In A & M (both by their father and litigation friend MS) v Royal Mail Group (2015) Ltd, district judge Lumb, the regional costs judge, considered the twin issues of deductions of success fees and insurance premiums from children’s compensation.
The outcome makes worrying reading for those of us struggling with the harsh economic realities of costs of £500 per case.
This particular case was not complex – a routine road traffic accident progressed through the portal. In the judge’s words, ‘the prospects of success were so high as to be virtually certain’. He is right, but has the benefit of hindsight. Any RTA lawyer with a few years’ experience can point to those ‘virtually certain’ cases that have turned out not to be so, but no judge in the land would increase a success fee that had been set too low in a contested case.
And as fixed fees are now so low, complex risk assessment is a luxury few can afford, particularly as the 25% cap on damages will in any event outweigh the value of the success fee in all but the higher-value cases.
Lumb DJ expresses concern about applying the 25% cap operating to all intents and purposes as a contingency, rather than a conditional fee agreement, but surely for these lower-value cases is that not exactly what Lord Justice Jackson intended? By reducing the fees payable by defendants to such low levels, wasn’t the success fee meant to go some way to bridging the profitability gap?
And what about after the event? Today I received an offer of ATE on a liability-admitted child case with a premium of £2,400. Leading lights in the personal injury industry, the Law Society and the SRA all suggest that not insuring litigated cases is negligent. Yet, in light of Lumb DJ’s comments, how can I justify a premium of £2,400 to a litigation friend who is unlikely to recover it from the child’s compensation?
In this instance I’m with Lumb DJ, because what is the risk the litigation friend is insuring against? Failing to beat a part 36 offer? My local county court regularly refuses to approve infant settlements where it thinks the offer is too low, routinely ignoring the arguments of litigation risk. So, can we not protect litigation friends from the risks of costs by simply seeking approval on every part 36 offer made?
Lumb DJ may have given district judges much more work to do as a consequence by doubling or trebling the number of settlement hearings per case, but given the extent to which court fees have gone up, inversely proportional to the recovered legal costs, perhaps it is about time judges took some more of the responsibility and started case management properly.
Diane Parker, partner and head of personal injury, Atherton Godfrey, Doncaster