This case highlights the potential pitfalls of not providing a clear and accurate costs estimate to the client. Forest Costing Service has recently been involved in a number of assessments under Solicitors Act 1974 where the costs have been reduced to a sum closer to that estimated to the client at the outset. In some circumstances this has resulted in the Solicitors losing tens of thousands of pounds.

If you are concerned about this issue or require any advice please do not hesitate to contact us on 01902 892636.

Forest Costing Service are regularly instructed by Claimant firms in high cost catastrophic injury claims given our substantial experience and excellent record of costs recovery. If you require any assistance for such matters please contact James Fisher or one of his colleagues on 01902 892636.

It is not uncommon for Defendant ‘costs negotiators’ to simply raise broad-brush ‘cut and paste’ disputes which do not state concisely the nature and grounds for the dispute, contrary to the  requirement of the Practice Direction.

The Defendant attempted to rely on Precedent G but the experienced District Judge agreed that Precedent G for points of dispute does not abrogate paying parties from their responsbility of setting out clear disputes to items of work. Paying parties must put their cards on the table if they wish to avoid costs penalties at detailed assessment.

The Defendant subsequently appealed the decision of the District Judge. However, we are pleased to say that the appeal was dismissed by His Honour Judge Gregory.

Unlike many large costs negotiating firms, Forest Costing recommend and prepare full points of dispute which comply fully with the Practice Direction. In our experience this is the best way to protect your position and to avoid criticism from the Judge on assessment.

Remember, Rule 47.14(7) confirms that Judicial intervention on assessment should generally be limited to items specified in the points of dispute. A failure to raise an objection in your PODs could leave you silenced!

Managing Director, James Fisher, commented that the company had enjoyed 15 years of success and growth notwithstanding the sad loss of John Fisher in 2002. He thanks all clients for their business and looks forward to many more years of the company providing costing services to the legal profession.

The result heralds an excellent victory for the Claimant and is suggestive that the Courts are making it increasingly difficult for paying parties to seek disclosure of CFAs and CCFAs. Perhaps Henry LJ’s “presumption of trust” will once again be the starting point…we shall see!

Following the revocation of the CFA Regulations in November 2005 paying parties are becoming increasingly inventive in finding ways to challenge the enforceability of retainers. One such potential challenge arises from an unlikely source – The Cancellation of Contracts Made in a Consumer’s Home or Place of Work etc. Regulations 2008 (SI 2008/1816) which came into force on 1^st October 2008. The Statutory Instrument regulates certain agreements between consumers and traders, the definition of which would cover a Solicitor providing legal services.

“Trader means a person who, in making a contract to which these Regulations apply, is acting in his commercial or professional capacity and anyone acting in the name or on behalf of a person.” – Section 2(1)

Section 5 of the Regulations sets out that they cover agreements for goods and services, which would include legal services. Where the agreement is entered into (a) during a visit by the trader to the consumer’s home, place of work or home of another individual; (b) during an excursion organised by the trader away from the business premise; (c) after an offer has been made during such a visit or excursion.

This would therefore include signing a CFA during a visit by a Solicitor, or their agent, to a client’s home or place of work, or a CFA signed subsequent to such a visit.

Regulation 7(2) sets out that any such agreement must give the consumer a written notice of their right to cancel the agreement within 7 days. The notice must be in a particular form, must be dated and must be easily legible and given sufficient prominence in the agreement.  Where such a notice is not provided, section 7(6) is very clear,

“A contract to which these Regulations apply shall not be enforceable against the consumer unless the trader has given a notice of the right to cancel and the information required in accordance with this regulation.”

Therefore, any CFA entered into after 1^st October 2008 where the CFA has been signed at the client’s home or place of work, or is signed after such a meeting, must contain the written notification of the right to cancel. Although there is no case law to be found on this point as at the date of this news article, there are clearly strong grounds for a paying party arguing that the CFA is unenforceable if written notification of the right to cancel has not been given.

Should you have any queries about this article and what can be done to protect your position, please contact our Mr James Fisher on 01902 892636.

http://www.lawsociety.org.uk/productsandservices/practicenotes/remunerationorder/3331.article

Prior to the CPR, there was always a presumption that legal aid only costs were not recoverable between the parties. This was confirmed in the case of Hunt v Douglas Roofing. However, the costing regime has changed dramatically following the introduction of CPR and many argue that Hunt is no longer applicable. This seems to make sense given that CFA’s and associated funding costs were not envisaged at the time of the decision in Hunt.

Some members of the profession have argued that as Hunt was briefly mentioned in the Claims Direct Test case (a post-CPR case) this should mean that funding costs still cannot be recovered on an inter partes basis. Many have argued that the costs of arranging a CFA and ATE insurance are no different in principle to arranging a bank loan to fund litigation. They reason that as the latter would clearly not be recoverable it must follow that the costs of preparing the CFA, etc should also not be recoverable.

Those who support the view that funding costs are recoverable also have many strong arguments. In support of their contention they reason that Regulation and case law both impose a heavy burden on Claimant Solicitors when dealing with the CFA formalities. Such costs are therefore necessary in order for the Claimant to obtain acces to justice. With the decision in Lownds v Home Office [2002] in mind, it is clear that such costs are unavoidable and ‘necessary’ to advance the litigation. As the costs are ‘necessary’ (as per Lownds) then they should be recoverable on an inter partes basis.

Master Rogers has now made his own view known in the case of Woolley v Haden Building Services. He found that nothing has changed the position which existed prior to the introduction of CPR and that funding costs are non-recoverable. However, Master Rogers made it clear that there is a divergence of opinion on the subject and that many District Judges hold very different views. In making his decision, Master Rogers also made it clear that clarification on the point was required and that this should come from a higher Court such as the Court of Appeal. Of course, that is unlikely to happen given that funding costs are rarely substantial and alone would not justify the cost of an appeal of the decision.

Although some Distict Judges are not going to distance themselves from the decision of Master Rogers, the decision in Woolley is clearly not a binding precedent and therefore we can expect further argument on this point for the foreseeable future.  As a consequence, Forest Costing Service currently advise receiving parties to include funding costs in their Bills and vice versa advise paying parties to continue to dispute such costs!

Pursuant to the Civil Procedure Rules, parties are obliged to serve costs estimates at allocation stage and listing stage. This applies to both fast track and multi track proceedings.

It has not been unusual for fee earners in past years to simply provide a very basic figure for the purpose of this exercise, very often without any reference to a breakdown.

Fee earners must now be far more proactive in preparing accurate and sufficiently detailed breakdowns. Section 6.6 of the Costs Practice Direction now clearly provides that if your final costs claim exceeds your estimate by more than 20%, the Court may conclude that your costs are disproportionate, resulting in reductions to your costs.

On the other hand, you may be at risk of unfavourable directions or a costs capping order if your estimate appears too high.

At Forest Costing Service we can prepare a properly costed and accurate estimate, thereby reducing your risks and increasing your profitability. We now have a substantial number of clients who make use of this service – why not join them for added peace of mind? Remember, our reasonable costs in preparing the estimate are usually recoverable at the conclusion of a successful case. You have nothing to lose and everything to gain from this service.

Call us now on 01902 892636 to arrange for an accurate estimate of your costs. Estimates can be prepared urgently subject to prior arrangement.