Ensure consistency between your Costs Budget and Bill of Costs

June 25, 2019June 28, 2019 andrewmcaulayLeave a comment

Consistency and a true connection between Costs Management and Detailed Assessment is essential for the successful recovery of costs on Detailed Assessment.

If a costs budget is prepared incorrectly, which creates a disconnection between the costs budget and bill of costs, then you can expect a costs law obstacle course and a heavy migraine on detailed assessment.

The case of MXX -v- United Lincolnshire NHS Trust [2018] is a great example, which is summarised below:

Background, Retainer and Hourly Rates

The Claimant instructed her Solicitors in 2012 and the matter was funded by way of a Conditional Fee agreement with the rate for the conducting lawyer (Grade A) agreed at £335 per hour.

In August 2013 the rate for the conducting lawyer increased to £460 per hour (this was an error). In January 2015 the hourly rate was reduced to £350 (effective from May 2014). It was increased to £360 in 2015 and £365 in 2016.

The substantive proceedings related to a high value injury claim, with quantification being resolved in November 2016. The claim was subject to a Costs Management Order dated 2 March 2015.

Detailed Assessment Proceedings were commenced in March 2017 and the bill of costs totalled circa. £1.3 million.

Background to the Costs Management Order

At the CCMC, the District Judge dealt with estimated costs and correctly stated that the incurred costs were for detailed assessment. The hourly rate included in the costs budget for the conducting lawyer was £465 per hour.

In respect of the estimated costs, the Judge indicated a composite rate of £280 per hour, which the parties then used to agree the estimated costs for each phase.

Discrepancies between Budget and Bill

Following the commencement of detailed assessment proceedings, the Defendant compared the costs budget (Costs Management Order) with the bill of costs and noted the following discrepancies:

Substantial differences in relation to hourly rates.The hourly rate included in the costs budget for the conducting fee earner was £465.00 per hour, but in the bill of costs hourly rates of £335.00 and £350.00 were claimed; and
The bill of costs included roughly 144 to 147 hours less time for incurred costs than the costs budget.

The Defendant had legitimate concerns and made an Application for an Order pursuant to CPR 44.11, arising out of what the Defendant described as a mis-certification of the Claimant’s costs budget in the substantive proceedings.

Decision

It is well worthwhile reading the Judgment and the very articulate submissions advanced by both parties. This will help you to fully understand the decision, which was as follows:

The Master did not find that the errors regarding the rates for the conducting fee earner (in respect of estimated costs) or the significant time discrepancies in relation to the time included in the costs budget and the bill of costs amounted to improper conduct.

However, the Master did find that there was improper conduct in relation to the inflated rate/s claimed within the budget (as incurred costs).The Master had previously dealt with a case with some similar issues (Tucker v Griffiths & Hampshire Hospitals NHS Trust 2017) and decided to apply the same sanction in this case as he did in that case, which was to disallow the items claimed in the bill of costs which related to the Costs Management Order.The Defendant had submitted that the Claimant’s bill of costs should be reduced by 75% due to the errors, but the Master said:“Whilst those behind the Defendant in both cases may have considered the sanction in Tucker to be insufficient, it seemed to me to be the only appropriate sanction. There is nothing wrong with the Bill in terms of the indemnity principle. The problem lies with the budget. I consider it to be entirely appropriate to impose a sanction in respect of the work which caused the problem.That work is the non-phase time spent creating and maintaining the budget. It would be wrong in my view retrospectively to disallow some of the budget itself”.
The decision in this case (and in the case of Tucker) are both cases which were before Master Rowley at the Senior Courts Costs Office. Another Court/Judge could reach a different conclusion and I certainly expect to see this issue again before the Courts for the following reasons:

Lawyers do not time record consistently within their respective departments and firms, which means that discrepancies between budgets and bills will continue to regularly occur and a different Judge/Master may well adopt a more stringent approach;

Costs Budgets are regularly being prepared by non-specialists and prepared very “late in the day”, which leads to errors; and

There is a misconception that the costs budget is a more flexible document than a bill of costs i.e. the statement of truth to a bill of costs carries more weight than a statement of truth to a bill of costs.It is very important that all lawyers (and law firms) approach Costs Management consistently and understand the importance it has on detailed assessment. If that is done, then it leads to a consistent bill of costs, less obstacles on detailed assessment and no migraine – but maybe a headache!

