This final part of our review looks at the area of costs budgeting and clinical negligence matters and draws together some conclusions in this much anticipated overview of the costs landscape.
Practitioners are now used to the Multi-Track costs management process and the preparation of costs budgets to manage cases and the trials and tribulations that have been encountered over the last few years.
It is vital to keep abreast of the ever developing case law and there has been some clarity brought by recent decisions. We have blogged about this very issue at various stages.
This area has been reviewed by LJ Jackson to assess how well this scheme has worked in practice and to what extent it ‘renders any extension of the fixed recoverable costs (“FRC”) regime unnecessary.’
This scheme has without doubt had the greatest impact upon the civil costs world and has now been integrated fully into the everyday management of a case by practitioners. Indeed, it has lead to a reduction in the number of matters proceeding to detailed assessment as approved budgets and the ever developing case law positions can be used as the platform for sensible and swift costs negotiations.
The costs management scheme and format has also developed in order to streamline the process for practitioners and further minimise protracted litigation and to encourage early discussions and negotiations between the parties during the substantive matter.
A combination of costs management and the new proportionality rule does seem to have achieved the intentions of LJ Jackson pre 2013.
During this review key members and sections of the profession have put forward their supportive views of the costs management regime as the best way to manage a case, to provide certainty over the level of costs, to address proportionality in line with the provisions of the CPR at an early stage and at a relatively low cost.
It is also clear that there are concerted attempts by the Judiciary to apply consistency between the courts.
In conclusion, following initial reluctance and fear the profession has embraced the new regime and adapted to the impact upon case management and with ever developing case law and guidance the costs landscape has been changed for the better it seems.
Incurred Costs Conundrum
However, there is an issue that remains for LJ Jackson and one which continues to provide for protracted costs negotiations and the potential for costs negotiations – Incurred Costs.
As part of this review 191 agreed or approved claimant budgets and 183 agreed or approved defendant budgets were considered. On average, in the claimant’s budgets incurred costs represented 35% of the total budget figure and in the defendant’s budgets the figure was 18%:
Para 3.2 from the report reads – ‘For present purposes, it is probably appropriate to treat actions against the police separately (the corresponding data in Table 6.1 is shown as “PALG”, the data having been supplied by the Police Action Lawyers Group). They often have higher incurred costs because of inquests and/or IPCC investigations. Also, those actions form a relatively small specialist area of litigation.14 If we focus on cases other than actions against the police, the figures are as follows: on average, in the claimant budgets, incurred costs represented 32% of the total budget figure; in the defendant budgets, incurred costs represented 15% of the total budget figure.’
To Fix or Not to Fix
LJ Jackson has addressed the potential to fix pre-issue and pre-budget costs. This has been suggested by Master Cook. LJ Jackson has concluded at this point that this process would involve a review of all areas of litigation, not just clinical negligence and it would require an elaborate grid of –pre-issue and pre-budget provisional costs with different figures for different types of cases.
It would also involve the introduction of a procedure for pre-action applications to the court for approval of expenditure above the proposed figures.
LJ Jackson has concluded that he has already proposed ‘significant reforms’ which ‘should be allowed to bed in before we take this quite major step.’
His only recommendation at this stage is that consideration should be given in the future to developing a grid of FRC for incurred costs and a pre-action procedure for seeking leave to exceed the FRC in the grid.
LJ Jackson also accepts that as costs management is now working on a better level that the need for FRC has been reduced but he leaves open the door for future reviews and extensions to account for any failures in the current system to ‘deliver effective control over costs’ or if it ‘becomes unduly expensive.’
Fortunately he has also acknowledged that there still remain areas for improvement within the costs management regime.
Clinical Negligence Litigation:
This area of litigation has been found to be the second largest category of claims. The first being personal injury.
The data received from NHS Resolution for the review detailed that the annual costs of clinical negligence has risen by just over £200 million from £1.489 billion in 2015/16 to £1.707 billion in 2016/17 and legal costs represented 36% of the 2016/17 expenditure. The number of reported claims is also increasing.
The data also provided a break down of the claims closed in the period 2015/16 and in 63% of the successful cases where damages were paid the claims were valued up to £25,000.00.
From their review LJ Jackson has concluded that LASPO and the new rules on proportionality have substantially reduced claimants’ recoverable costs but it is not yet possible to quantify this due to the number or pre-LASPO cases that remain in the data.
The views of the opposing parties have been reviewed with claimant representatives opposing fixing recoverable costs as it is premature step when the current costs savings cannot yet be quantified.
