The Top 5 Ways to Maximise the Profitability of your Modern Law Firm

How to Increase Law Firm Profitability

Fixed costs have affected a lot of personal injury practices, and are likely to be introduced for all civil litigation claims up to £250,000 in the foreseeable future.  With many law practices already shutting their doors, it is crucial that those who have yet to be firmly effected by fixed costs get their house in order to ensure they remain profitable going forward.  So what can be done to increase law firm profitability?

You may have been told this time and time again, and I personally found it difficult to transition from good old-fashioned paper to working digitally (and I still like to analyse data on paper form).  But it really is a revelation.  Think how long each staff member in your office takes looking for paper files, fetching them from a cupboard and searching for endless bits of paper. 15 minutes? 30 minutes?  Taking the lower of those two figures, multiply that by the 261 working days this year and you have just freed up 3915 minutes, or 65 hours per staff member.  Taking into account the saving on all the associated storage costs, and it doesn’t seem like such a bad idea does it?  Oh, and the use of two screens is highly recommended!

There are lots of options out there for case management systems, but not many that do it well.  Proclaim is an obvious choice.  It has a great reputation, is endorsed by the Law Society, and most importantly it can be developed.  But what does that mean?  Imagine how many times you re-write the same letters, party names or waste time searching for information.  With Proclaim you can develop standard letter templates that integrate the information of the case, automate emails being sent to the client regarding updates, have Court forms automatically completed.  The opportunities for improving efficiency and increasing law firm profitability are endless, and further with In case your clients can remotely monitor progress of their file when they want (you can customise everything they see) to improve the client experience.  Every improvement you make may only be a 1-5 minute time saving, but think about that on every task your team complete and it stacks up.

This sounds like an obvious one, but with the massive increase in Court fees the tolerance for wastage has significantly reduced.  Systems need to be implemented to ensure cases are pleaded at the correct amount.  Is that £5,000 issue fee really necessary, or is the claim only going to settle for £50,000 (equivalent Court fee would be £2,500)?  In all likelihood, even if the case succeeds the paying party will be successful in at least making some reasonable argument as to why the full Court fee should not be recovered for settling for half of what was pleaded.  That’s a loss that your practice could have avoided.  Set up proper review practices when a file is being issued, with Proclaim you could automate a Manager to be informed if a case is being requested for issue and for their to be an authorisation process.

Handily with Proclaim, any data entered into it can be reported upon, which provides endless analysis opportunities.  Want to know what your average spend on Court fees is per fee earner, or what you are recovering in Court fees per month?  Who is recovering the most profit per case and why? Where are the bottlenecks in your processes? Or even if you simply want to know at glance how many cases each file handler has.  The scope for analysis is infinite and can vastly assist in focusing your attention on key areas.  And the reporting can be automated too so you have it ready on your computer waiting for when you get into work.

We’ve seen a lot of firms re-structuring to ensure they focus more on hiring less experienced staff at reduced cost in order to maximise their returns:

“If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.”

It’s obvious that retaining high salary staff contributes significantly to your overheads, but we have seen time and time again the associated cost implications of inexperienced fee earners taking conduct of cases.  Failure to run cases expeditiously, difficult work being put to one side for months, strike out of claims or simply missed opportunities to maximise costs by making non-competitive Part 36 Offers, or none at all!  As always, the balance must be right and the need to retain talent remains stronger than ever.  When it comes to checking your overheads, don’t just look to cut the most expensive staff in your team.

In addition, keep your team motivated by giving them realistic targets and being open about their performance.  Wouldn’t it be nice to know how you contribute to the company and where you stand.  If employee X is generating 8x their salary for the business and employee Y is only generating 2x their salary, let them know and speak to them about why they are doing so well or how they can improve.  That’s what people want, feedback and opportunity to progress!

With fixed costs predicted to be expanding across the board, it makes sense to be the most efficient practice you can be to help increase your law firm profitability.  There are a lot of those who see fixed costs as a bad thing, and yes it does reduce the profitability you can make per file.  But that doesn’t mean law cannot be profitable, and we just need to focus more on how we can reduce overheads, improve our capacity and maximise the speed at which tasks can be completed.  If you need any free advice on maximising your firm’s potential, contact us here or contact the writer via email at Robert.Collington@legalpracticesupport.co.uk. 