This blog was prepared by Andrew McAulay who is a Partner at Clarion and the Head of the Costs and Litigation Funding Team. Andrew can be contacted at mcaulay@clarionsolicitors.com or on 0113 336 3334

NB There are some other interesting points and views in the Judgment which I will cover in a further blog.

Court of Protection Costs – Types of Assessments for your Costs.

May 8, 2019May 8, 2019 joshuasiddingLeave a comment

The previous blog in this series focused on the process of what goes into a Bill of Costs in the Court of Protection world. This blog will instead look at the process of an assessment in the Court of Protection and the different types of assessment that can occur.

Firstly, authority for the cost’s assessment must be established, as all Orders as to costs are at the discretion of the Court of Protection. There are three main methods of evaluating costs; agreed costs, fixed costs and summary/detailed assessment of Costs.

Agreed Costs

These kinds of costs Order are not regularly available in Court of Protection cases. As a principle, all bills of costs must be assessed, except where fixed costs are available. However, the Court may authorise parties to agree costs, where appropriate to do so. This is often used upon the death of a Protected Party whereby the Deputy is expected to agree costs with the Executor of the estate.

Fixed Costs

Found within Practice Direction 19B, fixed costs are available to solicitors and professionals acting as Deputy. The general rule is that costs of the proceedings should be paid by P or charged to their estate, but this rule can be departed from.

In Cases where fixed costs are not appropriate, professional Deputies may, if preferred, apply to the SCCO for a detailed assessment of costs. However, this does not apply if P’s net assets are below £16,000. In these cases, the option for detailed assessment will only arise if the Court makes a specific order.

Detailed Assessment

The detailed assessment of costs under Orders or Directions of the Court of Protection is dealt with in accordance with the Civil Procedure Rules. Professional Deputies should lodge a request for detailed assessment with the SCCO (not the Court of Protection or the Office of Public Guardian) using the N258B (request for detailed assessment), accompanied by:

The bill of costs;
Documents giving the right to detailed assessment;
Copies of all the orders;
Fee notes of counsel or experts;
Details of other disbursements;
Postal Address of any person who has a financial interest in the outcome of assessment;
Relevant assessment fee (£115 or £225);
The OPG105 (if applicable).

Part 27 of the Practice Direction 17.2(2) states that cases over £100,000.00, complex or other cases are to be dealt with by a Master. The relevant papers in support of the bill must only be lodged if requested by the Master.

Once the bill of costs is lodged in the correct manner, the Costs Officer will review the bundle of documents and assess the costs. The Costs Officer will review the bill of costs alongside the files of papers and decide whether costs have been reasonably, necessarily and proportionately incurred, making reductions, where necessary based on relevant case law and judicial decisions. The bill of costs is thereafter returned to the Deputy for consideration.

Clarion can also assist with requests for reassessment if the outcome is not as expected. If you would like further information about this process, then please do not hesitate to get in contact.

Joshua Sidding is a Paralegal in the Court of Protection Team of the Costs and Litigation Funding Department at Clarion Solicitors. You can contact him at Joshua.sidding@clarionsolicitors.com and 0113 222 3245, or the Clarion Costs Team on 0113 246 0622.

You can also take advantage of our free telephone advice service – available outside of office hours – by calling 07764 501252.

Costs Capping Pilot Scheme

April 30, 2019 Sue FoxLeave a comment

Sir Rupert Jackson’s proposal regarding costs capping is now a reality, with the launch of the voluntary capped costs pilot scheme on 14 January in London, Manchester and Leeds Business and Property Courts.

The aim of the pilot scheme

The aim of the scheme is to improve access to the Courts through:

streamlining the procedures of the Pilot Courts;
lowering the costs of litigation;
increasing the certainty of costs exposure; and
speeding up the resolution of claims.

