Old Law Still Good Law

Despite the major changes to costs law and civil litigation over recent years, the outcome of a detailed assessment hearing attended by LCN demonstrates that old legal principles seldom die. The hearing at Worcestor County Court concerned the costs payable for a successful counterclaim. The party paying costs, represented by LCN Negotiations Manager Paul Jones, argued the principal set out in a 1929 House of Lords decision. Medway Oil v Continental Contractors, that where only the costs of a counterclaim are to be paid this should exclude any costs which are common to both the main claim and the counterclaim. the other party disagreed and sought costs of over £4,500. The judge agreed with LCN and ruled that the legal point was still valid in this case. He went on to reduce the Bill to £430 and award LCN's client's costs of the hearing in the sum of £850. This rsulted in a net saving for the client of nearly £5,000 or 110% of the original costs claimed!
the case shows that there is still a place for legal argument at an assessment of costs and LCN's stance and expertise in this case resulted in a substantial saving for our client.

Why Can't Everyday be Like Christmas?

A Lancashire firm of solicitors recently ran a series of advertisements offering an accident compensation service headed: "If you've had an ACCIDENT and NEED some CASH for CHRISTMAS?" or "DO YOU NEED SOME CASH THIS CHRISTMAS?". Both advertisements stated: "If we accept your claim, we will let you have £300 of your compensation money within 7 days...What's more, if you lose your case you pay us nothing...". Not suprisingly, these advertisments generated complaints to the Advertising Standards Authority.
The Authority rejected these complaints on the basis that the terms were clear and the advertisements were not irresponsible. Although this decision itself is questionable, the more suprising fact to emerge was that the advertisment had been cleared in advance by the Law Society. The increasing pressure to remove self-regulation from the Law Society is easy to understand with decisions like this. And some say the compensation culture is just a myth.
Compensation Culture: Myth or Reality?

Following the publication of the Better Regulation Task force report, Better Routes to Redress(May 2004), there has been much comment in the press over the state of litigation in this country. the report concluded that the compensation culture was little more than a perception, albeit a dangerous one, fuelled by press stories of ambulance chasing lawyers, claims management companies (CMCs) and the increasingly 'have a go'

approach to litigation of the general public.
What cannot be denied, however, is that the environment within which legal claims are made has changed dramatically over recent years. The access to justice act in 1999 opened the floodgates for the widespread use of Conditional Fee Agreements (CFAs) in personal injury claims and in the process effectively did away with one of the major barakes on claims: the natural reluctance of a litigant to risk incurring legal costs. By taking out a CFA with an ATE premium, a litigant was effectively insulated against having to pay any legal costs whatever the outcome and would therefore be more likely to 'have a go'. taking advantage of this change, CMCs sprang up promising, 'Where there's blame, there's a claim' and 'No win, no fee', using aggressive marketing to bring the message to the public that they had nothing to lose and everything to gain.
The long-term viability of these CMCs was limited, as the collapse of Claims Direct, TAG, the Life Repair Group, Accident Advice Group, Invaro and others has shown. it is now very easy to blame it all on these CMCs, often cited as the very epitome of the ambulance chasing mentality.
Some personal injury solicitors could barely conceal their glee when the CMCs suffered the backlash and had their wings clipped so emphatically by the courts, claiming that litigants can now run back into the welcoming arms of solicitors. It should be remembered, however, that neither Claims Direct nor TAG would have reached the heights they did without the support of the hundreds of firms of solicitors who joined their panels in the hope of a flood of new claims.

Both Claims Direct and TAG were founded by solicitors and the Better Regulation Task Force also placed much of the blame for CMCs rise on solicitors. The judgement of the Court of Appeal in the latest TAG Test cases was as much a criticism of the solicitors on the TAG scheme as the scheme itself.
The lasting legacy of Claims Direct and TAG is a permanent change to the enviroment within which legal services are now provided. The CMCs have largely been replaced by solicitors grouping together under shared marketing schemes such as Injury Lawyers 4U. They have learnt how effective mass advertising can be, and their adverts promise the best of both worlds: easy, cost free, litigation but without the negative aspects now associated with CMCs. With the Clementi review promising a widespread upheaval of the whole legal market, the future may bring further competition for once legal claims in the form of 'Tesco Law' and once legal claims become just another commodity subject to pure market forces, the compensarion culture may finally become a reality.
whatever the future, as David Arculus, chair of the Better Regulation task Force noted: "While the compensation culture may be an urban myth, the costs associated with it are very real". The control of legal costs remains crucial in this ongoing struggle.

