Kerry Underwood

NEWS AND CASE ROUND-UP


As the title suggests this blog is a round-up of recent news and cases.

There is a theme running through many of the recent cases, and that is the courts reclaiming the streets.

I have reported elsewhere and in detail the landmark decision of the Supreme Court in the Employment Tribunal fees case – SUPREME COURT: FRIENDS OF THE PEOPLE.

In this round-up the Supreme Court upholds a debarring order against HMRC with Lord Neuberger, President of the Supreme Court, saying that higher, and not lower, standards are expected of public bodies.

The Court of Appeal severely criticises the First-tier Tribunal in its approach to immigration cases and the Upper Tribunal holds that the Department for Work and Pensions is illegally blocking access to the courts.

I will report elsewhere the President of the Supreme Court’s warning that the United Kingdom faces the serious risk of the rule of law being lost altogether and saying that the conduct of United Kingdom governments “has faint echoes of the familiar and depressing sight of repressive totalitarian regimes producing wonderful constitutions and then ignoring them”.

I see a major constitutional clash between the courts and governments coming.

TRIBUNALS AND DEBARRING ORDERS: A SUPREME COURT DECISION

In BPP Holdings Limited & others v Commissioners for Her Majesty’s Revenue and Customs [2007] UKSC 55

the Supreme Court held that the First-tier Tribunal was entitled to make a debarring order – here preventing HMRC from defending an appeal concerning liability for VAT on the supply of books to students.

The debarring order was allowed for in the tribunal’s own procedural rules.

Although the cases on time limits and sanctions in the Civil Procedure Rules do not apply directly, tribunals should generally follow a similar approach.

Here, HMRC also argued that the court should take into account that the debarring order prevented HMRC from discharging its public duty, leading to the public interest being harmed in that VAT which should be paid may not be recovered.

Lord Neuberger, President of the Supreme Court, dismissed that notion in clear terms:

“30. … I consider that it would set a dangerous precedent if that point were accepted, as it would discourage public bodies from living up to the standards expected of individuals and private bodies in the conduct of litigation. It seems to me that there is at least as strong an argument for saying that the courts should expect higher standards from public bodies than from private bodies or individuals. … there is no good reason to have different rules for public law cases.”

The Supreme Court suggested that the rules in tribunals might be changed to allow additional powers of sanction rather than the tribunal having a choice of making a debarring order or doing nothing.

The Supreme Court pointed out that the judge

“was faced with a binary question, involving two unpalatable choices .Making the debarring order, which she described as draconian, or not making the order, which, to use the vernacular, would have meant that HMRC effectively would have got away with it. There may be force in the notion that the tribunal rules should provide for the possibility of more nuanced sanctions, such as a fine or even the imposition of some procedural advantage. Experience suggests that such ideas, while attractive in theory can often be difficult to formulate or to apply satisfactorily in practice, so I mention the point with some diffidence.” (Paragraph 35).

 

FREEZING ORDERS AND SOURCE OF FUNDING

In JSC Mezhdunarodniy Promyshlenniy Bank and another v Pugachev and others [2017] EWHC 1847 (Ch)

the court has made an order requiring the defendant (P), who was subject to a worldwide freezing order, to disclose the source of his legal funding. It held that it was appropriate to require P to provide the information as a condition of him being allowed to proceed with an application to challenge the court’s jurisdiction.

The issue arose in the context of enforcement proceedings by the claimant (C) in respect of a Russian judgment it had obtained against P for approximately £1 billion. P applied to set aside the default judgment against him, and challenged the jurisdiction of the English court. In response, C submitted that the court should impose certain conditions which must be complied with before P’s jurisdiction challenge could be heard, in particular requiring P to pay £35,000 into court, and to file an affidavit setting out ultimately who was providing the money being used to fund his legal expenses in connection with the application, and where that person obtained the money from.

The decision is an interesting, and apparently novel, example of the court making such an order in these circumstances. The judge noted that this was an unusual case, in view of the fact that the defendant had previously been found to be in serious breach of numerous court orders and had failed to serve a two-year prison sentence for contempt of court. However, the decision illustrates that the court will be prepared, in an appropriate case, to require a defendant who is subject to a worldwide freezing order to disclose the source of his legal funding before proceeding with an application, including an application challenging the court’s jurisdiction

 

EMPLOYMENT IN THE LEGAL SECTOR

370,000 people are employed in private legal practice in the United Kingdom, two thirds of whom are based outside London, which still leaves a staggering 124,000 in London.

