Kerry Underwood

FIXED COSTS AND THE BAR

with 6 comments


This article first appeared on the Practical Law Dispute Resolution Blog on 25th May 2017.

 

It is accepted by solicitors and the Bar alike that, as fixed fees are introduced, solicitors will become more reluctant to instruct counsel, on the basis that they feel that they are spending their own money, rather than incurring a disbursement, which is then recoverable from the other side in the event of success.

 

Give solicitors a fixed fee of say £3,000 with counsel’s fee as a recoverable disbursement of, say, £750  and counsel will be instructed, but pay an inclusive fee of £4,000 and the solicitors will do the work themselves, even though they would be £250 better off than under the first scheme.

 

This has for long been the case where costs are not recoverable, for example in employment tribunals, and also in the existing fixed costs regime, covering most personal injury claims up to £25,000.

 

This current fixed costs scheme provides for a legal spend, with no separate fee for counsel, with one minor exception worth only £150. Solicitors are free to instruct counsel, but that is regarded as an office overhead in the same way as employing a solicitor, rather than a disbursement.

 

The advocacy fee is a free standing fixed extra fee in all fast track cases, not just personal injury work, and that is payable whether the advocacy is conducted by a solicitor or barrister or legal executive.

 

It makes sense. If counsel’s fees were an add-on for anything and everything, then some solicitors would pocket the fixed fee but instruct counsel to deal with the whole case.

 

Jackson LJ’s initial view a year ago was that the same principle should apply in all fixed cost civil litigation with a potential value of up to £250,000 damages.

 

While seeing the logic of that, it would seriously threaten the existence of the junior civil Bar. I believe that the maintenance of an independent Bar is of crucial importance, not only to the Bar itself, but to small and medium sized solicitors’ firms that often need recourse to the Bar.

 

Having an independent and sustainable Bar also sustains a nationwide network of solicitors able to carry out litigation work.

 

It looks increasingly likely that there will be a new intermediate track to sit between the fast track and the multi-track and that fixed recoverable costs will not spread to the multi-track at the moment, but will cover all intermediate track work.

 

It is likely that that intermediate track will cover work valued at between £25,000 and £100,000.
Consideration should be given to specific fixed fees for specific activities, generally carried out by counsel, but possibly a specialist solicitor, for work in that intermediate track. Those specific tasks could include:

 

  • Drafting pleadings.

 

  • Conferences.

 

  • Advices.

 

I am anticipating that advocacy fees will remain separate and fixed, whoever carries out the advocacy.

 

Advocacy itself throws up a further issue for counsel in that, at present, no advocacy fee or  preparation for advocacy fee is payable unless the matter goes to trial, or is settled on the day of trial (see Mendes v Hochtief (UK) Construction Limited [2016] EWHC 976 (QB)).

 

Work done by a solicitor is effectively covered in the post-listing pre-trial stage fixed costs, but counsel gets nothing.

 

I suggest that we revert to a scheme similar to that which existed when we had fixed recoverable success fees. I propose:

 

  • 25% of the fixed advocacy fee if the matter settles between 21 days and 42 days before trial.

 

  • 50% of the fee if it settles between seven days and 21 days before trial.

 

  • 75% of the fee if it settles within seven days of trial.

 

That is fair to counsel and encourages relatively early instruction of counsel by solicitors, and if there is to be settlement then it encourages it earlier rather than later.

 

I am sure that in particular areas of civil litigation there are other items to be considered, but the key is to ensure that the fee is fixed and certain in fixed costs cases, so as to eliminate the cost and delay of budgets, bills and assessments, which insofar as possible should be consigned to history as unnecessary parasitic costs which make the litigation process more expensive than it needs to be.

