1. 1 COUNSEL’S FEES AFTER APRIL 2013 ANDREW RITCHIE QC 9 Gough Square LONDON

2. 2 Before 2003 In PI cases in claimant work:  Solicitors were paid by the hour  The courts supervised solicitors fees at detailed assessment  Solicitors hourly rates were set by the courts annually  Barristers were paid as a disbursement  Barristers fees were negotiated with the solicitor  who had a duty to keep them down for client’s benefit

3. 3 Before 2003 – The disbursement basis  If a solicitor wanted to instruct counsel to advise or plead he could do so  The choice was cost neutral  The solicitor was paid to instruct counsel (if the claim was won)  Counsel was paid by the losing Defendant  Or counsel was paid nothing if the case was lost (no win no fee)  This allowed injured claimants full access to the specialist personal injury Bar

4. 4 Commoditisation Commoditisation is a business principle  It involves paying the same fixed fee  for every PI case  in a category  even though the work involved is different

5. 5 The Vital Rule of commoditisation  to maintain access to justice  to ensure victims can still bring their claims  the commoditised price must be the average for the category of cases  Mid way along the Bell Curve:

6. 6 Failure to follow the Vital Rule  If the commoditised price is too high  The insurers pay too much for the claims in the category  Claimant lawyers get rich  Society suffers due to excess insurance costs

7. 7 Failure to follow the Vital Rule If the commoditised price is too low:  Claimant lawyers cannot make money on the claims in that category when they do a proper job  So they do a lot less work - a cheap job – a bad job  Or they refuse to do the claims at all  Access to justice is blocked or damaged

8. 8 Benefits to Insurers of commoditisation The benefits for the insurers (D) are: [1] complete certainty about the C’s costs [2] insurers can behave as badly as they like (deny everything, object to everything, refuse interims, fail to give disclosure) and there are no adverse costs consequences to them -the C’s costs are fixed -Only the claimants lawyers suffer – so insurers have the whip hand

9. 9 Commoditisation: the effects on Claimant lawyers work  Fee certainty promotes certainty in planning for accommodation, staff, salaries  Fixed fees means taking the rough with the smooth  Solicitors are paid the same price for a whole range of different cases  Solicitors make profit on one case (low level of work needed)  Solicitors lose money on the next (high level of work needed)  Obviously this will promote cherry picking the easy cases

10. 10 Commoditisation: The effects on C’s solicitor’s behaviour  Fixed fees put commercial pressure on solicitors to:  Set a maximum number of staff hours which can be spent on each case  Keep expenses down to the minimum  Instructing counsel costs money  D will not pay for counsel even if D loses  Therefore commoditisation stops solicitors instructing counsel

11. 11 Commoditisation of counsel’s fees  To maintain access for victims to advice from barristers  The MoJ merely need to commoditise counsel’s fees  Which means fixing the fees for each category of case  If counsel is instructed then low fixed fees are paid by the losing D  MoJ refuse to consider this or even to comment on it  Why?

12. 12 Effects on injured victims:  Anyone with a difficult case in the category:  Will either be refused legal help  Or will have the case run by low qualified, inexperienced, para legals  Will not have advice from counsel  Will probably recover damages (if they win) below the level to which they are entitled in law

13. 13 The First commoditisation: The Fixed Recoverable Costs scheme 2003  Introduced for liability admitted RTAs under £10,000  Fixed fees for solicitors who settled cases before issue  Barristers were excluded from the list of allowed disbursements  Costs Forum 2002, result: Bob Musgrove the then CE of the CJC stated: “Disbursements and Counsel’s fees are not included: It was agreed that careful and specific wording in the Practice Direction should aim to avoid “out-sourcing” or possible shifting of costs into disbursements”  The MoJ cannot get this Musgrove Principle out of their minds. The Musgrove Principle

14. 14 Effect of victim’s blocked access to advice from the bar  FRC scheme: solicitors paid £800 + 20% of damages  No extra for instructing counsel to advise on quantum  So solicitors rarely instruct the bar  Do not want to “give away” what they regarded as “their fees”  Clients know no better so the risk of under settlement arose

15. 15 The second commoditisation: The Portal - 2010  Flush with the success of the FRC insurers pressed on lobbying government for more commoditisation  So Labour created and introduced the Portal  A commoditised system for dealing with all RTA claims under £10,000 where liability is admitted.  Fixed fees: £400 stage 1, £800 stage 2 and £500 stage 3 (to trial).

16. 16 Disbursements - counsel  Following the FRC pattern, counsel was excluded from the list of disbursements.  As a result solicitors stopped instructing counsel  PIBA surveyed members last year and the largest PI sets received 20-30 instructions in portal case pa!  This is de-minimis.  The MoJ just cannot get the Musgrove principle out of their minds.

17. 17 Under settlement  So since 2010 victims who have been advised to take settlements in Portal cases have faced a high risk of under settlement  Low grade staff do the cases  No profit for the solicitor in fighting for the extra 10-20%  No advice from the independent bar  Professor Fenn analysed the Portal results and concluded under settlement of 6% was occurring on pain, suffering and loss of amenity alone (7/2012).