Source: The Strength of English law and the UK Jurisdiction: Judicial Office, paragraph 9.

 

JUDICIAL REVIEW: UNITED NATIONS TO CRITICISE UK

The United Nations Economic Commission for Europe, which is nothing to do with the European Union, has prepared a draft decision expressing concern at the slow progress of the United Kingdom in establishing a costs system fulfilling its 1998 Aarhus Convention obligations to provide procedures that are fair, equitable, timely and not prohibitively expensive.

This applies to judicial review procedures in relation to environmental matters.

The draft decision requests the United Kingdom:

“To, as a matter of urgency, take the necessary legislative, regulatory, administrative and practical measures to ensure that the allocation of costs in all court procedures [subject to the convention] is fair and equitable and not prohibitively expensive”.

In his Fixed Costs Report, published on 31 July 2017, Lord Justice Jackson called for the existing capped costs scheme in this country for Aarhus Convention matters to be adopted for all judicial review cases.

 

IMMIGRATION TRIBUNAL SLAMMED BY COURT OF APPEAL

In AM (Afghanistan) v Secretary of State for the Home Department

the Senior President of Tribunals found the First-tier Tribunal had failed to take account of an Afghan boy’s age, vulnerability and learning difficulties.

AM claimed asylum in 2012 but his application was rejected by the then Home Secretary Theresa May in 2013.

AM was 15 at the time and was granted leave to remain in the UK until his 17th birthday.

Reasons for refusing his application for asylum included inconsistencies in his evidence and the fact that he had not demonstrated a risk to his life.

AM appealed to the Court of Appeal who said that the First-tier Tribunal’s response to a psychological report was “wholly inadequate.”

The Court of Appeal sent the matter back to the First-tier Tribunal and said that tribunals should “closely consider whether oral evidence is necessary at all” and whether requiring oral evidence might prevent there being a fair hearing.

Even if there were discrepancies in the evidence, tribunals should consider the extent to which the age, vulnerability or sensitivity of the witness was an element in those discrepancies.

It pointed out that tribunals have the power to appoint a Litigation Friend where access to justice requires it.

 

PERSONAL INJURY CLAIMS MANAGEMENT COMPANY NUMBERS DROPPING

The Claims Management Regulator, in its annual report published in August 2017 said that the turnover for Claims Management Companies in the personal injury field fell by 15% to £182 million in 2016/17, and this is down from a figure of over £300 million in 2014/15.

Applications from businesses seeking to become Claims Management Companies in the personal injury field dropped by 40% in 2016/17.

The number of authorised personal injury Claims Management Companies is now 762, down from 979 in 2015.

 

COMMERCIAL COURT: ONLY 28% OF USERS ARE FROM THE UK 

Just 121 cases were brought by UK litigants in the Commercial Court in England and Wales in 2016/17, amounting to just 28% of the total.

Comment

Is it not time to consider closing this court and diverting its resources, that is its judges and court buildings etc. to delivering justice for ordinary people in England and Wales?

No doubt the accountants and economists and hard-line capitalists will point out the invisible earnings that they bring into England and Wales.

What they will not point out is the increasingly visible damage that providing access to justice only to rich people is doing to this country.

 

DEPARTMENT FOR WORK AND PENSIONS ILLEGALLY BLOCKING ACCESS TO THE COURTS   

On 4 August 2017 the Upper Tribunal held that the Department for Work and Pensions had been unlawfully preventing people who had been refused social security benefits from going to tribunals to challenge the decision.

The Upper Tribunal criticised the DWP’s policy of denying Claimants an appeal if they failed to act within a month, saying that it was obvious that there would be a risk that people with good claims would miss the deadline as many of them were vulnerable.

Since 2013 any Claimant wishing to challenge a decision to refuse benefits has had to apply for a “mandatory reconsideration” before appealing to an independent tribunal.

Where the mandatory reconsideration application is made out of time, there is no right of appeal to the tribunal.

This case was brought by the Child Poverty Action Group (CPAG) on behalf of two Claimants, both of whom have mental health problems and who were denied benefits and were deemed to have failed to ask for a review in time.

CPAG claimed that the policy excluded large numbers of Claimants from the justice system and the tribunal said that this policy had resulted “in a significant number of Claimants who are entitled to benefits not being paid them”.

