Jackson Report - Latest twist

The future of the Jackson Costs Review becomes ever more intriguing and yesterday’s post on the Jackson Review may only tell half the story.

I have received information from a reliable source that both main political parties support the Jackson reforms, but that support is not particularly strong on the opposition’s side. The opposition support only parts of it, but they are looking more at setting up a CLAF rather than implementing the proposals. If this happens, then large parts of the reforms will not be implemented (or, if they are implemented, they will be implemented late).

If true, this would seem to turn conventional wisdom on its head in terms of the political element of the Jackson Review.

To make things even more interesting is the latest claim from the insurance industry that the public will pay more if the Jackson Report is implemented. Aviva claims it has computer-modeled Jackson’s final report and found that civil litigation costs under the proposed system would increase, rather than fall as intended. The extra costs would have to be passed on to all policy holders in the form of higher premiums.  This is based on the proposal for a 10% increase in general damages.

It is somewhat hard to understand what modeling system produced such an odd outcome. 

The claimant lobby had been suggesting the Report is the insurers’ dream come true, with Tom Jones, head of policy and public affairs at Thompsons, saying on publication: “the champagne corks will be popping at insurers’ headquarters.  They have got almost everything they have been lobbing for”.

I suspect this is a bit of clever spin by insurers (and why not?).  By suggesting they are not entirely behind the Report it implies it must be a more balanced set of proposals and increases its prospects of overcoming the political problems.

As Jackson LJ said: “It is interesting that the claimant lawyers are saying to me that the 10% uplift is too mean, but the insurers are saying that the increase of 10% is too generous.  It’s just possible that the balance of the report is right”.

Jackson Review - Gaining support

The big issue over the Jackson Review of Civil Litigation Costs is whether there is the political will to implement the proposals.  It appears that the Final Report is now starting to gain the political support it needs.

The Law Society Gazette reports: "The government and the opposition have hinted that they would implement some of Lord Justice Jackson’s recommendations on civil litigation costs, following the first parliamentary exchange on the judge’s report since its publication a month ago.  Justice secretary Jack Straw said: ‘Lord Justice Jackson’s proposals… are designed to reduce the costs of civil litigation overall. Those costs have risen too high, and that is a bar to proper access to justice.’ He said that the government is ‘actively assessing’ the proposals."

Dominic Regan, writing in the New Law Journal, says: "The greatest myth of the moment is that 'Jackson will never happen'.  It will and soon."

Costs draftsmen's late Christmas present

A number of readers no doubt work in the area of RTA claims.  Some at the front-end of the claims process dealing with the substantive claim, others at the tail-end of the costs side.  Hopefully, those readers will therefore be aware that we have a new claims process for low value RTAs starting on 6 April 2010 (and if they didn't know they are in real trouble).

What some of the more observant may have noticed is that despite being only a few weeks away from the start date we still have no published rules as to how the scheme will work.  Quite how this shocking state of affairs arose is a mystery.  However, finally, some progress is being made.  The Ministry of Justice has written to a number of specific bodies:

"The Civil Procedure Rule Committee approved the drafts of the documents listed below on the 12^th February 2010.  These documents are in draft form until: 

(1) the Statutory Instrument has been signed by the Civil Procedure Rule Committee and the Minister and then laid before Parliament, and

(2) the practice direction making document has been signed by the Minister and the Master of the Rolls.   

It is expected that the Statutory Instrument will be laid before Parliament by the beginning of March.  In view of the familiarisation, training and system adjustments that practitioners will need to undertake in order to be compliant with the new process we have decided [how gracious of the powers that be] to circulate these rules etc in draft form.  Please circulate to your members as appropriate."

In case these haven't yet made their way to you, the Legal Costs Blog and Gibbs Wyatt Stone have provided a link to all the draft documents here: RTA Claims Process.  Read them and weep.  No surprise that the final report in the Jackson Costs Review commented on the new process in this way: "I have two concerns about the new process in its present form.  My first concern is the sheer complexity of the process.  Over 80 pages of new material will be added to the rule book, in order to deal with the simplest category of litigation which exists, namely low value RTA claims where liability is admitted.  I fear that collectively these procedures might possibly open up a new theatre for the costs war."

