'Windfall' for defendant lawyers in new personal injury costs rules

New personal costs rules for fast track cases, coming into force on 31 July, could see defendant lawyers getting a "windfall" as they are paid the same for less work.

David Marshall, managing partner of Anthony Gold, said the rules would be applied to all cases that fell out of the personal injury portal, including where liability was contested or there was contributory negligence.

The RTA portal is being extended from 31 July to RTA cases worth up to £25,000 and to employer's and public liability cases worth the same amount.

Marshall described as "nonsense" and "wrong" the decision to apply the same set of fixed costs to defendants as claimants, given that defendant lawyers did "nothing like the same amount of work".

He went on: "It's important that defendants' costs are fixed, but you can't just say the work is identical without having the evidence base.

"This will incentivise defendant lawyers to make low ball-park Part 36 offers to get much bigger costs. I can't see any justification for setting them at a level which is not evidence-based and is higher than reality."

James Arrowsmith (pictured), associate at Browne Jacobson, who acts mainly for defendants, admitted that in many cases defendants' costs were lower, but the rules committee had taken a pragmatic view.

"Given that defendants will recover costs in relatively few cases, it is doubtful if it is worth doing the research and producing a new table of costs."

He said the new rules would "shut the door" on personal injury lawyers "delegating down cases to the most junior fee-earner possible and referring them to counsel to get the knowledge they require".

He said counsel's fees were not on the list of disbursements, suggesting that barristers could not be used routinely.

Marshall said that both the MoJ and the insurers were concerned to stop lawyers sub-contracting for additional work.

"The impact on the junior bar is potentially very serious," he said. "Solicitors are incentivised to keep work in-house and not to use counsel.

"The bar is looking at different ways of working. It might be cost-effective for solicitors to refer drafting to barristers whose fees are actually lower."

Arrowsmith said the rules committee had taken the "unexpected step" of prescribing fixed recoverable costs for interim applications.

"If they were not subject to the fixed recoverable costs rules, there would be an opportunity to generate additional fees on both sides," he said.

"The amount that can be recovered is limited, so a careful balancing exercise will be needed when making interim applications."

Arrowsmith said the formula used to calculate costs for interim applications was the court fee, plus 50 per cent of the type A and type B costs prescribed for quantum hearings at the end of the low value claims process.

Marshall agreed that it did not make sense to have a fixed costs procedure if there were a lot of costs outside it, but the precise figure for interim applications was the issue.

Arrowsmith added that although there may be "final tweaks" to the rules, the final shape was clear.