This year has seen added complexity to the role of Professional Deputies and Trustees thanks to the introduction of the OPG105 Form, greater costs management requirements and a tighter approach by the SCCO. Our Costs Consultant Sean Linley, offers some key advice.
In July 2016, the Office of the Public Guardian published updated guidance in respect of Professional Deputy Costs. Whilst the document (that can be viewed here) doesn’t provide any ground-breaking revelations, it does provide some useful clarification and guidance in respect of the Court of Protection costs.
Many Court of Protection practitioners will be aware of the OPG105 Form which came into effect in March of this year. The document requires Deputies to provide an estimate of costs for the upcoming Annual Management Year. It had been largely unclear as to what impact (if any) this would have upon the assessment of costs but we now have clarification that the estimate provided is not binding at assessment.
The OPG does request, however, that where costs exceed 20%, reasons for this exceeded amount are provided to the SCCO. It is therefore critical that the original estimate provided is as accurate as possible because, where no good reason can be provided for exceeding the OPG105, it is likely that costs will be limited to the amount in the original estimate.
Remember, the OPG105 is to be filed with the request for assessment so it really is critical that costs are not under-estimated.
Another key issue to note
As soon as the Deputy becomes aware that costs are likely to exceed 20% or more than the submitted estimate, then the OPG should be made aware. As with Costs Management, a proactive approach should be taken. If the Protected Party, for example, wishes to buy a property (and it wasn’t considered this would arise previously) at the point the Protected Party expresses his / her wishes then the Deputy should be considering the costs implications of such an action. In this example this would lead to an increase in costs and would therefore need to be factored into the original estimate.
The OPG guidance also brings proportionality to the forefront of Court of Protection costs. Many practitioners will be aware of some of the recent extreme cases demonstrating the full force of the new test for proportionality which cumulated in Queen’s Brian May speaking out against the test publically.
Costs incurred in any General Management year must be reasonable and ‘proportionate to the total value of the client’s estate, the amount of work done and that any work done should be done by the appropriate fee earner’. This creates a multitude of issues for Court of Protection Practitioners.
It is vitally important that within any Bill of Costs, details of the Protected Party’s estate are provided. This will give the assessing Costs Officer an assurance that Deputyship costs are reasonable. It also highlights the importance for Deputy’s to be aware of the Protected Party’s assets else risk the disallowance of costs legitimately incurred at assessment.
The guidance on proportionality also draws on the issue of delegation. Often, many firms I deal with do not have the resources to delegate work. One way to counteract this issue is to claim multiple rates within the Bill of Costs (e.g. letters settling invoices be claimed at a Grade D rate regardless of who undertook this work). We have found that the SCCO has been receptive to this approach as it demonstrates that a reasonable position had been adopted by the Deputy. In Tina Jayne Cloughton (1999), Master O’Hare made clear that suitable tasks should be delegated and this is reinforced in the OPG’s guidance. The Deputy therefore has a responsibility to reduce costs as much as possible and be able to demonstrate that this approach has been attempted, either by delegation or by charging a lower late (for suitable tasks). This will give a better recovery at assessment.
The guidance also provides black and white clarification on a number of other issues, including hourly rates that should be claimed at the SCCO’s Guideline Hourly Rates, except in the most exceptional circumstances. Unfortunately, there’s no guidance on what would constitute ‘the most exceptional circumstances’ but given the use of ‘most’ it is safe to assume that it will have a high threshold.
Three Minute Rule
The OPG has also provided what will be seen as an unsurprising but disappointing view on paying bills, making it expressly clear that only three-minute units will be allowed. It also states that: ‘No further time will usually be allowed for updating records with details of any payment’. This creates an issue for Court of Protection practitioners as, whilst this task can be delegated, it often requires authorisation from a senior fee earner. None-the-less the time spent will remain at risk of reduction at assessment.
A three-minute unit will also be ordinarily allowed for very straightforward letters, emails or duplicate letters (as per Leighanne Radcliffe (2004)). The OPG provides examples of writing a letter to a financial institution or to the Protected Party’s family.
It is further advised that only one home visit will be allowed in each 12-month period and that where more visits are necessary that the Deputy will have to justify this with reference to ‘their duties under the Mental Capacity Act’.
Where financial investment meetings are required, the OPG prescribes that only one senior fee earner will be allowed to attend.
Most fee earners are aware of the need for documentary evidence to support the bill of costs. This comes in various forms, including attendances notes or copy correspondence. If there is no evidence in the file of papers (and by virtue costs are ‘estimated’) they are likely to be disallowed at assessment.
Detailed Costs Management
At PIC, we will annotate the file / financial ledger to ensure that all the time claimed within the Bill of Costs is accounted for prior to the same being filed at the SCCO.
There is also clear guidance on costs which form part of the Deputy’s overheads (and will be disallowed save for in exceptional circumstances). These are as follows:
- Reading incoming routine correspondence (time spent reading non-routine correspondence is permitted);
- Internal Communications;
It is therefore vital that, where time is spent undertaking the above tasks, it is justified both in the file and in the Bill of Costs to increase the chances of recoverability at assessment.
I regularly provide free Court of Protection costs training and one of the common themes discussed is ‘what to do with litigation costs’. The OPG now confirms that costs will be disallowed which could be claimed within the context of on-going litigation. Therefore, any time spent by the Deputy in relation to litigation should be included in the Bill of Costs for that action and not as part of the General Management year.
I would encourage Deputies to ensure that such time is captured on the litigation matter so it isn’t missed.
Finally, another interesting point to note is that where the Protected Party dies, the Deputy should refer to an executor to see if the costs of that annual management year can be agreed. If the Deputy is also the executor, then the Bill of Costs should be submitted to the SCCO for assessment to avoid a potential conflict of interest. In either circumstances, authority will need to be sought from the Court of Protection to give the SCCO permission to undertake the assessment of costs. The SCCO will accept authority in the form of an e-mail or letter from the Court of Protection in order to save costs.
Costs, the CoP theme for 2016
The new guidance from the OPG therefore deals with and clarifies a multitude of issues faced by Court of Protection practitioners. It highlights the need for lawyers to have costs at the forefront of their mind at all times. It also demonstrates the difficulties which Deputies will face with the expectation that costs are always kept to a minimum. This of course creates a tension between client care and finances for many law firms.
If practitioners ensure that they are able to justify all of the time spent and this is reflected in both the Bill of Costs and the file of papers, then a positive outcome at assessment is highly likely. This approach, consistently applied, ensures that a high level of service remains to some of the most vulnerable people in society.
To book your free training session contact our Adrian Hawley, Head of Court of Protection.