Kerry Underwood

THE NEW INTERMEDIATE TRACK: SCOPE AND PROCEDURE

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This blog first appeared in Practical Law on 21 September.

I deal with this matter in detail in my Fixed Costs Autumn Tour starting on Monday 25 September– you can book here.

All of these matters are dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs, running to three volumes and 1,300 pages and costing £80.00 and available from me here or Amazon here.

This piece does not deal with the costs figures; that is for another piece.

As part of his Supplemental Report on Fixed Recoverable Costs, which will be considered by the Lord Chief Justice, Master of the Rolls and the government, Jackson LJ has proposed a new intermediate track.

This new track is a streamlined system for cases of no more than “modest complexity” valued at between £25,000 and £100,000, and lasting no more than three days at trial.

It will apply to claims that are principally for monetary relief – that is damages or debt – and will include cases where declarations are sought mainly to support the financial claim. It will not be possible to evade the scheme by including incidental claims for declarations. In exceptional circumstances a claim for non-monetary relief may be included in the track if that is necessary to provide access to justice.

Examples given in Jackson LJ’s report include individuals of modest means bringing defamation claims because of material on the internet and households seeking an injunction to restrain a private nuisance by a nearby industrial enterprise. “Modest means” is not defined and this may go no further, as means testing by the court and the need of the parties to obtain evidence is itself time consuming and expensive. It was never brought in for qualified one-way costs shifting, even though recommended by LJ Jackson.

The proposed criteria for allocating a case to the intermediate track are:

 

  • The case is not suitable for the small claims track or the fast track.

 

  • The claim is for debt, damages or other monetary relief, no higher than £100,000.

 

  • If the case is managed proportionately, the trial will not exceed three days.

 

  • No more than two expert witnesses per side giving oral evidence.

 

  • The case can be justly and proportionately managed under the new expedited procedure (see below).

 

  • There are no wider factors, such as reputation or public importance, which make the case inappropriate for this track.

 

  • Mesothelioma and other asbestos-related lung diseases are excluded.

 

  • There are particular reasons to assign a case to the track, even though it does not meet the above criteria.

 

Clinical negligence

Clinical negligence claims above £25,000 are, in principle, covered, but the report says that such claims:

“… will seldom be suitable for the Intermediate Track, unless both breach of duty and causation have been admitted at an early stage. The Multi-Track will be the normal track for clinical negligence claims above £25,000.00.” (Paragraph 3.5, page 102 of the report).

Other cases that will generally be unsuitable for the track include:

 

  • Some multi-party cases.

 

  • Actions against the police.

 

  • Child sexual abuse claims.

 

  • Intellectual property cases.

 

The complexity bands

Band 1 is likely to include quantum only personal injury claims, debt matters and simple claims where there is only one issue and the trial will take a day or less.

Bands 2 and 3 will be the normal bands “with the more straightforward cases going to into Band 2 and the more complex cases going in to Band 3.”

Band 4 will be for the most complex cases, for example a business dispute or an employers’ liability claim where there are serious issues of fact/law and the trial is likely to last three days.

A new Practice Direction will deal in detail with these matters.

Allocation to track and band

Claimants must state in the letter of claim what track and band the case should be in and the defendant must do so in the letter of response.

If the case settles before issue or allocation without agreement as to the appropriate track and band, then the judge assessing costs will decide the point.

Note that pre-action costs in an unissued case, as well as issued cases, will be subject to fixed recoverable costs.

On allocation the judge will allocate to both track and band. Either party may challenge the band, but not the track, at the subsequent case management conference. If the only reason for the case management conference is the dispute over band assignment, then the losing party on that issue pays £300 to the winner. There will be strictly limited exceptional circumstances in which a case can be removed from the intermediate track after the first case management conference, as otherwise the certainty as to costs will be lost.

It is not clear whether there will be power to move bands. It would seem sensible to be able to move down, but not up, bands, so that costs exposure could be reduced, but not increased. Thus a three day case becomes a one day case because of an admission of liability. It would make sense to move it from Band 4 to Band 1.

However one side’s costs exposure is another side’s costs recovery and so the certainty issue cuts both ways.

Procedure

Statements of case

Statements of case are to be ten pages maximum, with the court being able to order the claimant to redraft to bring it within this limit. Core documents are to be served at the same time.

Case management conference

The court will:

 

  • Review and approve a list of issues.

 

  • Resolve disputed document requests.

 

  • Consider alternative dispute resolution (ADR).

 

  • Give directions and fix a date for trial and a date for any pre-trial review.

 

  • Identify matters on which oral evidence is to be given.

 

  • Limit the number of factual witnesses using the powers contained in CPR 32.2(3).

 

  • Seek to design case management directions so as to have the trial completed in one day.

 

Disclosure 

Non-personal injury cases

CPR 31.5(3) to (8) shall not apply. Each party shall disclose:

  • The documents upon which it relies.

 

  • Any other documents or classes of documents ordered by the court at the case management conference.

The parties shall exchange document requests at least seven days before the case management conference.

Personal injury cases

There is no change in personal injury cases. Standard disclosure remains as now.

Factual evidence

Written witness statements are to stand as evidence-in-chief, with the witness statements for all witnesses of a party limited to 30 pages, so a maximum of 60 pages for both parties.

Expert evidence

Oral expert evidence is limited to two witnesses per party, but the court should aim to have only one per party. Each expert’s report is limited to 20 pages plus photographs, plans, and academic and technical articles.

Trial

The court will set time limits for oral evidence and submissions.

Applications

In so far as possible, all applications should be made at the case management conference and after that:

  • All applications and documents filed in support must be concise.

 

  • The respondent must answer in writing within seven days of service of the application notice. The response must be concise.

 

  • Any reply from the applicant must be provided within two business days of service of the response and be concise.

 

  • The court will deal with an application without a hearing unless it considers it necessary to hold them. The hearing may be by telephone.

 

  • The court will decide who shall pay the costs of any interim application and summarily assess them and such costs orders will be in addition to fixed recoverable costs.

