Costs in Employment Tribunal cases

Changes to the power of tribunals to award costs are expected to be introduced in April 2012.

It is intended that the cap on tribunals to award of costs will increase from £10,000 to £20000, unless assessment is by the court where higher awards may be achieved. We recently recovered £400,000.

To make matters more ‘interesting’ the increase in cap is to be coupled with a move away from the general presumption of ‘No Order For Costs” towards the normal presumption of civil matters which is costs follow the event, and the loser pays with both parties being able to ask for their costs if offers have been beaten.

This change is in stark contrast to the Jackson reforms where costs certainty is being preached and moves are afoot to introduce more fixed costs and qualified one way costs shifting – as in the defendant cannot seek to recover costs.

It is clearly a good time to check your retainers, whether they be damages based agreements (contigency fee agreements) or Legal Expense Insurance for companies given the changes in costs consequences.

Carlisle Legal Costing are experienced in advising on client care retainers as well as recovery of costs from tribunal matters. Contact us on 01228 63 55 45 if you require any further advice or assistance.

 

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Are retrospective success fees recoverable?

This was the question dealt with in the case of J N Dairies Ltd v Johal Dairies Ltd & Anor  [2011] EWHC 90211 (Costs), or more specifically “Whether the Claimant should recover success fees charged by its solicitors and counsel in respect of work done before the conditional fee agreements which created the liability to pay such fees were entered into”.

Both the Claimant and the First Defendant were wholesale dairy companies. The Second Defendant was a driver employed by the Claimant until November 2008. The Claimant’s case was that, shortly after his employment had been terminated, the Second Defendant returned to the Claimant’s warehouse in Wolverhampton and took a number of invoices. These gave details of the Claimant’s customers, their orders and the prices that they paid. The Defendants then used that information to seek to solicit the Claimant’s customers.

The Claimant succeeded in its claim and was awarded costs. The Defendant appealed against the decision on grounds of unfair trial and lost.  Shortly before the appeal hearing, the Claimant entered into a Conditional Fee Agreement with his solicitors due to cash flow issues. The CFA was intended to have retrospective effect. A CFA in similar terms was entered into with Counsel.

On assessment, it was deemed that the success fees on work done before the conditional fee agreements were entered into are not allowed, on the ground that they were not reasonably incurred. That applies to work done by both solicitors and counsel.

 

 

LSC Costs Recovery Action Success

The Legal Services Commission has successfully obtained judgment on the rights to recover payments on account made under the Legal Aid Act 1988 – LSC v Loomba and others [2012] EWHC 29 (QB), Cranston J.

The case involved three claims listed together as test cases. All three claims concerned moneys which the LSC asserted were owing to it by solicitors as a result of legal aid payments to them on account of work being undertaken for clients in civil cases. The Commission contended that the claims were authorised by law. Since it concedes that there were no express legislative power to make the claims, its argument raised some difficult issues of statutory interpretation. If the claims cannot be legislatively justified the Commissions advanced other legal bases for them, including restitution. The defendants contended that there was no legislative authorisation for the Commission’s actions, and in any event the claims are defeated by various defences. They also submitted that the Commission’s claims fail for public law reasons including the unfairness with which they have been pursued.

Judgment was entitled to recoup the payments on account in the manner it has pursuant to the incidental power in section 4(1) (b) of the 1988 Act.

This case highlights the need for lawyers reporting properly to the LSC, particularly when winding up a practice, and involving costs experts to prepare the appropriate bills of costs and claim forms to ensure costs are accounted for.

The Problems With Blogging

I enjoy blogging and openly admit it has raised my company’s profile. I am now a port of call for journalists from trade press wanting a comment on a variety of things from referral fees to after the event insurance and costs.

The purpose of a blog is to be informative and engage with clients and potential customers – not to have to spend thirty minutes deleting comments by illiterate spammers trying to sell things via linking to other people’s carefully crafted blogs.

Beware of this if you undertake or are thinking of blogging to boost your own profile.

Rant over.

Elephant in the room

There are a number of elephants in the room at present:
1) Alternative Business Structures
2) Mergers & Acquisitions
3) Jackson / LASPO

Law firms, whether you are a sole practitioner, small high street practice or even regional & national firm will be affected.

Solicitors and law firms, both traditional and modern will need to adapt and take any advantage or opportunity that may help them rise above the new entrants in the market and the storms rumbling on due to LASPO, and and adopt best possible working practices.

One of which would be to ensure your fee earners are employed in the most costs effective way – fee earning. The second thing would be to employ the services of experts in the field of costs and profitability – namely a costs lawyer.

Why would you do that?