A False Economy

LCN's ethos has always been based on assisting clients to limit their total costs exposure at all stages in litigation. This means more than simply trying to make a saving on the costs finally presented at the end of a claim.

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Where possible, we assit in limiting costs before our clients become liable for them, rather than just concentrating on the final negotiation process. By that stage it is often too late . In addition to our popular LCN road Show, we try to provide advice on controlling costs as part of the claims handling process. the following example highlights the importance of this.
One of LCN's staff was recently involved in an RTA and is in the process of bringing a claim for damages. The issue of "loss of use" arose and his solicitors claimed £25 for this head of claim. The Defendant insurance company wrote back, in a letter that just dealt with this issue, and offered £15. The solicitor wrote to his client for instructions. His client believed that the £25 figure was a reasonable one, especially in light of the facet that he is disabled and so the loss of the use of the vehicle caused particular inconvenience. The solicitor therefore wrote another letter rejecting the offer of £15 and repeating the claim for £25. The insurance company agreed and issued a cheque for £25.

How much did all this cost?

The solicitors charge £14 plus VAT per letter. They wrote at least two additional letters dealing with whether the damages for this head should be £25 or £15. They therefore incurred additional costs of £32.90 by virtue of the insurer's attempts to save £10. These additional costs will almost certainly become the liability of the insurers. possibly perversely, the same costs would still have been incurred even if the £15 offer had been accepted and so the insurers would still have made a false economy even if successful on this point.

Of course, the cost of this corresondence was not limited to the costs of the Claimant as the additional time spent by the insurers will also carry a cost.
Under the new Predictable Costs regime in RTAs, such behaviour may not have such adverse costs consequences for defendants, and it may occasionally have a tactical place, but such false economy and disregard for costs consequences is not limited to RTA claims and is a regular ocurrence in all types of claims handlers are trained to consider the costs implications of all their actions.

Simplicity Itself

At LCN we have consistently held that the "costs warface" that has beset the legal landscape in recent years has been almost entirely due to the ill-thought-out and badly drafted rules relating to CFAs and ATEs. This has finally been acknowledged by the Department for Constitutional Affairs (Making Simple CFAs a Reality, June 2004). The recent mediated agreement concerning fixing success fees in RTA cases has only provided what should have been included in the original rules: clear guidance as to the amounts properly recoverable success fees in RTAs is finally clear and simple:
a maximum success fee of 20% (Callery v Gray) will be recoverable for straightforward claims where the CFA was enetered into before 1st August 2001, unless the court allows a higher or lower figure, then droppping to 5% (Halloran v Delaney) for the simplest cases with a higher figure for less simple cases until 6th October 2003 when, for any accidents after this date, the success fee will become fixed at 12.5% if the case settles pre-trial and 100% for cases

that conclude at trial, unless the case is worth more than £500,000 in which case an application can be made to the court requesting the success fee to be assessed at a different level and the court will then allow whatever figure it considers appropriate unless it assesses the appropriate success fee between 205 and 7.5%, in which case it will allow 12.5% anyway. the position is the same, but different, for barristers with multi-track cases that conclude within 21 days of rial producing fixed success fees of 75% and 50% for fast-track cases that settle within 14 days of trial.
Simple? For those not quite convinced, why not consider our new Predictable Costs Service.

Killing Success Fees and ATE Premiums

The recent announcement that success fees in EL cases will also be fixed, at 25% for all cases which settle pre-trial, is a welcome one to defendants as it will bring an end to the grossly excessive amounts currently claimed - many of which are then allowed by the courts. However, lateral thinking and a more proactive approach may provide a chance to remove these costs altogether, togethers with ATE/notional premiums.
Potential claimants will usually sign-up to CFAs and ATE policies beacuse they do not have BTE cover. although insurers have tried to increase the take-up rate of BTE policies in recent years that has only had limited impact. Even when a potential claimant does have such cover it is virtually impossible for a defendant to discover this due to the restrictions on investigation that the courts have imposed on defendants.

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'One size' doesn't fit all!