 

Hand down of judgment

If judgment is reserved then there needs to be a separate hand down hearing, but the parties or advocates will not need to attend if all consequential matters have been agreed.

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Written by kerryunderwood

September 21, 2017 at 3:18 pm

Posted in Uncategorized

AFTER THE EVENT INSURANCE, THIRD PARTY FUNDING AND NEW FIXED COSTS REGIME: POST 7

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My Autumn Tour on the extension of fixed costs as proposed by Lord Justice Jackson and associated matters runs from Monday 25 September until Monday 16 October and these will be my only courses on this subject until at least September 2018.

You can book here.

All of these matters are dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs, running to three volumes and 1,300 pages and costing £80.00 and available from me here or Amazon here.

The issues of After the Event Insurance and Third Party Funding are not dealt with in Lord Justice Jackson’s report and there is no proposal there, or indeed amongst the torrent of Civil Litigation Reforms, to change the law or procedure in relation to either After the Event Insurance or Third Party Funding.

However, spreading Fixed Recoverable Costs to virtually all types of civil litigation where the claim is valued at £100,000 or less should make both After the Event Insurance and Third Party Funding easier to obtain.

This is because insurers love certainty and generally both ATE insurers and Third Party Funders are acting as insurers in relation to adverse costs, as well as the client’s own disbursements.

Costs, both those recoverable and those potentially payable to the other side, rise with each stage of the litigation and therefore are perfectly suited to staged premiums, with the premium rising as each stage is passed.

As part of the fee is calculated as a percentage of damages, the amount of damages directly affects costs recoverability and costs exposure, something which is not true in the open costs regime.

There is nothing to stop the ATE premium being calculated in the same way, that is a fixed core premium depending upon the stage of litigation reached, with an additional premium based on the amount of damages awarded, or the agreed settlement figure.

This introduces certainty for the parties as to costs if they have After the Event Insurance.

Thus a winning Claimant would know exactly what costs it would recover, and what ATE Insurance premium it would have to pay to its own insurers, if say the case settled for £73,000.00 after the Case Management Conference and during the process of Disclosure and Inspection.

The only element of uncertainty there is the fee due to the Claimant’s own solicitor and the Claimant and her or his own solicitor are free to agree whatever they want, but the market is likely to determine that the solicitor will charge Fixed Recoverable Costs plus a fixed percentage of damages, as now happens in virtually all work currently subject to the Fixed Costs Regime.

A losing Claimant with After the Event Insurance will pay nothing as far as adverse costs are concerned, as they will be picked up by the ATE Insurance and generally the ATE Insurance insures its own premium,  as well as other own disbursements, that is the so called Silver Bullet Scheme whereby a losing party does not have to pay its own premium.

In those circumstances the only sum payable by the Claimant would be the fees to its own solicitors, and that is a matter of agreement between them.

I suspect that the market will settle down to a system of No Win Lower Fee Agreements in most types of business litigation, with No Win No Fee Agreements in most private client litigations.

A losing Defendant with ATE Insurance is in the same position, that is that the only payments due will be to the Defendant’s own solicitors and they are free to form any type of agreement.

A winning Defendant will recover fixed costs but will also have to pay its own ATE premium, and, unlike a success Claimant, will have no recovered damages out of which to pay the premium.

Of course the Defendant will have avoided paying any damages and thus will have achieved a saving, but will not necessarily have the cash to pay the premium.

The combination of certainty of costs recovery and exposure, and ATE Insurance, enables solicitors to budget a case for a client with considerable certainty and this should lead to a very significant increase in business, especially from business clients.

I deal with this elsewhere in Marketing and Business Opportunities but a detailed knowledge of how After the Event Insurance works is essential.

There is a fly in this ointment.

I have referred throughout to certainty.

However the existence of four Complexity Bands, with markedly differently costs recovery, and therefore costs exposure, cuts across that certainty.

The problem is that neither the Track nor the Complexity Band will be determined until the judge allocates the matter post-issue, that is obviously well after the date when ATE should be taken out.

It may be that ATE insurers will deal with that by having a core fee that varies depending upon which Complexity Band the case is allocated to.

As we have seen elsewhere the Claimant’s solicitor, in the Letter of Claim, and the Defendant’s solicitor, in the Letter of Response, must state which Track and Band the matter should go into.

In the absence of agreement the matter will be decided by a judge, and if the case is settled pre-issue, and so no allocation has taken place, the judge dealing with costs will determine that matter.

This reinforces the great importance of solicitors addressing at the outset, which Complexity Band the matter should go into.

There are various tensions at play here.

A Claimant who expects to win may want to be in a higher Complexity Band so as to recover more costs, but will then pay a higher ATE premium.

A client who is less confident of winning may want, or rather the ATE insurers may want, a lower Complexity Band so as to minimise the adverse costs risks.

The After the Event Insurance premium remains recoverable in mesothelioma cases, but they will not be subject to Fixed Recovered Costs in any event – See Part 19.

In clinical negligence cases that element of the ATE premium relating to the cost of a liability and causation report remains recoverable but the costs of that report and the costs risk should not change, as it is a disbursement rather than legal costs and thus is not affected by the introduction of Fixed Recoverable Costs in clinical negligence claims.

Thus the only area where recoverability of the ATE premium remains, and which will now be subject to Fixed Recoverable Costs, is defamation and privacy.

Third Party Funding

In so far as Third Party Funders acting as After the Event insurers, all of the above points are relevant.

Third Party Funding generally also covers one’s own client disbursements, as do most After the Event Insurance premiums.

What Third Party Funding does in addition, generally, is to pay the party’s own lawyers a fee if a case is lost, and therefore effectively allows a client to have a no win no fee arrangement in circumstances where the solicitors may be unwilling to enter into such an arrangement, generally due to cash flow, rather than case-risk issues.

The value of Third Party Funding increases with the value of the claim and with the extension of fixed costs to claims up to £100,000.00, and with the £250,000.00 pilot running in the Commercial Court, Third Party Funding should become more readily available.