If you are interested in developing Proclaim to increase your firm’s efficiency, take a look at the Proclaim development pages on our website to see how a Proclaim developer  can assist your firm.

Why Choose Eclipse Proclaim When Going Paperless

Top Five Proclaim Enhancements

Proclaim is a great bit of kit and can be used straight out of the box, especially if you have also purchased some of the additional workflow packages that Eclipse Legal provide. However, if you want to get the most out of the software and ensure that the expensive desktop icon you’ve purchased translates into increased revenue for your Firm, then bespoke development and Proclaim enhancements by a skilled specialist is a must.

To that end here are the top 5 Proclaim enchantments that we at LPS know will repay your initial investment in spades;

Custom reports are one of many Proclaim enhancements available. While Proclaim comes with some great default reports out of the boxes, it won’t be long before you realise you need to create some bespoke reports that work for your Firm’s unique needs.

Do you specialise in holiday claims and need to know which holiday provider or region is responsible for the most successful claims so that you can adjust your marketing strategy accordingly? Are you a Firm that needs to know which CMC provides you with the best quality claims, so you’re not having your Fee Earners waste their time running duds? Are you a Clinical Negligence Specialist that wants to know how lucrative each claim is so that you can better target your marketing and focus on those high-value claims?

Proclaim is a database and in the right hands, it can be used to answer all of the above questions and much, much more. At LPS we’ve yet to encounter a set of data we’ve not been able to provide by producing a bespoke Proclaim report.  Needless to say, the Firms that utilise the reporting functionality of Proclaim to its greatest extent can make quicker and more informed business decisions than those that rely on gut feelings.

While you can drag documentation into Proclaim, manually this can quickly become a tedious and time-consuming exercise. Not to mention risky, when you are relying on individuals to drag documentation in manually themselves. With the correct development and software integration, you can ensure all of your Firm’s documentation is automatically imported into Proclaim.

The benefits of an automatic scanning solution cannot be overstated, while the upfront development costs can seem expensive, most Firms see the initial investment returned in savings within the first 6-12 months. Beyond that point not only are you likely saving substantial sums of money every month but you’ll also be ensuring every bit of paper correspondence that enters your Firm’s doors is added into Proclaim automatically.

The most apparent advantages of this are that you can monitor who is and is not dealing with their correspondence via custom reporting. Furthermore, if you have sufficiently optimised your workflow you can set triggers to create automated actions when the correspondence is imported such as notifying the client you have obtained his medical report.

With the right setup, you can go as far as scanning the contents of the letter and dealing with it appropriately. Does it refer to a Court Order or perhaps a Part 36 offer? Once you are automatically scanning your incoming correspondence, you can ensure that this sort of critical documentation is never missed and ends up in the rights hands rather than sitting in a Fee Earners desk tray indefinitely.

While every Firm is going to undoubtedly have similarities in the way it conducts itself, (after all how many ways can you submit a CNF?) there are going to be key differences and bespoke precedents that will be utilised along the way. After all, do you want to risk losing out on indemnity costs because a Fee Earner forgot to draft a paragraph into a Part 36 offer letter rather than using the Firm approved precedent? Or continue running a claim via the MOJ portal when it timed out months ago but the Fee Earner found it easier to settle the claim by keeping it on the portal. Or found out one week before trial that the CNF was never submitted in the first instance?

Key Proclaim enhancements for workflows correctly ensure your files follow have a set path in a way that suits your Firms needs, and will ensure all cases are run in a preapproved manner, which will reduce the likelihood of any negligent mistakes being made and that they are progressed as efficiently as possible. Rather than having your Fee Earners manually draught their letters or trawl through a list of Proclaim letters trying to find the correct one, it’s much more effective to have a one click solution in place.

For instance, optimise your workflow so that at the press of one button the four letters that you have approved to be drafted when issuing proceedings are created and all the requisite details pulled in automatically from your Proclaim system, this will reduce an hour long process to minutes. When you are disclosing your client’s medical report to the third party, why not automatically send an SMS to the client notifying them of this? It’ll reduce the likelihood of a client telephone your Fee Earners to ask for an update, thus freeing the Fee Earners up to generate more revenue and bring the claim to a conclusion more promptly.

At LPS we know that no matter how complex a system may seem, in the right hands it can be effectively mapped and optimised into an efficient and effective Proclaim system.

