CPR update introduces bill requirement for payments out of protected parties’ damages

Solicitors will have to provide a bill or breakdown of costs when seeking payment of success fees and after-the-event (ATE) premiums out of the damages of children or protected parties, under a change to the CPR being introduced on 6 April in the 104th update.

A new section of paragraph 11.2 of practice direction 21 will require “a copy bill or informal breakdown in the form of a schedule of the solicitor and own client base costs incurred”.

As we reported in December, a sub-committee of the Civil Procedure Rule Committee said it was “remarkable” how often applications were made in circumstances where no solicitor/client bill has been lodged with the court or served on the litigation friend.

It said: “The necessity for an assessment of the claimant’s costs liability to be undertaken before an application for payment out can be considered is simply not recognised by many solicitors.

“In order to determine the reasonableness of a success fee, it is necessary to ascertain the amount of base costs payable under the terms of the retainer. It is common, even in the absence of any considered risk assessment, for solicitors to enter into CFAs which provide for a success fee which equates to a 100% uplift on the solicitors’ base costs.

“In the absence of any information as to what those base costs are, the success fee of 100% of an unknown figure cannot be quantified and thus a determination of reasonableness, as required by rule 21.12(1), is impossible.”

Other changes clarify that certain restrictions in rule 21.12, which enable a litigation friend to recover their costs and expenses from damages awarded to the claimant for whom they acted, apply only where the claimant is a child, and not a protected party, as well as the circumstances in which the litigation friend may make an application for recovery and when any restrictions may apply. These amendments do not change the effect of the existing provisions, but make their operation clearer.

The update also inserts Practice Direction 51X – a new statement of costs for summary assessments undertaken as part of the two-year capped costs pilot that started last month.

This introduces forms N260A and N260B; the former applies when the costs have been incurred on an interim application, the latter when the costs have been incurred up to trial.

There are also adjustments to Precedent R budget discussion report.

 

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Costs News
Published date
28 Feb 2019

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