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An audience with Lord Justice Jackson: reviewing costs management

Meeting at Leeds Combined Court Centre
15 April 2015

Last week Lord Justice Jackson conducted a discussion in Leeds on how costs management is working in multi-track cases and what “tweaking” may be required to the costs management rules. The meeting was one of a series being held throughout the country at the two year anniversary of the implementation of the civil justice reforms by way of a review of the costs management process. 

Senior lawyers with experience in costs budgeting were invited to take part in three sessions; one for clinical negligence and personal injury practitioners, one for TCC and Chancery, and a third for general litigation practitioners. DWF head of costs Steven Dawson attended the personal injury session in order to clearly set out the views and experiences of insurers.

Costs management and budgeting

Delegates were invited to give their full and frank opinions and we therefore took the opportunity to highlight the issues we have encountered with the costs management process so far.

Steven was invited by Lord Justice Jackson to provide the first views at the start of the meeting and highlighted that the main issue continues to be the lack of a consistent approach to costs management; not only between different courts but also between judges in the same court. The inconsistencies range from differing amounts of documentation expected for the costs management hearing to certain judges declining to engage in the process at all. On a more practical level, difficulties have emerged around the time at which the costs budgets have to be prepared. Not only do they have to be drafted at a very early stage in the litigation and well before the costs management hearing, but they are prepared before the first directions hearing when there has been no court determination of how the case is to proceed.

Lord Justice Jackson was grateful for the participants’ candour and for highlighting the differences between the respective sides of the process. He will now consider the views and use them to prepare recommendations to be delivered in a speech on 13 May and subsequently published on the judiciary website. His recommendations will also be placed before the Rules Committee.

The meeting was therefore of considerable importance to the future of the costs management process and Steven welcomed the opportunity presented by Lord Justice Jackson to provide feedback on this topic. Hopefully the comments made during the meeting will result in a positive change in the costs management rules.

Whilst Lord Justice Jackson was careful to point out that he had an open mind and had not formulated any final views, the following possible recommendations were mooted:

  1. Consideration to be given to an initial short directions hearing, probably by telephone, followed by a later costs management hearing.

  2. A change to the date when cost budgets need to be filed. This could now be 7 or 14 days prior to the costs management hearing and after the directions hearing discussed above. This would enable the budgets to be drafted consistently with the case management directions.

  3. Standardised directions throughout the country in relation to the costs management process to ensure consistency and certainty. Shorter directions orders could be used in lower value cases.

  4. Further training for District Judges, again to ensure consistency.

Guideline hourly rates

Lord Justice Jackson also took the opportunity to canvas views about guideline hourly rates and how the profession might go about carrying out a fresh survey. He appeared to have a real appetite for reigniting the review of the rates and in particular expressed interest in “uplifting” the rates in certain types of case to reflect their complexity. 

This issue generated a lively debate with strong views from each side of the litigation process. Claimant representatives, saying they were concerned to ensure access to justice, wish to see an increase in the rates which have not changed since 2010. Whilst agreeing that access to justice is paramount for genuine claimants, Steven highlighted to Lord Justice Jackson that there is not necessarily a correlation between that and the rates which the court will allow for lawyers’ work. It is clear that defendant law firms remain sustainable whilst charging rates that are significantly lower than the guideline rates, he pointed out.

We invited Lord Justice Jackson to exercise caution in this regard and also to bear in mind that in light of the previous survey, a rate increase should not necessarily be the starting point of any review when there are indeed good arguments in favour of a reduction.

It will be interesting to see how this particular discussion develops in light of last Friday’s announcement by the Master of the Rolls, Lord Dyson, that the existing guideline hourly rates will remain in force for the foreseeable future. Last year’s review of the rates had resulted in no change because of fundamental shortcomings in the available evidence. Lord Dyson’s further discussions with the Law Society and the Government did not materially change that position, so in the absence of funding for an in-depth survey and also law firm engagement, he conceded that the evidence needed is unlikely to be forthcoming. As he noted though, a number of developments in the legal services market are making the guideline hourly rates less relevant in any event, including technological advances, and the use of proportionality and costs management. He would also like to see, and is pushing for, the wider application of fixed costs.

Insurers will see that Lord Dyson’s announcement at least seems to scotch the idea of any increase in rates, even though retaining current rates of course means that there is no current possibility of rate reductions as insurers would have hoped for at least in relation to certain categories of legal advisers. The position of Lord Justice Jackson that rates should be “uplifted” would be more concerning, though in ranking Lord Dyson is senior to Lord Justice Jackson and his announcement should be seen to be the more likely end result on this point, at least in the short term.

If though the current reforms including costs budgeting and management are unsuccessful in stemming the issue of high legal costs, then the part of Lord Dyson’s announcement that more fixed costs is likely to be the solution echoes previous comments from Lord Justice Jackson reaching the same conclusion.

Contact

For further information please contact Steven Dawson,  Head of Costs on 0113 261 6118.

Related articles

Costs Management Orders: first instance decisions or appellate court issues? 17 February 2015

Guidance on costs management: Yeo v Times Newspapers Ltd (2015) 17 February 2015

 How do we now get some progress on hourly rates paid to claimants? 29 July 2014

By Steve Dawson

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This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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