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Kurian v Falzon Master Leonard decided that the Incipitur Rule continues to apply and there was no good reason to depart from the normal starting point in relation to interest: Interest on costs should run from the date of the Consent Order which settled quantum and provided for the Defendant to pay the Claimant’s costs.
J N Dairies Ltd v Johal Dairies Ltd and Gurbir Singh In this instance, Master Gordon-Saker found that the retrospective success fee, covering a substantial portion of the Claimant’s costs, had not been reasonably incurred and was therefore disallowed upon assessment. However, despite what Paying parties may claim, this does not mean an end to the issue. Reasonably incurred retrospective success fees are allowable and recoverable on an inter partes basis (this was not even contested by Mr Simon Brown QC – the paying parties’ representative). Accordingly, this issue is still a grey area.
Nap Anglia v Sun-land DevelopmentIn this arbitration the Claimant had instructed claims consultants, Henry Cooper Consultants Ltd, and Mr Justice Edwards-Stuart found that this was recoverable. The Judge set out the following propositions having reviewed the
relevant authorities:•Sumspaidtoathirdpartyincurred solely for the purpose of advancing or assisting with the prosecution or defence of a claim may in principle be recoverable as costs provided that the third party is not doing any acts that only a solicitor can do and/or does not do any act whilst purporting to act as a solicitor.•Itdoesnotmatterthatthework done by the third party, even if it employs non-practising barristers or solicitors to do it, is work of a type commonly done by solicitors.•Thecostsofathirdparty engaged in these circumstances may be assessed by the court. To be recovered, they must have been reasonably incurred and be reasonable in amount.
newsletter
At the start of February, the House of Lords rejected all proposed amendments to the conditional fee elements of the Legal Aid, Sentencing and Punishment of Offenders Bill 2010-2011 (containing the so-called ‘Jackson Reforms’), but it was also announced that the government had pushed back the date for the implementation of the reforms from October 2012 to April 2013. A spokesman for the Ministry of Justice said
“We are committed to reforming the ‘no win no fee’ system” and “we wanttogivesufficienttimetogetthecomplex details right.”
The bill continues its passage through the Lords.
Update on Jackson
Issue 16
Latest Costs News
Third Party Funding
Contingency Fees
Fee-earner Training
Recruitment and Promotions
Inside this issueRecent Costs Cases
In the case of Adrian Simcoe –v- Jacuzzi UK Group PLC the Court of Appeal allowed the Claimant’s appeal and held that interest on costs runs from the incipitur date (i.e. date of the Order giving an entitlement to costs) even if the Claimant’s solicitors are acting under a CFA. For further details on this please see our website or contact Just Costs directly (contact details on page 4 of this newsletter)
Hot off the Press
Time to think differently – Nick Rowles-Davies examines the benefits of third-party litigation funding.
Theongoingdifficulteconomicclimateisforcinglawfirmstolookathowtheycan maximise their fee income and enhance their client base. In particular, dispute resolution teams are being forced to think differently.
Whilst most litigators have been relatively lucky, in comparison to their property-biased colleagues, they have still suffered because their clients have seen a reduction (or even termination) of their available litigation budgets.
Clients now want lawyers to share the risk by working on a conditional fee basis and other alternatives to the hourlyrate,includingfixedorcappedfees. They also like their lawyers to have an interest in the outcome of a case and for their legal team’s interests to be aligned with their own.
However,thedifficultyforlawyersisthat whilst acting under a conditional fee agreement (‘CFA’) means that if you win, you receive uplift on your base costs, it also means you have to wait until the end of the case to be paid anything. A fully contingent caseload may have its attractions and may allow you to run cases for clients who could not afford your services otherwise, but itdoesnothinggoodforyourcashflow.
Cases run on a full CFA can be just what the client wants, and they can be rewarding for the lawyers, ultimately. They may solve the problem of attracting clients, but they don’t release thefinancialpressure.
The answer to the problem lies in the use of third party litigation funding. Third party litigation funding is the process by which a funder, unconnected to the parties to the litigation, provides thefinancialresourcestoaclienttopaytheir legal fees in return for a share of the proceeds of the successful claim. If the claim is unsuccessful, the funder loses their money. There is a common perceptionamongstlawfirmsthatmostfunders won’t fund anything below £5 million. While this is true in many cases, there are funders out there willing to fund cases where there is no lower limit but the sums have to add up for the funder. Furthermore, funders willing to fund lower value cases are unlikely to publicise this, so expect to have to do some digging with any prospective funder. With regard to issues around
champerty, funders can make recommendations on cases they are funding but they can’t make decisions. The courts only have a problem with third party funding where there is some element of impropriety, such as strong interference in the case. However, it’s worth watching the Australian funding market; it is more mature than the UK and has gone as far as to allow the influenceoffundersonthelitigation.[Campbells Cash and Carry Pty Ltd v Fostiff Pty Ltd [2006] 229 CLR 386]
Most litigation funders will require that the lawyers take some risk, so they invariablyrequirethelawfirmtoenterinto a discounted CFA where part of the fee is paid monthly and the balance is contingent on success. If the case is won, the lawyers receive the balance of their discounted rate, but also a percentage uplift on the full (non-discounted rate).
