of the potential issues raised will be addressed before the rules come into force.

When will the new rules apply?

The new FRC will apply to all cases issued on or after 1 October 2023, save for personal injury and housing claims.

The new FRC will apply to personal injury claims where the cause of action accrues on or after 1 October 2023; and will only apply to disease claims where the letter of claim has not been sent to the defendant before 1 October 2023.

HMCTS court forms will be amended as appropriate for implementation in October 2023.

Exclusions

Proposals on introducing FRC for clinical negligence cases up to £25,000 are being taken forward separately by the Department of Health and Social Care (DHSC) and are not being introduced as part of this package of reforms.

It has been decided to delay the application of FRC for housing claims for two years.

Cases that are allocated to the small claims track will continue to be governed by the small claims track rules.

Rule 26.9(10) confirms that the following case types will be allocated to the multi-track rather than the new intermediate track, and will thereby be excluded from FRC:

  • A mesothelioma claim or asbestos lung disease claim.
  • One which includes a claim for clinical negligence, unless both breach of duty and causation have been admitted.
  • A claim for damages in relation to harm, abuse or neglect of or by children or vulnerable adults.
  • A claim that the court could order to be tried by jury if satisfied there is in issue a matter set out in section 66(3) of the County Courts Act 1984 or section 69(1) of the Senior Courts Act 1981.
  • Claims against the police involving an intentional or reckless tort, or relief or remedy in relation to the Human Rights Act 1998. This exclusion does not apply to a road accident claim arising from negligent police driving, an employer’s liability claim, or any claim for an accidental fall on police premises.

It is worth noting that the new rules will not apply to cases allocated to the fast track or the intermediate track, when the court orders otherwise. Judges will retain the discretion to reallocate more complex cases valued at under £100,000 to the multi-track, so that complex cases will not be inappropriately captured by the extended FRC regime.

Changes to the CPR Provisions

In drafting the new rules, a generic approach has been taken so far as possible such that all categories of case are covered by the same rules. An exception to this is noise induced hearing loss (NIHL) claims, the rules for which are included in section VIII of Part 45.

There have been substantial changes to Part 45 (Fixed Costs), which has been largely re-written. A new Practice Direction for Part 45 sets out the relevant tables of fixed costs.

Changes have also been made to Part 26 (Case Management – Preliminary Stage) and PD 26, as well as Part 28 (The Fast Track and Intermediate Track) and PD 28. Changes have also been made to Part 36 (Offers to Settle).

Consequential changes have been made to other Parts.

Complexity Banding

New bands of complexity will come into force on 1 October 2023. The court will allocate a case to a complexity band based on the factors set out in CPR 26.12-26.14.

The complexity bands provide an ascending scale of allowable costs commensurate with the complexity of the claim. These bands can be summarised as:

Band 1: Cases that are relatively straightforward and can be dealt with quickly and efficiently.

Band 2: Cases that are more complex and will require more time and resources to resolve.

Band 3: Cases that are very complex and will require a significant amount of time and resources to resolve.

Band 4: Cases that are exceptional in their complexity and will require a very significant amount of time and resources to resolve.

The actual tables with specific examples are reproduced at the end of this article.

Part 45

The proposed changes to CPR 45 are substantial.

The new FRC fees in the fast track and the intermediate track are confirmed in 45.44 and 45.50, which are reproduced partially below.

CPR 45.44For so long as the claim is allocated neither to the small claims track, the intermediate track or the multi-track, the only costs allowed in any claim which would normally be or is allocated to the fast track are—

(a) the fixed costs in Table 12; and

(b) the disbursements as set out in Section IX of this Part.

45.50(1) For as long as the case is not allocated to the multi-track, the only costs allowed in any claim which would normally be or is allocated to the intermediate track are—

(a) the fixed costs in Table 14; and

(b) the disbursements as set out in Section IX of this Part.

…

The proposed new FRC fees are set out in tables 12 and 14 of PD 45.

Progression through the FRC stages is unchanged from the existing fast track FRC:

  • Pre-issue.
  • Post-issue but pre-allocation.
  • Post-allocation but pre-listing.
  • Listed for trial.

Section IX of Part 45 consists of rules 45.57–45.62 and details the disbursements that will be recoverable in various scenarios.

