Fair pay for litigation

Fraser Whitehead argues that fixed costs will happen, and urges solicitors to get involved in the debate over how they will be implemented

Prompted by widespread concern about the costs system, the recent Civil Justice Council costs forum engaged in some radical thinking - and this included the concept of fixed costs.

A move in that direction is likely to be controversial.

Some see it as an imaginative solution, others a disaster, jeopardising efforts to make litigation profitable.Proportionality is the driving force behind the concept of fixed costs, which thrives on the chaos of conditional fees.

The Callery appeal fuelled the uncertainty, but this gives us an opportunity fully to analyse the potential of fixed costs.The key attraction of fixed costs is the certainty they will restore to the business process, and we must remember we are engaged in a business process.

We measure the probable 'value' of a piece of litigation and allocate appropriate resources, hoping to get a return.Historically, our perception of value focused on hourly rates, not time spent.

The perception was that as long as time was reasonable, that was sufficient.

Of course, 'reasonable' time was defined from the lawyers' perspective.That is no longer valid.

In a competitive world, the buyer rules and the efficient survive.

The costs shifting rule gave protection from the reality but the additional liabilities provisions of the Access to Justice Act 1999 introduced a more challenging dimension and the drive towards proportionality completes the circle.

The real world demands change.Meanwhile, disputes on costs are increasing.

The reported decisions on proportionality emphasise that while there is a core of minimum costs in every case, thereafter we must be influenced by what is at stake and that inappropriate styles of litigation should cost us dear.

For the vast bulk of litigation, fixed costs, if at the right level - and that is an important if - ought to be in everyone's interests.But it will demand three things, particularly within the inevitably expanded fast-track regime.

First, that we de-complicate the issues to match what is at stake and work in different ways.

It means more skill at the beginning where we assess and evaluate the legal issues, but much less in the subsequent commoditised process stages.

It involves lawyers being involved again at the end to ensure the deal is right.

That is just good business.The other problems are more difficult.

The first concerns professional standards.

If costs are capped, the amount of work will be limited.

Where the client accepts the cap, the client must be advised that the professional responsibility of the lawyer will be adjusted to a lower standard appropriate to the cap.

Equally, those who indulge their lawyers to outspend and circumvent a good claim against them must be penalised in costs.And fundamentally, what is a fair level of remuneration for fixed-costs work? It is glib to respond with 'an amount that is fair and reasonable'.

Almost certainly it also must be an amount that is regionally focused.In the process of benchmarking costs, there has been recognition of the need to move from a mass of regional rates to four or five national bandings.

This may have interesting implications for where we practise.

But the most important questions are what is the amount of work that will be required in an average case and, linked to that, what is the appropriate profit margin on the core costs and most importantly, how are these issues going to be decided and by whom? Fixed costs are going to happen.

Elsewhere, and indeed nearby, the professions welcome them.

Many law businesses currently undertaking litigation work accept less than a reasonable rate of return.

That must end.

In embracing fixed costs, we must enter into a debate and influence the outcome.

Our role in determining the amount of work and the rate of return must be decisive.Fraser Whitehead is chairman of the Law Society's civil litigation committee.

The views expressed here are his personally and not necessarily those of the committee