From the client’s perspective, the issue of who pays that success fee will change post-Jackson, but it is unlikely that the lawyers will forego that success fee when the Defendants are not paying and the clients are.
The main areas that a combination of litigation funding and discounted CFAs canassistlawfirmsare:
Cash flowBy paying fees on a monthly basis, the fundercansmooththecashflowofacontingent based case load for the law firm.Itdoesnotremovethepeaksandtroughs, but rather raises the level of the trough.
MarketingIn an ever increasingly competitive marketplace, offering litigation funding toclientswillsettheinnovativefirmsapart from their competitors and allowthemtoofferarangeofflexiblefunding solutions. Litigation funding is a marketing tool.
ExpansionThe ability to be paid regularly and the increased offering in terms of retainer solutionswillgivefirmsthebudgetandfunds to offer their services to a wider audience and assist the expansion and growth of their client base, and then consequently their business.
Regulatory complianceRule 2.03 of the Solicitors’ Code of Conduct places an obligation on lawyers to discuss funding options with their clients. If they do not give
this advice, they are risking a claim in negligence. The lawyers have a duty to advise on the range of funding options available, one of which is litigation funding. Making their clients aware of the opportunity to use litigation funding, complies with those duties.
Risk managementUsing a litigation funder can assist in managingafirm’sriskandtheclient’srisk. The funder will give an independent third party review of a case when assessing it. If they offer terms - it means they agree that the case is worth pursuing.
Moreimportantly,theyreducethefirm’srisk and exposure. If the lawyers run a case on a full CFA they may never be paid at all. With litigation funding, the funder takes the risk and the lawyers are paid a proportion of their fees on a regular basis. That way, even if the case loses, they still cover their overhead and makesomeprofit.
It is a time of change in the legal profession. Alternative Business Structures and the Jackson reforms are changing the way lawyers behave. Law firmshavetoadaptandtooffertheirclients something different from the hourly rate retainer. Those litigation departments that wake up to litigation funding and what it can do for them will prosper.
Nick Rowles-Davies is a solicitor and consultant with litigation funder Vannin Capital. www.litigationfunding.com
Article from vannin capital for just costs
Nick Rowles-Davies
On Thursday 19th January, Herbert Smith hosted a seminar to discuss how changes to the costs and funding regime are likely to change the litigation landscape. Mark Beaumont from Just Costs was there, and heard an interesting discussion, which raised the following points:
•Removalofthecurrentrestrictions on contingency fees, combined with the liberalisation of the legal services market allowing outside investment inlawfirms,meansthattherewillbe the opportunity for outside capital providers to invest not only in litigation, via third party litigation funding arrangements, but also in lawfirmswhichpursuelitigationona contingency fee basis.
•Therearemanydetailsstilltobe worked out as to how contingency fees will operate in practice, including: whether there should be a cap on the level of contingency fee in commercial cases; what controls should be placed on the lawyer’s ability to terminate the arrangement; and whether the lawyer should be potentially liable for adverse costs.
• Ifthirdpartyfundersareliablefor adverse costs but solicitors acting under contingency fees have no such liability, this might encourage funders tobuyorsetuplawfirmstoconduct cases under such arrangements, rather than putting in funding as a thirdparty,soastobenefitfromthat protection.
•Theenvironmentinwhich contingency fees are to be introduced will be very different from the
present also because of the abolition of recoverable success fees and ATE premiums, which will change the balance substantially as these arrangements will no longer havesignificantadvantagesoverthird party litigation funding.
•Thereissomeuncertaintyasto the continued viability of the ATE insurance market once recoverable premiums are removed. Parties may become less willing to take out ATE insurance for good cases. The basket of cases covered by ATE could therefore downgrade, meaning a lack of premiums in successful cases to cover the cost of paying out in unsuccessful cases.•TheATEmarketislikelytodiversify its business model, including by assisting litigation funders, and/or solicitors acting under contingency fees, to cover their risks. We may even see insurers guaranteeingfirmsaminimumlevel of income. Training and DevelopmentTogrowaprofitablepracticeinDisputeResolution it is more important that ever to understand the key issues within Costs and Funding.
