Kerry Underwood

THE BAR AND FIXED COSTS

with 2 comments


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

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Written by kerryunderwood

September 12, 2017 at 10:28 am

Posted in Uncategorized

2 Responses

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  1. Afternoon Mr Underwood

    Hope you are well

    I have recently received a number of Pre Med offers from Tesco Insurance, I have confronted them with the same only to be met with ‘why, what is the problem’

    They are fully aware of the Protocol but again seem to be able to flout the law

    Thank you

    Andy Edwards

    September 13, 2017 at 3:05 pm

    • Andy

      There is currently no law against pre-med offers, so they are not flouting the law and the only consequence is that a defendant’s Part 36 offer is of no effect until and unless a medical report is obtained, so actually there is a big benefit to claimants – an offer capable of acceptance – or rejection – without costs consequences.

      That is why I love pre-med offers.

      Kerry

      kerryunderwood

      September 13, 2017 at 3:13 pm


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