The tribunal, presided over by a High Court Judge, said that the DWP was improperly making itself “gatekeeper to the independent tribunal system.”

The Upper Tribunal said that the correct position was that where a Claimant made a mandatory reconsideration request at any time within 13 months of the original decision, they will, if dissatisfied, be entitled to pursue the challenge to a tribunal.

The government had argued that there was no need to have access to the tribunal because its decisions on late mandatory reconsideration requests could be challenged by judicial review.

The Upper Tribunal pointed out that not one of the 1,544,805 mandatory reconsideration decisions by the government since 2013 have been challenged by way of judicial review.

Comment

The decisions reported in this round-up are part and parcel of the same, enormously welcome, decision by the Supreme Court in R (on the application of UNISON) v Lord Chancellor [2017] UKSC 51 whereby the courts are taking a view that it is for the courts, and not Parliament, to decide on how access to the courts is to operate.

 

AMENDING CLAIM IN PRE-APRIL 2013 CFA CASE

In Mawer (Trustee in Bankruptcy of James Moore) v Mawer, Unreported, Companies Court, 7 April 2017

the High Court refused to make the Grant of Permission to amend a claim subject to a proviso that a pre-1 April 2013 Conditional Fee Agreement, with a pre-1 April 2013 After the Event insurance premium, would not apply to the amended claim and thus there would be no recoverability.

The judge held that the questions of what costs are recoverable under the Conditional Fee Agreement should be determined at the end of the litigation and the Conditional Fee Agreement should not “disrupt the flow of the litigation.”

 

EXCEEDING COSTS CAP IN COMPETITION APPEAL TRIBUNAL

In Socrates Training Ltd v Law Society of England and Wales [2017] CAT 12

the Competition Appeal Tribunal published its costs ruling.

As the case was conducted under the fast-track procedure, the Competition Appeal Tribunal had imposed a cap on costs and the Law Society had conceded that Socrates Training Limited should have its costs on the standard basis up to the capped maximum of £230,000.00.

However Socrates Training Limited claimed that its costs should be assisted on the indemnity basis and thus should not be subject to the cap.

The Competition Appeal Tribunal accepted that in the circumstances of the case, and with regard to the Law Society’s conduct of the proceedings, there were no grounds for an Indemnity Costs Order.

The Law Society’s conduct had not caused such a serious increase in costs that it materially changed the position so as to justify allowing additional costs over and above the amount of the cap.

However the Competition Appeal Tribunal appear to accept that had the conduct warranted indemnity costs then the cap could have been exceeded.

 

WITHDRAWING ADMISSIONS

In Blake v Croasdale [2017] EWHC 1336 (QB)

the Queen’s Bench Division of the High Court held that an admission by insurers was binding, but on the facts gave permission to them to resile from that admission.

Here the Claimant was seriously injured in a road traffic accident and the claim was submitted on the RTA Portal.

The Defendant stated that it might be alleging contributory negligence in relation to matters other than failure to wear a seatbelt and that the case was unsuitable for the portal because of its value, but they admitted primary liability.

When proceedings were issued the Defendant filed a Defence denying liability and including an allegation that the Claimant’s injury was caused by his own criminal act, asserting that at the time of the accident he was acting in the course of a joint criminal enterprise with the First Defendant, namely dealing in drugs.

There was sufficient evidence in support of that allegation that it would not be struck out on the usual principles.

The court also took into account the fact that a claim initially issued on the portal, and therefore valued at no more than £25,000.00, was now a multimillion pound claim.

That could be interpreted as meaning that a Defendant will be entitled to resile from an admission on that ground alone.

However in Wood v Days Health UK Limited and Others [2016] EWHC 1079 (QB) the court said:

“It is true that the potential value of C’s claim has increased since 2010; and that is the real ground for the application. But that is a risk which is inherent in any personal injuries claim, and is a reason why it can sometimes be commercially advantageous to try and settle a claim at an early stage. …  I do not consider that the fact that the potential value of the claim has increased since the admission is a good reason for allowing D1 to withdraw the admission.”

Comment

There is still considerable uncertainty in the law relating to admissions and withdrawing admissions.

In the absence of fraud or fundamental dishonesty or whatever it is hard to see why a party should be allowed to withdraw an admission, especially if that admission was made having received professional advice.

