Professor Dominic Regan: PANORAMA

Professor Dominic Regan: PANORAMA: "The programme destined to be broadcast on july 4th is about how insurance companies bodge the handling of claims ,causing great costs to mou..."

Yao Essaie Motto & Ors v Trafigura Ltd & Anor

Yao Essaie Motto & Ors v Trafigura Ltd & Anor [2011] EWHC 90201 (Costs), (QBD) (SCCO) (Judgment 15.02.11). 

This was a class action involving 29,614 claimants which settled for £30 million.  The Senior Costs Judge had to determine 22 preliminary issues of which the following will be of interest to practitioners generally:

• Vetting (i.e. the costs of collecting, assessing and management of each claim): recoverable in principle but subject to the wording of the CFA in respect of the date from which the agreement is to run.

• Risk assessments for success fees: these should be reappraised when new CFAs are entered into, more claimants join an action, and if events during the litigation mean that the position on success might have changed.
• Costs of entering into a CFA and establishing an ATE insurance policy: confirmed that these are recoverable on ground that this is work properly carried out and for which they are entitled to charge.

The senior costs Judge is to deliver a supplementary judgment dealing with interest on costs in this very expensive piece of litigation.


The judgement is unsurprisingly given its size subject to an appeal.  

In search of the perfect costs

Reports from CERN, the particle accelerator in Switzerland, suggest that the search for Higgs Bosun, the legendary and definitive particle, what all matter is made up of, has been successful. But what prospect of developing the perfect costs model being formed on which to base fixed costs for all fast track matters as envisaged by Lord Justice Jackson?

The difficulties faced are enourmous when considering the question and clearly the involvement of experienced Costs Lawyers is vital. Take a typical public liability case conducted by one firm, with one medical report settling shortly after commencement of proceedings with profit costs of typically £7,500 compared with another firm whose bill crossed our desks with profit costs of £20,000 for an identical case. The problem is how can data be analysed when one firm conducts matters efficiently whereas another conducts theirs to maximise their potential profit costs. One quick point is that we duly attended a detailed assessment and reduced those profit costs to approximately £7500 together with costs of assessment as we had accurately advised our client on appropriate Part 47.19 offers. 

Second example of difficulties is when should medical evidence be obtained? A large number of solicitors choose not to obtain a medical report until after liability has been admitted or until the last resort such as in the event that liability remains an issue and so proceedings are issued, medical evidence would have to be obtained for attaching to the Particulars of Claim. Defendants however retort that had medical evidence been disclosed at the outset, then they would have made a nuisance payment at the outset rather than argue over liability and incur vast costs. Who is right? As a Costs Lawyer who has had the benefit of seeing many different firms work and styles of conducting a case, I can see that there are merits in both sides arguments. Answers on the back of a post card to Lord Justice Jackson. Don't forget to copy me in.

All we can hope is that the Judiciary involves Costs Lawyers at all stages of the consultation and that our views and opinions and notes of caution are heeded.

Solicitors Code of Conduct

It never ceases to surprise that many solicitors are still failing to provide adequate information regarding legal costs at the outset of a case and to provide the client with regular updates regarding their costs.  The Solicitor’s Code of Conduct was introduced in 2007 and is to be replaced with the Outcome Focused Regulations (OFR) in August 2011, with Rule 2 being promoted to Rule 1 given its importance. However, for the purposes of this article we shall quote the current rules.

In the continuing difficult trading climate, conforming to the Solicitor’s Code of Conduct is vital.  We are receiving an increasing number of instructions from Litigants in Person challenging their solicitor’s costs, and not without just cause for complaint.   It, therefore, seems appropriate to refresh our working knowledge of the Code: 

 (1)  You must give your client the best information possible about the likely overall cost of a matter both at the outset and, when appropriate, as the matter progresses. In particular you must:

(a) advise the client of the basis and terms of your charges;

(b) advise the client if charging rates are to be increased;

(c) advise the client of likely payments which you or your client may need to make to                others;

(d) discuss with the client how the client will pay, in particular:

(i)  whether the client may be eligible and should apply for public funding; and

(ii)  whether the client's own costs are covered by insurance or may be paid by someone else such as an employer or trade union;

(e) advise the client that there are circumstances where you may be entitled to exercise a lien for unpaid costs;

(f) advise the client of their potential liability for any other party's costs; and

(g) discuss with the client whether their liability for another party's costs may be covered by existing insurance or whether specially purchased insurance may be obtained.

(2)  Where you are acting for the client under a conditional fee agreement, (including a collective conditional fee agreement) in addition to complying with 2.03(1) above and 2.03(5) and (6) below, you must explain the following, both at the outset and, when appropriate, as the matter progresses:

(a) the circumstances in which your client may be liable for your costs and whether you will seek payment of these from the client, if entitled to do so;

(b) if you intend to seek payment of any or all of your costs from your client, you must advise your client of their right to an assessment of those costs; and

(c) where applicable, the fact that you are obliged under a fee sharing agreement to pay to a charity any fees which you receive by way of costs from the client's opponent or other third party.

(5) Any information about the cost must be clear and confirmed in writing.

(6) You must discuss with your client whether the potential outcomes of any legal case will justify the  expense or risk involved including, if relevant, the risk of having to pay an opponent's costs.

Two separate cases recently crossing our desks involved a solicitor failing to comply with 1(f) of the code, the client being shocked when confronted with a bill for the other side’s costs. In one of the cases, the liability for costs exceeded £1 million. Throughout, the client had been advised that they had a good case and there was no insurance in place. Not only was no protection afforded the client, breaching 1(g) of the Code of Conduct, but the solicitor was negligent in failing to advise the client properly. 

The other case involved a £15k costs order against the client in a matrimonial case where they had had no realistic prospect of resisting an application in this country on the grounds that proceedings were being pursued in another country as there was no legal jurisdiction abroad.  The solicitor had unnecessarily exposed the client to a costs order. 

We have developed a number of solutions to solicitor own client issues and costs protection via our contacts in the insurance industry. Do not hesitate to contact us to discuss your needs or click here.

Another common breach relates to Rule 2.03 (6). In one particular case a company instructed a solicitor to recover unpaid invoices in the sum of £5k.  The solicitor’s bill totalled £35k.  We were instructed by the paying party to oppose the bill of costs and successfully reduced the bill at a Detailed Assessment hearing to £20k, resulting in a significant shortfall and a loss of £10k to recover the £5k invoice. 

Litigation must always be cost effective. As experts in costs, we have spent a considerable amount of time working with solicitors in relation to budgets and time management, we would be happy to advise you and your firm on this topic, details of our services being found by clicking here.  We are experienced in the service of preparing budgets and costs estimates, the same becoming increasingly popular with Lord Justice Jackson placing particular weight on ways of controlling costs.