Costs hell awaits the unprepared lawyer in Britain's new civil litigation landscape ... Judge Docket spells it out to Mr Fees ... BMWs in danger of repossession ... Fallout from the Jackson reforms
If civil litigation practitioners, not just specialists, have not prepared themselves in England & Wales come next April 2013, they will be in store for a nasty and expensive shock.
There'll be no more turning-up for a routine costs management conference expecting the judge to rubber stamp their draft directions.
They will, instead, find themselves in front of a docketed judge trained by the Judicial College in "active" case management demanding that the parties justify the "proportionality" of their itemised and carefully calculated costs budgets in prescribed form, as approved by their respective clients.
"But My Lord, lawyers don't do budgets," exclaimed Mr Fees.
"Then they will need to learn, Mr Fees, or they will pay for it, literally," thundered Judge Docket.
The blood drained from Mr Fees' face. His sturdy legs wobbled and his rich baritone voice became weak and trembly. He felt himself shrinking and the court became a vast airless prison with the judge looming ever larger over him.
It was Mr Fees turn to experience the humiliating sensation of panic, despair and inadequacy in a public court.
* * *
LJ JacksonChapters 39 and 40 of the Jackson Report - Case Management and Costs Management - have not grabbed the headlines here as other parts of his seismic report have done.
However, they are now coming to the fore.
In his interview with Professor Regan in the New Law Journal (March 9) Lord Justice Jackson was asked:
"What should practitioners do to prepare for the big bang next April?"
His answer:
"They should start to think about costs budgeting and also to embrace technology."
If they have not exchanged and filed a proper budget in due time, then the costs management conference may well be adjourned, with the defaulting party paying the costs summarily assessed and payable within seven days.
If both parties default, then wasted costs orders may be imposed on the practitioners.
Mr Fees rallied in defence of this monstrous attack upon his noble profession.
"But lawyers are no good at maths; we leave that to expensive accountants, your Lordship, as you know from your time in practice. Budgets are for housewives and companies. Our fees are the most reasonable anywhere. This is not a lawyers' Inquisition before being burned at the stake."
Judge Docket shot back:
"So you would prefer the Monty Python 'comfy cushions' instead then? If you want to get paid at the end of this case you will need to have prepared a budget. You will have to persuade me using your very best advocacy that your budget is reasonable and proportionate to what is at stake. Think TINA (there is no alternative), Mr Fees."
"Very well, I can see that it is in my best interest to fill in the form but it will take time and of course I can charge my client for that."
"No, no, no, Mr Fees, as a lawyer you are obliged to provide regular, justifiable, reasonable and truthful budgets to your clients. The itemised form is on the Justice website in simple electronic format for you to fill in. It auto calculates just like Excel and it's easier than doing your online tax return."
"TINA," sighed a resigned Mr Fees.
* * *
Once they have duly complied with the rules and directions, the parties will have to be prepared to justify their budgets and, if necessary, to argue about their opponents' budget as they regularly do before me on a summary (not detailed) assessment of costs.
The judge will then approve or not approve (cp disapprove) the respective budgets, recording that in the order, but giving the parties permission to seek approval of any revised budget should the justifiable need for revision be demonstrated.
Obtaining approval is very important for lawyers and their clients.
Its effect under the Practice Direction 51G is that any judge assessing costs:
"(1) will have regard to the receiving party's last approved budget; and (2) will not depart from such approved budget unless satisfied that there is good reason to do so."
Therefore, if the budget of the receiving party is approved then its costs are likely to be paid in full without delay or further later assessment at the end of the case.
On the other hand, if not approved then their costs will be subject to detailed assessment by a costs judge, with the expense of that process likely to be upon the defaulting receiving party.
Good costs management is like any project management exercise in any business.
Why should lawyers be exempt and why do they not receive or seek any training in it?
I suggest that practitioners seek the advice and training of someone like Liz Harris of Allocatur in Melbourne.
She kindly flew over to Blighty last year to mesmerise an audience about costs management.
Probably, the best form of training is case study role play in-house with Peter Lyons of CPD Training.
At the very least you can make a fool of yourself in front of him rather than in front of your clients and ending-up with a wasted costs order from an irate judge.