The Table of HMRC Fixed Commencement Costs, which were previously located in Table 7 of Part 45, has been simplified. The new Table is found at Table 11 in Part 45.

CPR 45.1 confirms that the court will have more flexibility to vary the fixed costs that are awarded in each case. This will help to ensure that the fixed costs regime is fair and proportionate in each case. For example, the court may vary the fixed costs if there are exceptional circumstances, such as the complexity of the case or the resources of the parties.

The court will be able to award fixed costs more quickly and efficiently, for example, at the end of a trial.

It is worth noting that the figures for FRC costs (which had previously been fixed at July 2016) have been uprated for inflation using the January 2023 Services Producer Price Index. The figures have been rounded so that the extended FRC regime starts off with a clearer set of figures. This is a positive development for claimants, as it was not expected that the rates would be uprated.

Part 36

The proposed changes to CPR 36 are designed to make Part 36 offers more attractive to parties and to encourage more settlements before trial:

Increased financial incentives: the amount of costs that a party can recover if they accept a Part 36 offer will be increased. Under the current rules, a party can recover their costs up to the amount of their Part 36 offer, plus 10%. The proposed changes to CPR 36 include a new 35% additional amount to be awarded where the claimant obtains judgment against the defendant which is at least as advantageous to the claimant as the proposals contained in their Part 36 offer. This means that if a claimant makes a Part 36 offer and the defendant does not accept it, and the claimant then goes on to win the case at trial, they will be entitled to recover their costs from the defendant, plus an additional 35%. The purpose of this new 35% additional amount is therefore to encourage defendants to accept Part 36 offers.

Reduced time limits: the time limits for making and accepting Part 36 offers will be reduced. Under the current rules, a party must make a Part 36 offer at least 21 days before the trial date. Under the proposed rules, a party will have to make a Part 36 offer at least 14 days before the trial date.

Improved flexibility: the court will have more flexibility to vary the terms of a Part 36 offer. Under the current rules, the court can only vary the terms of a Part 36 offer if it is satisfied that it is in the interests of justice to do so. Under the proposed rules, the court will be able to vary the terms of a Part 36 offer if it is satisfied that it is just and equitable to do so.

Mass issuing of non-PI cases

One potential issue with the extension of FRC is that it could lead to a mass issuing of non-personal injury (non-PI) cases prior to October 2023 in order to avoid the fixed costs regime. This is because non-PI cases are generally more expensive to litigate than PI cases, and the fixed costs regime could make them uneconomical for claimants to pursue.

This could lead to a situation where claimants are discouraged from bringing legitimate claims, simply because they are afraid of the costs involved. This would be a negative development for the justice system, as it would mean that fewer people would be able to access the courts to seek justice.

Alternatively, a claimant who is considering bringing a claim for damages for breach of contract may decide to issue the claim in the small claims track in order to avoid the fixed costs regime. However, if the claim is found to be outside the scope of the small claims track, the claimant may be ordered to pay the defendant’s costs, which could be significant.

Allocating and Banding Arguments

Another potential issue with the extension of FRC is that the allocating and banding arguments could become more complex and time-consuming. This is because the court will need to consider a number of factors in order to allocate a case to a complexity band, and this could lead to delays in the litigation process.

For example, the court will need to consider the following factors when allocating a case to a complexity band:

  • The nature of the claim
  • The amount of money in dispute
  • The complexity of the legal issues involved
  • The number of parties involved
  • The likely length of the litigation process

This could lead to a situation where the court is required to hold a hearing to determine the complexity band of a case. This could add to the cost and delay of the litigation process.

Unreasonable Behaviour

There is a risk that the new provisions could lead to an increase in unreasonable behaviour.

They could encourage parties to make unreasonable demands in the hope that the other party will settle rather than face the risk of having to pay the additional costs.

They could encourage parties to take unreasonable steps to delay or obstruct the litigation process, in the hope that the other party will give up or make a settlement offer.

They could encourage parties to engage in aggressive or abusive behaviour, in the hope that the other party will be intimidated or discouraged from continuing with the litigation.

However, new CPR 45.13 is intended to deter parties from engaging in unreasonable behaviour during litigation. The court will be able to award additional costs if it finds that a party has acted unreasonably in any of the ways described above. The court will have discretion to award additional costs, and the amount of the additional costs will be determined by the court on a case-by-case basis.

