Tag: Costs Management

The Court of Appeal finds solicitors’ time attending rehabilitation case management meetings is recoverable in principle

Ellena HunterLeave a comment

The anticipated Court of Appeal judgment of Hadley v Przybylo [2024] EWCA Civ 250 has been handed down this morning. The panel, consisting of Lord Justice Coulson and Lord Justice Dingemans (‘Lord Justices’), considered whether the cost of a fee earner’s attendance at rehabilitation case management meetings was irrecoverable in principle as legal costs.

Background

The proceedings concerned a road-traffic accident that caused the Claimant to suffer catastrophic injuries including numerous broken bones, damage to his spleen, bladder, kidney and lungs, a traumatic brain injury, permanent brain damage and sub-arachnoid haemorrhaging. Following the accident, the Claimant underwent rehabilitation at numerous facilities and once a Court of Protection order was in place, the Claimant was discharged into the community with a team of carers that provided 24-hour care.

First Instance Judgment

The cost budget put forward on behalf of the Claimant sought £1.18 million in costs.

Master McCloud ordered that the parties engage in ADR in respect of the future costs. Following ADR, only the “Issues and Statements of Case” phase remained in issue, in which £68,400 was claimed for estimated costs.

The Defendant challenged the costs claimed in this phase on the basis that a solicitor’s attendance at case management meetings with medical and other professionals during management of the Claimant’s rehabilitation needs, and at meetings with professional deputies (said to be part of creating a Schedule of Loss) were not in principle recoverable as costs of the litigation.

Master McCloud considered whether such attendances were progressive. She determined that they were not and that the costs were not capable of being recovered inter-partes.

Master McCloud gave permission for a ‘leapfrog’ appeal to the Court of Appeal.

Court of Appeal Judgment

The Claimant appealed Master McCloud’s finding and the Court of Appeal were tasked with determining whether a solicitor’s time attending rehabilitation case management meetings and the like were recoverable in principle as inter-partes costs.

The Court of Appeal considered that there were two issues:

  1. Is attendance at rehabilitation case management meetings recoverable in principle?
  2. If it is, are there any limits that this court should place on its recoverability at this stage, or should those be addressed on assessment?

The Lord Justices held that this element of the costs was recoverable in principle and found that:

“the Serious Injury Guide and the Rehabilitation Code both envisage the possible involvement of a solicitor in ongoing rehabilitation meetings. Whilst the extent of them, and the amount of necessary attendance, is a matter for the assessment of the cost budget or detailed assessment, both of those guides would clearly indicate that, as a matter of principle, this was a recoverable category of costs.”

The Lord Justices stated that:

“It would be wrong to decide that the costs of the solicitors’ attendance at rehabilitation case management meetings are always irrecoverable. Equally, it would be wrong for the claimant’s solicitor to assume that routine attendance at such meetings will always be recoverable. It will always depend on the facts.”

Whilst finding that the costs of attending rehabilitation case management meetings are recoverable in principle, these costs are of course subject to reasonableness and proportionality. The Lord Justices warned that there was no blanket or default entitlement to attend rehabilitation case management meetings routinely.

Ellena Hunter is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@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.

Reforming Budgeting, Guideline Rates, Pre-action/Digitisation and Consequences of Extended FRC

Anna LockyerLeave a comment

The Civil Justice Council have published their costs consultation responses and recommendations:

Click to access Civil-Justice-Council-Costs-Report-FINAL-May-2023.pdf

Although four key areas were considered, costs budgeting was the focus.

Costs Budgeting

The overarching finding was that budgeting is useful and should be retained, but ought to vary between different areas of civil justice.

Despite a wide range of responses, a clear outcome from the consultation was expressed in the following statement:

“Since costs budgeting was adopted, there is now evidence of real and sustained progress in the discipline and understanding around costs and this has consequently improved case management and the proportionality of costs”

Although a handful of respondents suggested the abolition of budgeting, most recognised that visibility of meaningful costs estimates is useful and should be retained, but  “a fresh, more nuanced approach” to budgeting was recommended.

