Presentation on theme: "1 COUNSEL’S FEES AFTER APRIL 2013 ANDREW RITCHIE QC 9 Gough Square LONDON."— Presentation transcript:
1 COUNSEL’S FEES AFTER APRIL 2013 ANDREW RITCHIE QC 9 Gough Square LONDON
2 Before 2003 In 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
5 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:
6 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
7 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
8 Benefits to Insurers of commoditisation The benefits for the insurers (D) are:  complete certainty about the C’s costs  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
9 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
10 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
11 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
13 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
14 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
15 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).
16 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.
17 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).
18 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
19 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
21 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
22 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
23 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?
24 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
26 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?)
27 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
28 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
29 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
31 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.
32 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
33 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.
34 Conclusion Commoditisation is workable in PI law if the vital rule is followed properly If the vital rule is not followed: