After The Event Insurance Premiums Recoverability in the Portal system

When the RTA portal was designed and the rules written, the easiest thing ever would have been to state that a premium was recoverable and it should be either staged or one stage only. But oh no – that would be too easy.

Instead, the rules were drafted to say ‘may’ and so began the war of county court decisions vs county court decisions.

Wanting their cake and eating it, the Defendant lobbyists argued for staged premiums when it was fixed price, or fixed price when it was staged and/or argued there was no need for such a premium as there was no risk on the portal – notwithstanding the huge variety of ways of the case falling out of the portal, the delays caused by Defendants on the go-slow………………

So, the mantle was thrown down for District Judge Smedley sitting in Liverpool County Court to create a test case and the Claimants and Defendants sat back and waited for his decision released today. The salient points are:

“…So, the claimant and his solicitor dealing with funding at the outset know that their particular claim may or may not resolve within the Protocol. If they choose a single premium policy and the case settles within the Protocol, it will be said on assessment that they should have chosen a staged, reduced-premium policy. If they choose such a policy and the case exits the Protocol and goes to trial, it will be said they should have chosen a single premium policy – in each case because the choice made was unreasonable. I accept Mr. Finn’s evidence on this point. There is no “right” or “wrong” decision to be made. Both single premium and staged premium policies are legitimate.

Having regard to all the matters I have considered, I am satisfied that in the present stage of development of the use of the Protocol, with the inevitable teething problems, and with the uncertainty whether a case will remain in the Protocol or not, a claimant and his solicitor are entitled to choose either a single premium policy or one with staged premiums. Either is permissible; neither can properly be said to be unreasonable…”

So DJ Smedley agrees with what most people other than insurers thought.

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Commercial Settlements -v- Reasonable Settlements

I was recently asked to negotiate costs on behalf of a landowner who offered to pay me in bales of hay, and was prepared to pay the receiving party in the same manner. Such is the economic climate.

It is not always sensible to push for the settlement you believe your costs deserve. I was once asked to attend an assessment hearing as an agent. My client was legally aided but had failed to file the appropriate statement in order to protect himself. We offered to settle for £10k with payments in instalments. My opponent chose to push for £13k which his bill was worth. However, even though the bill was assessed at £13k, they ended up with £10k including costs of assessment secured with a charging order in case the decaying property were miraculously restored. My client was delighted – in stark contrast to my opponent who had to advise his client that he effectively had nothing, losing £10k cash and gaining a worthless charging order.

The moral of the tale is your legal costs may be worth more than you sometimes have to accept, particularly where the other side is self-funding the payments.

MPs Response

‘Respiratory industrial disease is a terrible problem, and the government wants to see sufferers able to claim compensation at the earliest possible opportunity.
The MOJ is therefore working closely with the DWP to help mesothelioma sufferers who are unable to trace their employers’ insurer. The government hopes to be in a position to make an announcement on this before the summer recess’.

All good so far from my local MP in response to my nice lobbying over LASPO.

‘The no-win no-fee reforms….are simply about reducing the exorbitant fees lawyers are able to charge in these sort of cases. They will not reduce access to justice’.

Correct – but what about all the other types of claims?

‘General damages will be increased by 10% and there will be a cap of 25% on the amount of general damages that may be taken as a success fee.

No special damages can be taken as a success fee.

In PI claims a system of Qualified One Way Costs Shifting will be introduced

Legal costs will still be paid by (sic) the winning side

As the scheme stands the government would expect lawyers to consider carefully whether it is in the best interests of the client for them to claim the full 25% as a success fee.’

So claimants are not allowed to recover additional liabilities, there is no mechanism in place for QOWCS and the winner pays! Likewise, no sign of how they are going to implement the 10% increase in damages.

As for the allegation that solicitors charge exorbitant fees – it was the government of the day who introduced the scheme and scrapped legal aid. Who pays for the investigation of unsuccessful cases?

With the governments track record of implementing new systems (e-system at the Rolls Building?), the statement that the extension to the RTA portal will not be possible before April 2013….. The list of failures is getting longer by the day. And let’s not forget Prof Regan predicting other aspects unravelling. The show continues!

The X Appeal

As I walked through the happiest place in the UK and observed all the wannabees queueing up to sing in a tent it made me think about what makes a solicitor or costs lawyer stand out from the crowd.

