Firms face costs cap in multi-track cases

Claimant law firms acting in multi-track actions may soon have to produce preliminary budgets and face costs capping rather than go through detailed bills assessments at the end of their cases, following a major High Court ruling.

The issue arose this month after defendant firm Hempsons asked for costs in a multi-party action concerning organ retentions - excluding those in the Alder Hey scandal - to be capped, both retrospectively from February 2003 and prospectively until trial next January.

Claimant firm Alexander Harris agreed to the exercise but said that by the beginning of February it had incurred costs of 1.45 million, and would need an extra 1 million to get to the end of trial.

The court and parties agreed that 155 per hour was a realistic average charge by Alexander Harris lawyers.

However, Mr Justice Gage - who was advised by Senior Costs Judge Peter Hurst - argued that the firm's suggestion that it needed 3,410 hours on the cases was 'excessive and disproportionate'.

Capping its total budget to 506,500 and its fees to 271,250, he admitted that the order was a 'novel procedure' but argued that 'prospective budget setting' came under the court's case management powers, despite no specific power in the Civil Procedure Rules.

Alexander Harris partner David Harris said the ruling was only the 'tip of the iceberg' as Master Hurst had indicated strongly that courts should seize more control over costs.

'The whole aim is to do away with detailed assessments,' Mr Harris added.

'It will ultimately lead to the situation where you have a tariff for the amount a case gets.'

Costs expert Professor John Peysner agreed the ruling signified a move away from the current system, with courts increasingly insisting that claimant solicitors acting in multi-track cases produce budgets before matters were off the ground.

'This should make litigation much more predictable and proportionate in terms of costs,' he added.

Mark Harvey, secretary for the Association of Personal Injury Lawyers, said the ruling was a 'sinister' blow to cases with principles rather than damages as the main issue.

'Group actions are often extremely complex and you end up with a David and Goliath situation, where Goliath has deep pockets and can pay anything but David can't.'

But Jason Rowley, president of the Forum of Insurance Lawyers, welcomed the development.

'Defendant solicitors have long produced budgets for their clients,' he said.

'Decisions such as this will encourage both parties to set budgets for all forms of litigation.'

Paula Rohan