And that, of course, it the late Christmas present for costs draftsmen.  Jackson LJ may be intent on killing off the volume costs work but the Ministry of Justice, and those involved in formulating the new rules, have given it a massive boost.  

Time allowing, I'll have plenty more to say about this new RTA claims process.   

Costs muppet

A further definition from The (Alternative) Legal Costs Dictionary:

Costs muppet n. someone who had the stuffing knocked out of them when they read the Jackson Report’s proposals in relation to fixed fees.

Jackson Report - An Overview

The legal press and various other sources have been busy in recent weeks providing various summaries and commentaries on the final report of the Jackson Costs Review.  One of the best comes from specialist costs counsel Andrew Hogan of Ropewalk Chambers (although I don't necessarily agree with all of his interpretations of the proposals or their possible consequences).

For those of you who have not yet read the full 557 pages of the report (shame on you) or feel you are not fully up to speed with some of the recommendations and implications, I can thoroughly recommend this.

The first newsletter provides an overview of the report, the second newsletter looks at it implications and proposals in relation to personal injury litigation and the third newsletter considers the practical difficulties thrown up by Lord Justice Jackson's proposals.

Costs Law Reports

In a previous post I commented on the unsatisfactory way that legal costs case law (see post) is scattered all over the place and the problems this causes trying to keep on top of developments.

One potential solution to this problem may come from the re-launched Costs Law Reports.  This is a publication that has gone through (to put it mildly) recent difficulties.  It is now in the hands of new publishers who are making a very serious attempt to make this the most comprehensive collection of costs case law available.  The service will officially re-launch at the beginning of March.  Further information can be obtained by emailing: CostsLawReports@classlegal.com 

There will still be a print service, but more interesting is an online service with a fully searchable database and an email alerting service.

More exciting still, I understand that the publishers longer term goal is to try to bring together on the online database a fully comprehensive collection of costs case law going way beyond those cases reported in the print version.  If this ambitious goal can be achieved then this will become an absolutely invaluable tool for those with any involvement in legal costs.  The Legal Costs Blog strongly supports Costs Law Reports in this endeavour.

Reasonable legal costs - Compared to what?

It is not unusual for me to make offers in relation to claimants' bills of costs that represents only a fraction of the amount claimed.  However, from time to time the response I receive is not simply the inevitable one of displeasure but what appears to be a genuine reaction of incredulity.  There appears to be total disbelief in relation to the figures I have put forward, particularly in relation to document time in high value claims.  The claimant's lawyer takes the view that no solicitor, however good, could possibly be expected to undertake the work in so little time.

The problem that many claimant lawyers have is that their experience of what is "normal", in terms of time taken to run a claim, is often limited to no more than how long it takes them, or possibly some of their colleagues in the same firm, to run similar cases.  They have no idea how other firms handle such claims or how quickly.  If they spend 100 hours on documents for a certain type of disease claim they assume that is normal and reasonable.  The fact that the majority of other firms, for a similar claim, might take, for example, 50 hours is something totally outside their field of experience.

On the other hand, as a defendant costs practitioner, I see large numbers of bills of costs from firms throughout the country.  In my capacity as a manager, I have seen literally thousands more claims for costs beyond those I have dealt with personally.  It is staggering the difference in the size of a bill from an efficient firm compared to those from inefficient firms.  Before some readers start complaining that they should not be criticised for dealing methodically and conscientiously with their clients' claims and not cutting corners, my experience is that the best fee earners, in terms of the results they achieve for their clients, are very often exactly the same ones who produce the most modest bills.  It is often those firms that are not real specialists (despite their claims to the contrary) who under-settle claims, take twice as long to achieve under-settlement, and then produce the highest bills.  One of the obvious criticisms of the current legal costs system is that it not only rewards inefficiency but fails to properly reward the skilled lawyer.