It has been proposed:

  • Front sheets replace full budgets for Defendants where QOCs apply, but the courts will still have the power to order a full budget at its discretion. It is unclear how this will be of benefit given the fact a full budget is still required in order to produce a front sheet.
  • A ‘costs budgeting light’ scheme is introduced applying to claims valued between £100k and £1m. A separate ‘light touch’ approach to claims of £1m+ in the Business & Property Courts is adopted. These ‘light’ schemes are yet to be defined.
  • A staged process between directions and costs management is introduced where directions are contentious. Some costs information would however still need to be filed before directions. It is not yet clear what this information would consist of.
  • Mesothelioma and Media and Communications claims (and perhaps other specialist proceedings) are to adopt more bespoke practice arrangements for conducting budgeting.
  • Timescales for exchanging budget discussion reports are extended to allow for meaningful negotiation. It is hoped this will reduce the amount of budgeting hearings.
  • The budget variation process (Precedent T) is simplified. Details of a more straightforward process have not been provided.
  • There should be penalties for those who default on aspects of the budget timetable leading to a wasted court resource.
  • Hourly rates and incurred costs in the budgeting process are reviewed further.

Guideline Hourly Rates

The general consensus of respondents took the view the GHRs had a useful role in that they were a starting point for assessment and broadly reflect market rates.

In the short term, recommendations are:

  • A new band for complex, high value, commercial work is introduced, whether in London or elsewhere.
  • Hourly rates are subject to yearly reviews linked to SPPI on the 1 January each year. A retrospective uplift to the 2021 figures is to be applied and a detailed review should take place every 5 years. 
  • Counsel’s fees should be capable of being assessed by reference to GHRs, separately to solicitor GHRs.
  • A clearer test is introduced to allow for departure from GHR. No details of this proposed test are provided.

Costs under pre-action protocols/portals and the digital justice system

The aim of pre action processes, digital or otherwise, to settle claims without the need for litigation  or to narrow the issues where possible, should be encouraged and any reform should further this aim. 

Key proposals are:

  • Changes to pre-action costs; specifically the extent of recovery for new digital pre-action protocols. These should not impact recovery of pre-action costs post-issue.
  • A review of the Solicitors Act 1974 in view of the digitisation of dispute resolution.

Consequences of the extension of Fixed Recoverable Costs

As the extension of FRC regime is already underway, the general implications were not addressed in any depth. The only recommendation of note is:

  • The introduction of a costs cap of £500k into the Shorter Trials Scheme for patent cases.

Next steps…

The CJC will now consider how these recommendations are taken forward.

Look out for further commentary from the Clarion Costs Team.

Anna Lockyer is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Update on implementation of the extension to fixed recoverable costs

Robert PattersonLeave a comment

This third instalment of Clarion’s mini-series on preparing for the forthcoming fixed costs reforms, looks at recently announced changes following the Civil Procedure Rule Committee meeting on 3 March 2023.

It was intended that the new rules would take effect in October 2022, however implementation was delayed until April 2023. It was then announced in November 2022 that there would be a further delay until October 2023 due to the complexity of the reforms. It is still intended that the new rules will take effect from October 2023, however there will be changes to the scheme when it comes into effect.

Latest developments

The most important development is that there will be a general transitional provision whereby the new rules will apply to claims where proceedings are issued on or after 1 October 2023, save where the claim is for personal injury (including disease claims). In personal injury claims, the new rules will apply where the cause of action accrues on or after 1 October 2023 and they will apply to  disease claims where the letter of claim has not been sent to the Defendant before 1 October 2023.

A proposed new practice direction has been drafted setting out the rates for the fast track, intermediate track, and noise induced hearing loss claims. Previous versions of the rates were based on an initial report prepared by Lord Justice Jackson in 2017, and it has now been confirmed the rates will be uprated for inflation using the January 2023 Services Producer Price Index. This is an interesting development, as it was not expected that the rates would be uprated.

Other changes being considered include amended provisions in respect of disclosure to achieve a consistent approach between the fast track and intermediate track.

Next steps

Further drafting work will continue and it is anticipated that the final draft amendments will be presented to the committee ahead of the next meeting on 31 March 2023. This mini-series will be updated as and when further information becomes available.

Robert Patterson is a Senior Associate in Clarion’s Costs and Litigation Funding team. You can contact the team at CivlandCommercialCosts@clarionsolicitors.com

The Costs Management Practice Direction has changed!

Anna LockyerLeave a comment

With effect from the 1 December 2022 ‘Practice Direction 3E – Costs Management’ has been renumbered to ‘3D’ as per the 152nd Update – Practice Direction Amendments.

The contents of PD3D, which supplements CPR 3, still includes:

-Production of costs budget;

-Documents to be lodged for costs budgeting purposes;

-Budget format;

-Assumptions;

-Budget discussion reports;

-Costs Management orders;

-Oppressive behaviour; and

-Annexes.