As Oscar Wilde said: "Experience is the name you give to your mistakes."
Best to make cheap mistakes and in private. Your insurers like that and may reduce your premiums if you are properly trained to avoid errors & omissions.
* * *
The first task for any lawyer presented with a case by clients is to ask what budget they have for it and then to tailor a budget that is "proportionate" to what is at stake - the amount of money and importance of the case and what the client can afford, knowing that their adversaries will, or ought, to be doing the same.
By the time of the CMC, each party will know the costs already incurred, what the issues between them are and what electronic documents are to be exchanged.
Before the CMC has taken place the parties must discuss e-disclosure and how it is to be done economically.
Budgets can therefore be fairly robust by this time with the experienced litigator in charge of the case factoring in how much will need to be spent, providing it proceeds normally, stage by stage, to trial.
Like a quantity surveyor, a lawyer will have to assess what resources are available, the grade of fee earners to be deployed to undertake tasks and estimate the number of hours they will take and obtain competitive estimates for outsourced work such as experts, counsel and e-disclosure providers.
Contingencies that depend on anticipated potential situations (e.g. the need for experts or electronic disclosure technologists) or upon the activities of their opponents (e.g. specific disclosure or other applications) should also realistically be provided for.
The person in charge of the case then has the task throughout of working to that budget - otherwise there will be a very unhappy client or law firm that will have to pay for the excess.
* * *
HH Simon Brown QCSo how do I, as a judge, go about my job, you may ask? What am I looking for?
At the CMC, which is after all a conference, I explore within the hour allotted, how the case is to be handled by both parties.
I look at the case surgically to find out what is really in dispute via a short list of issues distilled from what ought to be "concise" particulars of claim and the "comprehensive" response to that document.
All of that is spelled out in the rules (CPR 16.4 and 16.5).
Then I can see how the whole case might be more efficiently and quickly disposed of.
I will often ask, "what is that you want me to try?"
More often than not, the parties want me to tell them what they have agreed between them a few years ago.
Quite frequently, the answers will be found, often by themselves, in a short email chain.
In the event they cannot agree, then a short (relatively) inexpensive trial of a preliminary issue on the terms of the contract, with restricted lawyers working on the case, will yield a result that can leave the parties to work out the rest for themselves or reach a mediated settlement.
I look at the biggest "Manhattans" in the budgets to see where the expensive lawyers' hours are to be put in. Normally it's disclosure and, oddly enough, witness statements, which are supposed to be in the witnesses own words, not lawyer speak, and of course trial costs.
I will see which areas can be cut because they do not take the case any further.
I will query why lawyers at high-charging rates are doing routine work, such as handling documents.
I will inquire about the real need for experts, particularly expensive accountants, when lawyers who appear in a mercantile court should be able to do the quantum calculations.
I will ask if quotations from experts have been obtained. I will ask how many documents are likely to be relevant i.e. adverse or supportive of the parties' cases and enquire how electronic documents are to be disclosed and then exchanged and produced to the court.
In many cases emails have to be de-duplicated and re-ordered or left in electronic form and invoices, for example, should normally remain in electronic form.
I expect the lawyer to be fully trained and conversant with e-disclosure and the rules for it.
I look to see if the volume of paper can be restricted. I will look at the charging rates and the grades of lawyers actually doing the work - senior partners never do much work on cases, they are client meeters and greeters and delegating firm managers.
I will enquire about apparent double manning of lawyers and what look like excessive working hours.
If the budgets look too light, too high or too far apart, I will normally give the parties the opportunity to exchange and submit revised budgets for subsequent approval in writing.
* * *
"Oh judge, please stop. You are making me dizzy. I am a lawyer, not a businessman or an accountant."
"The business of the law is the business of lawyers, Mr Fees, is it not?"
"Quite, quite so, me Lud."
"You are lucky you are not practising in the Equity Court in New South Wales, Mr Fees. Practice SC Eq11 has just abolished disclosure unless it is necessary. And even then, the court can cap your costs of doing it. The judges there are fed-up being swamped and being left to find the needle in the haystack for you. There are only a maximum of 10 determinative documents in any case. The 10 DOCS rule, they call it."
