Harmans Costs Brief - July 2014

Welcome to the latest edition of Costs Brief.  Over the last few weeks industry news has been dominated by the long awaited judgment from The Court of Appeal dealing with issues arising from the Mitchell decision.  We were amongst the first to publish our analysis of the judgement - you can read it below.

As usual, we aim to bring you all the latest news and developments in Costs along with expert analysis.  We hope you enjoy the latest issue of Costs Brief.

Many thanks, Harmans Costs 
For even more news and comment visit our website

Mitchell substantially sound simply misunderstood

The Court of Appeal has now handed down judgment dealing with issues arising from the interpretation of the “Mitchell” decision following which a “zero tolerance” approach was adopted in many cases as a result of a failure to fully comply with orders and/or directions.

Applications for relief from sanctions had proved unsuccessful given the rigid application by the Courts of “Mitchell” and as a result three cases were fast tracked to the Court of Appeal and heard by The Mater of the Rolls, Lord Justice Dyson, Lord Justice Jackson and Lord Justice Vos.

Denton and Others –v- T H White Limited - An appeal against the decision to allow the Claimant to adduce an additional six witness statements and to vacate the trial with the appellant submitting that the judge had not applied the new CPR 3.9.

Decadent Vapours Limited v Bevan - An application for relief from sanctions was refused where a claimant had failed to comply with an order stating that unless it filed a pre-trial checklist and paid the hearing fee by a specific date, its claim would be struck out.

Utilise v Davis - Considered if a number of breaches could be aggregated together so that whilst individually the breaches were trivial, the breaches considered together militated against relief from sanction.

The matters were considered 16 – 18 June with judgment handed down 4 July 2014.

All three Appeals allowed sending the message that the decision in Mitchell was “sound” but misunderstood.
Parties should agree extension of 28 days where breach “trivial”.

A three stage approach recommended:
1. Assess the seriousness and significance of the breach;
2. Assess the reasons why the breach has occurred and
3. Look at all the circumstances of the case taking into account the need to enforce compliance with rules and orders.
If the breach is neither serious nor significant the court is unlikely to spend much time on stages 2 & 3
The COA considered that the satellite litigation that has arisen post “Mitchell” can be blamed on a failure to apply the decision correctly
The Judgment adds that it is “wholly inappropriate” for litigants or their lawyers to take advantage of mistakes by opposing parties in the hope that “relief from sanctions will be denied and that they will obtain a windfall strike out or other litigation advantage."

It should only be in exceptional cases where a contested application for relief from sanctions is necessary with the Court more ready to “penalise” opportunism.

The court can also record on its order that opposition to RFS application was unreasonable conduct to be taken into account under CPR r44.11.

Whilst the full judgment is awaited we at Harmans welcome what appears to be a clear signal for the return of common sense with Party’s unable to seek a wind fall for oversights and trivial breaches.

Judgment available:

Gary Knight, Partner and Costs Lawyer

Family matters

Costs Lawyer magazine asked our family expert, Jim Lines, to comment on The Court of Appeal's recent decision that The Legal Aid Agency must pay the full cost of expert reports ordered by the family court.  You can read the article in full here.
Changes proposed to Judicial Review “could see unlawful administrative action go unremedied”     
Proposed changes to judicial review contained in the Criminal Justice and Courts Bill risk unlawful administrative action going unremedied, the House of Lords Constitution Committee has warned.

In a report on the Bill, which is to begin committee stage in the Lords next week (14 July), the committee highlighted in particular the potential impact of clause 64.

This part of the draft legislation sets out that courts should refuse an application for judicial review if it appeared likely that the “outcome for the application would not have been substantially different if the conduct complained of had not occurred”.

The report said this was a change from the current criterion that courts should only refuse an application if it is inevitable that the conduct complained of would have made no difference to the result.

The committee invited the House of Lords to consider whether the clause, by lowering the threshold, risked “undermining the rule of law”.

The report also:
Questioned the Government’s position that judicial review had “expanded massively”. It said that – once immigration cases were removed – the number of applications for judicial review had increased modestly;

Claimed that the Bill risked turning the permission stage of the judicial review process into a “full dress rehearsal” of the substantive stage. This could increase costs rather than lower them;

Warned that proposals covering the legal costs that may be imposed on third-party interveners in judicial reviews might “impose too great a limit on effective access to justice”;

Said consideration should be given to amending the Bill so that the views of the parties are to be taken into account when it is decided whether a case should ‘leapfrog’ the Court of Appeal and go direct to the Supreme Court.

Lord Lang of Monkton, chairman of the committee, said: “The Criminal Justice and Courts Bill will clearly have a significant impact on judicial review. Judicial review is an important means for citizens to challenge the legality of decisions by the state, so access to the process should not be unduly restrained. We have therefore invited the House to consider the bill in the context of the need to uphold the rule of law.”
ACL Annual Costs Conference 2014 – Special Report
NHSLA Annual Review Report and accounts 2013/2014
The new NHSLA Annual Review Report and accounts 2013/14 has confirmed a challenging and “unprecedented number of new clinical negligence claims” for the NHS, NHSLA teams and their Legal Panel, whilst simultaneously bemoaning the current cost scenarios post-Jackson which they allege are frequently arising in pre-investigation and pre-litigation stages without the benefit of cost budgeting requirements scrutiny.

