Since April 2013, any conditional fee agreement entered into does not allow the recoverability of a success fee from the other side (save for a few esoteric exceptions, such as privacy cases). The success fee was a welcome bonus and now it is gone. Of course, fees remain recoverable where arrangements were created before April, so we are in run off with old matters still having recoverability attached. The days are numbered.
The July reforms will transform the economics of everyday injury claims worth up to £25,000. The ceiling under the established road traffic injury portal rose to £25,000 where the claim notification form was submitted from 31 July. The attraction for defendants of settling claims under the portal is that costs are fixed and modest .
Also, new portals for both employers’ liability and public liability injury cases, worth up to £25,000, were introduced. These only apply where the accident happened on or after 31 July. The position is different for disease claims where the date of the letter of claim is the trigger. Claims from 31 July will be caught. Again, there is a fixed costs scheme, with fees of either £900 or £1,600 payable, dependent upon quantum.
The most audacious change, though, is the creation of a fixed costs regime that will attach to cases which exit the portal and indeed go to litigation. Road traffic, employers’ liability and public liability claims are caught. Recoverable disbursements are itemised. There is no room for counsel. The cost of drafting is not mentioned. A solicitor employing counsel will need to stump up the cost from the fixed costs, which many tell me fall woefully short of what they have been accustomed to recover in the past.
There is, of course, provision for an advocacy fee, though few cases now get to a hearing. Budgeting arrived in multi-track cases issued from 1 April. Incidentally, I understand that the random exclusions to budgeting, as in the Commercial Court, may be abolished soon. Since the very purpose of budgeting is to scrutinise the proposed spend, it is obvious that the suggested fees of counsel will be as much in issue as anything else. Downward pressure is likely.
The Court of Appeal was going to look at the approach to budgeting in Troy Foods v Manton last May, but the appeal was abandoned. Interestingly, the appeal was about counsels’ fees. The judge had allowed £350 an hour for counsel of 1995 call saying that, while high, the figure did not make him shake his head in disbelief. Moore-Bick LJ granted leave to appeal, since it was arguable that the correct test was only to allow a sensible, proportionate sum, rather than letting through everything but the perverse.
Long-term, I believe the hourly rate will go as a measurement of payment. The fixed costs described above are not related to hours. We have costs controlled in the Patents Court. Damages-based agreements (contingency fees), which were legitimised in April, are emphatically not about hours, but rather represent a reward for achieving a recovery, be it a brief or a protracted affair. Sir Rupert admires this concept and Lord Neuberger has indicated his preference also for the abandonment of time as the costs criterion.
In his introduction to the 2013 White Book, Jackson LJ speaks longingly of fixed costs in every fast-track matter, regardless of subject matter, and indeed, he is now minded to pushing them into elements of multi-track work too.
There is plenty of work out there. Those at the top of their game will always be busy and, frankly, there is nothing to stop them charging more than would be recoverable inter-parties. For everyone else, it is essential now to start planning ahead and looking at how work can best be done to a budget, where there is a happy outcome for all concerned.
Professor Dominic Regan, of City Law School, has assisted Jackson LJ and HH Judge Simon Brown QC with costs reform.