Some Third Party Funders are now looking at funding the firm across a basket of cases, rather than simply offering a bespoke arrangement in an individual case.

 

Also see:

FIXED COSTS REPORT OVERVIEW: POST 1

FIXED COSTS AND PART 36: POST 3

FIXED COSTS: THE FAST TRACK FIGURES: POST 4

JUDICIAL REVIEW AND FIXED COSTS: POST 5

CLINICAL NEGLIGENCE AND FIXED COSTS: POST 6

FIXED COSTS COURSE: CONTENT

FIXED COSTS COURSE

THE BAR AND FIXED COSTS

Written by kerryunderwood

September 20, 2017 at 11:26 am

Posted in Uncategorized

HOUSING CLAIMS AND THE NEW FIXED COSTS REGIME

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You can now book onto my Fixed Costs Autumn Tour – here

All of these matters are dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs, running to three volumes and 1,300 pages and costing £80.00 and available from me here or Amazon here.

Summary

All housing claims up to £100,000.00, therefore effectively all claims, are to be covered by Fixed Recoverable Costs.

Recommendations

There is no specific recommendation in relation to housing claims.

Commentary in report

At paragraph 5.18, page 88, of the report Lord Justice Jackson states:

 

“5.18 Housing claims.  The principle categories of housing claims are:

  1. Defending claims for possession, including mortgage repossession.

 

  1. Claims for unlawful eviction.

 

  1. Homelessness applications, including County Court appeals.

 

  1. Claims for breach of repairing obligations.

 

  1. Judicial review in respect of housing law issues.

The HLPA say that they are particularly concerned about housing disrepair claims because these seldom qualify for legal aid. I understand from one of my assessors, who has experience of managing disrepair cases in the fast track, that the FRC regime proposed above would be satisfactory for most disrepair claims. Most such claims would fit into either Band 3 or Band 4. Nevertheless, in certain of the cases cited by the HLPA, the recovered costs are higher than the proposed FRC (even allowing for the fact that the HLPA figures include VAT and disbursements). Possibly these are cases which ought not to have been in the fast track at all or possibly they are exceptional cases where the escape clause might be invoked (as to which see below). It is difficult to say without having the details of individual cases.”

Appendix 5 to Lord Justice Jackson’s report is:

Detailed Information on 83 Housing Disrepair Cases, collected from Solicitor members by the Housing Law Practitioners Association.

 

Fast Track

In the Fast Track, which for housing disrepair claims, but not other housing claims, is £1,000.01 to £25,000.00, claims will generally go into Complexity Band 3 or 4.

The starting point is Complexity Band 3 but with “particularly complex” cases going into Complexity Band 4.

Complexity

Few housing claims are above the general Fast Track financial limit of £25,000.00.

Any particularly complex claims I likely to be unsuitable for the Intermediate Track, which is for claims of no more than “modest complexity” and is primarily for claims suitable for the Fast Track, but for the value of the claim.

Any housing claim allocated to the Multi-Track will not be subject to Fixed Recoverable Costs.

Lord Justice Jackson states that some such claims may remain in the Fast Track, but be subject to the CPR 45.29J escape clause.

This allows parties to escape the Fast Track FRC scheme in “exceptional circumstances.”

LJ Jackson states:

“That provision will continue to apply, but its reach will be extended following the extension of FRC across the whole of the fast track. Use of this provision will continue to be rare, because any case of exceptional complexity is unlikely to be in the fast track.” (Paragraph 5.20, Page 89)

CPR 26.8 deals with the matters to be considered when allocating to the Fast Track and CPR 26.10 allows the court to reallocate a case which should not be in the Fast Track.

This is a double-edged sword as there is no system of Qualified One-Way Costs Shifting in housing claims, and so a Claimant seeking allocation to a non-Fixed Costs Track, or seeking to avoid FRC, exposes itself to a greater costs risk.

One of the unanswered questions concerns the interplay with the after the event (ATE) insurance.

Insurers love certainty, and so FRC, and therefore fixed maximum exposure to adverse costs, should make ATE insurance cheaper and easier to get.

However ATE insurers are almost certain to insist on a much higher premium if the matter is allocated to the Multi-Track, or any non-FRC scheme.

At present effectively, but not technically, only a Claimant can seek to invoke CPR 45.29J as it only applies to personal injury claims and Qualified One-Way Costs Shifting applies to all such claims.

As FRC spread to all types of civil work, any successful party, Claimant or Defendant, will be able to apply under CPR 45.29J.

Legal aid is generally not available for housing claims.

There is a powerful argument for spreading Qualified One-Way Costs Shifting regime to all housing claims.

The relevant part of the Civil Procedure Rules is CPR 45.29J to 45.29L which reads:

Claims for an amount of costs exceeding fixed recoverable costs

45.29J

(1) If it considers that there are exceptional circumstances making it appropriate to do so, the court will consider a claim for an amount of costs (excluding disbursements) which is greater than the fixed recoverable costs referred to in rules 45.29B to 45.29H.

(2) If the court considers such a claim to be appropriate, it may—

(a) summarily assess the costs; or

(b) make an order for the costs to be subject to detailed assessment.

(3) If the court does not consider the claim to be appropriate, it will make an order—

(a) if the claim is made by the claimant, for the fixed recoverable costs; or

(b) if the claim is made by the defendant, for a sum which has regard to, but which does not exceed the fixed recoverable costs,

and any permitted disbursements only.

Failure to achieve costs greater than fixed recoverable costs

45.29K

(1) This rule applies where—

(a) costs are assessed in accordance with rule 45.29J(2); and

(b) the court assesses the costs (excluding any VAT) as being an amount which is in a sum less than 20% greater than the amount of the fixed recoverable costs.

 

(2) The court will make an order for the party who made the claim to be paid the lesser of—

(a) the fixed recoverable costs; and

(b) the assessed costs.

