Keoghs Insight

Author

Howard Dean

Howard Dean

Partner

T:0247 665 8136

Fixed recoverable costs verification and negotiation

AWARE22/06/2017
Costs Aware Issue 3

The importance of accurate costs verification and negotiation will significantly increase when the forthcoming multi track extension of fixed recoverable costs is implemented.

It will bring with it a larger range of fixed fees at levels that are considerably higher than those applicable to fast track claims.  It will also increase the risk of “gaming” as claimant solicitors seek to maximise damages and particularly costs in each and every claim.  This trend is likely to be exacerbated by the extension of FRC to multi track claims.

Gaming behaviours

Claimant solicitors are exhibiting a variety of adverse behaviours designed to obtain a higher fixed fee than they are entitled to recover. Frequency of the following behaviours is increasing:

Fixed fee behaviours

  • Claiming a higher fixed fee than entitlement.
  • Incorrect calculation
  • Seeking listing for trial at the same time the claim is allocated in order maximise FRC.
  • Seeking FRC on cases which are allocated to the SCT because there is no personal injury claim
  • Seeking FRC on cases which hourly rates costs apply as they are more than the actual costs incurred.
  • Unreasonable portal exits
  • Premature litigation

Disbursement behaviours

Claimant solicitors also exhibit adverse behaviours in claims for disbursements. They claim:

  • Abated brief fees as a disbursement where the case settles shortly before trial
  • In excess of the amount of the fixed fees for medical reports
  • An agent’s fee for drafting witness statements or a locus report
  • Unnecessary or unreasonable translation fees
  • Counsel’s fees for solicitor work such as drafting particulars of claim
  • Counsel’s fees for an advice  
  • Witness statement fees from credit hire companies

Market update

The frequency increase is consistent with changes in other market indicators over the last 12 months in that:

  • Average general damages have increased from £2650 to £2750
  • Stage 3 frequency has increased by 10,000 claims
  • CNF frequency has fallen by almost 60,000

It all points to a hardening of the market as claimant solicitors try to maximise damages and costs recovery on every claim.

Frequency and Savings

Keoghs costs team deal with approximately 11,000 fixed recoverable costs (FRC) claims per year. On a rolling 12 month basis, we have seen gaming frequency increase from 21% of claims in Q1 to 52.6% of claims in Q4. On the 52.6% of claims, Keoghs costs team achieved an average saving of £696 per claim.

  • Average file claimed = £5060
  • Average file paid = £4364
  • Average file saving = £696
  • Average % saving = 13.8%

Claimant solicitors are actively seeking to maximise fees they derive from FRC claims. We shall continue to challenge gaming behaviours on FRC claims that we deal with on behalf of our clients.