The pilot will provide for a cap on recoverable costs for each stage of the case, and an overall cap on the total, rather than a fixed sum. The maximum a party will be ordered to pay will be £80,000.

The promise of a fixed recoverable costs scheme was first made two years ago by Sir Rupert Jackson in his IPA annual lecture “The Time Has Come”. His view was that “high litigation costs inhibit access to justice. They are a problem not only for individual litigants, but also for public justice generally. If people cannot afford to use the courts, they may go elsewhere with possibly dubious results. If costs prevent access to justice, this undermines the rule of law”. He predicted, or perhaps rather hoped, that the fixed recoverable costs project could be accomplished during the course of that year.

However, the flurry of chatter and speculation regarding the fixed recoverable costs scheme was left behind in 2016 and, as we moved into 2017, it was replaced with Sir Rupert’s proposals regarding costs capping, which he advised would follow the model used in the Intellectual Property Enterprise Court.

About the pilot scheme

This newly launched pilot scheme will last for two years. For those cases with a monetary value that are less than £250,000, and where the trial is two days or less, the voluntary pilot scheme is available. It cannot be adopted, however, for any cases where there are allegations of fraud and dishonesty; where extensive disclosure, witness evidence or expert evidence is likely; or where the claim will involve numerous issues and numerous parties.

Agreement of both parties is essential if the pilot’s shortened litigation process is to be pursued. The claim will exit the pilot if there is any dispute by any party in that regard. This shortened process is expected to be less costly, with the initial statements of case being limited in length and accompanied by the documents upon which the party proposes to rely.

Further, witness statements will also be limited in length, with the general rule being reliance on oral evidence of two witnesses. There are restrictions placed on expert evidence, which will only be permitted if the court is satisfied that it’s necessary, and it is likely to be on a single joint basis.

The trial judge will take a hands-on approach, to ensure that the trial estimate is adhered to, and has the power to strictly control cross-examination. When the several imposed time limits for filing the documents are considered collectively, the whole process – from the issue of the claim to the hearing of the trial – should not exceed 11 months.

The costs for each phase of the litigation is restricted to the cap and an assessment of costs is still required. Costs budgeting and detailed assessment are not applicable, with summary assessment being the favoured choice of the rule makers. The normal practice of filing the statement of costs prior to the hearing and the assessment of those costs then taking place at the trial will be avoided. Instead, the parties shall file and exchange schedules of their costs incurred in the proceedings not more than 21 days after the conclusion of the trial.

The schedules shall contain details regarding each applicable stage in the Capped Costs Table. The maximum cap of £80,000 for recoverable costs does not include court fees, VAT, enforcement costs and wasted costs, which are claimed additionally.

For those instances where Part 36 offers have been made the cap is increased to £100,000, and so Part 36 offers continue to play a central role.

With claims now able to be issued and pursued to trial in less than 12 months, and with costs not exceeding £80,000, will more parties engage in litigation? Or, conversely, will this restriction on the amount of costs that can be recovered be off putting? Only time will tell.

Sue Fox is a Senior Associate and the Head of Costs Management in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact her at sue.fox@clarionsolicitors.com and 0113 336 3389, or the Clarion Costs Team on 0113 246 0622.

The Senior Court Costs Office Guide – how to get paid for your work!

April 17, 2019April 16, 2019 bridiesandersonLeave a comment

A recent publication of the Senior Courts Cost Office Guide was produced as a result of various changes in the way legal costs are being assessed. However, in respect of Court of Protection costs, not a great deal has changed since its inception. As a result, the 2018 guide brings the perfect opportunity to review the position on Court of Protection costs, getting paid for your work and the rules to follow.

Initially, Section 25 of the Mental Health Act 2005 created the weight of the Court of Protection, which protects the property and financial affairs of persons who lack the capacity to manage their own.

There are three methods for recovering your costs; Agreed costs, Fixed costs and Summary Detailed Assessment of costs.

Most Orders will contain a clause entitling the professional Deputy to be paid for the work undertaken. It will provide the option of taking fixed costs or having the costs assessed, subject to the terms of the Order.