Costs of the costs-only proceedings or the detailed assessment

45.29L

(1) Where—

(a) the court makes an order for costs in accordance with rule 45.29J(3); or

(b) rule 45.29K applies,

the court may—

(i) decide not to award the party making the claim the costs of the costs only proceedings or detailed assessment; and

(ii) make orders in relation to costs that may include an order that the party making the claim pay the costs of the party defending those proceedings or that assessment.

Written by kerryunderwood

September 19, 2017 at 8:09 am

Posted in Uncategorized

FIXED COSTS COURSE: CONTENT

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My Autumn Tour on the extension of fixed costs as proposed by Lord Justice Jackson and associated matters runs from Monday 25 September until Monday 16 October and these will be my only courses on this subject until at least September 2018.

I set out below the contents of the course and this is a useful checklist for civil litigation lawyers as to what they should be considering in readiness for the widespread extension of fixed costs.

You can book here.

You can purchase my book Personal Injury Small Claims, Portals and Fixed Costs, running to 1,300 pages and three volumes from Amazon here or from me here and it costs £80 including P&P but anyone booking onto the course gets it for £50.00 including P&P.

In spite of the title of the book, it deals with the general principles, tactics and practical considerations in relation to fixed costs and is essential reading to maximise the benefit from the new fixed costs extension material.

Lord Justice Jackson himself said of the book

“Your book is great and very readable. It is my companion on many train journeys.”

Careful readers may spot in the book matters that subsequently appeared in the report!

SECTION 1 – OVERVIEW

  1. Summary of recommendations in Lord Justice Jackson’s report

 

  1. Interplay with other civil litigation reforms

 

  1. Likely timescales re reforms

 

  1. General principles

 

SECTION 2 – THE FAST TRACK

 

  1. The new Fast Track covering all civil litigation

 

SECTION 3 – THE NEW INTERMEDIATE TRACK

 

  1. Intermediate Track: Scope

 

  1. Intermediate Track: Procedure

 

  1. Intermediate Track: The figures

 

SECTION 4 – THE COMPLEXITY BANDS

 

  1. Track and Band Allocation

 

  1. The Complexity Bands in practice

 

SECTION 5 – IN PRACTICE

 

  1. Part 36

 

  1. The Bar and solicitors

 

  1. Advocacy fees

 

  1. Tactics

 

  1. Marketing and Business opportunities

 

SECTION 6 – SOME SPECIFICS

 

  1. Clinical negligence

 

  1. Noise Induced Hearing Loss

 

  1. Holiday sickness

 

  1. Judicial review

 

  1. Court of Protection

 

  1. Business and property litigation

 

  1. Housing Disrepair

 

SECTION 7 – THE PILOT IN COMMERCIAL CASES UP TO £250,000.00

 

  1. The details

 

SECTION 8 – THE LINKS

 

  1. List of links to other material.

 

 ALSO SEE:

 FIXED COSTS REPORT OVERVIEW: POST 1

 FIXED COSTS AND PART 36: POST 3

 FIXED COSTS: THE FAST TRACK FIGURES: POST 4

 JUDICIAL REVIEW AND FIXED COSTS: POST 5

 CLINICAL NEGLIGENCE AND FIXED COSTS: POST 6

 

Written by kerryunderwood

September 18, 2017 at 9:33 am

Posted in Uncategorized

HIGH COURT MAKES NON-PARTY COSTS ORDER AGAINST COMPANY IN SAME GROUP AS CLAIMANT

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In Montpelier Business Reorganisation Ltd v Jones and others [2017] EWHC 2273 (QB) (12 September 2017)

the Queen’s Bench Division of the High Court made a Non-Party Costs Order against the 7th Defendant, NPL, a major shareholder in the insolvent Claimant company which largely lost its breach of contract claim against the first to fifth Defendants.

The court declined to make an order against another company, MPL Leeds, a subsidiary of MPL as there was no evidence that MP Leeds had funded the litigation, or controlled it, to the extent that would justify making a Non-Party Costs Order.

The order against MPL was made under Section 51 of the Senior Courts Act 1981.

The court was satisfied that MPL was the real party to the litigation and thus that it was just to make the order.

It was the vehicle through which the litigation had been funded, by an interest free unsecured loan, and was the party that would benefit directly from the claim succeeding.

The absence of impropriety in MPL’s conduct did not prevent the order from being made.

MPL’s status as a major shareholder did not bring into play the special considerations that applied to directors who funded litigation, which require an applicant for a Wasted Costs Order to show that the funder is something more than a director of the Claimant, for example that there had been improper conduct on their part in conducting the litigation.

The court held that, although the interests of directors and shareholders may often be the same, their status is completely different, as directors are officers of a company and have statutory obligations to act in its best interest.

As to the fact that the allegation that MPL also controlled the litigation was only raised for the first time in the applicant’s skeleton argument, the court held that given the evidence at trial, it should have been clear to MPL that it was being alleged that MPL was controlling the litigation.

In any event, although here there was clear evidence of such control, the absence of control did not prevent an order being made where it was just to do so.

This is a somewhat unusual set of facts in that the Non-Party Costs Order was made against a funder in the same group of companies as the Claimant, in circumstances where the funder was the real party to the litigation and would benefit if it succeeded.

That fact alone, would not of itself justify a Non-Party Costs Order being made.

The 7th Defendant, along with the 6th Defendants, was only joined into the proceedings in order for the court to consider a Section 51 Order and were not original parties to the proceedings.

Written by kerryunderwood

September 15, 2017 at 1:04 pm

Posted in Uncategorized

THE BAR AND FIXED COSTS

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You can now book onto my Fixed Costs Autumn Tour – here

All of these matters are dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs, running to three volumes and 1,300 pages and costing £80.00 and available from me here or Amazon here.

Fast Track

There is no change in relation to the existing types of personal injury cases covered by fixed costs, that is road traffic accident, employer’s liability and public liability matters, save that industrial disease cases exiting the portal will now go to fixed costs.

However in relation to Noise Induced Hearing Loss claims, Lord Justice Jackson recommends that counsel’s fees and trial advocacy fees in such cases should be the same as those in Band 4 cases.