I fear that there is a similar danger for costs judges.  The bills that come before them are invariably the ones that are the most excessive. A paying party (or at least one with any sense) will not take to detailed assessment a bill that is broadly reasonable.  Even where the bill is overstated by 10-25% it will usually be possible for the parties to agree a compromise.  Therefore, the cases that come before costs judges are usually ones where the amounts claimed are more likely to be at least 25%+ over what a paying party knows to be reasonable compared to cases run by other firms.  More often, the amount claimed is 35%+ over a reasonable figure.  So what do most costs judges have to measure these claims against?  Other excessive bills that have also been brought before them to be assessed.  You can see the problem.  Costs judges run the danger of coming to believe the excessive bills that come before them are typical.  There should be some process whereby costs judges routinely have submitted to them the bills produced by the best claimant firms so that they have a yardstick of excellence against which to measure claims for costs.

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Another VAT change?

Legal costs practitioners are still struggling to work out exactly how the most recent VAT change impacts on what level of VAT to apply to different periods in bills of costs.  What news do we now receive?  Both Labour and the Conservatives are apparently considering a VAT increase to 20% to help fill the massive public deficit.  Are they deliberately trying to torture us?     

Bill of Costs

To outsiders the language of the legal costs world can seem strange and archaic.  Why are "indemnity costs" and the "indemnity principle" totally different and totally unrelated?  Why did "taxing masters" have nothing to do with tax?

To help cast some light on this obscure area of law the Legal Costs Blog is pleased introduce The (Alternative) Legal Costs Dictionary.  Over coming weeks we hope that these clear and concise definitions will provide invaluable assistance.  

Bill of Costs (claimant's) n.  a work of fiction (usu. pure fantasy).

Bill of Costs (defendant's) n.  a true and accurate account of the work reasonably and proportionality done to secure access to justice for a defendant who has had a claim entirely lacking in merit brought against him.

Default costs certificates

In legal costs it can often be the case that a judgment that is concerned with one particular issue may have unexpected relevance in another area.  One example of this is the case of Roundstone Nurseries Ltd v Stephenson Holdings Ltd [2009] EWHC 1431 (TCC).

The matter concerned a claim where proceedings had been issued.  The parties agreed that the proceedings should be stayed by court order to allow for the parties to complete the Pre-Action Protocol process.  The period of the stay came to an end but neither party had applied to the court to extend the stay of the proceedings, despite the Defendant noting in correspondence that such an extension was needed.  In the absence of a defence being filed by the Defendant, the Claimant, without any further reference to the Defendant, applied for and obtained judgment in default. 

The Claimant subsequently agreed to have the judgment in default set aside by consent but claimed they were entitled to their costs of the application to set aside and should not be required to pay the Defendant’s costs of the application.

The judge, Mr Justice Coulson, accepted that the Claimant was technically entitled to enter judgment.  However, the judge concluded:

“During the course of his helpful submissions on this point, Mr. Crangle went so far as to say that, if a claimant was technically entitled to enter judgment in default then he was entitled to do so, even if he knew that the defendant had a real prospect of defending the claim and therefore setting aside such judgment.  I am afraid I do not accept that submission: it seems to me that it is contrary to the entire basis of the Civil Procedure Rules.  If a claimant knows that, because of some technical glitch, he could enter judgment in default against the defendant, but that the defendant had a real prospect of successfully defending the claim (and therefore getting judgment set aside) then that claimant should not, at least as a general rule, enter judgment in default.  If he does, it seems to me that he must face the costs consequences of that decision.”

This decision seems to be relevant in relation to default costs certificates.  Although the gentlemanly thing to do where a paying party has not served Points of Dispute within time is to remind the paying party, it is common for the receiving party to simply proceed with an application for a default costs certificate without further reference to the paying party.    

A default costs certificate can be set aside where “it appears to the court that there is some good reason why the detailed assessment proceedings should continue” (CPD 47.12).  There is only limited case law on the issue of what amounts to a “good reason”.  One useful starting point is Seray-Wurie v London Borough of Hackney [2002] EWCA Civ 909.  The Court of Appeal, commenting on the decision of the Court below, said:

“When the judge considered the effect of the overriding objective, he said that there was a clearly articulated dispute about the amount of costs.  For the purposes of this judgment he was content to assume that the council had been late in submitting its points of objection, but it did dispute them and there was clearly a dispute to be determined.  The overriding objective necessarily implied that dealing with a case justly included actually dealing with the case.  If the deputy judge had made any other order [to that setting aside the default costs certificate], he would have shut out the council entirely from pursuing the disputed points in relation to costs, and both sides agreed that the amount of costs were very substantial indeed.  In these circumstances, whilst assuming that the disputed facts (some of which related to the hearing before the deputy costs judge) were found in the claimant’s favour, there was no possibility of any reasonable costs judge reaching any other conclusion.  There was therefore no realistic prospect of an appeal succeeding.  Permission to appeal was accordingly refused.”

