The Remains of the Day

“What is the point of worrying oneself too much about what one could or could not have done to control the course one’s life took? Surely it is enough that the likes of you and I at least try to make our small contribution count for something true and worthy. And if some of us are prepared to sacrifice much in life in order to pursue such aspirations, surely that in itself, whatever the outcome, cause for pride and contentment.”
― Kazuo Ishiguro,

Back in the late 1990s, I recall undertaking a road traffic accident trial in the Lincoln County Court. It was a three handed affair. Three barristers including myself. Three solicitors clerks sitting behind each of us. A recorder, resplendent in his Queens Counsel robes. The gold buckles glittering on his well polished black monkstrap shoes. Gold again, on the nib of his Mont Blanc fountain pen, hovering and poised to descend on the heavy pages of a red hardback notebook, ready to record page after page of neatly flowing script, in rich black ink.

After a day’s labour of evidence and submissions, judgment was duly solemnly given for my client. The amount at stake? Less than £5000. I remembered to ask for my costs on scale 2, probably not appreciating at that time what “costs on scale 2” meant.

The reason that I recall this largely unmemorable and long forgotten trial, is that it struck me at the time that a lot of forensic firepower was being deployed to reach a “just” result and I wondered at the time why that was so and why it was seen as “the norm”.

The costs of all three parties were probably collectively five times the amount in dispute.  Nowawadays, a case like that would be knocked off in short order in the Small Claims track, or at a stage 3 hearing. Is the end result more or less likely to be “just”? I suspect that the same result of that long forgotten trial would have obtained today, but at a fraction of the cost.

Although I usually deprecate “war stories”, I am telling you this because I want to make the point that because things are currently dealt with in a particular way, does not mean that is the best way, or the most efficient way or even a way that will endure to the next legal generation.

There is a real and continuing debate as to what degree, the costs of procedural justice, that is the costs caused by the provisions of the procedural rules within which a claim is litigated, actually add to the substantive justice of the result. A more slimline set of procedural requirements should reduce costs and so arguably increase access to justice overall, provided it does not markedly impair the quality of the substantive “justice” meted out in litigation.

Thus it is with the “costs of the costs”. On summary assessments of costs in the Commercial Court, on a daily basis, a schedule of £150,000 may be reduced to say £110,000 after 15 minutes perusal and some pointed comments from the High Court judge.

Would the prospect of reducing that summarily assessed sum to £100,000 or increasing it to £120,000 to obtain a more perfectly “just” result, justify the parties spending collectively £40,000 in detailed assessment costs, starting a detailed assessment, drafting a Bill, Points of Dispute or Replies, and spending 1 to 1.5 days in front of the Master?

If not, then what is the point of the entire detailed assessment process with its layers of costs?

It is with these thoughts in mind that I turn to consider the issue of fixed costs which is now very much on the horizon. Although lawyers will tend to regard fixed costs proposals with suspicion, if their fixed costs were fixed at £1 million per case, their resistance would quickly wane. It is not the concept of fixed costs which is obnoxious per se, but rather a concern over the level they are set at, coupled with a realistic cynicism that figures initially set for fixed costs tend to rust into position, without review even for inflationary increases.

Moreover, there is a belief, probably well grounded in part that fixed costs tend to favour the interests of institutional defendants, who are usually paying costs rather than recovering them. Amongst the biggest of institutional defendants, with a compensation bill that dwarves that of any insurance company, is the state and its various emanations. Thus the statement of Lord Wolfson in the foreword to extending-fixed-recoverable-costs-civil-cases-government-response can be treated with reserve:

One area in need of further reform is costs, and particularly those that a losing party has to pay the winner. This is especially true in lower value claims which people and businesses are most likely to face, either as claimants or defendants. These cases, while no doubt important to the parties themselves, are for relatively low damages and there is currently no certainty as to the costs that may be recovered or paid. Without being able to predict what the costs may be, it is difficult for either side to take an informed decision on the appropriate way forward. If cases are to be litigated, then we want them to be resolved as early as possible, with costs as proportionate and as fair to both sides as possible.

But there is more to the concept of fixed costs than narrow sectoral interests.

I would  like to propose that with forethought and the correct systems in place, fixed costs can be made to “work” and may prove good news for lawyers, whilst also increasing access to justice. The first reason this may be so, is that counterintuitively fixed costs may actually serve to fan the flames of litigation, whilst creating more work for lawyers.

If a potential party knows their potential downside is controlled and limited, then their appetite for litigation may be strengthened and disputes will be litigated, that would otherwise be left in the circular filing cabinet.

Secondly, the ATE insurance market in this country remains limited, and vast swathes of litigation are uninsurable, either because the ATE market does not see them as an attractive proposition, or the premiums are simply too excessive for the protection offered.

But a settled and predictive scheme of fixed costs may enable ATE insurers to identify their potential liabilities with greater precision, in a way that goes beyond blanket limits of indemnity in the policy and boost the ATE insurance market. This in turn again, will make it more likely that disputes will be litigated as ATE insurance may be more readily available or at least cheaper.

Thirdly, though this is very much a “stick” than a “carrot” in order to run fixed costs cases properly, a firm cannot have the luxury of too many touches on a file or otherwise bleed time on a case. The very existence of fixed costs should be a spur to greater efficiency, investment in information technology, creativity in claims handling and lean working practices.

And fourthly fixed costs represents a chance to reboot the procedural rules: as part of any fixed costs regime, there should be a bonfire of the accompanying procedural vanities, so that unnecessary layers of work are taken out of the system and the fixed costs are allocated to those areas of work which actually add value to the case. And the first and most obvious log for the fire, will be costs budgeting for low value multi-track cases.

In the next few posts, I shall consider in more detail the government’s proposals, and to what extent these hopes are likely to prove well, or ill, founded.

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