The growth in the figures for new clinical negligence claims was earmarked at a total of 11,945 with the NHSLA admitting that it had received more than 1,000 claims per month in a six month period, for the first ever time.

While the NHSLA were pleased to report that a total of 15,384 claims were closed in total in 2013/14, they also admitted that the market had changed post-LASPO with a shifting in the way that legal costs were penetrating the clinical negligence claim market with the argument that significant costs were being incurred by Claimant solicitors prior to the NHSLA even receiving a letter before claim.

The report quotes: “Changes to the legal market, in particular changes to claimant’s legal funding arrangements, had a significant impact on our work” further arguing that new entrants to the clinical negligence arena meant that it was “one of the last remaining areas where claimant solicitors can charge an hourly rate, resulting in us having to deal with more than ever new claimant solicitors.” The NHSLA go on to argue that “We have also seen an increase in poorly investigated claims and claims where the care clearly was not negligent being brought by lawyers who do not specialise in clinical negligence work.”
The NHSLA further contended that “this has resulted in the ‘front loading’ of costs in some cases prior to notification to the NHSLA. Significant costs are often incurred even before the claim reaches us, which can result in a disproportionate costs claim by the claimant’s lawyers compared to the damages payable to the claimant and mean that more monies can be paid to lawyers than patients who have been harmed by negligent care.”

To read the rest of this article click here.
M & A Rife Amongst Law Firms
According to Inside Counsel magazine “a recent Global Legal Post report suggests that merger activity among the top 100 law firms reached a record level in 2013, and this trend is only expected to continue in 2014.”
In an ever competitive market, there is a dawning sense among law firms that in order to thrive in a changing legal market, they either need to specialise in a specific set of practice areas where they can offer value, or scale up to trade under a widely recognisable brand.

When a merger works, the benefits can be profound. Hogan Lovells – the creation of the 2009 merger between London's Lovells and US firm Hogan & Hartson – is seen as one of the most successful in recent years, propelling the combined outfit to global player status.
According to the latest six-monthly survey by Andrew Otterburn of the Law Consultancy Network, there was an increase in the number of mergers in the second half of 2013, as well as “significant” growth in the general level of discussions between firms.

Nearly a quarter of the 37 mid-sized firms polled had merged in that time, with around the same number anticipating a deal during the coming year. For firms of 10 or more partners, however, the figures grew to 50% and 42% respectively.
2. Three-quarters of firms had made or received an approach in the second half of 2013.
3. The main reasons for a merger were improved size or structure (49%), better opportunities post Legal Services Act (19%) and solving succession issues (19%). A merger of two firms is considered a way of expansion for today’s modern legal practice, by enabling both businesses to build a national presence, drive global development and increase service to clients
Manchester-based firm Linder Myers actually avoided administration through a debt restructuring deal that included investment from Assure Law director Tony Stockdale, who has since become Chief Executive. As a result of this deal, the firm’s managing partner Bernard Seymour has instead taken on the role of senior partner. It is thought to be the first time a deal of this sort has been attempted after a notice to appoint administrators has been filed.
New government crack down on fraudulent whiplash claims
Ministers plan a total block on compensation for accident victims found to be exaggerating their injuries – and honest motorists are set to benefit.  The government has stepped up its battle against the whiplash cheats which cost honest motorists millions of pounds a year in higher insurance premiums.  The Government is promising to withhold all compensation payments from anyone found to have exaggerated or invented a personal injury claim following a road accident.

This means that where proved, fraudulent Claimants will not recover a penny in damages even if they have suffered genuine injuries.
The proposal is the latest step in the ongoing battle against the rising cost of personal injury compensation.

Last year, the Association of British Insurers (ABI) reported that payouts for whiplash injuries had reached £2 billion a year in the UK.
The organisation went on to say that insurers detected almost 60,000 bogus or exaggerated motor insurance claims in 2013.

In the past, the ABI has blamed lawyers and claims-management firms for encouraging  accident victims to overstate the nature of their injuries in order to win more compensation.  However, the coalition has already clamped down on these practices with a series of measures, such as banning no-win, no-fee solicitors from recovering success fees should they win in court, and introducing tougher new regulations for claims-management companies.  But now the Ministry of Justice says it wants the Courts to throw out any claim for compensation where the Claimant is found to have been "fundamentally dishonest".

Justice secretary Chris Grayling says: "Insurance premiums have fallen by record amounts over the past year as we have turned the tide on the compensation culture but there is more to do.  We are continuing to go after the fraudsters who force up costs for honest drivers."

The MoJ also wants to ban law firms from offering accident victims inducements such as cash and iPads.


Are you ready for the Care Act 2014?

The Care Bill is now an Act and with its implementation imminent, Local Government Lawyer, in association with DAC Beachcroft, are conducting a survey of local authority lawyers and other professionals to assess the potential impact of the legislation and local authorities' state of readiness for its key provisions.

If you are a social care, litigation or procurement lawyer, or another community care professional, LGL would be delighted to get your perspective. Completing the survey will take about 15 minutes and you can remain anonymous if you prefer. 

Survey respondents will be entered into a draw for a £50 John Lewis voucher. The results will only be published in aggregated form - no individual responses or organisations will be identified.

The survey can be completed online at the following link:

According to a little birdy in our Chelmsford office congratulations to Partner James Scott are in order.  He has now been working in costs for 25 years.  The drinks are on you Jim!


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