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Fee disputes to increase under Jackson reforms

Demand for cost budgeting on the rise, survey finds

13 June 2013

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By Manju Manglani, Editor (@ManjuManglani)

Fee disputes between solicitors and clients are set to increase as a result of the Jackson reforms.

That’s according to the UK Association of Costs Lawyers (ACL), which found that 80 per cent of the 128 ACL members polled expect to see more disputes between solicitors and clients over success fees in conditional fee arrangements (CFAs), up from 69 per cent last year.

The changes to the Civil Procedure Rules, which incorporate the civil litigation reforms recommended by Lord Justice Jackson, became effective on 1 April 2013. Under the reforms, success fees in CFAs and after-the-event insurance premiums will no longer be recoverable, but the use of contingency fees will be extended.

Nearly three quarters of respondents predict that the reforms will discourage solicitors from taking on less straightforward cases (up from 54 per cent in 2012), and 48 per cent said that clients will be discouraged from bringing cases (up from 31 per cent). Forty-seven per cent thought the changes tilt the playing field in favour of defendants (up from 42 per cent).

Overall, confidence has increased, as the number of respondents saying the Jackson reforms would lead to them reducing their practices has halved to 20 per cent. Twenty-eight per cent predict that their practices will grow as a result, and almost a quarter said they will take on more staff.

However, more than half (55 per cent) said they intend to diversify into other practice areas as a result of either the Jackson or legal aid reforms, as well as to increase sales and marketing, while a fifth plan to do more advocacy.

Nearly half of respondents (47 per cent) have seen demand for cost budgeting increase over the last 12 months, and 91 per cent expect it to increase in the next year, most by a significant amount.

The failure to keep thorough records was cited as the most common mistake made by solicitors when dealing with costs, followed by “thinking they can do it themselves”, using costs lawyers only when things have gone wrong and using unqualified costs draftsmen.

More than half (55 per cent) said they had experience of an unqualified costs draftsman inflating their bills. Poor understanding of the law was cited as the main difficulty with unqualified draftsmen.

ACL chairman Murray Heining said: “It is inevitable that solicitor/own client disputes will re-emerge and solicitors need to get used once more to ensuring that they have their records in order to counter any challenge they may receive.”

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