Other amendments consequential to the 152nd Practice Direction Update, as made by the Master of the Rolls, are:

-‘Practice Direction 3F – Costs Capping’ being renumbered ‘3E’;

-‘Practice Direction 3G – Requests for the Appointment of an Advocate to the Court’ being renumbered ‘3F’; and

-‘Practice Direction 51Z – County Court Officers Pilot Scheme’ being inserted after Practice Direction 51Y, providing for a pilot scheme to run from 1 December 2022 to 30 November 2024 to allow authorised court officers to make standard form case management directions on paper in certain circumstances in the County Court.

Anna Lockyer is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Optimising Costs Management: Part 3

Ellena Hunter1 Comment
You can listen to the blog here

This is the final entry of our three-part series on optimising costs management.

The first blog in this series outlined the 2% budget process provision; how to utilise this to obtain the best outcome possible at a CCMC; and the benefits of monitoring budgets. This can be read or listened to here.

Our second blog detailed potential problems of not utilising the 2% budget process provision. This can be read or listened to here.

The focus of this blog is minimising risk. So what steps can be taken to reduce exposure to risk?

Utilising budget process provision

If you utilise the 2% budget process provision prior to CCMC by investing time in budget discussions then at best you can have your budget agreed in full and at worst, nothing will be agreed but you will know which issues are in contention ahead of the CCMC. Counterarguments can then be prepared. Either way, you are in a much better position than if you fail to engage from the outset. Attending a CCMC with little idea of what the other party will say is not advisable.

The best way to optimise costs management following CCMC is to regularly monitor the costs of a case. This will enable you to take a proactive, rather than reactive, approach to managing your costs and ensure you achieve the most beneficial outcome for your costs recovery.

PTA time recording systems

One of the most efficient ways to monitor costs managed cases is by utilising a Phase, Task and Activity (PTA) time recording system. If your time recording system allows, every entry that is recorded should be allocated to an appropriate phase, task and activity. The benefit of doing this is that a costs managed matter can be monitored quickly and easily to ensure that the budget is not being exceeded, or if it is, providing the significant development criteria is met, then an application to vary the budget can be made promptly. This will also allow you to keep your client regularly updated on how much of the budget has been spent within each phase and make them aware of any potential shortfall well in advance. It also allows you to factor this into the case strategy.

Regular monitoring

As aforementioned, one way a case can be monitored is by way of a PTA time recording. However, not all systems are equipped to process this information. If you find yourself in this position, then we can carry out regular phasing exercises on your behalf using an export of your time ledger. Following this, we will present you with the budget monitoring data and the options going forward. It will be clear how much of the budget you have used in each phase and whether there is likely to be an overspend.

Budget revisions

For a budget revision application to be successful, you must satisfy a two-stage test; that the budget variation is due to a ‘significant development’ and the application is made ‘promptly’ as required by CPR 3.15A (2).

If you have been utilising the 2% budget process provision then you will have early notice of and be able to make an application to vary a costs budget promptly. Master Kaye held in Persimmon Homes Ltd and Anor v Osborne Clarke LLP and Anor [2021]that an application made 10 months after the alleged ‘significant development’ was not prompt enough and the variation was refused.

If a ‘significant development’ arises that has not been provided for in the assumptions to your Precedent H, and ‘was not one which ought to have been reasonably anticipated before it happened’ as per Master McCloud in Thompson v NSL Limited [2021], then an application to vary a budget should be considered. Clear budget assumptions and a good CCMC note can hugely improve the strength of your grounds for revision and the prospects of being successful.

‘Good reason’ to depart from budget

If following settlement, a case which has been costs managed and is to be assessed on the standard basis, costs in any given phase exceed those on the costs management order then the overspend may be allowed if it can be shown there was ‘good reason’ to depart from the budget. It is however advisable to ensure the revision route is explored initially and without proper definition, and because it is a discretionary power which the judge will consider based on case circumstances, using ‘good reason’ as an overspend justification really is a last resort.

This brings our mini blog series to a close. We hope it has been useful and please get in touch if you have any queries at all relating to budget process provision and how we can assist you in making the most of the costs management regime.

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

Proposed increases to court fees to proceed

Bethany CollingsLeave a comment

Court and Tribunal Fees – The Government response to the consultation on ‘Increasing selected court fees and Help with Fees income thresholds by inflation’

Following a consultation process, the Government will be proceeding with proposed increases to Court fees. the changes are likely to come into force in early Autumn. The proposed fee increases reflect inflation and are not therefore real terms increases.

The proposed increases will effect the costs  of detailed assessment as set out below.

