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Practice Direction 51W (PD 51W): Voluntary Capped Costs

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What is Practice Direction 51W (PD 51W)?

Practice Direction 51W introduced a new two year voluntary capped costs list in the Business and Property Courts in Leeds, Manchester and the London Circuit Commercial Courts. It is a pilot scheme and can be used in any case valued up to £250,000. The pilot scheme started on 14 January 2019 and expired on 14 January 2021, but any cases that entered into the scheme prior to its expiry, will remain on the same until conclusion of the proceedings.

There were some occasions when a case was not considered suitable for the scheme under Practice Direction 51W, which included cases where the Trial was more than two days, cases where there was extensive disclosure or expert evidence, and where multiple parties were involved.

The capped costs were not fixed, but were recoverable up to a maximum cap of £80,000 across different phases of work. The phases did not include VAT, Court fees, or costs of enforcement of wasted costs. Each phase provided a different cap on costs, such as £10,000 for pre-action costs and £7,000 for statements of case. The party could then calculate how much was spent in each phase with this cap being kept in mind.

Generally lawyers (and all those that work in a legal capacity) were worried that a cap on the recovery of costs would result in potential job losses, or would prevent smaller firms from being viable. However, a benefit of this type of scheme being in place would mean a quicker pace in the recoverability of costs with fewer requirements for detailed assessment, and thus, would most likely result in increased cashflow and an improved capacity for workload within law firms. Another benefit of these types of cases was that it also encouraged junior staff to have more input on cases.

It is important to remember that the scheme set out under Practice Direction 51W was voluntary, and a Claimant could start his case under this scheme, and it could later be transferred out of it. Prior to the Case Management Conference, the Defendant could object to the case proceeding under the pilot, and the Court’s permission was required for the case to leave the capped costs list.

At the case management, the Court would also make an order on whether disclosure, witness evidence or expert evidence were necessary to resolve the issues between the parties, and if this would impact on the appropriateness of the pilot scheme applying.

Upon conclusion of the case, and within 21 days of settlement or Trial, the parties were required to produce a schedule of costs by referring to the various stages of litigation, and these were then summarily assessed by the Court.

 

What was the Outcome of the Practice Direction 51W (PD 51W) Pilot?

Practice Direction 51W (PD 51W) and the pilot scheme set up under these procedure rules came to an end in January 2021. An outcome on the findings from the pilot is still to be reported, with no permanent change being made to the legal costs system as of yet. The scheme was set up in the hope to identify whether demand for costs capping is present in the legal profession, and whether it would yield any benefit in providing more certainty as to costs in commercial work, without the inflexible nature posed by fixed costs. We hope to hear of the findings and outcomes in due course. Nonetheless, the findings will determine if a broad implementation of this scheme will be necessary.

Unsurprisingly, the issues arising from the Covid-19 pandemic and varied rules as set out in Practice Direction 51Y are likely to have had an impact on the usability and take-up of the capped costs pilot, and findings may be impacted as a result.

How Can ARC Costs Assist? 

ARC Costs are a team of specialist Costs Draftsman and Costs Lawyers who can assist with costs arising from numerous different types of cases.

Our team possess extensive experience in assisting in costs disputes on behalf of both paying and receiving parties.  For receiving parties, we can assist in the preparation of your Bill of Costs in order to quantify the full extent of your legal fees.  In addition, we provide legal responses to any disputes raised by the paying party and can undertake negotiations on your behalf.

If you are the paying party on a costs claim, we can assist in providing advice on the level of costs being claimed, and suitable offers to consider making in order to resolve the dispute in the most cost-efficient manner possible. We can provide detailed legal Points of Dispute to the Bill of Costs on any issues which are deemed as unreasonable and disproportionate to the case.

Whether you are the paying party or the receiving party, the ARC Costs team can provide legal costs advice from the outset, whether it be in relation to issues of funding, all the way to the conclusion of the claim and recovery of costs, whether that is conducting detailed assessment on your behalf or assisting with enforcement proceedings.

If you wish to discuss your query further, please contact us on info@arccosts.co.uk or call one of our experts on 01204 397302. Alternatively, you may complete our online enquiry form, and a costs expert will contact you to discuss your query further.  All initial advice is on a free trial basis, and no charges will be payable unless a quotation for legal costs work is agreed.

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