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1
COUNSEL’S FEES AFTER APRIL 2013
ANDREW RITCHIE QC
9 Gough SquareLONDON
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Before 2003In PI cases in claimant work: Solicitors were paid by the
hour The courts supervised
solicitors fees at detailed assessment
Solicitors hourly rates were set by the courts annually
Barristers were paid as a disbursement
Barristers fees were negotiated with the solicitor
who had a duty to keep them down for client’s benefit
3
Before 2003 – The disbursement basis If a solicitor wanted to instruct
counsel to advise or plead he could do so
The choice was cost neutral The solicitor was paid to instruct
counsel (if the claim was won) Counsel was paid by the losing
Defendant Or counsel was paid nothing if the
case was lost (no win no fee) This allowed injured claimants full
access to the specialist personal injury Bar
4
Commoditisation
Commoditisation is a business principle
It involves paying the same fixed fee
for every PI case in a category even though the work
involved is different
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The Vital Rule of commoditisation
to maintain access to justice
to ensure victims can still bring their claims
the commoditised price must be the average for the category of cases
Mid way along the Bell Curve:
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Failure to follow the Vital Rule
If the commoditised price is too high
The insurers pay too much for the claims in the category
Claimant lawyers get rich
Society suffers due to excess insurance costs
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Failure to follow the Vital Rule
If the commoditised price is too low:
Claimant lawyers cannot make money on the claims in that category when they do a proper job
So they do a lot less work - a cheap job – a bad job
Or they refuse to do the claims at all
Access to justice is blocked or damaged
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Benefits to Insurers of commoditisation
The benefits for the insurers (D) are:
[1] complete certainty about the C’s costs
[2] insurers can behave as badly as they like (deny everything, object to everything, refuse interims, fail to give disclosure) and there are no adverse costs consequences to them
- the C’s costs are fixed- Only the claimants lawyers
suffer – so insurers have the whip hand
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Commoditisation: the effects on Claimant lawyers work Fee certainty promotes
certainty in planning for accommodation, staff, salaries
Fixed fees means taking the rough with the smooth
Solicitors are paid the same price for a whole range of different cases
Solicitors make profit on one case (low level of work needed)
Solicitors lose money on the next (high level of work needed)
Obviously this will promote cherry picking the easy cases
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Commoditisation: The effects on C’s solicitor’s behaviour
Fixed fees put commercial pressure on solicitors to: Set a maximum number of
staff hours which can be spent on each case
Keep expenses down to the minimum
Instructing counsel costs money
D will not pay for counsel even if D loses
Therefore commoditisation stops solicitors instructing counsel
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Commoditisation of counsel’s fees
To maintain access for victims to advice from barristers
The MoJ merely need to commoditise counsel’s fees
Which means fixing the fees for each category of case
If counsel is instructed then low fixed fees are paid by the losing D
MoJ refuse to consider this or even to comment on it
Why?
12
Effects on injured victims:
Anyone with a difficult case in the category:
Will either be refused legal help
Or will have the case run by low qualified, inexperienced, para legals
Will not have advice from counsel
Will probably recover damages (if they win) below the level to which they are entitled in law
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The First commoditisation: The Fixed Recoverable Costs scheme 2003 Introduced for liability admitted
RTAs under £10,000 Fixed fees for solicitors who
settled cases before issue Barristers were excluded from the
list of allowed disbursements Costs Forum 2002, result: Bob
Musgrove the then CE of the CJC stated: “Disbursements and Counsel’s fees are not included: It was agreed that careful and specific wording in the Practice Direction should aim to avoid “out-sourcing” or possible shifting of costs into disbursements”
The MoJ cannot get this Musgrove Principle out of their minds. The Musgrove Principle
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Effect of victim’s blocked access to advice from the bar FRC scheme: solicitors paid
£800 + 20% of damages No extra for instructing
counsel to advise on quantum
So solicitors rarely instruct the bar
Do not want to “give away” what they regarded as “their fees”
Clients know no better so the risk of under settlement arose
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The second commoditisation:The Portal - 2010
Flush with the success of the FRC insurers pressed on lobbying government for more commoditisation
So Labour created and introduced the Portal
A commoditised system for dealing with all RTA claims under £10,000 where liability is admitted.
Fixed fees: £400 stage 1, £800 stage 2 and £500 stage 3 (to trial).
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Disbursements - counsel
Following the FRC pattern, counsel was excluded from the list of disbursements.
As a result solicitors stopped instructing counsel
PIBA surveyed members last year and the largest PI sets received 20-30 instructions in portal case pa!
This is de-minimis. The MoJ just cannot get the
Musgrove principle out of their minds.
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Under settlement
So since 2010 victims who have been advised to take settlements in Portal cases have faced a high risk of under settlement
Low grade staff do the cases No profit for the solicitor in
fighting for the extra 10-20% No advice from the independent
bar Professor Fenn analysed the
Portal results and concluded under settlement of 6% was occurring on pain, suffering and loss of amenity alone (7/2012).
