Like it or not – and many solicitors do not – costs management is here to stay – as Jay-Z might have said to Beyonce!”

Why do many solicitors still not like costs management? It’s a generation thing! It means more work (almost certainly for less pay) and the development of new skills. Old dogs/new tricks maybe but attitudes are changing not least as a result of client pressure.  Today’s clients are more sophisticated. They want to know what their case is going to cost them just like any other commodity. Also younger solicitors have grown up with the new regime and are untroubled by it.

Why do many Judges dislike costs management?  This may well be a popular misconception. Whilst it is the case that initially Judges did not enjoy costs management – these if I might say so were the older brethren – another generation thing perhaps?  The newer, more youthful Judges welcome it – at least that is what they say though had they said anything different the likelihood is they would not have been appointed!

Are the views of solicitors paramount? No they are not – access to justice for the ordinary men and women on the street (or bus) is the true acid test.

There is in fact one area where even Lord Jackson admits there are teething problems and that is clinical negligence particularly in London, though intriguingly he says he’s not to blame! Apparently he proposed a pilot scheme of pre-issue claims management which never got off the ground – not because there was no pilot but because there was no additional Judge appointed! Also he says he recommended an extra Judge be elevated to case manage clinical negligence cases but instead of one more, there are two fewer! As a result there is now a huge backlog and 9 month waiting list. The solution to this problem…well obviously don’t costs manage the big ticket cases as these cases manage themselves, proportionality never being a problem!

Though the present system of costs management has its flaws it is almost inevitable that in the not too distant future it will be seen as the norm and the current debate will be regarded as much ado about nothing – with apologies to Shakespeare, Lord Jackson and Mumford & Son!”

A number of perennial cookery shows on the telly continue to capture the nation’s imagination as amateur chefs and bakers struggle through gruelling rounds of increasingly intense competition. The contestants strive for perfection under the spotlight of the TV studio and to my mind, there is a similarity with the Professional Indemnity season. Time ticks by, the pressure rises before the timer pings on 30^th September and we all worry.

Not exactly a crowd pleaser but the PI renewal ‘game’ remains pretty much the same, what can the contestants do to make sure they don’t end up with ‘soggy bottoms’?

As a solicitor buying insurance, there are two parts to the process for the perfect PII proposal; an understanding of brokers/insurers and a well prepared proposal.

Insurers – come in two flavours, plain (unrated) and self-raising (rated). Each has its own part of the market, plain is usually looking for up to 10 partner firms whilst rated insurers often have limited appetite for sub 10 partners.

Brokers – again they come in many flavours, including producing brokers who find the firms, placing brokers who find the insurers and general brokers who do both.

So how do they all mix?

Bigger law firms usually have a relationship with a large broking firm. They agree a fee and the broker will supply all their insurance needs, these are usually long term and established relationships. The bigger (rated) insurers tend to prefer these relationships.

For the rest of us it’s a little more complicated because in recent years there has been a scarcity of affordable rated insurers looking at less than 10 partner firms, and the unrated market has risen in importance. We need to be able to separate the good from the rest, be guided by the chef de cuisine as buying the cheapest ingredients doesn’t always make for a happy mix.

Unrated insurers carry reinsurance (basically insurers insuring insurers) and looking at the reinsurers, some are rated, providing comfort as to security and comfort.

Back to the recipe, ingredients are next, no broker has access to the whole market, some insurers will only deal with brokers, sometimes only one broker, solicitors cannot access these markets directly. The core ingredient for a good PII season is the application form, a complete form will give the underwriter a quick way to see if they want to sample the menu, they will then produce the set of requirements (ingredients) they need to take the matter further.

Fortunately we have a good idea as to these ingredients:

• Application form, fully completed
• Full disclosure of claims history (6 years worth)
• Copy of firm’s headed paper (one sheet of paper)
• Supplementary questionnaires (e. g. conveyancing) if required
• Firm’s accounts (last 2 years)
• Explanation of any oddities

It sounds old fashion but simple things such as an easy to read application pack help the underwriter to quickly assess a proposal.

With all renewals on the same day (it will take time to spread throughout the year) underwriters need to distil the deluge of applications down to the ones they want to offer terms on, the easier we make it for them the better the chances of a competitive quote.

So the motto is clear, ‘Start early and prepare well to get a reasonable quote’.

It was an honour to be part of the JLSLA panel convened to discuss the key issues facing solicitors and clients when considering litigation. Our host was Leigh Callaway of Irwin Mitchell and the seminar was chaired by Caroline Field of Fox Solicitors.

For those not in the know the JLSLA is part of the London Solicitors Litigation Association and was formed to represent the interests of junior civil litigators. It provides a forum for learning and socialising as a way to support career development. As a lapsed member of the Manchester University Geography Society (MUGS!) and former eager participant in the Lloyd’s Under 35 ‘club’, too old now, I know the value of such organisations, or networks, is often overlooked. In talking to the committee members it was fascinating to hear the story of their emergence and ascendency from the senior organisation who probably wanted to hold the reins tight! But it is an advantage for their members to be part of an organisation dedicated to their experience level (c. 5 years PQE or less). So, if you are based in London and are at the start of your career then look them up lsla/junior.

