Update: Provisional Assessment – Part 36 offers

Posted by Michelle Barron on 15th November, 2016 in Opinion and categorised in .

This update provides an extremely expensive lesson on why it is sometimes important to compromise. The original case was covered in our recent blog - Provisional Assessment – Part 36 offers. The case has now been resolved – and it wasn’t pretty for the Defendant.

In the original piece we explained the slightly convoluted process we had gone through to reach the point of a Bill provisionally assessed in the sum of £10,180.16. We asked you for answers on a postcard to the question of what the Court might order, nearly two years to the day after the Claimant originally requested their provisional assessment. It’s highly unlikely that anyone reading this could have predicted the outcome.

The answer is that the case has been settled, with the Defendant paying a total costs liability of £17,600.00. Not quite what you might have expected from the initial provisional assessment of £10,180.16. The figure is broken down into:

Bill   £10,180.16
Additional Amount £1,018.12
Interest on Bill £950.87
Costs of Ass  £5,250.85
Interest on costs £200

This has been a long running case that – in our opinion – could have come to a conclusion much earlier if a commercial view had been taken on the process. It’s worth noting, in particular, that we offered to accept a sum of £9,600 plus the costs of assessment and interest back in April 2015. However, the defendants maintained their position at £7,500.

Following that 2015 offer, Points were then served with an open offer of £5,200. After that our Replies were served, together with our further offer to settle at £9,117, including interest but excluding costs. We even took the collaborative step of inviting a compromise before the case was set down and offering to split the difference between the offers at £8,308.50. All attempts at resolving early were rejected.

So, we are now in a position where our opponent in the case has cost his client £9,291.50 more than we initially offered to accept, a substantial £10,100 more than their without prejudice offer and a huge £12,400 more than their open offer. These figures might make some of you reading this wince. It is certainly not a happy state of affairs for our opponent.

Points of principle cost money

Although one never knows the exact details of what takes place on the other side of the table, in this particular case the issue seemed to be one of intransigence. There was simply no willingness to compromise, to take a view or to move from a starting position – something that is essential when it comes to being commercially realistic for a client . Refusal was made on principle, and as we know with all litigation, points of principle cost money. It is a cautionary tale of allowing a personal unwillingness to budge to overrule the reason and logic that ultimately leads to a better outcome for both parties.

Taking a commercial view

Obviously, everyone has to reach a point where they are happy and comfortable to proceed. However, if this point is only reached when one party gets their own way then successes are likely to be few and far between. The skill of costs negotiation requires an ability to form a commercial view, taking into account case law and the risks of proceeding. Other factors that influence a commercial position should be looking at the potential scenarios of what could go wrong, weighing up the unpredictability of the courts and working out how much sticking to a point of principle could delay – and what that delay might cost.

Working out a commercial figure

When it comes to costs, the common practice is to take a bottom line figure, a best case scenario figure and opt for a point somewhere between the two. However, bear in mind that a commercial decision might require acceptance of slightly less than the bottom line figure in return for a swift resolution. Given the expense that is incurred where there is no swift resolution, it may cost more in the long run to refuse to budge than to accept the slightly less than bottom line figure in the first place.

This particular case certainly serves as a cautionary tale and a good study in the importance of managing client expectations and being commercial. Ultimately, a decision made on the basis of efficiency and expediency is likely to achieve a better outcome than one made on principle.

This article was written by Victoria Morrison-Hughes. Victoria is head of Burcher Jennings’ Manchester office and joined the firm in early 2016. A qualified Costs Lawyer with a degree in accountancy and finance, coupled with extensive experience working as a lawyer in high street practice provides Victoria with unique insight into both the operational and technical demands of a legal business. Her main areas of expertise include commercial litigation, clinical negligence, catastrophic injury, Court of Protection and solicitor & own client disputes together with Costs management and negotiations.  Victoria’s primary focus is on providing excellent client care and service where her priority rests on quality and ensuring clients receive a bespoke service.