Web services in Proclaim terms are effectively any system that relies on web technology to integrate an external system with your Proclaim system. Proclaim enhancements to web services can be particularly beneficial for law firms.

The obvious examples would be the stock A2A or Land Registry integration that can be purchased from Eclipse, this itself can be further enhanced in the right hands. For instance, do Fee Earners keep forgetting to attach the physio invoice onto the portal, why not automate that with a some of the bespoke development?

You might have a provider who you work closely with, ATE Insurer for example. Why not setup a web service to automate the process, with the click of a button you could feed your data directly into their system and pull back an ATE Certificate automatically attaching it to your system. It’s a solution that can be applied to any provider that offers a web service at their end; you just need the expertise to connect your Proclaim system and theirs together.

Or maybe you receive claims via your website and end up losing the leads due to poor response times. Why not link it in directly to your Proclaim system so an enquiry case is setup, and an automated SMS is sent to the prospective client advising them that claim has been received and that an advisor will be in touch shortly. Introducing a web service integration between your Proclaim system and your website could reduce the amount of lost prospective clients substantially and in turn translate into increased revenue for your Firm.

Proclaim enhancements can also be used to optimise task servers. Task Servers are an amazing tool that very few Firms utilise to full effect. Most are just left chugging along, performing the default actions that will have been in place since the time you had proclaim installed, such as sending faxes, SMS messages, and any default web services.

However, they are a vital tool that can be used to automate any repetitive action freeing up more time for fee earning staff to be performing actual fee earning rather than administrative tasks. Furthermore, they can be utilised to ensure you always have most up-to-date information at your fingertips. Want an hourly report tracking your Firms billed hours for the month and don’t want to watch as your screen freezes and your mouse become a swirling circle of loading doom? Then use a task server to ensure you don’t even need to think about that report running, you’ll just find a fresh copy in your mailbox hourly, or however frequently you need it.

This list of Proclaim enhancements is certainly not exhaustive, and each area has considerably more application that this article has time to delve into. However, should you want to know more about anything in this article or perhaps some other areas that fall outside the top 5  Proclaim enhancements, then don’t hesitate to contact our Legal IT Director at james.denby@legalpracticesupport.co.uk. 

Check out our Proclaim development web pages to find out how a Proclaim developer could assist your firm.

Proclaim Reports You Never Knew You Needed

Proclaim is in essence a database that in the right hands can be used to produce comprehensive and enlightening reports for your business. At LPS we’ve yet to encounter a set of data we have not been able to provide by producing bespoke Proclaim Reports.  Needless to say, the businesses that utilise the reporting functionality of Proclaim to its greatest extent can make quicker and more informed business decisions than those that rely on gut feelings.  Whilst straight forward, Proclaim Reports can be one of the most effective forms of Proclaim Development.

Supplier / Service provider Profitability

Understanding the profitability of each supplier your business utilises, is essential for minimising wastage, maximising efficiency and therefore increasing your profit margins. Consequently, it’s of paramount importance that you are able to determine who your most profitable suppliers of work or services are.

This means by way of example, that you now have the capabilities to ascertain the failure rate of cases that suppliers send to you. For instance, while Supplier A may seemingly supply more successful cases than Supplier B, what percentage of those cases are the successful ones? It sounds obvious but many businesses fail to assess the success rate of their work. If your fee earners are having to run 3 cases from Supplier A before they get a successful case, it may be less beneficial to work with them than Supplier B. After all, you pay your fee earners to run cases, if they are spending 75% of their time running unsuccessful cases this is a terrible use of time and by extension money.

It’s the same principle for other suppliers of course, does Barrister A achieve better results than B, which Cost Draftsman is getting you the most profit per case and which Medical Expert is turning around your reports the quickest?

Risk Profiling Report

Naturally as well as analysing which supplier is the most profitable for your business you should also utilise Proclaim to analyse which of your businesses revenue streams provides you the best return on your investment.

While it may be great that your firm has hundreds of clinical negligence, RTA or immigration cases, what is the actual percentage of these that will successfully conclude?  Then out of those that are successful, what will the profit be when compared to the investment you have made in terms of marketing spend, staff salaries and other such overheads?  Proclaim Reports in this area can be critical to improving percentage success rates and minimising lost WIP.

