I have been asked by a client about the post Jackson entitlement to and procedure for recovering costs from a protected party as defined under Part 21 of the CPR. There has been a fair amount of case law and conversation around this in relation to success fees and of course the CPR was amended to aid clearer understanding in this regard.
At present however it remains very much an unknown as to what this means for any costs shortfall payable by the protected party, assuming of course that CPR46.9(2) has been satisfied!). The guidance in this regard is frankly scant.
This may, in part, be demonstrative of the fact that lawyers are not yet comfortable in determining how appropriate it is as a concept to seek a shortfall from an incapacitated/minor client and furthermore what the process is. Interestingly the White Book offers the following narrative:
[Editorial note 46.4.1]
‘Where costs are recovered from a paying party on behalf of the child or protected party, solicitors frequently waive any further claim for costs, in which case there is no need for a detailed assessment of the solicitor and client costs.'
There is an indication here that the expectation is that lawyers will forgo any shortfall but, in a tougher market generally and with the absence of inter partes success fees, can this be the case? Certainly some of my clients are saying it is not. If they are to seek that shortfall, how then do they go about it?
What if there is a shortfall and the lawyers does wish to seek it?
It is clear, with reference to CPR 46.4 (2) that the court must order a detailed assessment of the costs payable by any party who is a child or protected party. CPR 46.4 and CPD 2.1 goes further to say that, on assessment, the court must assess any costs payable by a third party in the proceedings unless:
- There is Default Costs Certificate
- Fixed costs apply
- A detailed assessment has already taken place
- There is no need to do so to protect the interests of the protected party
- Where another party has agreed to pay a specific sum and the legal representative waives any further entitlement to costs
- Where an insurer or other person is liable the discharge the further costs
- Where the court has given direction for a summary assessment (relating to success fee shortfall)
CPD 9.9 of PD 44 further reinforces that the court will not make a summary assessment of the costs of a receiving party who is a child/protected party unless the legal representative has waived right to further costs.
Costs and expenses incurred by a litigation friend
I considered CPR 21.12 which sets out those costs and expenses which are recoverable from a protected party. This appeared, at first glance, to offer a simplified avenue for the costs to be approved, namely involving an application by the litigation friend to include provision of key documents relating to funding. Unfortunately this is avenue is precluded by 21.12(1A); essentially unless the costs have been assessed (by an inter partes detailed assessment) or are limited to the success fee, this rule cannot be applied.
Process for Assessment
It is clear at this point that, in so far as the rules provide, a detailed assessment of the costs to be paid by the protected party is required. Procedurally this must be an assessment of all the costs, with credit being given for sums recovered from a Third Party. CPR 46.9 (basis of detailed assessment of solicitor and client costs) states that it applies to every assessment of a solicitor's bill to their client, except legally aided clients. It states that costs are to be assessed on the indemnity basis but subject to the usual test of reasonableness with reference to express/implied agreement also.
CPR 46.10 sets out the assessment procedure; following the obtaining of an order under Part III of the Solicitors Act 1974 (by way of Part 8 application), which includes 28 days (from the Order) for provision of a breakdown of costs, followed by 14 days for the client to provide points of dispute and thereafter 14 days for replies and then the ordinary provision for an application for a detailed assessment hearing within 3 months.
What is not clear is who pays the costs of this process and therefore I presume it must fall as costs payable in addition from the protected party (with reference to the 20% point in terms of liability for costs?), which to my mind does beg the question why there is not a simplified process? I hope that we see some further guidance on the point but that does require a solicitor running the risk of simply being advised that they ought to be waiving their entitlement to any shortfall...