Written by kerryunderwood

August 8, 2017 at 10:47 am

Posted in Uncategorized

PART 36 AND INDEMNITY COSTS ON LATE ACCEPTANCE: THE CHAOS CONTINUES

with 17 comments


I will be chairing an all-day conference on Tuesday 14 November in London on Part 36 which Ben Williams QC and David Pilling will be speaking. Save the date!

In McKeown v Venton, Liverpool County Court, 24 July 2017

His Honour Graham Wood QC, Designated Civil Judge for Cheshire and Merseyside, held that a late accepting Defendant did not have to pay indemnity costs to the Claimant whose Part 36 offer had been accepted late.

Unless it was unjust, the Claimant was entitled to indemnity costs if it obtained a judgment better than, or equal to, its Part 36 offer, but, in the absence of judgment, the court had no discretion to award indemnity costs, absent exceptional circumstances, which were not present here.

Late acceptance of a Part 36 offer did not of itself constitute exceptional circumstances.

In Richardson v Wakefield Council

HH Judge Gosnell held that CPR 36.17 trumped CPR 45 and allowed standard, not indemnity, costs to be awarded to a Claimant on late acceptance by the Defendant.

Thus, in that case, the Claimant escaped fixed costs, but did not get indemnity costs, something aptly described by Judge Wood in McKeown as “something of a halfway house between the position adopted by District Judge Besford in Sutherland and the Deputy District Judge in the present case.”

That is a reference to Sutherland v Khan, Kingston-Upon-Hull County Court, Case number A81YM424

dealt with extensively in my blog PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE? 

Judge Wood said:

“59. … I have come to the conclusion that the decision of the deputy district judge should be upheld. His approach to the interpretation of Part 36 in the context of the Fixed Costs Regime cannot be impugned. If there are to be any additional and beneficial consequences to a Claimant arising from late acceptance in a fixed costs case, in my judgment these will have to be affirmed on a policy basis either by a higher court, or by reconsideration on the part of the rules committee. For now it may well be that precise fairness as to costs in individual cases is sacrificed on the altar of certainty which Part 45 has introduced.”

Comment

Take your pick:

  1. on late acceptance by a Defendant the Claimant gets indemnity costs (Sutherland v Khan);

 

  1. on late acceptance a Claimant gets standard, not fixed, costs (Richardson v Wakefield Council);

 

  1. on late acceptance the Claimant gets fixed costs (McKeown v Venton).

 

No case is currently proceeding to the Court of Appeal on this crucial and central point which will become much more important as the fixed costs scheme extends to most civil claims valued at £100,000.00 or less.

To make matters worse the courts are occasionally ordering a Claimant, who has been successful overall but has failed to beat a Defendant’s Part 36 offer, to pay indemnity costs from the date of expiry of the Defendant’s part 36 offer – See for example

Jordan v MGN Limited [2017] EWHC 1937 (Ch)

reported in my blog PART 36: CLAIMANT ORDERED TO PAY INDEMNITY COSTS ON LATE ACCEPTANCE.

This decision throws up another problem. Here the costs of appealing to a Circuit Judge alone were £12,000.00 on account and will presumably be much higher.

Obviously costs of appealing to the Court of Appeal would be much higher again.

Where a claim starts as a small claim and therefore cost free, it remains cost free throughout its appeal life, even if the matter goes to the Supreme Court.

There should be a similar system in relation to fixed costs cases, that is that there should be tightly controlled and relatively low fixed costs in any appeal arising from a fixed costs case.

Otherwise, and this is the potential problem with small claims, the party with the deeper pockets can simply take the matter to appeal to try and force the other party to settle.

PART 36 AND DISCOUNT RATE

In Marsh v Ministry of Justice, Costs, 31 July 2017,

the court held that where a Claimant beat its Part 36 offer only due to the change in the discount rate, made after the offer, it would be unjust for the Defendant to be ordered to pay Indemnity costs.

 

Also see:

PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE? 

PART 36: CLAIMANT ORDERED TO PAY INDEMNITY COSTS ON LATE ACCEPTANCE.

Written by kerryunderwood

August 7, 2017 at 11:05 am

Posted in Uncategorized

FIXED COSTS AND THE BAR: FURTHER THOUGHTS

with 2 comments


You can book onto my Fixed Costs Autumn Tour – here

Lord Justice Jackson’s Fixed Recoverable Costs Report was published on 31 July 2017 and is available here.