Progression Report

In the legal industry recent and pending reforms have increased the need for all processes to be as efficient as possible. Automating processes will increase efficiency and will allow staff to work with higher volumes, but you will also need oversight of all these cases that is both meaningful and easily accessible; it is too easy after all, for a file handler to put that difficult case to one side and focus on the more straight forward cases.

The idea behind Proclaim Reports for progression is that you can breakdown any process into its key stages whether this be assembling flat pack furniture or in this instance running clients’ cases. All cases will have a beginning, a conclusion and multiple stages in between. The start generally would be vetting the case and the end would be submitting a final bill for the work done. A good illustration would be a typical personal injury case where you would want to breakdown the case into stages. Such stages may include: the procurement of signed identification and retainer documentation; the requesting and receipt of a date for a medical appointment and report; or whether the pre-action period has expired and the case is now ready for issue.

The obvious benefit to this kind of reporting is that you can quickly identify any bottlenecks in your workflows. If 50% of your work is stuck in a certain stage it will allow you to identify and rectify any issues before the consequences of the problem catch up with your cash flow. Additionally, you can quickly see how work is progressing, if 75% of the cases are still at the beginning of the progression report stages, you know these are unlikely to convert into revenue anytime soon and you can forecast accordingly.

Work Age Report

Leading on from progression reports, work age reports are also essential when trying to keep oversight of large volumes of work.

These Proclaim Reports will give you a breakdown of your cases and the length of time in which they have been running. The primary purpose of this reporting is so you can work out average conclusion times of cases, as well as ascertain where all of your businesses work sits within that time period. This helps with financial planning, especially when you utilise it in tandem with reports such as the work failure rate or a supplier profitability report.

For instance, a firm has 1000 cases, if you know that after analysing the work age report cases take 12 months to conclude and that 20% of your businesses work is still within the first 3 months of its life, that’s 200 cases that will not settle for another 9 months. You might also know by reviewing a work type failure rate report that 25% of these cases fail and consequently you will only be left with 150 of these cases by the time they conclude.

Furthermore, if you had a profit report that shows the average net profit per case being £1,000 you could project with reasonable accuracy that you would likely bill £150,000 in 9 month’s time.

Closing Remarks on Proclaim Reports

The benefit of robust and accurate Proclaim Reports cannot be overstated when running a successful business. Attempting to make sound business decisions without the appropriate information in your possession will almost always prove impossible. Of course the ability to accurately and efficiently pull data from your system will be limited by the extent to which your system has been developed. If you have limited automated workflows and rely on staff to manually input data, it will only ever be as good as the individuals inputting that data and as we all know, individuals are often prone to error through no fault of their own.

Consequently, to get the most from your reporting you should always seek to develop your system and its workflows. The more automated it is, the less prone to human error it will be and the more accurate your dataset and reports will be as a result.

This list is certainly not exhaustive, and should you want to know more about anything in this article or perhaps some other areas that fall outside the top 4 Proclaim Reports, then don’t hesitate to contact our Legal IT Director at james.denby@legalpracticesupport.co.uk

Proclaim Risk Management

At Legal Practice Support we have yet to meet a solicitor who enjoys regulatory compliance. It’s a monotonous job after all, nobody will thank you for getting in the way of practising law or slowing the speed in which a case might be concluded. The role is so often reduced to box-ticking and paper trails. This is where a Proclaim Risk Management system can help.

As a consequence of this with smaller firms we tend to see either a lax approach to compliance or compliance outsourcing to a compliance consultant at a cost of course. For bigger firms it is difficult to outsource the job and they often have the resources to deal in house. This does not however, mean it is always dealt with commercially, efficiently or even effectively.

An effective solution would be to adopt a software approach such as developing a Proclaim Risk Management System, which is something we at Legal Practice Support have extensive experience undertaking.

Risk File Reviews

Too often it is thought of that compliance is the responsibility of the senior management and compliance officers but this is not how the regulators see things. Compliance is seen to be the responsibility of every employee within your firm. By using Proclaim to develop a comprehensive compliance platform you can ensure that all employees are involved in the process by creating one centralised system.

A Proclaim Risk Management System can be developed to allow everyone to easily conduct audits, report on incidents and deal with any other compliance related tasks. This will all help ensure that dealing with compliance becomes a shared culture within your business taking the pressure off senior management and compliance officers.