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Written by kerryunderwood

May 26, 2017 at 8:59 am

Posted in Uncategorized

6 Responses

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  1. A useful insight into the interpretation of the rules but not necessarily the only one. Many Judges have twigged to the fact that fixed costs were not introduced on a ‘one case-one fee’ basis. It can be strongly argued that ‘Fixed Recoverable Costs’ apply to what was the solicitors ‘Profit Cost’ element in the usual schedule of such costs.
    As you are aware, certain disbursements are also recoverable and CPR45.29I(2)(h) provides for ‘any other disbursement reasonably incurred due to a particular feature of the case.’
    Counsels fees have always been a disbursement and if Counsel’s fees are ‘reasonably incurred due to a particular feature of the case’ it can be strongly argued, and it has been accepted and such fees/disbursements awarded at County Court level so far, that Counsels fees are recoverable in addition to the Fixed Recoverable Costs.
    Counsel are, quite properly, not involved in the vast majority of claims and only become involved in the minority of claims ‘due to a particular feature of the case.’
    If such an argument continues to prevail, as it should, it should prevent many of the difficulties you quite properly identify including ‘difficult’ cases that should never go to trial or do so on the wrong points or otherwise inadequately prepared because of the disincentive to pay Counsel from the FRC/Profit Costs of a solicitor.
    I would wholeheartedly agree that Counsels fees, where reasonable incurred, should be separate to a solicitors ‘Profit Costs,’ thereby overcoming many of the difficulties now becoming apparent due to a lack of Counsels involvement in appropriate cases, but I am far from convinced that a ‘one fee fits all’ approach is correct particularly where the Court will, in any event, have to assess if Counsel was ‘reasonably involved due to a particular feature of the case’ and is then also quite capable of assessing a reasonable fee for that involvement.
    If the CPR45.29I(2)(h) approach does not continue to succeed then an alternative remedy to these difficulties is required and the alternative you propose ought to be strongly considered and, in any event, the abated advocacy fee scheme that you suggest.

    Ian Pennock

    May 26, 2017 at 9:59 am

    • Ian

      Thank you for your comment, but I disagree entirely.

      I do not think it can be argued at all that Fixed Recoverable Costs apply to just to the solicitors profit cost element.

      Indeed the whole tone of the Civil Procedure Rules and indeed the Jackson report and subsequent consultations are against you.

      The Civil Procedure Rules specifically deal with work other than advocacy carried out by counsel.

      CPR 45.23B reads:

      “Where—

      (a) the value of the claim for damages is more than £10,000;

      (b) an additional advice has been obtained from a specialist solicitor or from counsel;

      (c) that advice is reasonably required to value the claim,

      the fixed costs may include an additional amount equivalent to the Stage 3 Type C fixed costs.”

      Type C fixed costs are £150.00 plus VAT.

      CPR 45.29I reads:

      “(1) Subject to paragraphs (2A) to (2E), the court—

      (a) may allow a claim for a disbursement of a type mentioned in paragraphs (2) or (3); but

      (b) will not allow a claim for any other type of disbursement.”

      “(2) In a claim started under either the RTA Protocol or the EL/PL Protocol, the disbursements referred to in paragraph (1) are—

      (c) the cost of any advice from a specialist solicitor or counsel as provided for in the relevant Protocol;”

      CPR 45.29I(1)(h) does indeed provide for “any other disbursement reasonably incurred due to a particular feature of the case.”

      No one is disputing that counsel’s fees have always been a disbursement but the rule quoted above in relation to counsel’s additional fee specifically in the disbursement section.

      I am aware that some, but not many courts, have allowed counsel’s fees in the circumstances set out by you.

      My view is that that is wrong given that this same rule specifically sets out the circumstances in which counsel’s fees may be claimed.

      On my recent nationwide tour, which unfortunately very few barristers attended, I had a lengthy session on the relations between solicitors and counsel in Fixed Recoverable Costs cases, especially with the proposed extension of Fixed Recoverable Costs to all civil work and to a much higher damages level than the current £25,000.00 in personal injury work.

      I specifically asked about courts allowing counsel’s fee as a disbursement on the basis set out by you and the vast majority of the very considerable number of solicitors attending, said that courts were refusing to allow this element.

      To say that the Fixed Recoverable Costs scheme is a “one fee fits all” approach is entirely wrong.

      There are different fees depending on the value of the claim, the type of claim, and the stage reached.

      The general view is that the existing fixed costs scheme works exceptionally well, although the portal fees are far too low.

      These points are dealt with in pages 625 to 646 of my new three volume, 1,300 page book – Personal Injury Small Claims, Portals and Fixed Costs which can be ordered from Amazon here.

      Thank you for commenting.

      Kerry

      kerryunderwood

      June 1, 2017 at 12:12 pm

      • Dear Kerry,
        The point where we depart appears to be on the interpretation of CPR 45.29I(2)(c) which specifically permits, in the specified circumstances, what may be termed an ‘infant quantum’ advice which is required for the courts approval.
        That rule, nor any other, does not expressly nor impliedly exclude Counsels fees for other types of work i.e. an opinion on liability which may well fall within CPR45.29I(2)(H) “any other disbursement reasonably incurred due to a particular feature of the case” (although you would appear to interpret it as if it does).
        It is also clear that not many people know this point in order to argue the same in court.
        We would both appear to agree that currently the reality and effect of failing to provide separately for Solicitors and Counsels fees in such circumstances is the failure to include Counsel in cases where they were needed itself resulting in cases not being pursued which could have been won and, conversely, cases which should never see the light of day wasting everyones time including the courts.
        Whilst I accept that the whole manner and tone of the recent amendments to the CPR has been to reduce the costs of litigation the point I are is that I did not see any substantive consultation or discussion in effectively attempting to exclude the Bar from P.I. work valued under £25,000 and which is why CPR45.29I(2)(h) is, has been, and ought to be interpreted so as to allow for the involvement of Counsel in those cases where it was ‘reasonably required due to a particular feature of the case.’
        Kind regards
        Ian

