Costs News

13 April 2017
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Costs management: better than fixed costs, say solicitors

Solicitors do not like costs management but consider it the lesser of two evils given the prospect of more fixed recoverable costs, a survey by Just Costs Solicitors has found.

In a poll of 146 personal injury (PI) solicitors and 155 commercial litigators from the UK’s top 200 firms, Just Costs also found the former far more likely to outsource their costs work than the latter.

The survey found that 65% of PI solicitors and 60% of commercial litigators thought that costs management had had a negative impact on litigation. Commercial litigators complained about the lack of consistency among judges. “The lack of guidance as to what proportionate costs means and the fact many judges are still unclear on what basis they are supposed to review the parties’ budgets only heeds to heightens their concerns,” the survey said.

“The introduction of cost management process has only increased the cost of litigation in some litigators’ eyes. The need to comply with deadlines, or having to apply for an extension before the deadline expires, is seen as an accumulation to the cost of litigation, especially when the principal claim remains their main focus of litigation."

“Given that costs management has been in place for four years and only 17% said it has had a positive impact and 23% remained neutral, the survey said questions remained about whether the fundamental procedure was working.”

The views were similar among PI lawyers, with just 10% saying costs management has had a positive impact.

But despite this, 90% of personal injury solicitors and 78% of commercial litigators preferred costs management to fixed recoverable costs.

The PI survey added: “There is also a possibility that legally complex cases, though low in value, will require an extensive amount of work to obtain a successful conclusion [that is more than] the allocated cost band would allow. This could ultimately result in litigators not taking on such complicated, low-value cases, preventing legitimate claims from being pursued.”

However, 57% of commercial litigators believed their clients would prefer fixed recoverable costs. Only 33% of PI lawyers thought the same.

Phil Bradbury (pictured), head of costs management at Just Costs, said: “Lawyers are trapped in a marriage of convenience with the costs management process. There’s no love or affection for the process, but it’s ‘better the devil you know’ and they won’t be filing for divorce any time soon.”

The survey found that commercial litigators were far more likely to complete Precedent H in-house (63%) – usually the fee-earner with conduct of the case – while 70% of PI lawyers outsourced the work to costs specialists.

Frustrations with the Excel-format Precedent H were also found, highlighting deleted formulas/reformatting and limited contingents as the biggest problems.

 

The ACL eBulletin will back in a fortnight.

 

This post was posted in ACL e-Bulletin

Comments

Sue Nash   25/09/2017 at 20:56

It appears that RNB is set for a HC appeal - watch this space! Meanwhile, RIP Solicitors Journal which - sadly - has just ceased publication after 180 years

News Flash   28/09/2017 at 12:18

Another pointless case, why resist a payment on account when your paying the opponents costs in the end anyway? these types of disputes should be a thing of the past!

MB   05/10/2017 at 13:18

Why has the focus returned to the SCCO "going completely digital". Was the electronic bill not extended to all Courts!

Dragon   12/10/2017 at 13:40

Well said Jim. Too often we see clinical negligence claims settle for say £2k only to be followed by a bill for say £50k. Thankfully there are some excellent costs lawyers out there who battle those costs down, but the situation remains outrageous.

Simon Mccarthy   13/10/2017 at 13:56

Dragon - your comment overlooks the fact that it is almost invariably your clients - the Defendants - who cause those scandalous costs by intransigently, and inexplicably, refusing to come to the negotiating table until too late, when the costs have already been racked up; it is their failure to take a realistic view to claims at the outset which necessitates the costs. This faux horror is therefore hard to stomach, especially when one considers the equivalent costs being incurred by government bodies (funded by us tax payers of course) often to the tune of 4-5 times the sums you mention, and the many Defendant costs draftsmen shelling peas for their piece of the pie. Sadly, it is the same old story of 'pay peanuts get monkeys' and, unless and until government wake up and start paying competent people to deal with claims pragmatically, the UK public purse will continue to haemorrhage billions of pounds that we can ill afford. Still, as long as it keeps Defendant costs draftsmen/lawyers in business?....

Northern Costs Monkey   13/10/2017 at 14:31

Just shows how ridiculous the whole budgeting process is. The reason firms generally don’t make applications to revise their budgets is because the bar set for varying them is absurdly high. No one even knows what a “significant development” is. A load of nonsense in my opinion. The situation we have now is that firms just don’t bother revising the budgets because in all likelihood it won’t be accepted. Meaning firms can be stuck with an “approved” budget that is a couple of years out of date, was drafted before the directions were even agreed, and is no longer fit for purpose. What should happen is that budgets should be drafted after the first CMC, and there should be a rule put in place that parties are able to freely revise a previously agreed or approved budget every six months, regardless of significant developments, with the updated budget to be considered at a costs management conference listed for a later date. That after all was the whole point of budgeting, was it not? Pragmatic costs management?

Simon   16/10/2017 at 16:47

I find this whole issue completely unnecessarily. Independent Midwives had commercial insurance suitable for their needs, however to try and save money they chose to try and become self-funding and cancelled their insurance without fully understanding the risks and exposures. I cannot see why it is in the public interest to bring a JR (and why the costs should be capped) when commercial solutions were available, however the issue is that as a group they didn't want to pay the costs of commercial insurance.

Dragon 2   18/10/2017 at 08:07

Great points Simon. Fully agree. Courts are fully aware of how these matters are conducted by those representing defendant. Surely though the money for damages and costs comes out of the medical suppliers' insurers' account, not tax pot nor nursing fund. Maybe that's why there is such a drive to extend the fixed costs regime to clin neg claims. Just a thought......

Mel B   19/10/2017 at 12:05

'Like' Simon McCarthy's comment

Cath Hart   21/10/2017 at 09:32

In reply to Simon's comment (which I thought at first meant this situation could be resolved) my understanding is that professional indemnity insurance for independent midwives has been withdrawn, but even if available the premium would be in the region of 20-30k annually (reference https://www.aims.org.uk/Submissions/nmc.htm) so I would disagree that it was cancelled to "save money" - these premiums exceed many of the midwives salaries so it was simply unworkable without government assistance. When professional indemnity insurance became mandatory under the EU directive in 2014 the independent midwives did appeal to the government for funding but this was rejected due to the low number of women involved so was not thought to represent value for money for the taxpayer. (reference: https://www.gov.uk/government/news/independent-midwives-insurance-options-outlined).

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