Risk Management

Proclaim can be utilised to create task management workflows where you can plan, track and action all compliance activity. Furthermore the system automates tasks and ensures that all activity is tracked and dealt with efficiently and within your prescribed timescales. By utilising proclaim you can take a proactive approach to risk and compliance, ensuring that you never again miss an action date.  Further, completion of tasks can be prohibited until certain documentation has been placed on file.  For instance, has the CFA been signed and received before significant costs are incurred in the absence of a retainer, has a pre-Trial risk review been completed before the substantial costs of preparing for Trial and instructing Counsel have arisen?  Is the file handler instructing Counsel from a pre-approved list of suppliers who are known to have a good success rate?

Risk Reporting

Arguably one of the most important aspects of a comprehensive and effective risk management system is the ability to produce reports. Proclaim Risk Management System allows you to produce full compliance reports that can be scaled to your own bespoke requirements. This enables you to instantly see an overview of the whole landscape or drill down a specific section.

Using a Proclaim Risk Management System users could do things such as track risks by department or work type. Build up a dynamic risk register categorising by risk level, likelihood and consequence. Furthermore, you could utilise Proclaim Risk Management System to produce mitigation strategies, allocating tasks to those responsible for controlling risk within your firm and effectively track and monitor these tasks by reporting on them.

Risk Workflows

Automated workflows drive efficiency, ensure consistency and increase visibility. By developing a Proclaim Risk Management System you can replace inefficient spreadsheet based processes with highly automated solutions that are not prone to error. Additionally, you would reduce the time and cost spent on managing compliance by having a structured and well thought out workflow in place.

A Proclaim Risk Management System allows you to optimise your processes and improve the consistency of your reporting. Increase your team’s productivity through organised communication & collaboration all in addition to controlling and enhancing your compliance culture.

Individual Risk Review

Additionally, you can utilise Proclaim to analyse trends in individual employees or certain case types or demographics. I.e. is a certain employee more prone to error on a certain case type or in general? Are certain cases more likely to incur adverse costs than others? Information like this will allow you to gradually adapt how you monitor your cases so those with the biggest risk are easily identified early on.

This would allow you to produce a comprehensive risk register highlighting both employees that are more prone to incurring adverse cost and case types which are likely to do the same. This sort of data can prove crucial for HR departments when conducting appraisals and similarly for the practice when determining which case types to take on or supplier to utilise.

Incident management

A Proclaim Risk Management System can be designed to help law firms record, track and manage incidents, including the resulting actions needed to resolve any issues that may arise. You could efficiently record and track incidents, automatically assign them to relevant parties and create and track any actions needed to resolve the matter. Proclaim should be utilised to manage the following;

• Compliance Reporting
• Complaints Management
• Professional Indemnity Claims Management
• Misconduct Reporting
• Risk Register
• Anti-Money Laundering
• File Handler Risk Record (Adverse Costs)
• Many others

Document storage

An often overlooked area of comprehensive compliance solution would be document storage. You can utilise a Proclaim Risk Management System to securely store all documentation relevant to your firm’s compliance needs.

Collaboration and information sharing is an essential part of maintaining efficient compliance and quality workflows. Proclaim as a database is the ideal solution with the ability to store documents centrally and to record any documentation directly to the relevant incident you are working on. For example, you could store the following, all within a secure and password-protected digital environment if required;

• Complaints
• Disciplinary documentation
• Risk Register
• File Audits
• Undertakings
• Anti-Money Laundering

Closing Remarks

Compliance is a necessary but often daunting aspect of any law firm. Fortunately, the modern and more demanding requirements can be made much easier by utilising a modern and more efficient comprehensive electronic solution such as a Proclaim Risk Management System.

Check out our Proclaim development web pages to find out how a Proclaim developer could assist your firm.

This article while comprehensive does not provide an exhaustive list of ways in which Proclaim can enhance the way your law firm deal with compliance. Each area has considerably more application than this article has time to delve into. However, should you want to know more about anything in this article or perhaps some other areas that fall outside a Proclaim Risk Management System, then don’t hesitate to contact us here or contact our Legal IT Director via email at james.denby@legalpracticesupport.co.uk

The Legal Sector and Automation

2018, it’s a year that very few if any Claimant PI firms throughout England and Wales are looking forward to. The small claims limit will be raised to £2,000 and £5,000 for whiplash specifically which is a de facto abolishment of the claim.

