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COUNSEL’S FEES
AFTER APRIL 2013
ANDREW RITCHIE QC
9 Gough Square
LONDON
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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
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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
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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
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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:
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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
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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
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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
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Commoditisation: the effects on
Claimant lawyers work
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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
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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
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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?
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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
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The First commoditisation:
The Fixed Recoverable Costs scheme
2003
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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
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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
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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).
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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.
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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).
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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
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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
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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
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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
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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
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Now the final threatincrease 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?
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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
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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
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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?)
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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
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Getting to trial
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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
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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?
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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
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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.
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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
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The future
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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.
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Conclusion
 Commoditisation is workable in PI law if the
vital rule is followed properly
 If the vital rule is not followed:
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Thank You
Andrew
Ritchie QC
9 Gough Square
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