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Date: 31 January 2007
NEGOTIATING CLAIMS FOR COSTS: SOME USEFUL POINTS
It is vital that insurers are correctly advised about claims for costs from solicitors acting for claimants, which constitutes a significant part of most personal injury claims. Having reviewed the costs provisions in the CPR, I would like to highlight three areas.
1. Proportionality
The concept of proportionality is still being modified by the Courts but, essentially, this is an argument which we shall want to run if the total costs claimed far exceed the damages recovered and the case was not complex. The Court will adopt a two-stage approach: firstly, if it concludes that the costs as a whole are not disproportionate then, as a rule, there will be no further consideration as to proportionality. If, however, the costs as a whole appear disproportionate, the Court will want to be satisfied that the work in relation to each item was necessary and, if necessary, that the costs of the item were reasonable: Lownds –v- Home Office [2002] 4 All ER 775.
Note that the issue of proportionality will not arise if the costs are being assessed on the indemnity basis (for example, the paying party fails to beat a Part 36 Offer made by the receiving party).
2. Conduct
Under CPR Part 44.14(2), the Court has the power to disallow all or part of the costs claimed if a party or his legal representative has been guilty of conduct which was unreasonable or improper.
Last year, I was involved in a case which the Claimant appeared to value at more than £200,000 but was settled for £10,000. I obtained some very useful surveillance evidence. At the detailed assessment, his Bill was reduced from £51,000 to £37,500. The District Judge reduced that figure by one-third (to £25,000) because of the Claimant’s conduct. The eventual figure was significantly below my Part 47 Offer. The Claimant had to pay the costs of assessment.
3. Solicitors’ Success Fees
Beware the solicitor who claims exorbitant success fees! In many cases, these have been streamlined and, in accident cases at least, are now comparatively reasonable.
(i) Motor Claims
The success fee is now 12.5% but will rise to 100% if the claim concludes at trial. A Claimant
may apply for a success fee that is greater than 12.5%, but only if the claim is worth at least
£500,000.
These provisions do not apply if the accident occurred before 6th October 2003.
(ii) Employer’s Liability Claims
These provisions do not apply to accidents which occurred before 1st October 2004 or road traffic
accidents where an employee is injured in the course of his employment.
The success fees are 27.5% if the claim is backed by a Union or 25%, if not. As with road traffic
claims, a claimant may apply for a higher success fee if the case is worth at least £500,000.
If a case proceeds to trial, the success fee will be 100%.
(iii) Employer’s Liability Disease Claims
This section applies to disease cases where the letter of claim was sent on 1st October 2005 or
later.
In an asbestos case, the success fee will be 27.5% but 30% if the claim is union-backed.
If the claim is for work-related stress or a work-related, upper-limb disorder (but not hand/arm
vibration injuries), the success fee will be 100%.
For any other disease, the success fee will be 62.5% unless the claim is Union-backed in which
case it will be 70%.
If any disease claim concludes at trial, the success fee will be 100%.
A claimant may apply for an increased success fee, if the value of the claim is at least £250,000.
These provisions are set out in more detail at Rule 45 of the CPR. It is worth noting that the
success fee will be 100% if a case proceeds to trial.
I think the success fees are generous to claimants for the disease cases, but at least these figures add clarity and enable insurers to set their reserves with more precision. We now await specific success fees for public liability claims – watch this space!
Richard Seagrove
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