3+9=Costs (November 2022 Edition)

Welcome to the 6th Edition of 39 Essex Chambers’ Costs Newsletter.  Who would have contemplated that we would have had 3 different Prime Ministers since the last edition?!  Whilst we are a little later to print than is usual, and still grappling with the new reference of “Judge” rather than “Master”, a few days before our intended publication, the Court of Appeal handed down 3 cases dealing with costs.  Rest assured, we sweep up the key developments of the last six months as well as the Court of Appeal judgments of recent days.

Aside from the content examined here, at the recent Costs Law Reports Seminar in September, the Senior Costs Judge informed the delegates that the summer meeting of the Civil Justice Council Costs Review discussed the idea of budgeting being disjointed from directions and canvassed the possibility of budgeting being done by Costs Judges (something suggested by the former Senior Costs Judge long ago); and the idea that incurred costs could be summarily assessed on a provisional basis at the same time as the budgeting exercise.  The latter idea certainly fills this Editor with dread.

The Senior Costs Judge also gave the impression of the corridor’s frustration at so-called ‘shortfall’ claims against protected parties.  This is surprising as the commerciality of such recoveries in the past resulted in shortfalls being written-off routinely, but those features are no longer the same today and no provision has prohibited such recovery, yet the frustration appears to be strong and consistent.

Lord Justice Birss, speaking at the ACL conference in November, expressed the idea that costs estimates ought to be more readily capable of being converted into budgets to avoid the time consuming and expensive exercise that budgeting has become.  He went on to ponder whether summary assessment in every case made better sense.  The Civil Procedure Rule Committee (which he chairs) was in the process of giving full scrutiny to the rules governing the extension of fixed recoverable costs expected in April 2023.  Plenty of time for editorial guidance ahead of the rule changes then!

Analysis carried out by Jim Diamond, a Costs Lawyer and published in the last few months, claims hourly rates at the richest law firms in the UK have doubled in the past 15 years, with magic circle partners routinely charging between £1,000 – £1,500 per hour and their nearest competitors charging up to £900 per hour.  With the Court of Appeal’s guidance in Samsung Electronics Ltd & Ors v LG Display Co. Ltd & Or [2022] EWCA Civ 466 notifying that clear and compelling justification is required to exceed the guideline hourly rates, the disparity between the analysis and GHRs strongly suggests that the GHRs are far from representative of the true market place.  Maybe it would just be easier to say so, pressing ahead with expanding fixed costs and hourly rates becoming more of a permitted scale rather than a guideline, which seems to have been the desire from long ago.

Enough of all of that.  Let me tell you about what you will find in this issue.  The first two out of the 3 Court of Appeal cases in recent days, namely, Belsner and Karatysz, are reviewed, noting that Portal cases are not caught by s.74(3) of the Solicitors Act 1974 and the corresponding rule in the CPR at 46.9 (which limit a solicitors’ recovery from client to that which is recovered from the opponent in County Court proceedings).  “Proceedings” here meant contentious business and as no proceedings were issued, those provisions did not bite.  The question of informed consent did not arise and there were no fiduciary duties upon a solicitor when negotiating their own renumeration.  Failures to give appropriate advice about pricing and the overall costs were to be left for the regulatory regime.

We move you on to a review of 3 cases in the litigation funding arena examining the perils of backing a losing case in ECU Group Plc, the wide discretion over costs in the Competition Appeal Tribunal as seen in Gutmann, and a bust-up between funder and lawyer on the interpretation of the agreement between them in US litigation in Woodsford.  Gutmann then receives a second and closer examination from the perspective of Collective Proceedings Orders.

Talking of “proceedings” again, the third of the 3 Court of Appeal cases in recent days, namely, Achille, is taken out for a test drive in the domain of mixed claims in QOCS cases, and whilst we’re on that track, further analysis of how to weigh up whether a mixed claim should still attract QOCS protection in the case of Arshad.

Away from QOCS, we analyse a decision of the SCCO as to the question of whether the fixed costs of provisional assessment should, and can, apply to a detailed assessment per Hussain, and highlight an example of the Court applying in effect a blended rate at summary assessment in curious circumstances – Eurohone.

Our finale is certainly worth the wait!  Yet another gift to the costs world from Richard Slade & Co. Ltd, exploring the fall out between a solicitor and client, the status and effect of a compromise agreement between them and the competing jurisdiction afforded to the Court under s.70 when compared to s.61 of Solicitors Act 1974, and the scale of assertions of negligence and their corresponding effect on detailed assessment.

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