However, let’s not forgot it wasn’t too long ago that the same demographic of lawyers were dreading the impending date of April 2013 ushering in the Jackson reforms. Which was only shortly after adapting to the fixed fee changes brought about by the MOJ portal and the more seasoned reader will of course remember the even older Woolf reforms. Claimant PI lawyers might be forgiven for thinking that their entire profession is under siege and I’d struggle to disagree with them.

Consecutive governments rather than tackle more pressing matters such as the national debt or even the deficit have made punitive changes to the way in which claimant PI lawyers can operate. It always seemed to me that a basic change such as mandating all vehicles have dashcams installed might be a more constructive means of tackling fraudulent PI claims. Then again, I didn’t attend Eton and nor do I have friends that run insurance companies so who am I am to criticise the no doubt stellar logic behind the decisions.

However, what has become increasingly apparent is that lawyers are resilient and will continue to adapt, whether it be diversifying into different areas of law or finding new ways to maximise profits. The way that many forward-thinking law firms are moving is to try and ensure that their entire operation is a well-oiled machine.

The dream for many firms would be self-generating work via a strong online presence and then funnelling all of that work directly into a robust case management system, which removes the majority, if not all administrative tasks. Leaving only the matters of genuine complexity to be dealt with by the fee earning staff. Well until AI really takes off in the next 20 years or so that is, not that its stopped some from already trying that approach (https://futurism.com/an-ai-law-firm-wants-to-automate-the-entire-legal-world/) and (https://www.bloomberg.com/news/articles/2017-02-28/jpmorgan-marshals-an-army-of-developers-to-automate-high-finance ).

The benefits of an efficient system should not be understated, it has always been desirable but now it is becoming mandatory. If a business’s profits are to drop by a substantial margin action must be taken. Many firms may layoff staff or cut back on new work and while this may be prudent in the short term, the long-term implications can often be a perpetual downward spiral leading to insolvency. A much more consecutive approach is to maximise the resources the business has.

If it takes a fee earner 20 hours to settle case worth £1,000 currently and that case is soon to be worth £500 then as a minimum the time taken needs to be reduced to 10 hours to return the same profit. If this can be achieved, then the firm is in no worse a position that it was previously. Stating this is of course obvious, achieving it is considerably less straightforward.

If we take one example example of how a firm might go about doing this the time savings and other benefits become even more readily apparent. Most firms will receive their medical reports by email, they will get reviewed as and when the fee earners gets around to it and then they might get printed off and disclosed. With the correct development of a case management system, you could almost entirely remove the human element from the process.

The report could be automatically uploaded into the case management system, with sufficiently advanced OCR software it could even be evaluated. For firms without OCR it could trigger a prompt to the fee earners to review the report. Now again to cut down further time you could incorporate the Ogden tables into your case management system, so a fee earner need not have any knowledge of the case at all, they could simply select the injury’s and the prognosis length then let the system determine the bottom and top line valuation of the claim. A supervisor would then approve this valuation (or not if you’re sufficiently confident in your system) and the letter automatically drafted and disclosed digitally to the client. Who could then electronically approve the report instantly. Not only would you be cutting down on the human hours required in this process but you would reduce the process from a week to less than a day.

This is an isolated example that may not be applicable to all firms but it is just that, an example of what is possible. When you look at any process there will always be areas that can be streamlined and automated which will  provide real returns to your bottom line.

At LPS we specialise in automation and efficiency, using the resources already at your disposal to cut your overheads and increase your profit margins.

Check out the Proclaim development pages on our website to see how a Proclaim developer  can assist your firm.

What is a ‘Good Reason’ to Set Aside a Default Cost Certificate?

The subject matter revolved around an RTA LVI claim in which the Claimant had given instructions to discontinue his claim, giving the Defendant an automatic entitlement to their costs pursuant to CPR 44.9(c). The Defendant in turn served a Bill of Costs that was received by the Claimant Solicitors, the severity of which was not appreciated by the receiving fee earner.  The matter was not escalated to the relevant department and thus, a Default Costs Certificate followed.

An application was brought within 14 days under CPR 47.12 (2) to set aside the Default Costs Certificate, on the basis that the Claimant had a ‘good reason’ to set aside  on the basis that the receiving file handler had not appreciated the seriousness of the Bill of Costs received, and that the Points of Dispute filed with the application reduced the Bill of Costs to less than 50%.  Given this had been a low value RTA matter albeit one that had been allocated to the Multi Track, the Claimant’s base costs totalled £20,000 in comparison as against the £47,000 sought by the Defendant, which included no additional liabilities.

