It's All our Own Fault, Apparently!

The Law Society Gazette has reported today on a speech given by the Master of the Rolls, Lord Dyson, at a Leeds Law Society Event in which the inevitability of the extension of fixed costs in litigation (to include all fast-track cases and all cases in what he referred to as the 'lower reaches' of the multi-track) was confirmed. The full article can be found here http://www.lawgazette.co.uk/law/dyson-extending-fixed-costs-is-the-way-forward/5055647.article, but part of the justification given was that Lord Dyson was "horrified that costs litigation is now a recognised specialism"

Costs of litigation are "far too high"

Quality of service is "'impressive, but who can afford it?"

In respect of work not covered by Conditional Fee Agreements "you have to be pretty desperate or very rich to be willing to engage lawyers in the time-honoured way, being charged at an hourly rate, with no cap and simply not knowing what you're committing to"

Fixed costs will reduce the need for budgeting and he was "horrified that costs litigation is now a recognised specialism."

Master of the Rolls, Lord Dyson

​Taking the last point first : I began my career in costs in 1987 and "costs litigation" really did not feature until 26th April 1999 when we were first introduced to the Civil Procedure Rules courtesy of Lord Woolf. By and large most costs people spent their time drafting bills which, more often than not, resulted in a sensible agreement between the parties, because both sides had a pretty good idea of what the final result was likely to be if the bill went to "taxation" as it was then called, and whichever side got it badly wrong would be properly penalised in costs. There was a scale of recoverable costs under the old County Court rules which restricted costs in lower value cases, subject to a discretion to exceed in appropriate cases. Not "fixed", but capped at an appropriate level, with a "safety valve" where it could be demonstrated that the cap would produce an unfair result. Hourly rates were not determined by guidelines : they were completely discretionary, as a result of which market forces (and the discretion of individual judges, who knew their localities well) meant that they were kept at a realistic level.

Since then we have had -

Proportionality subject to necessity, replaced by proportionality independent of necessity

Proportionality of base costs only replaced by proportionality of all costs, including additional liabilities

Success fees payable by the client, replaced by success fees payable by the opponent, finally reverting once more to success fee payable by the client (but with exceptions in some types of case, just to keep us on our toes!)

ATE premiums partly payable by the opponent, partly payable by the client

Costs estimates on AQs and PTCs replaced by costs budgeting

Costs Budget Comparisons replaced by Costs Budget Discussion Reports

Version after version of Form H (and no doubt a new one any day now that the proportionality of ATE premiums is up for grabs)

Fixed RTA costs

Portal Costs

Costs-only proceedings

Arguments for fixed costs on costs-only proceedings

Guideline rates to remove any degree of market force

QOCS

Transitional Provisions on QOCS

Up with assignment of CFAs, down with assignment, assignment finally (?) held to have been okay all along

Mitchell

Denton

BNM -v- MGN

And no doubt a myriad of other significant changes that I can't remember, I'm so busy desperately keeping up with the latest version of the current rules!

Is it really a surprise that such a system, with so many changes and inherent uncertainties, results in litigation? I didn't ask for the changes, nor as I recall did the profession as a whole. Should we be castigated for working hard to gain the necessary expertise to guide both professional and lay clients through this muddy field? That seems to me to be extraordinarily harsh.

The Access to Justice Report 1996 which preceded the rule changes in April 1999 identified a number of principles the civil justice system should meet to ensure access to justice, and I would suggest that there is perhaps an equal degree of horror in taking the time to review those and consider whether, in terms of the sphere of costs alone, they were ever met and whether the panacea of fixed costs would actually make any difference at all -

The system was intended to be as follows [with my comments in brackets] -

(a) be just in the results it delivers; [an arbitrary reduction on grounds of proportionality, when it is too late for the litigant to do anything about it is certainly not "just" - fixed costs would mean the result would either be even more unfair, or would mean that deep pocketed defendants could simply make cases uneconomical to run]

(b) be fair in the way it treats litigants; [fixed costs only determine what can be recovered - for those on a CFA that pretty much determines what can be spent - whereas defendants can and will spend as much as they like to try to sap the claimant's will to continue - equality of arms out of the window for good]

(c) offer appropriate procedures at a reasonable cost; [is the costs budgeting process even fit for purpose, never mind appropriate? I am fairly certain it actually costs more than it saves]

(d) deal with cases with reasonable speed; [the SCCO is taking around 8 weeks to log correspondence, and a full day hearing will be listed in around 8 months if we are lucky]

(e) be understandable to those who use it; [costs budgeting anyone? the proposed new bill format?]

(f) be responsive to the needs of those who use it; [I've given up on chasing for responses from some Courts, because I've been told that every time I chase it increases the delay]

(g) provide as much certainty as the nature of particular cases allows; [the new proportionality test remains, as far as I can see, about as far from "certain" as one could possibly get]

(h) be effective: adequately resourced and organised." [no, no and no]

All in all, not a particularly impressive outcome. My view is that the system had more than enough weapons at its disposal to deal with increasing costs without resorting to the constant tinkering that has taken place over the last 17 years, and without jeopardising a fair outcome for those who have had to resort to using it. Here are some suggestions / thoughts -

1. Even without "proportionality" the court was able, pre CPR, to stand back and say that the "line by line" approach resulted in a figure that was too high. See for example Treasury Solicitor -v- Regester [1978] 2 All ER 920, QBD where Donaldson J said "the final figure will result from an exercise in judgment, not arithmetic, whatever arithmetical cross-checks may be employed". There was a wide discretion enabling the "line by line" figure to go down or up depending on the specifics of the case which, unfortunately, was largely under-employed.

2. Recognise that fixed costs will only address recoverability. Reducing incurred costs can only be achieved by market forces. For 16 years (at least in CFA cases) there has been no appreciable "market" because most litigants have not had to bear any shortfall. The Legal Aid Fund used to operate as a market in that it underwrote most personal injury litigation up until around 1999, and kept a close eye on the cases it underwrote (and incidentally in respect of PI work, it cost the tax payer virtually nothing because of the statutory charge, which meant that the lay client too had a vested interest in keeping costs to a minimum). The irrecoverability of success fees (and thus payment of them from damages) may yet operate as a "market"

3. Consider revising the method of recording time and claiming for it on assessment. Six minute units for routine work (when so much is automated) is just not appropriate in the 21st century. Perhaps a much higher rate for genuine "thinking time" that really drives the case on, and nothing for routine work?

4. Insist on expense of time calculations (remember them?) rather than just asking the profession what it charges and then setting that as a guideline rate to be adopted by all

5. Treat assessment seriously. If a party is miles out on its offer, award full costs of assessment as a deterrent. What motivation is there for paying parties to be sensible when the most that is at risk (in most cases) is £1,500 and there is always the possibility of a massive BNM style windfall?

6. If we are to have budgeting, design a properly integrated system, so that the mandatory (though often not enforced) initial client costs estimate becomes the budget, which then becomes the bill, which the court can then assess electronically to give the final decision on assessment