In principle virtually all fast track cases, that is all civil litigation under £25,000, becomes subject to Fixed Recoverable Costs. However if Lord Briggs’ proposals for the Online Court is implemented, then outside the field of personal injury nearly all such claims will be in that court, with no, or very limited, costs recovery.

Band 4 is a reference to the new concept of different costs for cases of different levels of complexity.

There are four bands and in relation to Band 4 claims only, it is proposed that there be ring- fenced fees for counsel or specialist lawyers as follows:

Post-issue advice or conference –                         £1,000.00

Settling defence or defence and counterclaim –    £500.00.

 

Band 4 in the Fast Track will include employer’s liability disease claims and any particularly complex tracked possession claims or housing disrepair claims, property disputes, professional negligence claims and other claims at the top end of the Fast Track.

Thus what determines whether a case will be in Band 4, or indeed which of the other three bands, is a combination of the type of claim and the particular complexity of any given claim.

So far as counsel are concerned, the key is to get the matter into Band 4 as that is where the additional, ring- fenced, fees set out above are payable.

In addition there are additional trial advocacy fees in the Fast Track if the claim is a Band 4 one, and these additional fees are significant.

I set out the Band 1 to 3 figures as well, by way of comparison.

Stage: 1 2 3 4
Trial advocacy fee a. £500

b. £710

c. £1,070

d. £1,705

a. £500

b. £710

c. £1,070

d. £1,705

a. £500

b. £710

c. £1,070

d. £1,705

a. £1,380

b. £1,380

c. £1,800

d. £2,500

 

a = claim value up to £3,000

b = claim value £3,001 to £10,000

c = claim value £10,001 to £15,000

d = claim value £15,001 to £25,000.

 

The Fast Track remains limited to one day trials.

In relation to Noise Induced Hearing Loss claims Lord Justice Jackson had this to say:

“4.3 Counsel’s fees and trial advocacy fees. The CJC [Civil Justice Council] working group did not reach full agreement on these matters. I have considered the relevant material and the rival submissions made within the working group. I recommend that counsel’s fees and trial advocacy fees in NIHL cases should be the same as those which I propose for ‘Band 4’ cases in the next section of this chapter. Almost all NIHL claims are low value. So, as set out below, the trial advocacy fee will generally be £1,380.” (Page 84).

Counsel’s Fees Generally

Lord Justice Jackson dealt with the principle of counsel’s fees by saying:

 

“5.8 Counsel’s fees. Many of the written submissions and many speakers at the seminars maintain that fees should be specifically ring fenced for counsel. They put forward two arguments with equal vigour: (i) Ring fencing is necessary for the protection of the junior Bar, which is very much in the public interest. (ii) Counsel’s specialist input at an early stage is beneficial for the client and for the efficient conduct of the litigation. Professor Richard Disney (one of my 14 assessors) has, with good reason, questioned the validity of the first argument. I do not see how I can recommend any reform because it is necessary to ‘protect’ one part of a profession. The professions exist to serve the public, not vice versa.  It must be for the professions to organise themselves in whatever way is necessary to protect younger practitioners.  The second argument, however, does have force in relation to the more complex fast track cases.

5.9 Does that mean ring fencing for barristers alone? No. Very often barristers will do the ring-fenced work and receive the ring-fenced fee.  But on occasions the proper person to do the work and receive the ring-fenced fee may be a solicitor, for example the intended trial advocate. On some occasions the proper person to do the ring-fenced work and receive the ring-fenced fee may be a fellow of the Chartered Institute of Legal Executives with appropriate expertise. I shall use the phrase “counsel or specialist lawyer” to describe all such individuals.

5.10 In relation to Bands 1, 2 and 3 (where there is currently very little ring fencing of fees for counsel) I recommend no change to the present rules, essentially for the reasons set out in chapter 15 of my Final Report.  It is for solicitors to decide whether to do items of pre-trial

5.11 The mediated NIHL agreement provides that £500 be ring-fenced for settling the particulars of claim. I recommend that this should apply to all Band 4 cases. The mediated NIHL agreement also provides that £1,280 be paid for restoring a company to the register.  That includes both preparatory work and any necessary court appearance.  This should apply in both NIHL and Band 4 cases. The mediated NIHL agreement recommends that other counsel fees should be recovered on top of the FRC, if justified. In my view that approach is too uncertain. I recommend that in NIHL and Band 4 cases separate fees should be recovered in respect of any of the following items done by counsel or specialist lawyers:

Post-issue advice or conference                       £1,000

Settling defence or defence and counterclaim  £500

Solicitors may well choose to instruct counsel or specialist lawyers in respect of other matters, but the fees for that other work should not be recoverable as an addition to the monies set out in Tables 5.1 and 5.2.

5.12 Trial advocacy fee. The NIHL working group accepted that in NIHL cases the trial advocacy fees should be higher, but they could not agree on a figure.  Having considered the rival arguments, I recommend the trial advocacy fee should be increased as follows for both Band 4 and NIHL cases:

(a)  Claim value up to £3,000                      Trial advocacy fee £1,380

(b)  Claim value £3,001 to £10,000             Trial advocacy fee £1,380

(c)  Claim value £10,001 to £15,000           Trial advocacy fee £1,800

(d)  Claim value £15,001 to £25,000           Trial advocacy fee £2,500

CPR rule 45.39, which provides some flexibility in respect of fast track trial costs will continue to apply.” (Pages 86 & 87)

 

Intermediate Track

This new Intermediate Track will cover claims between £25,000.00 and £100,000.00 and will be subject to a streamlined procedure.

