Master of the Rolls slams Irwin Mitchell's 'out of kilter' costs
Irwin Mitchell has been forced to defend its pricing policy after the Master of the Rolls Lord Neuberger highlighted a case in which it charged six times the amount paid out to its client.
Lord Neuberger
Ruling in favour of the firm in the widely anticipated costs case, Simcoe v Jacuzzi UK Group (16 February 2012), the MR said “something is out of kilter” when the firm had managed to amass costs of £75,000 when its client, plumber Adrian Simcoe, had received a £12,500 settlement for a personal injury claim.
Giving the substantive Court of Appeal (CoA) judgment Neuberger MR stated: “Unless this is an exceptional case, the fact that, without even incurring the cost of as trial, it cost the claimant nearly six times as much to pursue the claim as it was actually worth suggests that something is out of kilter in at least some parts of the civil justice system.”
Irwin Mitchell, however, contended that it was the defendant’s solicitors at Berryman Lace Mawer who had driven up costs “through unnecessary delays and tactics”.
“The defendants refused and dragged this case all the way to the door of the court, settling one working day before the trial was due to begin,” the firm said.
It continued: “If the defendants had listened to the expert medical reports, then this case could - and should - have been settled much earlier. The fees would have been much lower and our client would have been able to move on with his life much more quickly and not have this dragged out unnecessarily over three years.”
Berrymans Lace Mawer responded: “The amount of costs in relation to damages in this matter is not uncommon and highlight the issues within the current costs regime. We agree with the Master of the Rolls’ comments and welcome reform.”
The MR’s comments were made in a judgment on the appeal brought by Irwin Mitchell’s client Simcoe, against a decision regarding the date upon which interest became payable on costs which the respondent had been ordered to pay.
The CoA panel of four, made up of Neuberger MR, Lord Justice Hooper, Lord Justice MacFarlane and Master Gordon Saker, was asked whether the interest ran from the date the order for costs was made, ‘the incipitur date’, or the date on which the costs were subsequently assessed or agreed, ‘the allocatur date’.
Lawyers said with interest rates set at 8 per cent substantial sums are at stake in larger cases.
The long-standing position, which has been reinstated in this judgment, is that interest runs from the incipitur date - the date on which the order for costs is made.
Neuberger MR stated in his judgment: “The date from which interest ran on an award of costs in the county court in favour of a successful litigant was, by reason of article 2 of the County Court (Interest on Judgment Debts) Order 1991, the date the order for costs was made, not the date on which costs were assessed or agreed.”
Readers' comments (17)
Anonymous | 21-Feb-2012 11:39 am
"Judges enter real world for small amount of time, don't like it, retreat back to peaceful cloisters"
No change there, then.
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Anonymous | 21-Feb-2012 11:51 am
While I agree to some extent with the above commentator about judicial interference in cases surely it is about time someone took control of these huge fees.
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Tom Blackburn | 21-Feb-2012 12:26 pm
Has it dawned on IM that perhaps this wasnt the best case to run the 'incipitur' interest argument on?
Own goal perhaps...
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Rural Bliss | 21-Feb-2012 1:01 pm
These fees are utterly ridiculous, particularly bearing in mind that this represents the amount for which IM settled - God knows what their original claim must have been. Whatever happened to the `proportionality' requirement?
It's all very well IM whingeing about delay on the part of the insurers. If this happens it's in their hands to drive the case towards trial, but it's obviously a lot more profitable just to generate letters, phone calls and emails at £27 to £50 a time (according to the report they were charging £270 to £500 per hour - what a joke!) complaining about the delay.
It's precisely this type of greed that has killed the goose that laid the golden egg and driven insurance premiums to the level they are.
Claims like this are dream propaganda for the reformists, and I'm afraid no rational person can disagree with them that this kind of exploitation must be stopped.
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Wigged Wonder | 21-Feb-2012 1:44 pm
I think we're all agreed that "something must be done", particularly when all posters are aware of all material background facts.
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Tom Blackburn | 21-Feb-2012 1:52 pm
Insurance (motor, home and contents, building, employer etc) are at the level they are, due to people (insurers and their shareholders) fixing them at a profitable level.
Please do not think its legal costs that are responsible for insurance companies making money out of insurance. To believe the same would be akin to believing Mr Clegg when he claims he only agreed to the coalition on moral grounds to keep the Conservatives in check!
PS - Father Christmas isnt real either.
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Anonymous | 21-Feb-2012 2:25 pm
Firstly, I am sure I saw Father Christmas in The Lawyer this week.
Secondly, of course this kind of publicity is bad for the profession and high fees need to be cut down. But it is wrong to blame high legal fees for motor insurance rates as the MOJ seems to be ready to concede at the moment.
Claimants and defendants and INSURERS are responsible for the state of the personal injury market and, more often than not, it is an insurance company which is sat behind the litigant. What about the costs of rehabilitation, medical reports, disclosure etc etc, the MR is right, there is something out of kilter and the sooner something is done about it in a fair and constructive manner the better,
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John Bower | 21-Feb-2012 2:37 pm
I can only assume Rural Bliss is a defendant lawyer-each and every day I experience time wasting and cost building exercises perpetrated by Defendant lawyers. If Defendant lawyers want to take up each and every point and want a response to their letters/enquiries then they have only themselves to blame for increased costs.
