Will the Broadhurst decision change Part 36 behaviours?
If I am not mistaken (which is entirely possible) this is the first case where a Claimant has beaten their own Part 36 offer for damages. I know of numerous instances where it has happened in Costs disputes but not the substantive claim.
When I read the decision and some of the comments, for example from my learned friend “The Prof” Dominic Reagan who called it “..stupendous..” the first thing that I wondered was;
“Will it make any difference or change behaviours?”
If it doesn’t then it could be of little consequence. I tend to agree with the view from the Association of Personal Injury Lawyers president Matthew Stockwell who said it was ‘…difficult to overstate how important this is given proposed extension of fixed costs…’
As a lawyer who worked predominantly on the defence side for over 20 years, it was a constant frustration that opponents would not make settlement proposals even when Part 36 was first introduced, but arguably the stakes were not high enough. That is no longer the case and if fixed costs are extended, as most expect, I think this tool will be employed by more and more good Claimant lawyers for the benefit of both themselves and their clients.
So what are the potential consequences of claimant offers to settle?
- Quicker settlements good for the client
- Shorter case life cycles good for the lawyer in fixed fee cases
- Defendant has a choice they can conclude the case and move on or roll the dice
Where could this get interesting?
Some compensators rely heavily on damages calculation tools, on occasions slavishly, and they could now be at serious risk from well calculated Claimant Part 36 Offers which, if successful, could hugely increase their claims spend with orders for indemnity costs.
What do I think will happen in practice?
The reason this is the first time the issue has come before the court is that in truth any good defendant lawyer ought to be capable of valuing an opponent’s case, and indeed building in a tolerance for the Court where it may be heard, and so assessing any offer received. There is then a threshold within which it is simply not economic to proceed. As such any reasonable offer ought to be accepted.
I do think it will encourage more claimant offers to settle which is a good thing.
The combined result of the above ought to be quicker settlements for Claimants but I would be surprised if there were regular indemnity costs orders.
Managing performance in Law Firms – Have you got it right?
As we approach the mid-point of Q 1, I expect many Managing Partners have held or are about to hold their first Management Meetings of 2016. How is it looking? Ideally you will be on or ahead of your plans, but if not you may be wondering why and more importantly if you can catch up.
Whatever the position, you may want to ask yourself some questions;
- Have you set the right targets?
- Are you measuring the right things?
I’m my experience setting performance targets in law firms can often be a very ad hoc process with little or no science behind it. It can be a crude as;
“…well you achieved £X last year so shall we say £X + 10% for 2016…?”
Looking for growth is laudable but I think it has to be based on sound rationale. Who is to say that this arbitrary increase is correct, it could be too low in which case it becomes easily achievable and you may over reward the individual or team concerned. Equally it may be too high and so wholly unachievable which is de-motivating.
I definitely subscribe to the mantra that – “…what gets measured gets done…” but that does of course assume that you are measuring the right things. My recommendation would be to ask yourself what behaviours are the targets you set likely to drive?
- Do those targets fit with your strategic goals?
- Are the targets relevant for your kind of business?
A great example is rewarding people on bills delivered, but ignoring cash received. This simply encourages people to invoice as much as they can without any thought as to whether the client will agree and then pay the bill.
I would favour an approach based on client satisfaction, as in my experience happy clients pay bills and will recommend others to use your services!
Also do the targets encourage a silo mentality or team work? If rewards are simply based on personal performance then why would people work together? Whereas, if there are elements of team performance and indeed the performance of the wider business which result in reward, you will create a more unified approach.
My final tip would be not to operate a secret society. Be inclusive and share good news but also explain bad news. Most people care about the businesses they work for and want to do well. If you involve them they tend to work harder to achieve the goals you set.
Are you charging your clients enough?
It is a hot topic at the moment, solicitors costs, with Jacksons proposals etc. and of course as a profession we are often ridiculed for the level of our fees. I would invite lawyers to ask themselves;
- Are we charging with any relation to the value for the client?
- Does the price represent the risk we are assuming for the client?
- Do we know what it will cost us to do the work?
In my experience, many (possibly most) lawyers will not even consider the first two questions when putting together a fee quote, and simply not have accurate information about the last one to know the answer. What they will do is either;
- Guess how many hours it will take and multiply by their wholly arbitrary hourly rate, or
- Pluck a figure from thin air and hope for the best, or worse still
- Just quote an hourly rate which the client will hate
I would describe this as ‘working with unknown unknowns‘ or guesswork which in today’s market is nothing short of madness. Lawyers need to understand their clients better, what is important to them, what is not important to them and what risks will the lawyer be assuming by doing the work.
Discussing these issues with the client will allow informed decisions to be taken by both parties. Allied to this ought to be business intelligence about the likely cost of production for the work. Lets be honest, as lawyers we don’t break ground that often, we repeat processes and transactions. Frankly if we are breaking ground then value to the client is enhanced and the price ought to be.
There are tools out there which will capture the true cost of production, see – www.rekoop.com as just one example. All too often we rely on human input rather than automated tools and the only thing you can guarantee is that this will be inaccurate and will create an inbuilt discount for the client as time is under captured.
Would a car manufacturer or a retailer set prices with a finger in their air? No!
So why do we as a profession?
We don’t have to is the answer and all it takes is some investment in time & technology allied to a change in mind set.
Sounds easy when you say it quickly!
So he’s back with a bang, Sir Rupert that is, now wanting to fix costs across all multi-track cases up to £250,000. This time it isn’t just Legal Aid & personal injury getting it in the neck (pardon the pun Mr. Osborne) but it is all litigation. Is it such a bad thing?