Agreed Costs

As set out in the Guide, Agreed Costs are not generally available and would only be necessary in the circumstances that fixed costs do not cover the work undertaken and it would not be appropriate to undertake a costs assessment. For example, following the death of a Protected Party, they are often required to attempt to agree their costs to bring the matter to a smooth conclusion.

Fixed Costs

Practice Direction 19B supplementing Part 19 of the COP Rules 2017 sets out fixed costs that may be claimed by Solicitors and office holders in public authorities acting as Deputy for the Protected Party. However, the Court has the discretion to apply the rules to other professionals such as accountants and case managers acting as Deputy. The general rule is that the costs of the proceedings should be paid by the pp1 or their estate unless a Court Order provides for an alternative. Where a Court Order or direction provides for a detailed assessment, the Deputy can choose to take fixed costs in lieu.

Detailed Assessment

Professional Deputies should lodge a request for Detailed Assessment with the SCCO by way of N258b form. Accompanied by:

the Bill of Costs
the document giving right to Detailed Assessment
copies of the Court Orders
any fee notes of Counsel and/or expert as claimed within in the bill
Written evidence of any other disbursement exceeding £500
The relevant lodgement fee (currently £225.00 for detailed bills over £3,000, £115.00 for short form bills under £3,000)
A copy of the OPG105 relating to the time period claimed within the Bill of Costs

In cases with costs exceeding £100,000.00, they are to be dealt with by a Master, and the relevant papers in support of the bill must only be lodged when requested.

It should be noted that, unlike litigation costs, a Court of Protection bill MUST NOT be filed electronically.

Once the assessment has taken place, you have 14 days from the date of receipt of the assessed bill to raise an appeal if dissatisfied. If following the review, you remain dissatisfied at the outcome, the SCCO will arrange a date for a oral hearing before a Master. In practice this is usually by telephone or letter.

After completion of the assessment, the Professional Deputy must complete the bill summary on the bill certifying the castings as correct, returning the original bill to the SCCO to enable them to issue the Final Costs Certificate, which is your authority to be paid.

Payments on account

Section 6 of the COP Practice Direction 19B states that Professional Deputies who elect for detailed assessment of the annual management charges can take payments on account for the first, second and third quarters of the year which are both proportionate and reasonable to the size of the estate. The interim bills must not exceed 25% of the estimated charges, so no more than 75% for the annum. The details of the interim bills received must be outlined within the Bill of Costs submitted to the SCCO.

If you require any further information, please contact bridie.sanderson@clarionsolicitors.com or call me on 0113 336 3350

What do Court of Protection Costs draftsmen actually do?

April 5, 2019April 5, 2019 joshuasiddingLeave a comment

The legal world of costs is not the biggest or most well-known, and it’s often the case that many lawyers aren’t sure what Draftsmen actually do. This is especially true if the costs are related to the Court of Protection, as it’s another area that isn’t particularly familiar to many, with some potentially not even knowing which costs are assessed, or how.

The previous blog in this series focused on the Bill of Costs and the process of claiming your costs and ultimately getting paid. This blog will instead breakdown the process of what goes into a Bill of Costs within the Court of Protection world and how the Costs Draftsmen – and women – here at Clarion can help.

Process for creating a Bill of Costs

Arranging the file

Once we receive a file from one of our clients, it’s opened within our case management system and we assess how long the Bill will take to draft and which one of the Draftsmen would be best suited to do it. We review various points including: the specific needs of the client, the amount of work in progress (WIP) on the file received, the complexities involved, and the workload of the Draftsmen involved to determine who in our team is best placed to prepare the Bill of Costs. There are 10 of us who deal with Court of Protection costs on a daily basis.

Drafting the Bill

Thereafter, once the file is allocated, our job is to match up entries on the file and billing ledger and cost the file as appropriate. At Clarion, we review the file of papers on a page by page basis, for completeness. The costs are calculated electronically to ensure absolute accuracy and we will make note of any issues identified, to be raised with the client. We are fully aware of the restrictions and court requirements as to what is and is not recoverable in Court of Protection cases. As a result, we will use our experience and discretion to put the bill of costs together in a way that the Court will be happy with, which is fundamental for our clients’ reputations.