 In a solicitor’s case, it maybe the ability to make sense of the most complicated case and win. The ability to build a relationship with clients. I was interested to read that firms are not automatically recruiting trainees with the highest grades, but are looking at graduates with business acumen and other qualities such as marketing, client care and those able to generate new business for instance.

So what makes us stand out from the crowd? Traditionally, costs draftsmen only became involved at the end of the case to draft the bill of costs and negotiate settlement.  However, we prefer to start off earlier than that. By drafting the retainer, being involved in file management and in-house training we go further to maximising your firm’s profitability. By identifying alternative business opportunities and working in conjunction with business consultants, we help your business grow – not just survive. By highlighting changes in law as soon as they come out, we help your firm react and where necessary adjust to the new opportunities that we can create.

In the current climate, doing what you did last year, does not keep you ahead of the game. Give us a call and see what difference we can make. Call 01228 63 55 45 now.

Severance of Retainers

The Court of Appeal have acted to clarify the law concerning severance of retainers and whether it was reasonable to sever the same due to a client’s unwillingness &/or inability to pay.

The case concerned was Cawdery Kaye Fireman & Taylor v Gary Minkin [2012] EWCA Civ 546, with Lord Justice Ward neatly summarising the case as follows:

“Every solicitor will encounter, in one way or another, the kind of problem which gives rise to this appeal. The solicitor is instructed to conduct certain litigation on the client’s behalf. He gives his best estimate of the cost of doing so. He asks for a payment on account. The litigation becomes more complicated than had been envisaged. The estimate is exceeded. More money is requested on account. The client is by now dissatisfied with the service he has been receiving and believes that the costs are excessive and that the solicitor is achieving nothing. The fractious relationship is terminated and the solicitor’s bill is assessed. Then – and this may be the unexpected turn of events, at least from the solicitor’s perspective – the costs judge conducting the assessment concludes that it was the solicitor who wrongfully terminated the retainer and did so before the litigation had come to its end. Not having performed an entire contract, the solicitor is entitled to no further fees: indeed he must repay the fees he has already received on account”

In this case, the solicitors gave an initial estimate of the likely costs and requested a payment on account of those likely costs. However, the opposing party changed the course of the litigation and so the estimate was no longer valid and costs were increased. Mr Minkin expressed his concern and explained his inability to pay and the relationship deteriorated to the stage that the agreement between the solicitors and Mr Minkin was terminated. At the initial detailed assessment, Master O’Hare found for Mr Minkin stating that the solicitors had acted unreasonably. Master O’Hare reduced the first bill rendered from £3490 to £2785 thus triggering the 20% rule and so awarded Mr Minkin costs summarily assessed at £17,650. The second bill only had £10 plus VAT assessed off.

I pause for a moment to dwell on the fact that Mr Minkin was complaining he couldn’t afford £6565 and yet he incurred a liability to his new solicitors summarily assessed at £17,650! Staggering.

Master O’Hare’s Judgement was upheld on appeal but as Ward LJ stated “It seemed to me that clarifying what solicitors can and what they cannot do was a compelling enough reason to grant permission for this second appeal.”

This is what they did and overturned the original decision. The vital question is whether the solicitors were entitled to, and did, suspend the retainer or whether they wrongly terminated their engagement.

“In my judgment they were wrong. The fact that the client complained promptly cannot assist him if his complaint is not a reasonable justification in itself. The complaint that the bill exceeded the estimate cannot stand in the face of the fact that the letter enclosing the Terms of Business, the contents of which the client accepted in writing, made plain by paragraph 2 that estimates were not intended to be fixed or binding and that other factors might mean that the estimate would be varied from time to time.

“Mr Minkin could not reasonably expect his solicitors to wait for payment until they had an order for costs made against Mrs Minkin. That is not the way the world works and Mr Minkin was well aware of that fact….I conclude, therefore, that the client had no reasonable justification for not meeting the bill presented to him.”

Giving the last word to Elias LJ

“I have no doubt that Mr Minkin was justified in raising his concerns about the invoices with the firm, given that the amounts exceeded the estimates and that he had not been notified about this, as he should have been. But in my view, once there was a cogent explanation for the increase it was unreasonable for Mr Minkin to continue to refuse to pay, particularly since if he was dissatisfied with the amounts he could have challenged them. It seems to me that any other view would compel a solicitor to carry on working for a client even though there may be little realistic prospect of payment.”

So the verdict is solicitors do not have to carry on working without realistic prospect of payment provided they dot the ‘i’ and cross the ‘t’ and operate a belt & braces approach with the difficult clients