News | General

Predictable Costs Regime

14 March 2006

An article appearing in the Law Gazette dated 9th March 2006 regarding the predictable costs regime is summarised as follows:

Progress has been made to extend the predictable costs regime for small road traffic cases to similar employers’ and public liability cases following a high-level gathering of industry experts, including the Civil Justice Council (CJC), Court of Appeal judges, top solicitors and insurers.

The forum also covered the move towards drawing up a ‘pre pre-action protocol’ that would encourage insurers to make early admissions of liability following a basic initial letter before claimant solicitors begin racking up costs.  This protocol would see a solicitor do little more than send an initial letter to the insurer, giving 14 to 28 days to admit liability before any substantial work was undertaken.

The road traffic scheme, with predictable costs for cases that settled pre-issue for less than £10,000.00 have largely worked well and have brought down the length of cases and improved cashflow for claimant solicitors.

There has been support for extending the scheme, with one leading insurer in the employers’ liability field claiming that the cases were sufficiently predictable to introduce the regime as his company settled 85% of such claims without any issue of liability.  However, claimant solicitors were more cautious, insisting that there must be statutory mechanisms to ensure regular reviews of the levels of any predictable costs.

There has also been interest in the creation of a costs council to provide advice to the judiciary on setting guideline hourly rates, fixed fee levels and other related issues.

The forum recognised the requirement to investigate other funding methods, given the concerns that the conditional fee agreement (CFA) regime may not be secure in the long term, mainly due to the continuing doubts over the after-the-event insurance market.  Court controlled contingency fees as exist in Canada provoked interest, and a plan was put forward for legal aid covering generic costs, which would be recoverable by the Legal Services Commission with a success fee, while individual’s costs were covered by CFAs.

The Master of the Rolls commented that although differences remain as to how costs should be assessed and as to how civil litigation should be funded, the forum was a success.