Although each case will depend on its own facts, where an application to set aside a default costs certificate, supported by points of dispute, is filed reasonably promptly it is hard to envisage many situations where the Court will not set aside the certificate.  In the past, where this happens, it would generally be accepted that the paying party should have to pay the associated costs.  The decision in Roundstone Nurseries Ltd v Stephenson Holdings Ltd suggests that this may not be appropriate.  If a receiving party has been too quick off the mark and failed to warn the paying party that they intend to apply for a default costs certificate, may they find themselves having to pay the costs of having it set aside?

Court of Appeal Legal Costs Judgments

You wait ages for an interesting legal costs decision from the Court of Appeal and then two come along together.

Both cases concerned a similar issue as to the extent of a costs judge’s discretion to limit costs in a manner that appears to go beyond a strict reading of the final costs order.

In Drew v Whitbread [2010] EWCA Civ 53 the claim had been allocated to the multi track on the basis of the claimant’s schedule of special damages.  At trial the matter went into a second day and the judge limited the claimant’s damages to an amount within the fast track limit.  The final order was that costs were to be assessed on the standard basis. 

The District Judge ruled on commencement of the detailed assessment that costs would be assessed as if the matter had been allocated to the fast-track.  This restricted the level of costs recoverable. 

The Court of Appeal recognised that the case raised a number of points of principle:

“Where the trial judge has in a multi-track case ordered costs to be paid on the standard basis, to what extent is a costs judge free to rule that the case was in reality a fast track case and assess trial costs on a fast track basis?  Is this a matter which a paying party has to raise before the trial judge or be precluded from raising the point thereafter?  In particular should a party obtain a ruling from the trial judge as to whether a case should have been disposed of within a day when in fact it was not?  If the costs judge is free to consider whether a case should have been allocated to the fast track, how should he or she approach assessment thereafter; can he or she simply say I am going to assess the costs of trial as if it was a fast track case or is it simply something to be taken into account when assessing the costs?”

The Claimant argued by reference to Aaron v Shelton [2004] EWHC 1162 that if a party wishes to argue that a case was, in reality, a fast-track case, and in particular that it was a case that should only have lasted a day, that must be raised with the trial judge, and if not raised with the trial judge cannot be raised with the costs judge.  

The Court of Appeal rejected that approach:

“in fulfilling their different functions, the trial judge under 44.3 and the costs judge under 44.5 are enjoined to take into account many similar factors.  That may mean that if a factor has been raised before the trial judge and the trial judge has ruled on that factor, that will bind the costs judge but (and it is important to emphasise this) more often than not the costs judge has material which the trial judge did not have, and thus will not be bound.  But the notion that if a party has not raised a matter under 44.3 he should be precluded from raising it under 44.5 does not sit easily with the express provisions. … In my view it would not be consistent with the express provisions of 44.3 and 44.5 and with the court's duty to see that costs are proportionate and reasonable to preclude a party raising a point highly material to that question because it had not been raised before the judge under 44.3.”

It was doubtful that Aaron v Shelton (see previous post) ever represented good law but it now entirely clear it does not.  The Aaron Principle has not survived. 

The following guidance was given by the Court:

“In my view 44.3 and 44.5 are intended to work in harmony and it is intended that the parties' conduct (for example) may have to be considered under both. If what is sought is a special order as to costs which a costs judge should follow that obviously should be sought from the trial judge. If it is clear that a costs judge would be assisted in the assessment of costs by some indication from the trial judge about the way in which a trial has been conducted, a request for that indication should be sought. But none of this needs a rule as per Henderson v Henderson that a failure to raise a point before the trial judge will preclude the raising of a point before the costs judge.