DescriptionCurrent FeeIncreaseFinal fee  
Assessment of costs (under Part 3, Solicitors Act 1974)  £55+£4£59
Where the party filing the request is legally aided  £220+£17£237
Costs up to £15000  £369+£29£398  
Costs £15000 – £50000  £743+£58£801  
Costs £50000 – £100000  £1,106+£86£1,192  
Costs £100000 – £150000  £1,480  +£115  £1,595  
Costs £150000 – £200000  £1,848  +£144  £1,992  
Costs £200000 – £300000  £2,772  +£216  £2,988  
Costs £300000 – £500000  £4,620  +£360  £4,980  
Costs Above £500000  £6,160  +£480  £6,640  
Issue of default costs certificate£66  +£5  £71  
Appeal (detailed assessment proceedings)£231  +£18  £249  
Request/application to set aside a default costs certificate  £121+£9£130  

There will also be an effect on the costs of assessment in Court of Protection cases:

On the filing of a request for detailed assessment for Court of Protection  £85£2£87  
Appeal against a Court of Protection costs assessment decision  £65£5£70  

Bethany Collings is an apprentice paralegal in our Costs and Litigation Funding team. If you have any questions, please contact her on 0113 227 3607 or at Bethany.Collings@clarionsolicitors.com

More changes are coming to costs in the latest amendments to the CPR – Civil Procedure (Amendment) Rules 2021

Anna LockyerLeave a comment

More changes are coming to costs in the latest amendments to the CPR – Civil Procedure (Amendment) Rules 2021, which comes into force on 6 April 2021, and the 127th update to the PD. 

Costs Management

These changes are not significant, however it is noted that there has been one amendment that is worthy of mention particularly for practical reasons. During the last tranche of costs changes in October 2020 (122nd update) when the costs practice directions and rules were consolidated and the precedent H guidance notes were incorporated into PD 3E, it was identified that one of the amendments created difficulties in terms of drafting of the budget. The amendment related to CPR 3.17(3)(a) which stated that the Court may not approve costs incurred before the date of any costs management hearing and replaced the previous practice direction that referred to how the courts may not approve incurred costs up to and including the date of the costs and case management hearing. This amendment resulted in the provision of updated incurred costs information that included an element of estimated costs, i.e. the costs associated with attending the CCMC. Please see follow this link https://www.clarionsolicitors.com/articles/costs-and-litigation-funding-newsletter-october-2020 for more a detailed analysis in that regard.

Master Cook recognised the difficulties that rule change made in the 122nd update created and has now addressed this in this latest tranche of rule changes. The rules have been amended, as follows:

“(3) Subject to rule 3.15A, the court (a) may not approve costs incurred up to and including the date of any costs management hearing; but (b) may record its comments on those costs and take those costs into account when considering the reasonableness and proportionality of all budgeted costs.”

This is a change that is very much welcomed and simplifies the presentation of incurred costs.

Some minor amendments to the cost management Practice direction 3E have been made which are limited to substituting “budgeted costs” for total costs (incurred and estimated) in paragraph 4b of practice direction 3E; and the substitution of interlocutory for interim at paragraph 10 (a). The final amendment relates to the table found in PD 3E in the Disclosure section, where ”third party” is to be substituted with “non-party”.

Summary assessment

The PD 51X Costs for Summary Assessment Pilot scheme has been running for nearly 2 years and the judiciary have confirmed that they have received some useful comments, however they have extended the voluntary pilot scheme for a further year to enable the capture of more data.

Capped Costs Pilot

PD51W Capped Costs pilot scheme was launched in January 2019 and has run for 2 years. The scheme was limited to cases valued up to £250,000 in the Business and Property Courts in Manchester, Leeds and London Circuit Commercial Court. It followed a recommendation made by Sir Rupert Jackson in his 2017 report as part of his push for fixed costs. There has been limited uptake with only one case being heard under the pilot and consequently the scheme has not been extended.

The CPRC have commented that “it was acknowledged that the broad aims remain as current as ever and the need for schemes of this kind for the efficient despatch of medium value claims, whether as pilots or not, will continue to be considered in the context of post Covid-19 recovery and new ways of conducting business litigation”.

Joanne Chase is a Senior Associate in our Costs and Litigation Funding team. If you have any questions, please contact her on 07826 166 300 or at joanne.chase@clarionsolicitors.com .

Lock Up and Cash Flow: How the Precedent H Costs Budget can assist – updating and monitoring is key

Anna LockyerLeave a comment

Please see our Costs Management team’s first of many podcasts. We include useful tips regarding how the precedent H Cost Budget can assist with lock up and cash-flow. We also discuss the statement of truth and the importance of the incurred cos. To view please follow this link.

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