In the first instance, the DDJ rejected the Claimant’s application on the basis that no sufficient good reason had been provided.  The fee earner should have been aware of the seriousness of the documentation, and it was purported that the size of the Bill had no relevance, save for if the same had been extremely excessive to‘the sum of £2,000,000’!

The Claimant rejected this notion and on Appeal to the High Court, the HHJ ruled in favour of the Claimant, stating that the level of the Bill of Costs was of relevance and that if the paying party could prove there would a “a substantial or significant reduction in the costs awarded from the costs claimed in the Bill” if detailed assessment continued, that the ‘good reason’ threshold had been fulfilled.

Key Points

• Ensure your staff know how to deal with Bills of Costs received – LPS can provide training or assist with any adverse cost orders
• Make any application to set aside a Default Costs Certificate within 14 days
• Your accompanying Points of Dispute must seek a reduction of significance with reasonable prospects of succeeding, failing which the threshold for ‘good reason’ will not be met.

If you or any of your colleagues require any advice on setting aside a default costs certificate or any other legal cost matters, please do not hesitate to contact us for assistance.  We provide both Claimant and Defendant legal cost drafting, negotiating and advocacy services.  Based in Bolton, we are proud to offer nationwide paperless services to all our clients and a market leading three day working day turnaround on all costs work received.  If you wish to seek our initial free advice on any matter, please do not hesitate to contact our Legal Costs Director on Robert.Collington@legalpracticesupport.co.uk

Can You Recover Hourly Rates on Fixed Costs Cases?

I’m sure we are all aware by now of the outcome of Broadhurst v Tan and Taylor v Smith [2016] EWCA Civ 94 (23 February 2016) in which indemnity costs were awarded for the Claimant having beaten their own Part 36 Offer on assessment.  As a consequence, the Claimant was allowed to seek their costs from the date of expiry of the Part 36 basis on an hourly rate indemnity basis, thus trumping the fixed cost regime.

But what about the wider implications?

Jockey Club Racehorse Limited v Willmott Dixon Construction Limited [2016] EWHC 167 (TCC) was a reminder that indemnity costs can and will be awarded for late acceptance of a Part 36 Offer.  Which begs the question, are you utilising Part 36 Offer tactics to their full advantage?  If so, then if you make a competitive Part 36 Offer and the Defendant accepts your offer out of time, there is merit in threatening to seek your costs on an indemnity basis, failing which an application to the Court can be made for the same.

Here at Legal Practice Support we can offer free advice on the issue and whether you are able to overcome the fixed cost hurdle.  Further, if your case has prospects we are able to draft and negotiate the Bill of Costs prepared as a result. We provide both Claimant and Defendant legal cost drafting, negotiating and advocacy services.  Based in Bolton, we are proud to offer nationwide paperless services to all our clients and a market leading three day working day turnaround on all costs work received.  If you wish to seek our initial free advice on any matter, please do not hesitate to contact our Legal Costs Director on Robert.Collington@legalpracticesupport.co.uk or contact us here.

What Are The New Changes to Budgets?

The New Proportionality – Where are we at Now?

I’m sure by now you’ve read or heard of BNM v MGN Limited [2016] EWHC B13 (Costs) (03 June 2016). If not, it will soon be imprinted onto your retina through rinse and repeat Defendant party citations. BNM was a privacy case involving a primary school teacher having been in a relationship with a premiership footballer for circa three years. The Claimant lost her mobile phone, later kindly returned to her wiped of all data, but not before all the data had been scooped right from it. The irony of a case about privacy being printed, probably right now as you read this, on thousands of Points of Dispute across the country should not be forgotten.

The decision runs 54 paragraph long. The salient legal facts are this – This was a Post-April 2013 CFA funded claim entailing additional liabilities of the instructed Solicitors and Counsel (paragraph 7). Costs totalled some £241,817 including additional liabilities (paragraph 10) with damages having settled for £20,000.00. Issues were raised as to Article 10 ECHR rights, a resurrection no doubt inspired by Coventry and others (Respondents) V Lawrence and another (Appellants) [2015] UKSC 50, but this thankfully failed (paragraph 11). The matter progressed to assessment wherein the sums were reduced on the basis of reasonableness and then thereafter reduced by half on the basis of a more global appreciation of proportionality (paragraph 14). In total £83,964.80 was recovered in costs.