In this case the question of exaggeration was raised before the trial judge. He was expressly enjoined to take the possibility of exaggeration into account under 44.3(5)(d). That might have led to a special order for costs, e.g. that the claimant should only get 50% of his costs. But the fact that no special order has been made does not preclude the costs judge in assessing costs considering whether the conduct of a party should preclude an award of costs for some particular item. I can see no reason why the costs judge should not consider the effect of such conduct unless some specific finding of the trial judge binds him. Thus a view expressed that exaggeration was not such as to lead to a special order, ought not it seems to me to prevent a costs judge who must have regard to all the circumstances of the case, being entitled to assess what would have happened if a claimant had instructed his lawyers properly.

…

… in my view the costs judge was not entitled simply to rule that she was going to assess the costs of trial as if the case were on the fast track. To so rule does seem to me to rescind the Recorder's order. I cannot accept that in ruling as she did it can be said she was simply “assessing costs on the standard basis taking into account that the case should have been allocated to the fast track” which in my view is the permissible approach. It may in some cases be a distinction without a major difference, i.e. where a case has finished within a day and the sums awarded have fallen well within the fast track limits, but that was not on the face of it this case. This case had run into a second day due at least very arguably to the fact that liability was fought hard. Simply ruling that costs of the trial should be on a fast track basis may have meant that the costs judge gave no separate consideration to the question whether it was a trial that would always have been likely to run into a second day.

I accept that, if appreciating that the case had run into a second day, she had given reasons as to why it should not have done so, and that on that basis fast track trial costs was all it was reasonable for the paying party to have to pay, she could not have been faulted.”

So Aaron is completely dead and we now have the Drew Principle which allows conduct to be taken fully into account on assessment even where it has not been raised before the judge making the final order.  Further, even where conduct has been raised before the trial judge, it can also be raised on assessment unless this would conflict with a specific finding by the trial judge.  This is a very useful decision from a defendant’s perspective but I anticipate that it may create some practical difficulties for judges on assessment who will not now be able to avoid considering issues of conduct.

The case of O'Beirne v Hudson [2010] EWCA Civ 52 concerned the question of whether, where a case has been settled before any allocation by a consent order ordering costs to be paid on the standard basis, the costs judge is entitled to take the view that the case would have been allocated to the small claims track and thus that the paying party should only pay costs on the small claims track basis.  This was a very similar issue to Drew as it concerned the extent to which a judge on assessment can go behind a strict interpretation of the costs order.

The Court of Appeal ruled:

“This was a consent order providing for costs to be assessed on the standard basis; the addition of the words reasonable to my mind adds nothing to the order that costs were to be assessed on that basis. It certainly follows from that that the costs judge was not free to rule that the costs would be assessed on the small claims track basis and if and in so far as Judge Stewart might be understood to be saying that he was in my view wrong. But, and this is the critical point, in making an assessment the Costs Judge is entitled to take account of all circumstances (see CPR 44.5(1)), including the fact that the case would almost certainly have been allocated to a small claims track if it had been allocated. In so doing she would have regard to what could or could not be recovered if the case had been so allocated.

At that stage the Costs Judge must question whether, if it could have been fought on the small track, it is reasonable that the paying party should pay the costs of a lawyer. The Costs Judge would not be bound (as I think Mr Morgan's formulation would suggest) only to allow the costs as per a case on the small claims track but it would be a highly material circumstance in considering what by way of assessment should be payable.

            …

I also accept that as Judge Stewart noted, a costs judge has no power to alter the order for costs made by the a judge, and thus make a direction from the outset where costs have been awarded on the standard basis that costs will be assessed on a small track basis. But what lay behind what Judge LJ said reflects what Lord Woolf was saying in Lownds and provided the Costs Judge does not purport to vary the original order or tie himself to assessing by reference to the small claims track it is quite legitimate to give effect as far as possible to the philosophy which lies behind the above statements. There is a real distinction between directing at the outset that nothing but small claims costs will be awarded and giving items on a bill very anxious scrutiny to see whether costs were necessarily or reasonably incurred, and thus whether it is reasonable for the paying party to pay more than would have been recoverable in a case that should have been allocated to the small claims track. Was it for example necessary to have had lawyers and is it reasonable for the paying party to have to pay for lawyers are questions that should arise where a claim should have been allocated to the small claims track.”