The main one is that they are the most up to date on costs law, CFAs, ATE disputes, third party costs orders etc. But another point often overlooked is that the costs lawyer has the added benefit of comparing what other firms are doing with what you are doing and helping in an advisory capacity to improve best working practices.

Contact Carlisle Legal Costing on 01228 63 55 45 to discuss how we can help you further.

We will be happy to attend your offices to host costs seminars and training, or visit us for our next one coming next month.

Recovery of high interest rates

In F&C Alternative Investments (Holdings) Ltd v Francois Barthelemy & Anthony Culligan, parties to a complex litigation had been compelled to take out loans at a high rate of interest to pay for their legal costs, and where their opponent had acted in such a way as to attract an order for costs on the indemnity basis, it was appropriate that they should be paid interest on costs at the actual rate that they had been forced to incur.

Will this have any future role in cases where third party funders are involved? Will be a something to keep an eye in future.

Is it the end for After The Event Insurance?

The introduction of the Legal Aid Sentencing & Punishment of Offenders Bill (LASPOB) will result in the end of the recoverability of success fees and after the event insurance between the parties. The introduction of qualified one way costs shifting (QOCS) will potentially render ATE superfluous or will it?

It is proposed that a limited form of ATE will be permitted in clinical negligence matters limited to funding of disbursements, but it is doubtful whether this will present a sustainable form of business for insurers.  So what other work will be insurable? A savvy firm may survive selling ATE on the basis of no sleepless nights. Whilst the introduction of QOCS is intended to mean the end of defendants seeking to recover their costs from losing Claimants, others see it as the future hotbed for satellite litigation. Likewise, Lord Jackson’s proposal that Before the Event Insurance will be the new ATE insurance but will it take off particularly in light of the banning of referral fees upon which BTE is reliant. As such, it is envisaged that the cost of a proper BTE package will be equivalent to in price to purchasing ATE, so why would anyone buy BTE on the off chance that they need to make a claim, when they can obtain ATE as and when required.

It is clear that the future for ATE is uncertain, but we at Carlisle Legal Costing are keeping our ear to the ground and keeping you all informed.

Why not put us to the test and contact us for advice on funding, retainers, offers or other costs queries.

Interest issue revisited

As the tension mounts over whether or not interest will be allowed on costs from the date of judgement or not and with reference to the forthcoming appeal in Motto v Trafigura, a quick look at the poll results suggests the majority of respondents think that interest SHOULD be payable on costs from the date of judgement or order. Another option would be to only allow interest on paid costs from the date of judgement. Those who think interest should not be paid were in the minority.

So lets briefly discuss why interest should be paid:

  • As a matter of public policy
  • To encourage swift settlement
  • To discourage paying parties from delay without penalty.

Particularly on large claims for costs, it is our experience that payment of interest focuses the mind of the sensible paying party more swiftly. Who in their right mind would want a bill escalating at a significant rate? As such, most clients faced with this situation focus not only on an appropriate payment on account to minimise interest, but then ultimately go on to think about settlement generally. With regards to delay, is it fair for the paying party to sit on their nest egg collecting interest whilst the receiving party goes without? As for the public policy argument, years of case law have been established stating that interest should be paid and hence for continuity and sake of certainty, should interest not remain payable, as it is certain that the paying parties next target would be legally aided clients and private paying parties who have only paid nominal amounts on account of costs. This would surely result in a further waive of satellite litigation positively discouraged by the courts.

Option Two is to disallow interest until a final costs certificate has been obtained. If the paying party has been made aware of their liability to pay costs and providing there has been no delay on the part of the receiving party, why should the Defendant be allowed to sit on their nest egg save. The argument gained favour because public authorities like the NHS were paying out small fortunes on account of interest, and so there was a public policy argument to disallow interest, but surely if they were properly represented by experienced costs lawyers, then the interest issue would not have arisen to the extent that it did? Reference is made to points made in favour of paying interest above.

Option Three has merits in our opinion – only pay interest where the client has paid money. The downside is I can foresee this giving rise to satellite litigation over who paid what and how. Reference is also made to F&C Alternative Investments (Holding) Ltd v Francois Barthelemy & Others where interest was to be paid out at a higher rate due to the commercial rates that the receiving parties had been forced to pay.

 

If you wish to be safe, why not let our experts at Carlisle Legal Costing assess your retainers and ensure that they are as watertight as possible.

Happy New Year

Wishing you all a happy and prosperous New Year to everyone. This year is a special one for Carlisle Legal Costing as its our 10th anniversary in February. Lots of special things going to be happening to mark the occasion.

Contact us at the costs clinic with any queries you have, keep an eye out for special offers and promotions and look out for our costs seminars and forthcoming legal practitioners manual.