"But that's just not fair! We make our money pleading everything and in reviewing millions of documents.
Lots of lawyers will lose their jobs. Law firms will close down.
In my last case - a large one involving £1 million - it was necessary to employ seven lawyers to spend 2,713 hours reviewing electronic documents that had to be printed out to be read properly and then printed out six times - one for each advocate, one for each solicitor, one for the judge and one for the witness box - because the court requires everything in paper and for nothing to be missing or adverse inferences maybe drawn or we might get sanctioned.
The bill of £4.1 million kept my firm afloat and enabled us to open a large new expensive office in the centre of the city that is necessary for us to thrive."
Judge Docket was unmoved:
"That does not sound proportionate to me, Mr Fees and, anyway, who is able or foolish enough to pay that? You will never get any repeat business and you will spend a fortune on marketing for new clients.
"You would not get such a budgeted figure past me and you would be wasting your time doing useless work. No costs judge would allow that.
"No, the days of Doc Handler and P Hot o'Copier are over in Oz. They are redundant in the electronic non-disclosure 21st century and they soon will be in old Blighty. You need to find new wheezes and Spanish Practices if you can, or modernise and earn an honest living in the brave new world."
"Its just not fair, My Lord."
"Wrong again, Mr Fees. Dealing with a case justly under the Overriding Objective of the Civil Procedure Rules, requires 'saving expense' and dealing with the case in ways which are 'proportionate' to what is at stake.
"It's the rules, Mr Fees. It is gross negligence for a civil litigation lawyer not to know or follow the civil procedure rules - see Earles v Barclays Bank.
"You need to recite the overriding objective every night before you go to sleep Mr Fees, if you are to be a successful civil litigator from now on.
"My duty is to 'actively' manage cases and to follow the rules. You are here to help me, Mr Fees. Do I make myself clear?" boomed Judge Docket.
* * *
Since the introduction of costs management in Birmingham, the number of new case issues in the court has blossomed.
I am told that court customers, i.e. the litigants themselves, like costs management as it diminishes, or at least defines, their risks and enables them to make early assessments of their cases.
According to my clerk, they also appreciate the website access to the court and its electronic forms, its efficient working and speedy service.
Those they instruct do not regard it as "capping" but an endorsement of their reasonable costs, helping them get the final bill of their fees actually paid sooner and in full, without the need for detailed assessment.
Counsel appearing before me have skilfully used the itemised budgets when arguing about the need for experts or whether or not it there should be a trial of a preliminary issue.
For my part, I really cannot conceive how you can effectively case manage to meet the overriding objective unless you have an informed idea on how much it will cost to order the parties to take particular steps in the litigation.
How the case is to be tried is the responsibility of the judge and costs are a crucial feature. It is, after all, the signature of the judge at the bottom of the order for directions.
If firms are to survive and thrive, as they have done in the mercantile courts, costs management does require a cultural shift in attitudes to litigation and budgetary training by civil litigators.
The days of putting in a bill at the end of a case based on a multiple of billable hours x £x per hour and expecting to be paid are over.
No ordinary person or SME in this country using the civil courts can afford it - everyone here is skint.
Lawyers will be too if they do not modernise. The BMW will be repossessed, along with the house and the drive it was parked on.
* * *
"Please do not sob, Mr Fees. Go and see the CPD doctor and get yourself properly trained. Then you can come back and help me," said sympathetic Judge Docket.
"I am very much obliged, my Lord," he snivelled, bowing so low that his head struck the lectern in front of him.
"Costs in case - you are in luck this time Mr Fees. Not your usual wasted costs order. Call on the next case."
Mr Fees grabbed his four bulging lever-arch files and hurried from the court before the judge could change his mind, but his Lordship's thoughts and gaze were elsewhere.
"Ah, how nice to see you Miss Purrfect. You should have been here earlier to show poor old Mr Fees how it is done. I have read on-line your skeleton, the CMC bundle and am pleased to see from your carefully considered budget that you can do this case well for such a reasonable amount. I need not trouble you. Budget approved and directions as sought.
Well, that completes my list on the dot of 4.30pm. It is high time for a round of golf."