This might be thought to create something of an artificial distinction.  A judge cannot simply apply the small claims track costs regime where the costs order is for costs on the standard basis.  However, as part of the assessment process, the judge can disallow all the solicitor’s costs as being unreasonably incurred and thus limit the costs to what would have been recovered in the small claims track.  Artificial or not, this is another good decision from a defendant perspective. 

Taken together, these decisions considerably widen the scope for challenges on detailed assessment where the final costs order was not ideal and where issues of conduct had not been raised before the trial judge or incorporated into a final consent order. 

Middleton v Vosper Thornecroft (UK) Ltd

I acted in a detailed assessment recently where the Claimant had failed to serve a statement of reasons in respect of the success fee in accordance with CPD 32.5(3) when serving the bill of costs and notice of commencement.   The appropriate statement was subsequently served.  It was argued for the Defendant that the failure to serve with the bill amounted to a breach of the rules which was not rectified simply by serving the document late and the consequence was that the success fee was not recoverable.  The judge questioned where in the rules it stated that the document needed to be served with the actual bill.  Despite my best efforts, I was unable to point to a specific provision that dealt with the time for service.  The judge concluded that it would be sufficient to serve the document in advance of the hearing and therefore allowed the success fee. 

In the event, this decision was not decisive to the outcome of the detailed assessment and I still managed to comfortably win on the Defendant’s offer.  However, I was left with the strong feeling that the judge was wrong but unable to identify quite where he had gone wrong.  The best I was able to do was note that the heading to the section listing the documents to be served is worded: “Commencement of detailed assessment proceedings”.  Common sense therefore suggests that the timing for service of the documents is at the same time as commencement of the detailed assessment proceedings (ie when the bill and notice of commencement is served, as per CPR 47.6).

Before travelling to the hearing I had put in my briefcase a copy of a judgment I had come across on Lawtel that looked interesting.  I didn’t have a chance to read this on the day of the hearing.  You can imagine how annoyed I was when, a few days later, I got around to reading the judgment only to discover it was exactly the case I needed.

In Middleton v Vosper Thornecroft (UK) Ltd & Others, CC (Winchester) 2/6/09, the claim was funded under a CFA that pre-dated the revocation of CFA Regulations 2000.  No statement of reasons was served with the Bill but some reasons were subsequently provided in the Claimant's replies.  His Honour Judge Iain Huges QC, sitting with Regional Costs Judge James, made a number of findings:

1.                  The “statement of reasons” to be served must be “the statement of reasons as included in the CFA.  The paying party is entitled to the whole of that statement and not an abbreviated version.  Further, he is entitled to know that that is what he is being given”.  He concluded: “the statement of reasons set out in the reply did not amount to a compliant statement.  First, because it was neither provided nor identified as being the statement of reasons given in the CFA.  Secondly, it did not have the appearance of being such a statement.  Thirdly, even if it had been identified as the statement of reasons in accordance with the rules, in fact it was not”. 

2.                  The “CPR require the receiving party to serve the statement of reasons and the other documents specified in section 32 at the same time of serving the notice of commencement and that the Claimant in this case failed to do that.  That triggers the sanction imposed by CPR 44.3B(1)(d) which denies recovery of his success fee”.

Another useful case in defendants' armoury.

Business Environment Bow Lane Ltd v Deanwater Estates Ltd

Where a claimant has picked up one or more costs orders in its favour on the way to a trial, but fails very badly at the trial (for example due to exaggeration), can the costs judge assess those costs at nil on the footing that they were not, as it turned out, reasonably incurred because they had been incurred in an action that sought an exaggerated sum which should never have been claimed?  No, according to Business Environment Bow Lane Ltd v Deanwater Estates Ltd [2009] EWHC 2014 (Ch).