Page 105 of his report LJ Jackson says:

“5.2 Ring fencing fees for counsel. Many practitioners, both solicitors and barristers, have urged the importance of ring fencing fees for counsel. The involvement of counsel at an early stage, both in advising and drafting, brings substantial benefits. Independent counsel bringing a fresh eye to the case can focus the litigation and sometimes bring about settlement. On the other hand, the rules cannot insist upon the use of counsel. Many other specialist lawyers bring the same benefits. In my view, for the reasons set out in chapter 5, the best course is to specify fees for items of work which are to be done by counsel or specialist lawyers.” (Page 105)

 

I was one of those who urged upon Lord Justice Jackson the importance of ring- fencing fees for counsel, as I believe the continued existence of the Bar is valuable to maintain the network of independent firms of solicitors up and down the country.

That concept has been accepted by LJ Jackson and the relevant figures are in table 7.1 on pages 106 and 107 of his report.

Thus there is a counsel/specialist lawyer ring fenced fee for drafting Statements of Case and/or advising, if so instructed, and these are as follows:

Bands 1 and 2 – £1,750.00

Bands 3 and 4 – £2,000.00, but £3,000.00 if there is a counterclaim and defence to counterclaim.

That is Stage 2.

 

At Stage 7 there is provision for a further ring fenced fee for advising in writing or in conference, if instructed and the fees are:

Band 1: £1,250.00

Band 2: £1,500.00

Band 3: £2,000.00

Band 4: £2,500.00 per day.

 

There is further encouragement for solicitors to instruct counsel in that there is a Fixed Recoverable Fee for anyone from the solicitor’s office attending, whatever the level of fee earner, and those fees are:

Band 1: £500.00 per day

Band 2: £750.00 per day

Band 3: £1,000.00 per day

Band 4: £1,250.00 per day.

If the attendance is for half a day or less, then these fees are halved.

 

The actual advocacy and related matters are set out in Stages 10 to 15 of table 7.1 as follows:

Stage (S) Band 1 Band 2 Band 3 Band 4
S10 Advocacy fee: day 1 £2,750 £3,000 £3,500 £5,000
s11 Advocacy fee: subsequent day £1,250 £1,500 £1,750 £2,500
S12 Hand down of judgment and consequential matters £500 £500 £500 £500
S13 ADR: counsel/specialist lawyer at mediation or JSM (if instructed) £1,200 £1,500 £1,750 £2,000
S14 ADR: solicitor at JSM or mediation £1,000 £1,000 £1,000 £1,000
S15 Approval of settlement for child or protected party £1,000 £1,250 £1,500 £1,750
Total: (a) £30,000 (b) £50,000, (c) £100,000 damage (a) £19,150

(b) £22,150

(c) £29,650

(a) £33,250

(b) £37,250

(c) £47,250

(a) £39,450

(b) £43,450

(c) £53,450

(a) £53,050

(b) £57,450

(c) £68,450

The advocacy fee for second and subsequent days is halved if the attendance is for half a day or less.

That does not apply to the first day, when the full fee is payable in any event.

 

Seniority of counsel irrelevant

Throughout the report, Lord Justice Jackson steers away from anything that will lead to a replay of the arguments as to what level of fee earner should have been utilised.

Thus the report specifically states that in table 7.1 “solicitor” includes a representative of the solicitor’s firm, in the context of attendance of solicitor at trial, when not appearing as the advocate.

Likewise the advocacy fee, with its many variations, is nevertheless fixed, irrespective of the seniority of the barrister or solicitor appearing at trial or at the mediation or settlement hearing or whatever.

Comment

This aspect of Lord Justice Jackson’s report should be warmly welcomed by the Bar, as well as by solicitors who depend on the Bar in order to carry out litigation, especially advocacy.

Lord Justice Jackson has very clearly listened to those of us who made these points and his proposals are different from his initial thoughts a year or so earlier when considering extended Fixed Recoverable Costs.

Thus all Intermediate Track claims, that is claims valued at between £25,000.00 and £100,000.00, have elements of ring- fenced fees for counsel, and the advocacy fees should work as well.

It is now up to the Bar, as well as solicitors instructing barristers, to ensure that fixed costs work for them.

The alternative is that solicitors will increasingly carry out fixed costs work themselves.

 

 

Ring fencing of counsel’s fees in the Fast Track

Counsel’s fees 

There is an element of ring fencing counsel’s fees in the Fast Track.

This applies to matters in Complexity Band 4, the details of which are set out above.

These fees are as follows:

Post-issue advice or conference –                                      £1,000.00

Settling defence or defence and counterclaim –                 £500.00.

 

Although I refer to the ring- fencing of counsel’s fees, such a fee is also payable to a specialist lawyer instructed by the solicitors.

This wording exists in the current rules in relation to the additional fee of £150.00 payable if the advice of counsel or a specialist lawyer is required to advise on quantum in a claim valued at over £10,000.00.

It is still not clear whether a specialist lawyer can be someone else in the same firm of solicitors, or has to be an outside lawyer.

For an additional fee of £150.00 under the current scheme, no one got too concerned about this.

However with potential additional fees throughout the case of £1,500.00, this should be clarified.

If one cannot instruct another lawyer in the same firm, then there is nothing to stop firms of solicitors having mutual arrangements whereby they refer these elements of work to each other on their cases.

There is nothing wrong with that – on of the reasons for instructing someone else is an independent view and a fresh pair of eyes.

In relation to what is a specialist lawyer Lord Justice Jackson says this:

“Does that mean ring fencing for barristers alone? No. Very often barristers will do the ring-fenced work and receive the ring-fenced fee. But on occasions the proper person to do the work and receive the ring-fenced fee may be a solicitor, for example the intended trial advocate. On some occasions the proper person to do the ring-fenced work and receive the ring-fenced fee may be a fellow of the Chartered Institute of Legal Executives with appropriate expertise. I shall use the phrase “counsel or specialist lawyer” to describe all such individuals.”

That is still not clear as to whether it can be a specialist lawyer in the same firm, but it appears that certainly a solicitor trial advocate in the same firm could be instructed.

This is potentially significant for solicitors, especially as the Band 4 advocacy fee is very substantially higher than the advocacy fee for Complexity Bands 1 to 3 as seen in the above table.