This piece develops some thoughts contained in FIXED COSTS AND THE BAR: POST 2 and in due course will be incorporated into that post.

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 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 at all 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 [2002] Kingston upon Thames County Court 17 May 2002 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 assistant 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.

Written by kerryunderwood

August 4, 2017 at 2:30 pm

Posted in Uncategorized

PART 36: CLAIMANT ORDERED TO PAY INDEMNITY COSTS ON LATE ACCEPTANCE

with 4 comments


This subject is dealt with in great detail in my 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. 

In Jordan v MGN Ltd [2017] EWHC 1937 (Ch)

the Chancery Division of the High Court ordered a late accepting Claimant to pay costs on the indemnity basis for the period from expiry of time for accepting the Part 36 offer until acceptance, although due to an undertaking given by the defendant earlier, the actual period covered by indemnity costs was shorter.

Here the Claimant accepted a Part 36 offer of £15,000.00 that had been made three years earlier and the Defendant had made later, higher, offers including an offer at a settlement meeting of £100,000.00.

The Claimant accepted the old offer of £15,000.00 shortly before trial, having rejected a much higher non Part 36 offer, which he then sought to accept, unsuccessfully.

Here the court held that the Claimant’s conduct was such as to warrant an order of indemnity costs as the Claimant had failed to make any sensible offer until shortly before the trial, after considerable costs have been incurred.

The judge said:

“The bottom line is that Mr Jordan did not advance any explanation, let alone a good one, why, having run his case for 2½ years, having failed to respond properly to a number of offers, one of which was close to his own proposed financial settlement, having caused himself and the other side to run up significant amounts of costs, and having exposed the defendant to the prospect of having to pay the CFA uplift and ATE premiums (which I am satisfied is a powerful threat to a defendant), should at the last minute do the equivalent of walking away from the action. I consider that all those factors, and the other matters referred to in this section, are good reasons for ruling that the costs be paid on the indemnity basis, and I so order.”

The facts of the offers in this case are very complicated indeed and the decision should not be taken as establishing a principle that generally a Claimant is liable for indemnity costs on late acceptance of a Part 36 offer.

Nevertheless, it is a warning to Claimants that failure to engage in proper negotiations, and failure to make offers and respond to offers, does put them at risk of an Indemnity Costs Order on late acceptance of a Part 36 offer.

The judge appears to have been influenced by the fact that the Claimant had a Conditional Fee Agreement, and therefore was not running up further costs himself by letting the matter drag on.

“One would have thought that a client who was willing to consider settlement would have started to engage more at that point. I find it hard to believe that a normal paying client, who was not litigating under a CFA and with the protection of ATE insurance, would have adopted the tactic of not responding and not engaging further.” (Paragraph 64)

Comment

As the debate rages on as to whether a Claimant is entitled to indemnity costs on late acceptance by a Defendant, here is another case where a successful Claimant has been ordered to pay indemnity costs to a Defendant following late acceptance by the Claimant of the Defendant’s Part 36 offer.

This makes no sense at all. The penalty on a late accepting Claimant is that they are deprived of costs from the expiry of the date for accepting the Part 36 offer AND have to pay the losing Defendant’s costs from that date.

Thus it is a double penalty.

If a late accepting Defendant does not have to pay indemnity costs, then there is no penalty whatsoever upon that Defendant.

 

Also see:

PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE?

Written by kerryunderwood

August 4, 2017 at 7:39 am

Posted in Uncategorized

FIXED COSTS: THE FAST TRACK FIGURES: POST 4

with 6 comments


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

Lord Justice Jackson’s Fixed Recoverable Costs Report was published on 31 July 2017 and is available here.

In other posts I look in detail at various aspects of the proposed changes.

Here I set out the figures for the Fast Track as proposed in the report.

Fast Track

In the Fast Track there is a new single fixed costs grid covering all Fast Track claims of all kinds, except Noise Induced Hearing Loss Claims and clinical negligence claims.

In relation to Noise Induced Hearing Loss Claims there is a separate grid, which I set out below, and no figures have yet been provided for clinical negligence claims.

In relation to such claims Lord Justice Jackson proposes that the Civil Justice Council and the Department of Health should set up a working party to develop a process for clinical negligence claims initially up to £25,000.00, together with a grid of Fixed Recoverable Costs for such cases (Page 118).