Specialist costs counsel

The 2010 edition of the Association of Law Costs Draftsmen's diary contains advertisements from six barristers' chambers holding themselves out as specialists in legal costs matters.  Five of these give the names of the barristers in their costs teams.  The number of named individuals totals 49.  There are a number of other chambers who have costs specialists who did not advertise in the diary.  So how many specialist costs barristers are there?  There were a large number of names I did not recognise and it may be that there is a certain amount of wishful thinking going on as to who can be properly described as a costs specialist.  Alternatively, it may be that they operate in areas of costs law that I do not deal with and our paths therefore do not cross.

A number of years ago, and before there were anything like the current number of specialist costs counsel, a senior judge (can anyone remind me who?) expressed displeasure about the fact that the complexity and number of legal costs disputes had reached the level that some lawyers were basing their whole career on costs matters.

Quite how many will be left in the post-Jackson world remains to be seen but their prospects are probably better than those of a large number of costs draftsmen.

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Jackson Report - Success fees

Arguably, Lord Justice Jackson's most significant recommendation, in his Final Report, is an end to recovery between the parties of success fees.

This proposal will lead to obvious and huge savings to defendants.  Those who think that current political uncertainty will lead to much of the Report being shelved should think again.  Whichever party is in power after the general election, there will be a pressing need to control public expenditure.  In terms of the money paid out by the NHSLA alone, and ignoring all the other areas where the public purse pays for litigation, this will be a compelling reason to adopt this recommendation.  This is great news for defendants but really bad news for claimant lawyers.

Yes, solicitors can still enter into CFAs with their clients and charge a success fee.  But there are two big problems.  Firstly:



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Heavy advertising in recent years telling potential claimants that they will keep 100% of their damages will make it very unattractive for claimant solicitors to now start taking a cut of their clients' damages.  There will be enough firms who decide to take the hit themselves that others will be forced to follow.  Success fees in personal injury claims are likely to disappear.  For the lower-end RTA claims, the loss of the 12.5% success fee will not be dramatic but it will come straight from solicitors' profit margins.  It is likely to discourage some claims from being pushed to trial where the incentive of the automatic 100% success fee will disappear.  On the other hand, the removal of the 100% threat will encourage defendants to take more cases to court, especially in relation to quantum disputes.

Even if firms do feel able to charge success fees, Jackson LJ's proposed cap will limit to a large extent the amount that can be charged.  Not only is a cap of 25% of damages recommended, but Jackson LJ's master-stroke is that this cap will exclude damages referable to future loss.  The element of damages that claimants will be required to pay as success fee will be limited to the general damages and past losses.  In heavy litigation, and in particular catastrophic injury and clinical negligence claims, the cap is going to bite significantly in a high proportion of claims.  This will have a big impact on profit margins for some firms.

The claimant lobby has been arguing that this proposal will reduce access to justice.  This argument fails for a number of reasons.  These proposals largely revert the position to the one that existed prior to the Access to Justice Act 1999.  As Jackson LJ happily notes: "During 1996 APIL confirmed that those arrangements provided access to justice for personal injury claimants and that those arrangements were satisfactory".  He further notes: "In this regard, it is significant that in Scotland personal injury cases are conducted satisfactorily on CFAs, despite the fact that success fees are not recoverable".  Until recently, most BTE work and trade union work was conducted on unwritten speccing arrangements.  It is not obvious that recoverability of success fees brought about an increase in the kind of claim that was pursued.  The same kind of claim will still be run but the profit margins will shrink.

The Jackson package, and in particular this recommendation, is designed, at least in relation to personal injury work, to reduce legal costs at the expense of claimant lawyers.  And that can be no bad thing.

Dr Friston's Civil Costs - A short teaser

I have recently been commenting on the forthcoming publication of Civil Costs - Law and Practice, a new book by Dr Mark Friston. To give you some idea as to the scope and ambition of this book have a look at this sample chapter (external link).

This chapter deals with the important topic of contracts made away from solicitors' places of business.  If this looks like a difficult and obscure subject that you can ignore, think again.  If a solicitor's paperwork is not in order their bill will be unenforceable.  In the current edition of Claims Management magazine, Andrew Twambley, managing partner at Amelans, wrote: "Well, I have a word from the dark side - from the deepest annals of defendant burrows, from behind the largest rock - that an attack is imminent.  Mark my words, brace yourselves and hope you are not the ones chosen by them, to be the receivers of test litigation".