In addressing proportionality (paragraph 17 onwards), emphasis is placed on Access to Justice, but that this must be at proportionate cost (paragraph 18), with the ‘new’ test of proportionality having been, in Master Gordon-Saker’s view, intended to bring around a ‘real change in the assessment of costs’. This included allowing hands on treatment of additional liabilities, paragraph 32. Whilst it was accepted in principle that base costs sums which exceed those in issue may not be innately disproportionate (paragraph 40), paragraph 49 carries on to state

‘In these circumstances base profit costs of £46,000 and base counsel’s fees of £14,000 must be disproportionate under the new test, being over 3 times the amount of agreed damages, and covering work which fell far short of trial. In my judgment costs of about one half of those figures would be proportionate’

Base costs of 1.5 x the global damages were deemed proportionate, but in terms of gross sums, £83,964.80 all-in having been allowed as per paragraph 14, equates at just over 4x global damages.

It is clear therefore, that the Courts remain of the view that costs can still exceed damages and all is not doomed, although the test is somewhat a significant departure from the Pre-April 2013 decision of Home Office v Lownds [2002] EWCA Civ 365 (21st March, 2002).

The new proportionality test certainly tightens margins and does not leave much room for error, allowing a Judge to reduce a Bill further at will if they feel so justified. Nevertheless, it should be remembered that this is, in a sense, an artificial comparison – BNM was a relatively straight-forward matter which settled well before Trial, and in any event, there are also sums to be considered above and beyond base sums, including the costs of assessment and any success fee that may be recovered at detailed assessment.

The decision however also introduces further uncertainty. The quantification would appear to have been arbitrary, a rough guess at best, and so Post-BNM the Court has continued to try and find the magical ‘proportionate’ costs to damages ratio.

The issue of what is proportionate post April 2013 is also assisted in the decision of May & Anor v Wavell Group Plc & Anor [2016] EWHC B16 (Costs) (16 June 2016) is a decision handed down subsequent to BNM. In May the bill of costs presented totalled £208,236.54, damages having settled for £25,000. A reasonable level of costs therein was determined to be a figure of £99,655.74, however, this remained disproportionate (paragraph 43) and thus costs were ultimately reduced to the solely proportionate figure of £35,000 plus VAT (paragraph 46). Thus in BNM the Court allowed, excluding VAT, costs of 3.8:1, but subsequently in May, VAT-exclusive costs in a ratio of 1.4:1 were deemed proportionate.

So what implications does this have for inherently low value cases, for example a significant portion of Noise Induced Hearing Loss claims?

Let’s take an example. On an average Post-April NIHL claim, let’s say £5,000 was recovered. Global costs allowable, as per the decision in May, would therefore be proportionate if they were in the region of £7,500. However, taking the global approach of a 4:1 costs to damages ratio in BNM still allows up to £20,000 in total costs. The guidelines for recovery therefore remains ambiguous, and many questions arise.

So how do we determine what’s right in each case?

In the writer’s experience, the issues of complexity and importance are predominantly of lesser influence in routine lower value cases, but certainly come into play in higher value matters. Issues of capacity, extent of medical evidence or Defendant conduct are often key factors in increasing costs in these instances.

In lower value litigation however, the key in determining proportionality can often be related to the stage of litigation based on current principles. Whilst we must accept that the days of pre April 2013 costs are gone, and that we must always find ways to improve our efficiency through technology and keep costs down, that does not mean that lower value cases should not be profitable.

Whilst in BNM, proceedings concluded some twelve months after the initial date of issue with the process of litigation quite advanced (likely at the disclosure stage), conversely, the matter of May settled shortly after issue and prior to receipt of a Defence. It is evident therefore, that the stage of litigation bears key influence of proportionality and that, in theory, in excess of the 4:1 ratio of BNM is recoverable on a global costs basis should the matter proceed further through the stages of litigation to Trial.

Therefore, in summary whilst the Courts may be trending towards finding the answer, the current guidance certainly ensures that lower value work can certainly remain profitable with global costs likely to be recoverable between 2x – 5x the level of damages in lower value cases, and dependent upon the stage of litigation you reach.