Thus the grid set out below covers both personal injury claims and non-personal injury civil claims and is very much based on the existing fixed costs table set out in CPR 45.29.

The figures are cumulative, that is you get the figure in the relevant box, and only that figure, that is you do not add up the totals in the various boxes.

The exception is the trial advocacy which is a free standing add-on fee.

Thus a Band 1 case reaches trial and is worth between £3,001.00 and £10,000.00.

You get a preparation fee of £3,250.00, up to and including all pre-trial matters and then a free standing advocacy fee of £710.00.

VAT is added to all figures.

As before the fee is, in most cases, a combination of a core fee and a percentage of damages.

A new concept is complexity and I will deal with that in more detail in another post.

However, here is a simple list of the matters that Lord Justice Jackson proposes go into each band and these are set out on page 84 as follows:

 

“5           The remainder of the fast track

5.1          Proposed matrix of FRC and paradigm cases.  Drawing on the work of the FTWG, I propose that all fast track cases be placed into four bands of complexity, Band 1 being the least complex and Band 4 being the most complex.  The following are paradigm cases for each band:

Band 1: RTA non-personal injury claims (popularly known as ‘bent metal’ claims).

Band 2: RTA personal injury claims.

Band 3: ELA and PL accident claims.Band 4: ELD claims (

Band 4: ELD claims (non-NIHL) and the most complex fast track claims.

 

5.2         A fuller list of cases suitable for each band. I propose the following:

Band 1:  RTA non-personal injury, defended debt cases.

Band 2:  RTA personal injury (within Protocol), holiday sickness claims.

Band 3:  RTA personal injury (outside Protocol), ELA, PL, tracked possession claims, housing disrepair, other money claims.

Band 4:  ELD claims (other than NIHL), 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.

 

5.3          At the allocation stage, the court must have discretion to move individual claims between those bands having regard to the nature of the individual case.  Judges should exercise this discretion sparingly and bearing in mind the proportionality factors set out in CPR rule 44.3(5).  Any case of particular complexity does not belong in the fast track at all.”

 

Fast Track Fixed Recoverable Costs table

Complexity Band
Stage: 1 2 3 4
Pre-issue

£1,001 – £5,000

£104 + 20% of damages £988 + 17.5% of damages £2,250 + 15% of damages + £440 per extra defendant
Pre-Issue

£5,001 – £10,000

£1,144 + 15% of damages over £5,000 £1,929 + 12.5% of damages over £5,000
Pre-issue

£10,001 – £25,000

£500 £2,007 + 10% of damages over £10,000 £2,600 + 10% of damages over £10,000
Post-issue, pre-allocation £1,850 £1,206 + 20 of damages £2,735 + 20% of damages £2,575 + 40% of damages + £660 per extra defendant
Post-allocation, pre-listing £2,200 £1,955 + 20% of damage £3,484 + 25% of damages £5,525 + 40% of damages + £660 per extra defendant
Post-listing, pre-trial £3,250 £2,761 + 20% of damages £4,451 + 30% of damages £6,800 + 40% of damages + £660 per extra defendant
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

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.

 

Noise Induced Hearing Loss Claims

There is a separate proposed matrix for such claims:

Stage NIHL claims with value less than £25,000
Pre-Issue

£4,000 + £500 per extra defendant (reduced by £1,000 if there is an early admission of liability or by £500 if settled before proceedings drafted)

Post-issue, pre-allocation

£5,650

+ £830 uplift per extra defendant

Post-allocation, pre-listing

£7,306

+ £1,161 uplift per extra defendant

Post-listing, pre-trial

£9,187

+ £1,537 uplift per extra defendant

Trial advocacy fee

Not agreed

“Counsel’s fees and trial advocacy fees. The CJC 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.”

Trial advocacy fee in NIHL claims

As seen above the trial advocacy fee was not agreed and Lord Justice Jackson says that generally the trial advocacy fee will be £1,380.00.

That is correct, although in claims valued between £15,001.00 and £25,000.00, the trial advocacy fee is £2,500.00

Here is paragraph 5.12 of the report:

“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.”

 

Advocacy fees generally

The advocacy fees appear in the table set out above and apply whether it is a junior lawyer conducting their first case or a senior QC or 30 year solicitor or whatever.