We on the panel were given strict instructions to keep what we said focused on practicalities. The event was informal and the Chair guided us through aspects of our particular subject teasing out what she considered useful to the audience. Jo Box (Brick Court) spoke about the key considerations in respect of jurisdiction (Recast Brussels regs, etc), Leigh Callaway (Irwin Mitchell) discussed solicitors obligations under the SRA Code, David Kearns (Expert Investigations) worked through surveillance and observations, and my gig was a crash course in the Third-Party funding and ATE markets.

Apparently the seminars which focus on practical issues are always very well attended so there was a reciprocal benefit for me because it is useful to be reminded of the issues our solicitor clientele face and how we can best help in respect of the funding market.

Quite an eclectic mix of topics but common themes ran through what we had to say about our respective areas. The title of the event “Well begun is half done – how to get a flying start” was apt in that the panel all agreed that when considering jurisdiction or funding, prepare well and prepare early.

Yes there were drinks afterwards, not too different from MUGS!

To say that law firms are a little reticent about DBAs is a colossal understatement along the lines of ‘did we just scrape an iceberg?’! Our collective betters in the shape of the senior figures at the MoJ and judiciary are most excellent at enacting legislation with holes that make Swiss cheese look solid. The problem comes when law firms see the potential of DBAs but the risk of doing one outweighs the benefits. No one wants to be the guy or gal who falls in the hole and gets pointed at as the test case sails towards the Supreme Court. There be dragons. But like St George, we at QLP hate the idea of twiddling our thumbs and believe we need to get stuck in and slay a few dragons, so here goes.

Flicking through my idiots guide to the law and Latin, I can see that any right minded compliance partner would look at the Regulation and think ‘no meruit entitlement’ and think ‘yuk’ don’t like that. So the risk of breaching DBA regulations and earning nothing, because the contract is unenforceable, is a real threat which must be factored into any assessment. We think the potential pitfalls are principally:

• The perceived new conflict that now exists between the client and solicitor; is a DBA unsuitable when the outcome for the client may have been more advantageous under a CFA? It looks as if a CFA is cheaper in the short term but a DBA is better in the long term and therefore a sliding scale of return linked to the point of settlement could be the solution.
• The ‘Ontario’ model. This model is the only LASPO acceptable model and deviation from it will lead to trouble.
• The ‘hybrid’ DBA looks set to be barred and quite rightly too. The regulations make it clear that the indemnity principle applies and if your client has no liability to pay then nor does the opponent. ‘Hybrids’ stalk an unattractive hinterland that seeks perhaps to subvert a DBA by introducing the discounted CFA model within it, so be aware that the current mob at the MoJ don’t like anything unless it is ‘vanilla’.

Getting the basics right

Unusually for civil servants, what is required within a DBA document is pretty sparse, name the legal proceedings, when is the client required to pay, how much is the contingency, etc. It might be worth clearly defining terms, for instance what is meant by Costs, Expenses, Lose, Appeal, etc. Also, watch out for grey areas, for instance counsel fees are a cost but what about ATE premiums? Should be an Expense but is it…

Despite all the negativity, the future glows brightly for DBAs because they finally sever the link of remuneration being limited to the hours spent. Lawyers can now be rewarded on results not how much midnight oil was burnt. This is sensible and potentially good for litigation clients.

So we at QLP safely here in Chateau ten miles from the front line say to you lawyers, sally forth and give DBAs a go.

As always, we love feedback and would welcome any comments on this blog. Do you want more of the same or are there any areas of interest you would like our views as an independent broker.Get in touch at: contact-us

Following on from our blog of 12^th February 2015, My Lord Faulks QC (Minister of State for Civil Justice and Legal Policy) has made the following Written Ministerial Statement.

“The Government has made a priority of addressing the high costs of civil litigation in England and Wales. To that end, Part 2 of the Legal Aid, Sentencing and Punishment of Offenders (LASPO) Act 2012 reforms the operation of no win no fee conditional fee agreements. Those reforms came into effect generally in April 2013, but were delayed until April 2015 in respect of insolvency proceedings (WMS 24 May 2012: Column 94WS). This delay was to give insolvency practitioners and other interested parties time to prepare for and adapt to the changes.

 However, the Government now agrees that more time is needed. The Government will therefore delay commencing sections 44 and 46 of the LASPO Act 2012 forinsolvency proceedings for the time being. Accordingly, no win no fee agreements in insolvency proceedings will continue for the time being to operate on a pre-LASPO Act basis with any conditional fee agreement success fees and after the event insurance premiums remaining recoverable from the losing party. We will consider the appropriate way forward for insolvency proceedings and will set out further details later in the year.”

So, a short reprieve, we now have time to look at all current insolvency cases and at least get underwriters’ comments if not a policy.