The Proclaim Development team of Legal Practice Support (LPS) was tasked with automating the fixed costs process for a personal injury department, dealing in low value (below £25,000) claims in Road Traffic Accidents, Employer’s Liability and Occupier’s Liability claims.
What was the Issue?
At the point of instruction, on settling any case the file handler was required to manually prepare a fixed costs schedule based on the details provided in CPR 45, and also to manually insert the disbursements figures. Inevitably, in a fast-moving post-Jackson department which requires fee earners to be focussed on progressing cases, the last thing on fee earner’s minds was dealing with costs. This ultimately led to costly errors arising, including the failure to claim the correct fixed costs, to recover some disbursements, and in significant delay in costs being paid.
Cashflow is integral to any company, and therefore LPS was instructed to automate the fixed costs calculation and recovery process in order to streamline the process, and to minimise errors arising.
LPS developed a system whereby based on the clients damages and selection criteria on case conclusion, the fixed costs were automatically calculated and detailed in a costs schedule, and disclosed to the Defendant. Disbursements were standardised dependant upon the case type and correspondents utilised, so that a file handler would need to consciously ‘opt-out’ of attaching a relevant disbursement voucher and its corresponding details such as value and reference. The process was tied into the accounts system so that incurred disbursements not only automatically flagged within the cost schedule but it also provided an easy checklist for accounts to review along with the physical invoices and the relevant details all in one place.
On approval, the costs schedule was automatically disclosed to the ‘on-record’ paying party and the disbursement invoices were all automatically consolidated into a single document then attached to the cost schedule. If no response was received within specific timescales, the outstanding costs were automatically chased.
As a result of this process, the errors in claiming the correct level of fixed costs were eliminated, and the failure to recover all disbursements incurred was vastly reduced. This was without any significant change in fee earner behaviour and actually reduced the level of time spent by any individual on administrative costs work.
Extension of Process
With the extension of fixed costs proposed to extend to claims of up to £100,000 in the near future, now is the time to ensure your fixed costs processes are up to speed and accurate. Further extension of the process could incorporate links into the accounts system, to auto raise payments (to be approved) to third parties on receipt of settlement monies, or to feed into an enforcement process to ensure an application is lodged for failure by a paying party to raise funds in a timely fashion.
If you would like to discuss how to expand the automation of your fixed costs system, or to discuss general Proclaim development, please do not hesitate to contact firstname.lastname@example.org for further information.
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James Denby is Head of Proclaim Development at Legal Practice Support and possesses in excess of eight years’ experience, both in-house and as an external consultant, in developing legal case management systems. James is also uniquely in the position of having worked as a Senior Manager within a law firm, and as having conducted his own caseload as an experienced Paralegal. As such James understands the requirements of any IT system/workflow/task from the view of the user, as well as from an IT perspective.Read More
Some of you may have heard a bit of noise being made about Merrix -v- Heart of England NHS Foundation Trust  EWHC 346 (QB) recently concerning the impact on your Cost Budget, the Judgment for which can be found here.
But what’s all the noise about?
Well, the case is actually a strong result for all receiving parties, and emphasises the importance of getting your Costs Budget right and getting it agreed/assessed before settling. For years paying parties have argued that the Costs Budget should not and cannot be exceeded in any circumstance, and that on assessment, the costs claimed are still subject to detailed scrutiny. This is true however, the impact of Merrix is that it clarifies the position as to how a Costs Judge is to deal with costs on detailed assessment when a Costs Management Order has been made.
So what’s new?
Well it’s not so much new, but a renewed focus on CPR 3.18 (b), to “not depart from such approved or agreed budget unless satisfied that there is good reason to do so”. The intent of this inclusion in the CPR was with the purpose of reducing the need for detailed assessment, and the whole purpose of budgeting was to set reasonable and proportionate amounts of expenditure in the early stages of litigation (see para. 68 of the Judgment, and CPR 3 PD 3E 7.3). It was ultimately concluded by Mrs. Justice Carr that this could only be interpreted as meaning that a Budget should not be departed from, either upwards or downwards, unless there is good reason to do so.
And how does this affect you?
Detailed assessment is still a detailed assessment, the Court can and will continue to remove any unreasonable costs. But if a Budget has already been set and your end costs are within the boundaries of this Budget, then to argue they are disproportionate (and thus subject to the dreaded second-phase of the new proportionality test) is to conflict with Merrix. One should take heed however, as in para. 82 of the Judgment it is stated that if good reason is given, the new proportionality test could still rear its head on assessment, or it may infact simply be applied sooner in the budgeting process, rather than later on assessment. It is also anticipated that the matter may now be appealed go to the Court of Appeal for a more senior decision to be made, so this may not be the last we hear of this issue.
What can we learn from this?
Get your Costs Budget right and get it agreed if possible before settling your case. If a paying party has agreed a Budget and your costs remain within the same, then your position on proportionality is significantly stronger. It may also be worthwhile electing for your costs to be subject to Costs Management (remember PD 3E (2)(a)!) even when it’s not mandatory, especially in low-value cases, such as Fast Track clinical negligence matters where costs are often much higher than standard PI litigation.
Here at Legal Practice Support we can offer free advice on the issue and whether you are able to overcome the fixed costs hurdle. Further, if your case has prospects we are able to draft and negotiate the Bill of Costs prepared as a result.
Contact our Legal Costs Director at Robert.Collington@legalpracticesupport.co.uk for further information.Read More