Reviewing the file and the Bill of Costs

Once the whole file is efficiently costed, the Draftsman reviews the file and ledger once more and notes any missing entries on the ledger that are not evidenced in the file. We also check if there are things within the file that could be included in the Bill of Costs, that the fee earner didn’t know could be recovered. If there is anything missing from the file, the client is informed, giving them the opportunity to provide the documents required, to ensure that a complete log of evidence is submitted to the Court.

Collating and arranging the Bill of Costs and bundle

Once all the information is present and the Bill of Costs complete, Clarion prepares the Form N258B, which is a request for detailed assessment of the costs, if they are payable out of a fund. We also draft a comprehensive letter of advice, informing the client of possible reductions and guidance to improve costs recovery going forward. All documents are returned to the client, enabling them to easily submit them to the Court for assessment.

The assessment

The matter is thereafter assessed by the SCCO on the Standard Basis, and Clarion will consider the outcome of the assessment, to determine if it is reasonable or not. Clarion can also assist with requests for reassessment if the outcome is not as expected.

If you would like further information about this process, then please do not hesitate to get in contact.

You can also take advantage of our free telephone advice service – available outside of office hours – by calling 07764 501252

Changes in relation to CPR Practice Direction 21

March 29, 2019May 3, 2019 andrewmcaulayLeave a comment

From 6 April 2019, Practice Direction 21 of the CPR will be amended to make it compulsory for a bill of costs or a “informal breakdown in the form of a schedule” to be prepared and filed with any application for the approval of payment of expenses from the damages of a protected party or minor.

Many cases now settle by way of a JSM or Mediation. We recommend preparing a Bill of Costs for the JSM or Mediation in order to:

Try and reach settlement of costs at the ADR meeting (to avoid the time and expense of detailed assessment);
If a settlement on costs cannot be achieved, then to obtain a healthy payment on account; and
Proceed swiftly post settlement with any application under CPR 21 (where applicable)The bill or schedule should make a clear distinction between inter partes and solicitor/own client costs. In terms of a schedule, we recommend preparing a statement of costs for summary assessment (Form N260 or N260B) which can be adapted, where appropriate.The bill or schedule will enable the Judge at the approval hearing to properly determine the appropriate amount to be deducted from damages, which may include (in terms of a Solicitor) a success fee, ATE insurance premium and any inter partes costs shortfall (if claimed).This blog was prepared by Andrew McAulay who is a Partner at Clarion and the Head of the Costs and Litigation Funding team. Andrew can be contacted at andrew.mcaulay@clarionsolcitors.com or on 0113 336 3334.

The new statement of costs goes live on 1 April 2019

February 26, 2019March 1, 2019 Sue FoxLeave a comment

I have further updates regarding the new statement of costs following on from our January newsletter. The pilot scheme will operate from 1 April 2019 to 31 March 2021 and will apply to all claims in which costs are to be summarily assessed, whenever they were commenced. There will be two statements of costs which may be used whilst the scheme is in force; the N260A when the costs have been incurred up to an interim application and the N260B when the costs have been incurred up to trial. The N260 will be available in paper/pdf form and in electronic form. Parties are able to use the paper/pdf form only, however if they use the electronic spreadsheet form this must be filed and served in paper form and electronic means. The format has changed and the document schedule now requires the time entries to be dated.

In cases which have been subject to a costs management order, any party filing the form N260B must also file and serve the precedent Q (which is a summary that details any overspend/underspend for each phase of the budget). Now that the court can identify overspends in the budget, will this additional layer of information result in more costs being summarily assessed and less detailed assessments? Will this assist with applications for payments on account? Will we see the N260B being used at trials that are listed for more than one day, to demonstrate that there hasn’t been any overspend in the budget and resultantly the budgeted costs being allowed in full? Possibly, but only if the incurred costs are identified separately to the estimated costs, please see my earlier blog for a more detailed analysis in that regard.