This may prove to be something of a doubled edged sword for counsel. The significant extra fees available may encourage firms of solicitors to engage and develop solicitor advocates to do this work and earn these extra fees whilst the routine preparation work is done by more junior staff.

This model fits well as the same fee is paid throughout the Fixed Costs Regime, whoever the work is performed by.

Thus a model of a junior lawyer preparing the case and taking advice from a more senior solicitor advocate within the firm as and when necessary, being paid for that advice, as well as any trial advocacy, may be an attractive one.

See below for a worked through Intermediate Track case.

Can the solicitor pay counsel less than the fixed cost?

The short answer is “yes” in that if solicitor and counsel agree a lower fee than the fixed recoverable costs fee, and do not seek to charge that from the other side, then there is no problem.

However, there is no point whatsoever in doing that.

It may be the case that counsel is not prepared to work on a No Win No Fee basis, but is prepared to accept a fee which is lower than the ring fenced fixed recoverable advocacy fee or advice fee or whatever.

The answer there is for solicitor and counsel to have a No Win Lower Fee, whereby the lower fee is payable in any event and the full recoverable fee is payable in the event of success.

This limits the solicitor’s/client’s liability if the case is lost but means that the indemnity principle causes no problems if the case is won and obviously then everyone will want to recover the full fixed cost from the other side.

In Nizami v Butt [2006] EWHC 159 (QB)

the court held that the indemnity principle did not apply in fixed costs cases.

However, until case law develops, I would not want to rely on that in a situation where there can be no liability for the client and/or the solicitor to pay counsel the full recoverable fixed fee, and as set out above this problem is easily avoided by having a solicitor and counsel No Win Lower Fee Agreement.

Success fee

This does not mean that the total charge to the client is limited to the fixed recoverable costs.

In a No Win Lower Fee Agreement there can still be a success fee on the normal charge – see Gloucestershire County Council v Evans & Others [2008] EWCA Civ 21. –

This makes sense as in a No Win Lower Fee the fee on defeat is zero and the fee on success is the solicitor and client rate, but with an uplift to reflect success.

 

Intermediate Track – an issue magnified

 

Let us take an Intermediate Track Band 4 advocacy fee for a three day case.

The fixed recoverable costs for advocacy are £10,000.00 – see Stages 10 and Stages 11 of the matrix in my original post.

Solicitor and counsel could have a No Win Lower Fee Agreement whereby counsel is paid say £5,000.00 on defeat,  that is half the recoverable fixed costs.

The ordinary rate in the agreement could be the fixed recoverable costs sum of £10,000.00, but I will come back to that point.

There could be a 50% success fee for counsel to reflect the fact that s/he is only receiving half of the fee if the case is lost.

Thus in the event of success counsel would receive £15,000.00, of which £10,000.00 would be recoverable from the other side and £5,000.00 payable by counsel’s successful client.

There are endless variations, which I will deal with on another occasion, but the main point to note is that the success fee cannot exceed 100% of the ordinary rates.

It is that ordinary rate, in this case £10,000.00 which forms the basis of the maximum 100% success fee.

It is not the lower fee of £5,000.00 that forms the base fee on which the success fee is based.

This appears to be an illegal 200% success fee as obviously £15,000.00 represents a 200% uplift on £5,000.00.

That is where the logic of Gloucestershire County Council v Evans comes in – normally the lower fee would be zero and obviously any percentage uplift on zero is zero.

Thus it is unquestionably always the case that the normal fee, in this case £10,000.00, forms the base fee on which the maximum, or indeed any other, uplift is calculated.

 

Part 36

I refer above to the ordinary base fee in the agreement , that is not the discounted fee, being £10,000.00 as that would be the fixed recoverable costs in this case.

However, by definition, one would hope that if a matter is going to trial both parties will have made Part 36 offers. The Defendant may choose not to if they think the case has no merit, but a Claimant should always have made such an offer, and indeed risks being punished in costs for not doing so.

Lord Justice Jackson proposes that the concept of indemnity costs in Part 36 disappears in fixed costs cases and be replaced by a fixed percentage uplift.

That was indeed my submission to Lord Justice Jackson.

He says that that uplift should be either 30%, or 40%.

Assuming that it is 40%, that would obviously give a recoverable fee of £14,000.00, and not £10,000.00, in a Band 4 three day Intermediate Track trial where the Claimant wins and has matched or beaten its Part 36 offer.

Irrespective of Nizami v Butt, my view is that if the standard fee in the agreement is £10,000.00 then that is the limit of recovery.

This is unexplored territory, as currently in a fixed costs case beating a Part 36 offer escapes fixed costs and triggers indemnity costs and there is no doubt that Nizami v Butt does not apply when open, indemnity costs are awarded.

However, the whole point of the 40% uplift, is that it will be fixed and forms part of the Fixed Costs regime, and arguably Nizami v Butt saves the day for the Claimant in such a situation.

However, there is no point in taking the risk.

Thus in this scenario, that is a three day Intermediate Track Band 4 trial, the client/solicitor/counsel agreement should provide for a fee of £14,000.00, so as to satisfy the indemnity principle if the fixed 40% Part 36 uplift is achieved.

Subject to the success fee not exceeding 100% of those base costs of £14,000.00, client and solicitor and counsel are free to agree whatever they want.

A properly drawn Conditional Fee Agreement can provide that in any event the total charged to the client is limited to what is recovered from the other side, or more likely that the total charged to the client is limited to what is recovered from the other side plus a percentage of damages.

The effect of this is that if the Part 36 offer that the Claimant has made is not matched or beaten, that the Claimant still wins and beats any Defendant’s Part 36 offer, then although the agreement provides for payment of £14,000.00 fee to counsel, the parties can agree that that will only be £10,000.00 in those circumstances.

The key is a properly drafted agreement and I can help J.

Personal injury

In personal injury cases there is an additional requirement that the success fee should not exceed 25% of damages, and there are further restrictions on the damages that form the Allowed Damages Pool, which is the fund subject to the 25% charge.

