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Bill or Breakdown of Costs to be required before payments will be allowed out of children and protected parties’ damages

Following a recent decision by the Civil Procedure Rule Committee (CPRC), in future solicitors will need to provide a Bill of Costs or, at the very least, a breakdown of costs when seeking payment of success fees and ATE premiums out of the damages of children or protected parties.

It was decided this year that the CPRC should reconvene to reassess the last amendments to CPR 21.12 and CPR 21 PD11 (last amended in April 2015) to see if any further revisions were required.

Three changes were suggested and accepted by the CPRC at their October meeting, (the minutes of which were only recently published). These changes are likely to come into force in April 2019.

PD21 para 11.1(1A)

This provides that an application for payment out of damages recovered pursuant to rule 21.12(1) may be made “where the Court has assessed the costs to be paid by the child or protected party”.  As success fees and ATE premiums are not recoverable, the “costs to be paid” are the costs to be paid by the Claimant to their own solicitor.

The CPRC found it “remarkable” that so many applications were made when no solicitor/own client bill had ever been lodged with the Court or served on the litigation friend.

It is necessary to determine the appropriate level of base costs payable under the terms of the retainer to be able to establish the reasonableness of a success fee.

It is very common for solicitors to apply a blanket 100% success fee uplift on base costs, even in the absence of a considered risk assessment.  The CPRC stated that “In the absence of any information as to what those base costs are, the success fee of 100% of an unknown figure cannot be quantified and thus a determination of reasonableness, as required by rule 21.12(1), is impossible.”

It was noted that there was no specific obligation under PD21 para 11.2(1) on either the solicitor or litigation friend to lodge a copy of the Bill of Costs.

Under para 11.3(2), there was no longer an obligation for a risk assessment to be undertaken prior to entering into a CA with a success fee, which seems incredible.  The CPRC noted the “considerable assistance” of the provision of such an assessment to assist in the determination of the reasonableness of costs incurred by the litigation friend.

The decision was therefore made to retain the risk assessment provision and the practice direction is to be amended accordingly to include “an express requirement for the lodgement of a copy of the solicitor’s Bill to their client – or, in the alternative, a breakdown of such costs.”

Rule 21.12(1A)

This rule will be amended as a result of an issue raised by Mr Justice Turner in Leddington v Kabul [2017] 3262 (QB) to remove the restrictions on the ability of a litigation friend, acting on behalf of an adult protected party, to recover costs and expenses from the Claimant’s damages.  These restrictions were only meant to apply to children and the rule will therefore be amended to clarify this.

Rule 21.12(8)

This rule is to be amended to clarify that the parties’ failure to agree disbursements in fixed costs matters should not prevent the determination of an application for an order under rule 21.12(1).

Conclusion

It would be our advice to start getting into the habit of preparing Bills on matters where a success fee or ATE premium is to be deducted from a child or protected party’s damages.

We also cannot express just how important it is to ensure that a carefully considered risk assessment is prepared.  We would refer you to our recent article featured in the Action against Medical Accidents newsletter (Assess the Risk or Run the Risk) on this very point click here to view.

Should you have any queries relating to the likely impact of these changes, please do not hesitate to get in touch with me.

Jenny Cawthorne – Costs Consultant – Partners in Costs

12.12.18