CPR 45.13 will apply to all cases, regardless of the track on which the case is allocated. The provision is intended to encourage parties to act reasonably because of the very real risk of having to pay additional costs if they are found to have acted unreasonably.

Why are the new rules being introduced?

Sir Rupert Jackson’s 2017 report had the following stated aims for the extension of FRC:

Fairness: the new rules are intended to make the costs regime fairer and more transparent. The amount of recoverable costs is based on the complexity of the case, rather than the amount of money in dispute. The new rules require the court to take into account the resources of the parties when making costs orders. This can help to ensure that costs are not awarded in a way that is unfair or disproportionate.

Speed and efficiency: they are also intended to make the litigation process more efficient, which can lead to cost savings for both parties. For example, the new rules encourage parties to engage in early settlement discussions, which can help to avoid the need for a full trial. The parties know in advance how much they will be able to recover in costs, which can help to reduce the need for protracted negotiations and disputes.

Certainty and predictability of costs: FRC provides certainty and predictability of costs for both parties to a litigation. This is because the amount of recoverable costs is fixed in advance, based on the complexity of the case. This can help to reduce the risk of unexpected costs.

It remains to be seen whether these stated aims will be achieved.

It is worth noting that the Law Society does not support the current proposals, either across the existing fast track or to intermediate cases. The Law Society is concerned that the proposals pose a substantial risk to access to justice and that they are based on out-of-date data. They believe that the actual costs of civil litigation must be reduced by streamlining processes before FRCs are extended.

Conclusion

The new rules make a number of changes to the CPR provisions relating to costs. These factors will need to be considered by parties when bringing a claim, and there are several potential issues that could arise as a result of the changes.

It is unknown how effectively the new rules will be implemented in practice, but they will undoubtedly have a significant impact on the way that civil litigation is conducted in England and Wales.

The MoJ propose to review the tables of costs and the extended FRC regime more generally in 3 years’ time. Anything that is particularly egregious should be resolvable by way of case law in the interim. 

Extending FRC is not a panacea for all the problems with the civil litigation system, but it may be a valuable tool for improving the efficiency and fairness of the civil litigation system, at the substantial risk of reducing access to justice.

If you have any queries or concerns regarding these changes, please contact us for a more in depth discussion.

Should you have any questions, you can contact the team at CivilCosts@clarionsolicitors.com

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

A Local Authority v PG & Ors [2023] EWCOP 9

hawamayetLeave a comment

 

This case concerns P’s views in relation to contact with care workers and receiving care where P’s capacity may fluctuate.

Background

P is a 34-year-old woman with a diagnosis of autism spectrum disorder, Emotionally Unstable Personality Disorder, and mild learning disability. She currently lives in a supported living placement. Before then, she lived with her mother where a deterioration in her mental health led to her being admitted under s2 of the Mental Health Act. There had been a number of incidents involving P around drugs, alcohol and approaching younger men in public and it was necessary for the Judge to consider whether P had capacity.

Views of the Social Worker and the Medical Expert

At the hearing, a social worker talked of potential triggers for P’s behaviour and Dr Jordan King, who is a Highly Specialist Clinical Psychologist at the Intensive Support Team of the Adult Neurodevelopmental Services for a NHS Trust, prepared a report for s.49 Mental Capacity Act 2005 purposes. Dr King gave oral evidence to the Court and was cross examined regarding P’s fluctuating capacity and the circumstances in which this occurred. Dr King explained that when P was calm, she could assess and weigh up risks but when faced with a trigger, P would become agitated and would struggle with weighing up and understanding information.

Conclusion

A Judgement was made that P should be deemed as lacking capacity, but emphasis was placed on the fact that when being assisted by the care workers, P’s autonomy should be protected, and interference should be kept to minimal levels to keep P safe.

The Judge considered the complexities of the fluctuating capacity for P and the difficulties the care workers would face in having to exercise a complicated decision-making process in order to decide whether at any individual moment P did or did not have capacity. This would then vary depending on the individual care worker, and how much of the particular episode they had witnessed. The Judge deemed that the result of this would fail to protect P, probably have minimal benefit in protecting her autonomy and in practice make the law unworkable.

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