David Faithful says predictable costs judgement raises more questions than answers.
The Lord Chancellor recently announced that "predictable costs" would be piloted from this autumn. Some insurers have have said it will save them money. However the judgement is unlikely to prove so clear-cut.
Conditional fees
The first mistake is to assume that this scheme will see an end to conditional fee agreements. It is proposed that the new rules should bring about an end to the current legal challenges.
However the question must be asked: what does this mean to the costs matrix?
Weighting
It has been identified that the costs matrix would be unfair to firms operating in London. But is this fair to other firms operating in large cities? If the weighting is too generous then firms may be tempted to open claims units in London to benefit from the higher rate. Is this fair?
The opt-out
Another provision is the ability to withdraw from the predictable costs scheme. However multi-party claims could be problematic. Looking from the claimant's perspective if may be preferable to run the two claims separately and claim two predictable costs. However the penalty for failing to recover costs will be draconian.
Disbursements
The pilot is not intended to fix disbursements such as medical report fees. It has been recognised that with profit costs being fixed there will be a temptation to outsource work. Therefore future practice direction will have to be specific as to what is recoverable.
One example is the use of forensic accountants where the claimant is self-employed. Will a claimant's solicitor waste time wading through the client's books, when this will eat into the predictable cost recoverable? The judge is likely to come down on the side of the claimant.
There is a great deal more to predictable costs than meets the eye. We await with interest the deliberations of the rules committee.