As the leading costs specialists, Just Costs Solicitors are able to provide consultancy, training, and advice across all areas of costs and funding, to ensure that you are making the most of your opportunities. Just Costs Solicitors Seminar Program is available (often on a complimentary basis) to Dispute Resolution practices across England & Wales. We can come
toyourofficesandpresenta60/90minute talk to your fee earners over a lunchtime, or as part of your monthly meeting.
Accredited for Continuing Professional Development by the Solicitors Regulation Authority, our acclaimed seminar program delivers practical and up-to-date advice across to fee earners looking to:
•Attract&RetainClients•IncreaseBillableHours•MaximiseProfits
Bring your fee earners completely up to speed with all aspects of costs and funding. The latest developments in law and practice will be discussed, clear and practical guidance provided on the legislative framework and full use will be made of topical case illustrations.
Topics covered include:•FileManagementtoMaximise Recovery•HourlyRates:thepossibilities•Budgeting&Estimates: the latest advice•Funding&RetainerOptions:thepast, the present, the future•LitigationFunding:abusiness development tool?•Othersubjectsdealtwithonrequest Many of our clients have taken advantage of this seminar, and are reapingthebenefitsingreaterprofitability,moreattractivefundingarrangements and increased new business.
For further details please contact Mark Beaumont on 020 7758 2155 or [email protected]
How contingency fees could change commercial litigation
OurManchesterofficeispleasedto announce that Bob Hanlon has joined the team. Bob is well known in the costs world, and across the commercial litigation sector in the North West, with over twenty year’s experience. He’s dealt with heavy weight cases for some of the country’s biggest practices, and is also a skilled Advocate, having appeared at many hearings including the House of Lords.
Mike Fitsell is now an Associate inourLondonoffice.Mikehas22years costs experience, working for
arangeoffirmsandgainingawealthof knowledge in all aspects of costs, including group litigation matters.
Our Advocacy Team is now being led by Tom Blackburn from our Londonoffice.JustCostshasateam of Barristers, Solicitors and Costs Lawyers, of whom 16 practice Advocacy. In 2011 Tom recovered over £10m in costs for clients, as well as reducing a £1.9m Bill to less than £700,000 upon a two-week Detailed Assessment Hearing in the SCCO, saving the client over £1.2m.
The business has continued to thrive in 2011 and now numbers almost 100 staff,coveringfiveoffices. We will continue to recruit high-calibre costs professionals throughout 2012 to satisfy the continuing growth in demand for our services, particularly in commercial litigation and complex personal injury and clinical negligence cases.
Our aim is to provide the best legal costs service in England & Wales and we welcome applications from people who would like to be a part of our team.
Just Costs Recruitment & Promotions
Patron: Right Honourable The Lord Woolf of Barnes
The Commercial Litigation Association Annual Conference
Practical Challenges for Modern Commercial Litigators
With Keynote Address by Lord Justice Jackson
Monday 12th March 2012 9:00am - 4:30pm
CPD Registered with the SRA for 5 Points To Register Interest in this Seminar or CLAN Membership please contact:
Hogan Lovells LLPAlantic House, 50 Holborn Viaduct, City of London EC1A 2FG
Manchester South: [email protected] Trident One Styal Road Manchester M22 5XB DX 22355 Cheadle Tel: 0161 435 6069
Manchester Central: [email protected] Pall Mall Court 61-67 King Street Manchester M2 4PD Tel: 0161 618 1095
London: [email protected] Central Court 25 Southampton Buildings London WC2A 1AL DX 426 LDE Tel: 020 7758 2155
Chesterfield: simonwadlow@justcosts.comDunstonInnovationCentreDunstonRoadChesterfieldDerbyshireS418NGDX743530Chesterfield8Tel: 01246 267 961
Leeds: [email protected] No 1 City Square Leeds West Yorkshire LS1 2ES DX 14094 Leeds Park Square Tel: 0113 366 3193
The information and any commentary on the law contained in this Newsletter is provided free of charge for information purposes only. No responsibility for the accuracy and correctness of the information and commentary, or for any consequences of relying on it, is assumed by any member of Just Costs, or Just Costs as a whole. The information and commentary does not, and is not intended to, amount
to legal advice to any person on a specific case or matter. The various articles were written at the dates shown for particular audiences and purposes and may not represent the law as it stands today. You are strongly advised to obtain specific, personal advice from a lawyer about your case or matter and not to rely on the information or comments on this site.
