With costs for low value PI claims being stripped to bare bones and further cuts on the horizon, maximising fixed costs is essential. In this article, Jasmine Murphy asks the question: Have we all been missing a trick? The trick in this case is another eighth of the costs allowed in fixed costs cases.
The fixed costs regimes, whether the case remains in the RTA or EL/PL Protocol or has fallen outside it, all provide for a 12.5% increase in costs1 if the claimant lives or works in parts of the London area and instructs a legal representative in that area.
Is the definition of ‘legal representative’ limited to solicitors? Or, does it include Counsel?
If it does include Counsel then the consequence is that even if the solicitors are based in Bolton, if the claimant lives in Bromley and Counsel is instructed who practices from chambers in Lincoln’s Inn, London the extra 12.5% of the costs is recoverable.
As far as I am aware there is no reported case on this subject2. Having discussed this issue recently with colleagues, one has since argued this point and succeeded in front of a District Judge3.
Paragraph 1.1(11) of the Pre-Action Protocol for Low Value PI Claims in RTAs states “’legal representative’ has the same meaning as in rule 2.3(1) of the Civil Procedure Rules 1998.” The Pre-Action Protocol for Low Value PI (EL and PL) Claims states the same at paragraph 1.1(15).
CPR 2.3(1) states “’legal representative’ means a:
(c) solicitor’s employee;
(d) manager of a body recognised under section 9 of the Administration of Justice Act 1985; or
(e) a person who, for the purposes of the Legal Services Act 2007, is an authorised person in relation to an activity which constitutes the conduct of litigation (within the meaning of that Act),Who has been instructed to act for a party in relation to proceedings.”
CPR 44.1(1) dealing with interpretation and application of costs rules also states ‘(‘Legal representative’ has the meaning given in rule 2.3)’.
Therefore the definition of ‘legal representative’ in both the Pre-Action Protocols and the CPR does include Counsel.
Entitlement to 12.5% uplift
The right to claim an extra 12.5% is set out in:
- CPR 45.11(2) for claims arising out of RTAs where costs are in dispute or infant settlement proceedings.
- CPR 45.18(5) for Stage 3 RTA or EL/PL claims.
- CPR 45.29C(2) for fixed recoverable costs in RTA claims that have exited the Protocol.
- CPR 45.29E(2) for fixed recoverable costs in EL/PL claims that have exited the Protocol.
- CPR 45.29G(2(b) for fixed recoverable costs in a RTA counterclaim that has exited the Protocol.
- CPR 45.29H (2) where there is a costs order on an interim application in a fixed recoverable costs claim which has exited the Protocol.
The criteria is the same in each provision and are:
- Claimant must either live or work in an area set out in the Practice Direction4; and
- Claimant instructs a legal representative who practises in that area.
The areas set out in paragraph 2.6 of Practice Direction 45 are: ‘… the area served by the County Court hearing centres at Barnet, Bow, Brentford, Central London, Clerkenwell and Shoreditch, Edmonton, Ilford, Lambeth, Mayors and City of London, Romford, Wandsworth, West London, Willesden and Woolwich and (outside London) the County Court hearing centres at Bromley, Croydon, Dartford, Gravesend and Uxbridge.’
12.5% of what?
There is a difference between the Stage 3 procedure and the FRC procedure as to what costs the additional 12.5% is calculated from.
In the Stage 3 procedure this extra amount is 12.5% of the Stage 1 and 2 and Stage 3 Type A fixed costs: CPR 45.18(5). Type A costs are the legal representative’s costs as opposed to Type B costs which means the advocate’s costs for attending the hearing.
This is a potential extra 12.5% of £750 or £93.75 in a claim up to £10,000, or 12.5% of £1,050 or £131.25 in a claim up to £25,000.
When it comes to fixed recoverable costs the 12.5% is calculated on a wider range of fees, depending on the value of the case and point at which it concludes. In RTA claims the extra amount is 12.5% of ‘… the costs allowable under paragraph (1) and set out in Table 6B.’ Table 6B sets out the following types of costs:
- The fixed costs figure; and
- A sum equal to a percentage of the damages; and
- Trial advocacy fee.
In EL and PL claims the provisions are the same but the figures are those set out in tables 6C and 6D.
For example, a £15,000 RTA that concludes at trial would generate fixed costs of £2,655 (fixed costs) + £3,000 (20% of damages) + £1,070 (trial advocacy fee) = £6,725. An extra 12.5% of those costs is £840.62.
Note too that the 12.5% applies to:
- Costs orders made on an interim application (CPR 45.H(2))
- Defendant’s costs (CPR 45.29F(5))
- A counterclaiming Defendant’s costs (CPR 45.29G(2))
Traditionally it has been thought that the 12.5% increase is only triggered if, as well as the claimant living or working in the area set out in Practice Direction, the solicitors practiced in that area. There is similar reflection in the guideline hourly rates for solicitors practicing in the areas listed in the Practice Direction which are higher than the hourly rates nationally. Therefore the purpose of the 12.5% increase seems to be to provide higher costs for solicitors practicing those areas.
There is also some support for that proposition in the way that the costs rules for Stage 3 hearings distinguish between legal representative and advocate and only provide for the 12.5% increase on the legal representative’s costs and not the advocate’s costs.
It is important though that this distinction is removed in fixed recoverable cost cases as the 12.5% is calculated from the total fees set out in the Tables, which include the trial advocacy fee.
As with many of the new costs rules, it is difficult to determine what was Parliament’s intention and what may have been inadvertently caused as a result of poor drafting. However, as the definition of legal representative as defined by the Rules includes Counsel, I consider that there is a good argument that if London Counsel is instructed in a fixed costs case then this would trigger the 12.5% increase which may otherwise have not been triggered if the solicitors do not practice in the London area.
In reality, the sums involved are small and unlikely to be the subject of an appeal giving rise to a binding decision. Therefore there is likely to be a variety of views of District Judges hearing these cases and no clear guidance.
Further, this issue will only arise in a small proportion of cases: a claimant living or working in the London area is needed as well as Counsel. Counsel’s involvement means that this issue will probably only arise in cases where there is an interim application or those that go to trial.
But in those cases, it is my view that instructing Counsel based in London gives solicitors based outside of London a good chance of recovering a further one eighth of their costs if the claimant is based in the London area. In these lean times and with no risk attached that is surely a chance that is worth taking.