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Anonymous | 21-Feb-2012 3:14 pm
Sorry, even as a Defendant costs lawyer who likes nothing more than to see Claimant's twist in the wind re their costs but, this was a rum do by the MR. The £75k agreed costs included the success fee (67%) and also the ATE premium. As any fule kno for proportionality arguments these additional liabilities should NOT be included and the MR knows this.
IM have not shot themsleves in the foot (and I never thought I would be defending IM re their costs!) but have been subject of an unwarranted pincer movement
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Shaun Matterson | 21-Feb-2012 3:54 pm
Well it is about time that Irwin Mitchell get fingered for doing this 'again', it is any wonder that this sector is under fire. I agree with comments about IM shooting themselves and every over PI / Clin Neg firm. Once again well done 'Irwin Mitchell', a class act law firm!
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Anonymous | 21-Feb-2012 8:30 pm
What does lord neuberger know about running a business
or a solicitors' practice? Precisely zero. Judges should be kept out of costs as they know damn all.
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Anonymous | 21-Feb-2012 11:46 pm
@ Rural Bliss
Insurers make more money from referral fees than they pay out in legal fees and yet they still drive up premiums using an easy target of blaming solicitors costs. Insurers are only trying to drive down costs now because the nest egg of referral fees is under threat.
People seem to forget that insurers are the ones pushing people to claim and often refer them to the solicitors they attack over excessive fees.
Look at fixed fees in RTA claims, they have not increased since being established in 2003 yet overheads including referral fees have increased annually.
Insurance companies have the government firmly in their pocket at the moment so Claimant PI firms will have to start looking to expand into other areas as the writing is on the wall regarding reduced fees.
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Anonymous | 22-Feb-2012 9:57 am
People are slamming IM, but what about BLM?
They agreed the £75k so presumably acknowledge their ill behaviour which pushed IM’s costs up. At that point surely BLM should have got out while the going was not-so good rather than adding insult to injury (pun intended) by then racking up no doubt sky high DA and appeal costs.
I bet BLM’s bill to their insurer client was substantially higher than £75k come judgment day.
Poor claimant billing structure or poor choice of defendant solicitor?
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Rural Bliss | 22-Feb-2012 1:03 pm
Some interesting (and some predictable) responses.
I agree that BLM probably are partly to blame. Unfortunately, it's just as much in their interests to rack up these ludicrous costs as IM's. What's wrong is a system that allows either side to do so.
"Look at fixed fees in RTA claims, they have not increased since being established in 2003 yet overheads including referral fees have increased annually."
Which simply proves that they were set far too high in the first place. When they were agreeed I don't recall any element of the claimant solicitors' costs proposals including a budget for referral fees.
However, PI firms can afford to pay £500 or more in referral fees and yet are still keen to take on this fixed costs work, so even with that taken out of it they must still be making a decent profit out of the fixed costs.
It's also not unusual to see firms advertising `£500 cashback' just to sign a client up to a PI claim.
So please don't try to pretend there's only a modest profit in the fixed fee regime, it's quite obviously `fill yer boots' time.
I suspect the claimant lobbies managed to con the MoJ originally into thinking the average unissued PI claim would involve 8 hours work by a qualified solicitor at a charge out rate (then) of £150 per hour, when in fact it probably involves 3 or 4 hours work by an unqualified paralegal whose charge out rate (then) would have been perhaps £40 an hour.
"Claimant PI firms will have to start looking to expand into other areas as the writing is on the wall regarding reduced fees."
Unfortunately for them (though fortunately for the rest of us) I can't see the MoJ being naive enough to set up the same gravy train again.
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Anonymous | 22-Feb-2012 1:16 pm
the MR didn't actually slam IM regarding their costs, strictly speaking. His concluding comments in relation to costs (para 50) highlighted his concern with the civil justice system generally and proposals for reform:
"Both my own experience in this court and the evidence contained in Sir Rupert Jackson's report on Civil Costs suggest that this is not a particularly exceptional case. It is therefore to be hoped that the changes which are in the process of being enacted and implemented in relation to civil costs and civil procedure will help ensure that costs become more proportionate."
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William Chambers | 22-Feb-2012 4:14 pm
I am not surprised by Irwin Mitchell Costs being over the top in relation to the amount of damages actually recovered.
It begs the question how many Senior fee earner's at high charge-out rates had input in this particular case including lower fee earner's involved on a Training exercise in support.
Of course IM wanted the matter to proceed to trial so that they can make as much money as possible.
However, the Defendant (BLM) should have make their best offer (Part 36) at the earliest opportunity to put the claimant at risk on the day, if necessary.
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Anonymous | 29-Feb-2012 1:05 pm
Couldn't have happened to a nicer bunch of ambulance chasing fee churners.
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