Reference to a, b, c and d are to the value of the claim as follows:

a – A claim valued at up to £3,000.00

b – A claim valued at between £3,001.00 and £10,000.00

c – A claim valued between £10,001.00 and £15,000.00

d – A claim valued at between £15,001.00 and £25,000.00.

 

Review

The existing figures have been uprated for inflation – around 4% using the Services Producer Price Index.

Lord Justice Jackson proposes that the figures be reviewed every three years.

 

Also see:

FIXED COSTS COURSE

FIXED RECOVERABLE COSTS: LJ JACKSON’ S REPORT HERE

FIXED COSTS REPORT OVERVIEW: POST 1

FIXED COSTS AND THE BAR: POST 2

FIXED COSTS AND PART 36: POST 3

 

Written by kerryunderwood

August 3, 2017 at 11:04 am

Posted in Uncategorized

FIXED COSTS AND PART 36: POST 3

with 4 comments


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

Lord Justice Jackson’s Fixed Recoverable Costs Report was published on 31 July 2017 and is available here.

Generally Lord Justice Jackson reports that the existing Fixed Costs Regime works well and that he proposes to make no changes, apart from uprating the figures for inflation.

Any other issues are for the Civil Procedure Rule Committee.

However, LJ Jackson made an exception in relation to Part 36 saying that it was the “one issue which cannot be ducked”.

His comment and proposals apply to all cases covered, or to be covered, by Fixed Recoverable Costs, that is the existing scheme in relation to most personal injury cases, as well as the proposed scheme for all civil cases in the Fast Track and for most civil cases in the new Intermediate Track, covering claims between £25,000.00 and £100,000.00.

In Broadhurst v Tan [2016] EWCA Civ 94

the Court of Appeal held that a Claimant who matches or beats its own Part 36 offer when judgment is entered gets indemnity costs, and not fixed costs.

In Lowin v W Portsmouth & Co Limited [2016] EWHC 2301 (QB)

the Queen’s Bench Division of the High Court adopted the same reasoning in relation to provisional assessment proceedings where there is a cap of £1,500.00 plus VAT and court fees.

In Phonographic Performance Limited v Raymond Hagan [2016] EWHC 3076 (IPEC)

the Intellectual Property Enterprise Court, part of the Business and Property Court, adopted the same line of reasoning in relation to the system of capped costs in IPEC cases.

The effect of these decisions is that Part 36 trumps fixed and capped costs, resulting in an award of indemnity costs when a Claimant matches or beats its own Part 36 offer and obtains judgment, and possibly on late acceptance by a defendant where there is no judgment.

Although many people, including the Court of Appeal and the High Court, consider that necessary to give Claimants in fixed costs cases an incentive to make Part 36 offers, it takes away one of the central points of a Fixed Costs scheme, which is that parties know the maximum extent of their liabilities when they embark upon bringing or defending litigation.

Allied to that is the fact that it then triggers detailed assessment of costs, bringing a further layer of expense and delay into what is meant to be a certain situation.

I deal with all of this in great detail in my book – Personal Injury Small Claims, Portals and Fixed Costs which consists of three volumes and over 1,300 pages and costs £80.00 including P&P and can be ordered from me here or Amazon here. 

On page 1,237, and in my submissions to Lord Justice Jackson, I said:

PART 36

“If the current Part 36 system is retained then the parties are still in the position of not knowing what the costs will be and the apparatus of detailed assessment needs to be maintained.

I propose that rather than maintain the existing system, where the Claimant escapes fixed costs if s/he matches or beats its own Part 36 offer, and where a Defendant gets costs from the date of expiry of its Part 36 offer if the Claimant fails to beat it, there be introduced a new system of calculating Part 36 penalties/rewards.

This would consist of a percentage add-on/deduction to Fixed Recoverable Costs depending upon the stages passed between expiry and acceptance etc.”

Lord Justice Jackson proposes replacing indemnity costs in such circumstances with a percentage uplift of either 30% or 40% and states that this proposal is a clear issue of policy to be addressed in the consultation exercise following his report.

Lord Justice Jackson does not suggest 30% for one of case and 40% for another, but rather that the figure for everything should either be 30% or 40%.

At present there are conflicting decisions at Circuit Judge level as to whether or not a late accepting Defendant, as compared with a Defendant who has a judgment entered against it, should be liable for indemnity costs.

Lord Justice Jackson does not express any view in his report as to whether the 30%/40% uplift should apply on late acceptance as well as on judgment.

