Tuesday 12 February 2013 by Rachel Rothwell
With the Court of Appeal’s recent judgment in Henry, much attention has focused on the new costs budgeting rules coming in this April as part of the Jackson reforms. But there is another change on its way that will also affect lawyers and costs professionals quite significantly – and its impact has just been ramped up by a factor of three.
From April, the ‘provisional assessment’ (PA) process that has been piloted in selected courts in the north-east will be implemented nationally. The scheme is designed to cut down on the expense of dealing with legal costs by ensuring that bills below a certain threshold (£25,000 in the pilot scheme) are assessed on paper in the first instance. If a party wants to dispute the court’s provisional assessment, it can request an oral hearing to appeal it - but if it is not then awarded an increase of at least 20% on the costs it was allowed under the PA, it will have to pay the costs of the oral hearing.
There have been mixed reviews from practitioners on the ground who have been through the PA pilot process, with some questioning the fairness of outcomes under it. But the powers that be have considered it successful enough to be rolled out nationally; and lawyers have been given plenty of notice that it is coming. What has only recently come to light, however, is that when the scheme is extended across the country in April, there will be a huge jump in the threshold of bills to which it will apply – from a maximum bill value of £25,000 in the pilot scheme, up to a whopping £75,000.
The first I heard about this was when it was mentioned a few weeks ago by costs master Haworth of the Senior Courts Costs Office, at IBC Legal’s Solicitor’s Costs Conference (I’ve written a report of the conference in February’s edition of Litigation Funding). Haworth mentioned that the reason for the threshold being ‘jacked up’ to £75,000 was unknown to him, and he questioned whether, with the inevitable increase in workload it would entail, the SCCO would still be able to meet its target of dealing with PAs within six weeks.
Should lawyers be concerned about this change? If they care about recovering the full extent of their costs, then yes. The rise in the threshold means there is suddenly quite a lot more at stake under PA. As costs expert Sue Nash at Litigation Costs Service pointed out to me recently, if you put in a bill for, say, £50,000, and the court provisionally assesses it at only £35,000, you have a difficult choice to make. You would need the bill to go up to £42,000 at oral hearing to avoid having to pay for the costs of that hearing. If you achieve only, say, a 10% increase, you could actually end up worse off.
Much will depend on whether judges are getting things right at the PA stage when the scheme goes national – but, as I’ve blogged before, not all judges appear to be terribly interested in costs.
It is worth noting that Jackson himself only ever recommended that PA should apply to bills up to £25,000. But if government did want to extend it, it could have started by implementing the national scheme on the same basis as the pilot – with the £25,000 threshold – but made it clear that, if PA proved to work well over a set timeline, then the threshold would rise to £75,000. That way judges would have the chance to get to grips with the scheme before it was extended, and lawyers would have fair warning of what was coming.
Wouldn’t that have been a more sensible approach?
Rachel Rothwell is editor of Litigation Funding magazine, providing in-depth coverage on costs and the financing of litigation.