        Ian Pennock

        June 1, 2017 at 12:38 pm

      • Dear Ian

        My apologies for the long delay in replying.

        I agree that the effect of a fixed legal spend, which includes counsel’s fees, but not as a separate disbursement, has the effect that solicitors will tend to try and do the work themselves, rather than instruct counsel, even if the overall result would be more remunerative for the solicitor, for the reasons that you set out, that is avoiding bringing unnecessary cases and conversely pursuing cases which can be won.

        This will vary from solicitors firm to solicitors firm in that generally an experienced solicitor should be able to deal with the vast majority of fixed costs cases under the current scheme as they only apply to claims worth £25,000.00 or less.

        There is of course already a free standing fee for trial advocacy and thus I do not think that the Fixed Costs Scheme, as it currently stands, has led to a reduction in solicitors instructing counsel to conduct the trial.

        I am not sure that I agree that all of the recent amendments to the CPR have been with the aim of reducing the costs of litigation.

        They have certainly intended to make certain the costs of litigation, and that is not necessarily the same thing.

        Firms of solicitors who understand the Fixed Costs Scheme, and I accept that there are very few, can make good profits in that scheme.

        The portal costs are too low.

        You refer to attempting to exclude the Bar from personal injury work valued under £25,000.00 and there being no substantive consultation or discussion.

        There was very lengthy and substantive consultation and discussion concerning Lord Justice Jackson’s 2013 Reforms and in fact the fixed costs element was unfinished business from Lord Woolf’s proposals, which largely came into force in 2000.

        The key issue is as to whether there should be a separate provision for counsel, as compared with having a single legal spend, which can be spent as the lawyers think fit.

        The problem from the Bar’s point of view is that the control of that spend is with solicitors and not barristers with the effect that we have both recognised, that is solicitors will seek to do the work themselves.

        This will be of much greater significance as fixed costs are extended, almost certainly to £100,000.00 in a new Intermediate Track.

        I disagree with your interpretation of CPR 45.29I(2)(c), in the sense that the very fact that the Civil Procedure Rules specifically state that the court may allow as a disbursement the cost of any advice from a specialist solicitor or counsel as provided for the in the relevant protocol indicates that no other additional fee for specialist solicitor or counsel will be allowed.

        If you are right and I am wrong what is the point of CPR 45.29I(c) in that the court would have that power anyway under CPR 45.29I(2)(h)?

        However, as discussed earlier, I am aware that different courts are coming to different conclusions on that point.

        Lord Justice Jackson’s report will be out very shortly and I am sure that we will both look with interest as to his proposals for separate fees, or otherwise, for counsel in claims valued at between £25,000.00 and £100,000.00.

        I see no likelihood of any change in the current Fast Track Scheme covering claims up to £25,000.00, and therefore clarification of the situation concerning CPR 45.29I(2)(h) would be welcome, but the Civil Procedure Rules Committee has not got a good track record of clarifying points which are very clearly causing widespread practical problems.

        The commercial case pilot in the High Court and Manchester and Leeds District Registries, which on a voluntary basis covers claims between £100,000.00 and £250,000.00 does not contain provision for any separate fee for counsel, although again there are free-standing advocacy fees.

        Many thanks for taking the trouble to comment.

        Kind regards

        Kerry

        kerryunderwood

        July 12, 2017 at 2:15 pm

  2. The fixed fees set a price if you will for the work needed to be done in a case. A solicitor can opt to do it all or outsource. If they outsource they don’t get all of the FF. same as with hourly cases – they can’t recover twice for the same work, so I fail to see the need for anything counsel related in the Fixed fees. They can still get paid if a solicitor needs them as they do now.

    David

    May 26, 2017 at 4:25 pm

    • David

      I see the logic of that, but I think it will be the beginning of the end for the Bar, and I do not think that that is a good thing.

      Kerry

      kerryunderwood

      May 26, 2017 at 4:41 pm


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