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Expanded Commoditisation: expansion of the Portal April 2013
The MoJ will expand the (liability admitted) portal in April 2013
Unless the APIL JR stops the plan
It will expand horizontally to cover EL and PL claims.
It will expand vertically to cover claims up to £25,000
The cuckoo is growing in the nest
Mum’s looking small
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This commoditisation breaks the vital rule: The fees set by the labour
government in 2010 were fixed through negotiations between insurers and claimant lawyers
This coalition government has proposed much lower fixed fees (cut in half)
at levels requested by insurers at and since the Downing Street “summit” on 14.2.2012.
Submissions made by all claimant lawyers and the Law Society and the Bar Council in consultations since that time have been ignored
Fix the fees far too low and access to justice is blocked
20
The Fourth Commoditisation –The Fast Track The most recent
consultation paper from MoJ proposes to commoditise Fast Track fees.
The same pattern is proposed namely: commoditise (fix) solicitors
fees ignore the bar (namely do
not fix barristers fees) thereby abolishing access
for victims to advice and pleadings from the bar
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What does the future hold?
Successive ministers for justice have been briefed to: tackle the
“compensation culture” bring down the costs of
personal injury litigation with a view to reducing
the costs of RTA and EL insurance
Whilst maintaining access to justice
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Steps taken/proposed so far
Government has: Abolished referral fees; Made success fees payable only by
the injured victim out of damages; Capped success fees at about 12.5%
of damages Made ATE insurance fees payable by
the victims out of damages Commoditised 95% of all PI claims –
those in the Portal and on the Fast Track – by fixing fees.
Excluded victims from gaining access to advice from the bar by abolishing the disbursement basis
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Now the final threat- increase the small claims limit
Last week the Minister for Justice announced that he is considering increasing the small claims limit to £15,000 in PI
No legal fees are paid in small claims
Who will this affect?
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What’s involved in running a small RTA claim?
Get the police report (how?)
Interview witnesses and draft witness statements (time consuming)
Draw a plan Write your own
witness statement on liability and quantum
25
What is involved in running an employers liability claim?
For instance a manual handling or dermatitis claim:
Obtain and engineering report on the item lifted or the substance which caused the dermatitis (how? Who?)
Find the relevant safety regulations and identify which was breached
Interview witnesses at work Obtain disclosure of policies
and procedures of employer re manual handling or skin protection
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Small claims procedure
Find a the appropriate medical expert (where do I start?)
Instruct the expert Get a medical report from
the expert Find the insurance
company or the MIB (who?) Write to the insurance
company or MIB Make the claim (what is a
head of loss?)
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Suing
Draft the claim form (where do I get that?)
Get the court issuing papers (what?)
Copy them (where?) Send a cheque for the
correct amount (how much?) plus the right number of
copies Send to the Central
processing unit in Birmingham
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Getting to trial
Deal with directions What are directions anyway? Make part 36 offers Sorry what are they? Draft a schedule of loss… what? Turn up at trial with no barrister Meet the insurance company barrister
and get cross examined Have the case heard by a District Judge
with no copy of Kemp on Quantum because the MoJ refuse to provide the DJ with their own copies.
Produce comparable cases for quantum (where do I find them?)
Lose or achieve under settlement
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Justice MoJ style
Who could do this? Middle class well
educated people? Yes Elderly people? No Mentally disabled
people? No Socially
disadvantaged people? No
Immigrants? No Poor People? No
Who cares about them anyway?
30
The role of counsel in PI claims
Traditionally the role of counsel in PI claims has been to advise and to represent at trial
Barristers kill off bad claims and fraudulent ones
Barristers promote and fearlessly fight good claims
Barristers are independent, well trained and highly regulated
The involvement of Barristers in PI cases ensures that the law is followed and that settlements are at the right level
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The way forwards:
Simple Drop the small claims increase Fix fees in the Portal and on the
Fast Track at fair average levels for solicitors based on a fair analysis of the work involved
Fix barristers fees payable in all cases (Portal and Fast Track) and require the losing D to pay
Stop worrying about the Musgrove “outsourcing” issue. It is de minimis.
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Multi-track cases:
The disbursement basis is still in existence in multi track PI claims
Success fees: APIL/PIBA 6 needs to be re-written for CFAs.
QOCS will affect the drafting
Difficult cases will have minimal success fees which do not match the risk
Many injured people will face no access to justice because the rewards will not match the risk
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The future
The junior bar will wither Victims in 95% of PI claims will suffer
barriers to access to justice and a substantial risk of under settlement
Courts will see an increase in litigants in person PI claims which are run and prepared in a shambolic way
Insurers will make more money … but will premiums come down?
In 3-4 years the MoJ and government will realise that they have really damaged the tort law system in England and Wales …. when a “Daily Mail” journalist suffers an injury and has to run his own small PI claim, then bleats about it in the newspaper.
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Conclusion
Commoditisation is workable in PI law if the vital rule is followed properly
If the vital rule is not followed:
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Thank You
Andrew Ritchie QC
9 Gough Square