I deal with all of this in my blog: PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE?

 

Lord Justice Jackson set out the different views on Part 36 generally at paragraph 2.6 of chapter 5 of his report on page 80 as follows:

 

“2.6        Broadhurst v Tan and the effect of an order for indemnity costs. The one issue which cannot be ducked, however, is Broadhurst v Tan [2016] EWCA Civ 94; [2016] 1 WLR 1928.  This decision, unless its effect is modified by rule change, will impact upon fixed costs generally. This issue is equally important in relation to higher value claims, but I deal with it here and will not repeat the discussion in later chapters. Views on this issue are sharply divided:

(i) Nine of my assessors consider that, although CPR Part 36 must continue to bring rewards for claimants who make effective Part 36 offers, in the context of a fixed costs regime it would be better for there to be a percentage uplift on the fixed costs rather than an order for indemnity costs.  This will avoid the need for a detailed assessment of costs.  Also, it will provide certainty for litigants.  Certainty is an essential feature of an FRC regime.  As to the level of percentage uplift, views range between 25% and 50%.

(ii) Five of my assessors take the opposite view.  Nicholas Bacon QC writes:

“I do not agree with the proposal that we do away with the Broadhurst indemnity costs order.   These cases on indemnity costs are not clogging up the courts with detailed assessments.  It is a powerful message for a party to consider rejection/acceptance.  A 30% enhancement is not sufficient to redress the failure to accept an offer.  It ignores the fact that as between solicitor and client more than the fixed costs will have been incurred by the client.  Why should a client not be entitled to be reimbursed for their actual legal spend, rather than fixed costs, where a party has misconducted themselves or caused a party to incur costs unnecessarily because an earlier offer should have been accepted.”

I have set out the competing arguments, because this is the only issue on which my assessors are sharply divided.  After considering the powerful arguments on both sides, on balance, for the reasons set out in sub-paragraph (i) above, I favour replacing indemnity costs with a percentage uplift of 30% or perhaps 40%.  BUT this is a clear issue of policy, which will need to be addressed in the consultation exercise following this report.”

 

Unreasonable conduct

In cases of unreasonable litigation conduct, the report proposes that the court should have the power either to award a percentage uplift on costs of 30% or 40%, depending upon which figure is finally chosen, or to make an order for indemnity costs.

The court will exercise that power, having regard to the seriousness of the conduct in question.

One example of such unreasonable conduct, given in the report, might be substantial non-compliance with the relevant Pre-Action Protocol.

As to what constitutes unreasonable litigation conduct, Lord Justice Jackson refers to the case of

Dammermann v Lanyon Bowdler LLP [2017] EWCA Civ 269,  at paragraphs 30 to 32,

dealt with in detail in my blog – SMALL CLAIMS – UNREASONABLENESS AND COSTS.

 

Comment

Unsurprisingly, I welcome this proposal as it reflects my own views.

I would go for a 40% uplift.

It is in the interest of all litigators, whatever side they are on, to have an authoritative superior court decision as soon as possible as to whether a Claimant gets indemnity costs on late acceptance by a Defendant.

 

Also see:

FIXED COSTS REPORT: POST 1

FIXED COSTS AND THE BAR: POST 2

FIXED RECOVERABLE COSTS: LJ JACKSON’ S REPORT HERE

PART 36 AND FIXED COSTS

SMALL CLAIMS – UNREASONABLENESS AND COSTS

PART 36: DOES A CLAIMANT GET INDEMNITY COSTS ON LATE ACCEPTANCE?

Written by kerryunderwood

August 2, 2017 at 7:37 am

Posted in Uncategorized

FIXED COSTS AND THE BAR: POST 2

leave a comment »


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

Lord Justice Jackson’s Fixed Recoverable Costs Report was published on 31 July 2017 and is available here.

This is the second in a series of posts considering the report, and the first one was an overview.

Here I look at the specific proposals in relation to the Bar.

Fast Track

There is no change in relation to the existing types of cases covered by fixed costs, that is road traffic accident, employer’s liability and public liability matters.

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.

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.

 

Also see:

FIXED COSTS REPORT OVERVIEW

FIXED RECOVERABLE COSTS: LJ JACKSON’ S REPORT HERE

FIXED COSTS COURSE

Written by kerryunderwood

August 1, 2017 at 7:24 am

Posted in Uncategorized

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