Solicitor paying counsel less than fixed recoverable costs and keeping the change

Adopting the scenario above, could a solicitor agree with counsel a fee of say, £5,000.00 and not £10,000.00 but still recover the full £10,000.00 from the losing party as fixed recoverable advocacy costs?

Yes, in my view, provided the agreements are prepared properly.

Thus, an overall charge to the client of say fixed recoverable costs plus 30% of damages, with the solicitor to discharge any counsel’s fees or solicitor agent fees or whatever, does allow the solicitor to instruct counsel on whatever basis a solicitor and counsel agree.

This principle has been established in a number of cases, for example in Crane v Canons Leisure Centre [2007] EWCA Civ 1352 and Stringer v Copley in relation to outsourcing of work, that is that in principle there is no difference between a solicitor making profit on outsourced work as compared with making a profit on work done by an assist solicitor or trainee solicitor or whatever.

What I think is not permissible is to present a bill stating that counsel’s fee of £10,000.00 has been incurred if in fact counsel has only been paid £5,000.00.

However, the point of fixed costs, is that normally no bill is sent to the other side as the costs are fixed – that is the point!

Whether counsel are prepared to agree such an agreement is a market issue.

This comes back to the point raised above – if solicitors say “Well these ring fenced fees are good – I think I will instruct a specialist lawyer in my own firm and have the advocacy done in my own firm unless counsel will do it for a lower fee”, then the Bar has a problem.

Success fees for the Bar

As I understand it, the general position now that success fees are not recoverable from the losing party is that counsel are often instructed on a No Win No Fee basis but do not get a success fee in the event of winning.

It is not for me to comment on the rights and wrongs of that – again it is a question of market forces.

Talk!

What seems to me of crucial importance now is that barristers and solicitors start talking to each other to make arrangements for when these dramatic changes come in, probably on 1 October 2018.

Make no mistake – there are cases in solicitors’ offices now which will be subject to the new regime.

The letter of claim must state which track and complexity band the claimant thinks the case should be in. Defendants must do the same in the letter of response.

If the case settles before issue or before allocation, then the band allocation decision will fall to the judge assessing costs if there is no agreement between the parties.

Thus counsel’s fee will be determined by the letter of claim and response, and so the bar may care to try and become involved at that stage in advising on the appropriate track and complexity band.

 

Also see:

FIXED COSTS REPORT OVERVIEW : POST 1

FIXED COSTS AND PART 36: POST 3

FIXED COSTS: THE FAST TRACK FIGURES: POST 4

JUDICIAL REVIEW AND FIXED COSTS: POST 5

CLINICAL NEGLIGENCE AND FIXED COSTS: POST 6

Written by kerryunderwood

September 12, 2017 at 10:28 am

Posted in Uncategorized

CLINICAL NEGLIGENCE AND FIXED COSTS: POST 6

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All of these matters are dealt with in my new book – Personal Injury Small Claims, Portals and Fixed Costs, running to three volumes and 1,300 pages and costing £80.00 and available from me here or Amazon here.

Clinical Negligence

Clinical negligence is dealt with in chapter 8 of the report here, at pages 113 to 118.

Summary

It is recommended that there be a Fixed Recoverable Costs grid for all claims up to £25,000.00, the details to be determined by a joint Civil Justice Council/Department of Health working party and such grid to cover claims up to £25,000.00 in all tracks.

“Conclusion and recommendation

  1. Conclusion

6.1          Recommendation. I recommend that the Civil Justice Council should in conjunction with the Department of Health set up a working party, including both claimant and defendant representatives, to develop a bespoke process for clinical negligence claims initially up to £25,000 together with a grid of FRC for such cases.”

 

Thus no specific proposal is made as to the level of FRC in clinical negligence claims.

The aim of the proposed working party will be to develop a bespoke process for clinical negligence claims initially up to £25,000.00 with a grid of Fixed Recoverable Costs for such cases. (My italics).

That grid would cover 63.15% of successful claims.

Taking into account unsuccessful claims, where obviously no costs are awarded to the claimant, such a scheme would result in open costs, as compared with fixed costs, in 19.81% of cases, with just over 80% of cases resulting in no award or an award of £25,000.00 or less.

If, in due course, all claims up to £100,000.00 were included in line with other litigation, then that would leave 6.62% of cases subject to open costs recovery.

2.93% of cases result in awards or settlements of over £250,000.00.

These statistics are on pages 113 and 114 of the report.

It should be noted that LJ Jackson proposes an FRC grid for all clinical negligence claims up to £25,000.00 “regardless of whether they are suitable for the Fast Track, the Intermediate Track or the Multi-Track.”

This is significant. Few clinical negligence claims are allocated to the Fast Track, and the Intermediate Track is as yet an unknown quantity, so a FRC scheme limited to the Fast Track would leave nearly all cases subject to open costs. That is not going to happen. Value, not track, will determine whether or not the matter is subject to FRC.

Thus clinical negligence cases may be the first multi-track claims to be subject to FRC and may pave the way for other types of multi-track cases to be brought within FRC.

“Once delivered and implemented, in time it might be possible to extend the success of such an initiative to claims of somewhat higher value.” (Paragraph 5.4).

The report also says that a minority of clinical negligence claims valued at between £25,000.00 and £100,000.00 might be suitable for the new Intermediate Track.

An example given is of a case where the defendant admits breach and causation in the protocol period with only relatively straightforward quantum issues to be resolved.

Given the National Audit Office’s report in September 2017, and given that most defence costs in clinical negligence are paid by the state, I suspect that this will be the first type of work to be subject to FRC for all cases, whatever their value.

Timescale

Unlikely to be before April 2019.

 

Also see:

FIXED COSTS REPORT OVERVIEW : POST 1

FIXED COSTS AND THE BAR: POST 2

FIXED COSTS AND PART 36: POST 3

FIXED COSTS: THE FAST TRACK FIGURES: POST 4

JUDICIAL REVIEW AND FIXED COSTS: POST 5

Written by kerryunderwood

September 11, 2017 at 12:40 pm

Posted in Uncategorized

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