18. 18 Expanded Commoditisation: expansion of the Portal April 2013  The MoJ will expand the (liability admitted) portal in April 2013  Unless the APIL JR stops the plan  It will expand horizontally to cover EL and PL claims.  It will expand vertically to cover claims up to £25,000  The cuckoo is growing in the nest Mum’s looking small

19. 19 This commoditisation breaks the vital rule:  The fees set by the labour government in 2010 were fixed through negotiations between insurers and claimant lawyers  This coalition government has proposed much lower fixed fees (cut in half)  at levels requested by insurers at and since the Downing Street “summit” on 14.2.2012.  Submissions made by all claimant lawyers and the Law Society and the Bar Council in consultations since that time have been ignored  Fix the fees far too low and access to justice is blocked

20. 20 The Fourth Commoditisation – The Fast Track  The most recent consultation paper from MoJ proposes to commoditise Fast Track fees.  The same pattern is proposed namely:  commoditise (fix) solicitors fees  ignore the bar (namely do not fix barristers fees)  thereby abolishing access for victims to advice and pleadings from the bar

21. 21 What does the future hold?  Successive ministers for justice have been briefed to:  tackle the “compensation culture”  bring down the costs of personal injury litigation  with a view to reducing the costs of RTA and EL insurance  Whilst maintaining access to justice

22. 22 Steps taken/proposed so far  Government has:  Abolished referral fees;  Made success fees payable only by the injured victim out of damages;  Capped success fees at about 12.5% of damages  Made ATE insurance fees payable by the victims out of damages  Commoditised 95% of all PI claims – those in the Portal and on the Fast Track – by fixing fees.  Excluded victims from gaining access to advice from the bar by abolishing the disbursement basis

23. 23 Now the final threat- increase the small claims limit  Last week the Minister for Justice announced that he is considering increasing the small claims limit to £15,000 in PI  No legal fees are paid in small claims  Who will this affect?

24. 24 What’s involved in running a small RTA claim?  Get the police report (how?)  Interview witnesses and draft witness statements (time consuming)  Draw a plan  Write your own witness statement on liability and quantum

25. 25 What is involved in running an employers liability claim? For instance a manual handling or dermatitis claim:  Obtain and engineering report on the item lifted or the substance which caused the dermatitis (how? Who?)  Find the relevant safety regulations and identify which was breached  Interview witnesses at work  Obtain disclosure of policies and procedures of employer re manual handling or skin protection

26. 26 Small claims procedure  Find a the appropriate medical expert (where do I start?)  Instruct the expert  Get a medical report from the expert  Find the insurance company or the MIB (who?)  Write to the insurance company or MIB  Make the claim (what is a head of loss?)

27. 27 Suing  Draft the claim form (where do I get that?)  Get the court issuing papers (what?)  Copy them (where?)  Send a cheque for the correct amount (how much?)  plus the right number of copies  Send to the Central processing unit in Birmingham

28. 28 Getting to trial  Deal with directions  What are directions anyway?  Make part 36 offers  Sorry what are they?  Draft a schedule of loss… what?  Turn up at trial with no barrister  Meet the insurance company barrister and get cross examined  Have the case heard by a District Judge with no copy of Kemp on Quantum because the MoJ refuse to provide the DJ with their own copies.  Produce comparable cases for quantum (where do I find them?)  Lose or achieve under settlement

29. 29 Justice MoJ style Who could do this?  Middle class well educated people? Yes  Elderly people? No  Mentally disabled people? No  Socially disadvantaged people? No  Immigrants? No  Poor People? No Who cares about them anyway?

30. 30 The role of counsel in PI claims  Traditionally the role of counsel in PI claims has been to advise and to represent at trial  Barristers kill off bad claims and fraudulent ones  Barristers promote and fearlessly fight good claims  Barristers are independent, well trained and highly regulated  The involvement of Barristers in PI cases ensures that the law is followed and that settlements are at the right level

31. 31 The way forwards:  Simple  Drop the small claims increase  Fix fees in the Portal and on the Fast Track at fair average levels for solicitors based on a fair analysis of the work involved  Fix barristers fees payable in all cases (Portal and Fast Track) and require the losing D to pay  Stop worrying about the Musgrove “outsourcing” issue. It is de minimis.

32. 32 Multi-track cases:  The disbursement basis is still in existence in multi track PI claims  Success fees: APIL/PIBA 6 needs to be re-written for CFAs.  QOCS will affect the drafting  Difficult cases will have minimal success fees which do not match the risk  Many injured people will face no access to justice because the rewards will not match the risk

33. 33 The future  The junior bar will wither  Victims in 95% of PI claims will suffer barriers to access to justice and a substantial risk of under settlement  Courts will see an increase in litigants in person PI claims which are run and prepared in a shambolic way  Insurers will make more money … but will premiums come down?  In 3-4 years the MoJ and government will realise that they have really damaged the tort law system in England and Wales …. when a “Daily Mail” journalist suffers an injury and has to run his own small PI claim, then bleats about it in the newspaper.

34. 34 Conclusion  Commoditisation is workable in PI law if the vital rule is followed properly  If the vital rule is not followed:

35. 35 Thank You Andrew Ritchie QC 9 Gough Square