It is also argued that it is inherently unsuited to FRC because of the ‘complexity and variability’ of the subject matter. Whereas, costs budgeting can be tailored to each case.
It is argued that as many contested cases would invariably exceed the sum in issue then access to justice would be affected.
Claimant representatives have also rightly argued that defendants frequently exacerbate the costs of litigation with maintained denials of liability and unrealistic offers. This issue is currently under investigation by the National Audit Office. LJ Jackson therefore reserves his position but comments that there is evidence to support the need for this investigation. This is a welcome development for claimant representatives.
From the defendant stand point it is argued that the costs are ‘crippling the National Health Service and adversely affecting front line services’ and FRC is the only viable way forward.
The Medical Defence Union is strongly in favour of FRC for clinical negligence claims and the Medical Protection Society support the introduction of a FRC scheme for cases up to a value of £250,000.00.
Further support is provided by NHS Resolution for a FRC regime in the lower level of the multi-track.
Unsurprisingly defendant representatives are also critical of claimant conduct citing the ‘drip feeding’ of information and ‘front loading’ costs – incurring as many costs as possible pre-issue to avoid scrutiny at the CMC.
LJ Jackson again reserves his position pending the investigation by the National Audit Office.
The Leeds Proposal
Following a round-table meeting with a cross-section of the Leeds Bar a working party was set up to formulate their proposal for a set of template budgets as part of costs budgeting rather than a FRC regime.
Their proposal is called the “Leeds matrix” and described as ‘ingenious’ by LJ Jackson as recoverable costs go up or down at each stage, depending on the complexity of the case and the number of matters in issue.
The matrix has been tested with real cases with ‘varying’ results. The conclusion being that it would require further development before it could be brought into general use.
LJ Jackson has also concluded that a different approach for FRC above the fast track is appropriate as set out in the other blogs.
It seems that the matrix has provided food for thought and will be reviewed in the future once the other proposals have bedded in. Costs management will therefore continue to play a vital and major role in clinical negligence litigation with likely refinement in the future as a result of the Leeds proposal.
In conclusion it appears that LJ Jackson is keeping in mind the development of a grid of FRC for clinical negligence cases up to £25,000.00 – again a stand alone scheme is envisaged.
In respect of cases above £25,000.00 LJ Jackson comments that a minority of cases up to a value of £100,000.00 might be suitable for the intermediate track (e.g. admission of breach and causation in the protocol period with relatively straightforward quantum issue) but the majority are likely to proceed in the multi-track as per the current position and will be subject to costs management.
It has to be concluded that all practitioners accept that costs budgeting has had successes but requires continued review and development and given the extent of the further FRC proposals it is vital that a further period of time is now allowed to quantify the post LASPO costs savings as this will directly impact upon whether further proposals will be made in due course, particularly in respect of clinical negligence matters.
The initiatives will also need to be integrated with the other ongoing initiatives:
• Whiplash reforms – which will affect the lower threshold of the fast track and the number of personal injury claims falling within that track
• Online Solutions Court – a new separate Court intended for litigants to use without recourse to legal representation with a simplified procedure and a limited FRC regime. It will deal with cases up to a value of £25,000.00 but with personal injury, clinical negligence, possession, intellectual property and housing disrepair claims excluded from its remit. The aim is for this Court and the fast track to sit ‘side by side, subjecting all claims below £25,000.00 to some form of fixed costs recovery. This is part of the reasoning behind not recommending an increase in the fast track limit
• Raising the County Court / High Court threshold – implications for the future of the proposed capped costs pilot in the Business and Property Courts
• The Business and Property Courts – the capped costs pilot is intended for suitable lower value business and property disputes in the newly designated Business and property Courts.
• Upgrading of Court IT – planned upgrading which is vital for the FRC regime extension and development.
• Simplifying disclosure – may be addressed by Lady Justice Gloster’s working group. The proposals made in respect of the intermediate track would need to be addressed alongside any recommendations and reform to CPR Part 31.
LJ Jackson concludes that these further recommendations are a ‘major piece of unfinished business left over from my previous review.’
Given the changes made after his previous review it is likely that the current proposals will soon find their way into the costs landscape.
It is also clear that the door has been left wide open for further review, further proposals and extended regimes once the legal world has adapted.
LJ Jackson also concludes that the initiatives proposed share a common theme – to improve access to civil justice. Only time will tell.
Written by Charlotte Knight - Solicitor and Associate
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