Informality lends itself to speedy, low-cost resolutions
Well, money really is the topic of the moment. I wrote recently about the payment provisions of the Construction Act, and then about the statutory right to interest under the new Late Payment Act. Sue Lindsey highlighted the profession's preoccupation with money as demonstrated by the new standard form of appointment sfa/99. And now, independently, two construction solicitors inform me of new provisions which favour architects who are having problems recovering their fees.
James Bessey of Edge & Ellison believes that by increasing the limit for the small-claims track to £5,000, the new Civil Procedure Rules (cpr) benefit those pursuing small-invoice debts. The small-claims track is designed to be a user-friendly service leading to the rapid resolution of small claims, and avoids many of the procedural formalities relevant to larger cases on the fast or multi-tracks. Procedure is controlled by District Judges who are required to be interventionist whilst keeping proceedings informal. Furthermore the usual rule that costs follow the event does not apply to the small-claims track. Thus the unsuccessful party will not be responsible for the other side's costs.
The new cpr in general and the small-claims track in particular are designed to keep costs to a minimum in any event. An additional fee of £80 must be paid before the claimant can be given a hearing date. But, importantly, if a claimant or defendant applies for summary judgment before this fee is paid, the 'no costs' rule does not apply. So those with a clear-cut case need only show that the other party 'has no reasonable prospect of success' under cpr Part 24 and the District Judge can give judgment and assess the costs of the application there and then.
Architects can deal with bad debts by issuing a small track claim form and applying for summary judgment. If they are successful they will get their money and their costs assessed on the day. James Bessey believes that the prospect of quick payment of fees and costs should encourage architects to seek legal advice and representation for these claims.
If the carrot of prompt payment of legal fees is not enough to overcome the architect's reluctance to venture into the turbulent waters of legal dispute, then Nick Carnell of S J Berwin has a life-jacket to hand in the shape of 'Cap It All' insurance. Cap It All is an after-the-event insurance provided by the insurer, Abbey Legal Protection, and linked to capped contingency-type fees for legal services provided by a specified firm of solicitors - S J Berwin.
Unlike traditional insurance, an application is made after there is a claim. In fact, the term 'insurance' can be misleading, it is more akin to a loan advanced on the basis that the insurers will ultimately be reimbursed by the other party. Because neither the insurers nor the lawyers want to waste their time and money on borderline cases, claims will be subjected to an initial assessment and only strong cases will proceed.
The lawyers' view is central to the scheme. If they misjudge the matter and the claim is unsuccessful, they will pay for it. The cost of the cover is proportionate to the legal costs likely to be incurred. This makes it well-suited to financing the recovery of bad debts such as architects' fees. Provided the paper work is in order and there is no multi-million pound counterclaim in the wings, the likely cost and recovery are relatively easy to assess.
Edge & Ellison's London office can be contacted on 0171 404 4701. S J Berwin's number is 0171 533 2222.