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Expert Debt Collection

Medico Legal

by Alison Somek, Expert Witness and CEO, Somek & Associates Alison Somek continues to act as an expert witness as well as running Somek & Associates – a Medico-Legal consultancy with over 200 expert witnesses, including Occupational Therapists, Nurses, Midwives & Physiotherapists. She is currently on the membership committee of EWI. This article is based on a presentation at the Bond Solon Annual Conference in November 2017. Many thanks to Alison Somek for kind permission to re-print. The author wishes to point out that the following is based upon her personal experience as an expert witness and CEO of a company providing expert witness services. Alison is not a lawyer or an accountant and advises readers to take professional advice on any relevant matter

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Experts Getting Paid

At the EWI Conference in September 2017, its chair Martin Spencer QC stated “Experts are entitled to be paid a proper fee; and to be paid on time”.

For many years one of the issues most consistently raised at Expert Witness conferences is that of getting paid. This editorial aims to provide some insights and tips that may assist and it predominantly looks at what you can do to maximise payments.

The author’s main experience is in civil litigation although much of what is stated here will apply to all expert witness fields. However, the rules about who pays what in criminal, family and coroners’ court cases are different and prior to entering into a “contract” to undertake any work expert witnesses would be advised to clarify the position.

1.Business Brain

Develop a business brain and functions

Expert witnesses are no longer working for an organisation where salaries simply appear in the bank account on a particular day of each month.

If you want to be paid for your work you must act in a professional business way, and ensure you have structures and systems in place. You must also ensure you have time to put those systems into practice, or pay someone else to do it for you.

I have heard of expert witnesses who often fail to present invoices for work undertaken. Not dealing with the business side of your legal practice will clearly lead to non payment and may ultimately cause financial difficulties. Moreover this is not professional behaviour, not least because it gives a totally false view of the cost of litigation which is not helpful.

Thought and planning are required. Advice can be sought from colleagues and your professional bodies; some may have a specialist section for independent or private practice, with business codes of conduct, and business guidance (such as the Royal College of Occupational Therapists). You may prefer to employ an accountant (if only for tax advice) and/or a solicitor (e.g. to assist with drawing up terms of engagement).

A huge source of great advice is through the expert witness organisations such as Expert Witness Institute (EWI), Academy of Experts (AoE) and UK Register of Expert Witnesses.

You should consider investing in a management system of some description so that all communications can be well documented, instructions and work can be logged and invoices and receipts processed. If you do not have a dedicated system, you must develop your own and above all ensure all communications (verbal and written) are logged very carefully.

2. Client Relationship

Any supplier of services has two options – to agree to work for a client or to respectfully decline. A question you should consider is whether you wish to work for any particular client, personally, professionally and financially.

Expert witnesses should understand who is instructing them and their financial status. Is the firm a Legal Entity or simply a Trading Name for another company? Who has responsibility for payments? For example, you may receive instructions from Your Legal Friend. The Legal Entity for Your Legal Friend (and Camps Solicitors) is 2020 Legal. Many solicitors have a similar business structure. You can find this information out from the Law Society website.

A sensible approach is to undertake credit checks. Many legal firms, large and small, have gone into administration in recent years and if this happens when you are owed money, you may not get paid at all, and if you do, almost certainly, you will not get paid for a long time. There are a number of credit checking facilities available; we use a company called Experian paying about £750pa. For this we are able to check out the credit score, rating and limit for most firms, along with varying degrees of useful financial information. We also receive daily if not weekly updates through a monitoring process. So if the credit rating for a previously, apparently sound business plummets, we will get a credit warning.

Considerations include:

1. Is this company sound?

2. If the case goes badly can they still afford to pay me?

3. If the credit rating is poor, you would be mad to agree to deferred payment terms, but you may agree to doing a case on 30 day terms to see if they pay, or if the credit rating is that poor you may decide to ask for money up front

4. However, once instructed on a case (in proceedings) you have a duty to the court, so the decision to refuse to do further work is not so simple. Credit scores are fairly simplistic and can sometimes be a bit misleading. You may agree to do work for some companies with poor credit scores, where their payment history with you is good and your experience of the company informs you that they are a well managed and ethical company. It would be advisable to monitor their on-going payment record carefully, and limit the level of total credit given.

Credit checking is just one tool in your decision making process. You need to look into the company, its history, its size, its experience in the market, and make your decisions accordingly.

Another consideration is to establish whether the instructing solicitor’s firm is the same as the organisation paying your bills? The one responsible for paying your fees is the one you need to check. See article by Chris Pamplin, from UK Register of Expert Witnesses:

http://www.jspubs.com/experts/ewire/itemtext.cfm? ewid=323

It is clear that some, generally smaller legal firms, have set up a separate “Reporting Company”, to be responsible for paying your invoices. So what is the situation should the “Reporting Company” go into administration? Do you have a contractual relationship with the legal firm itself?

Chris recommends that you should take the time to get terms with the instructing legal firm to provide you with some protection in the event this happens. It may not be quite that simple, but you need to do your due diligence when assessing whether to work for this solicitor/reporting agency in terms of your risk.

3. Terms and Conditions

When agreeing to accept instructions and undertaking work you are entering into a “Contractual relationship”.

If you want to ensure to get paid you must have Ts&Cs which should be clear and unambiguous, and issued to the client at the earliest opportunity. They should be sufficiently comprehensive; they need to deal with all aspects of your work with clients and most importantly your fees (including cancellation fees, disputes and non payment of fees) and payment terms.

See EWI, UK Register of Expert Witnesses and AoE for Sample terms:

http://www.ewi.org.uk/

https://www.jspubs.com/

http://www.academyofexperts.org

The UK Register of Expert Witnesses even has an online application to produce your own bespoke Ts&Cs. Some professional bodies also produce sample terms eg RICS.

You may want to include caveats, such as if records sent to you for review are in really poor order you will reserve the right to charge an additional fee.

Legally, for a contract to be deemed to be in place, terms must be offered and accepted. It is not sufficient to simply send terms; you need a positive response; even an email saying I accept! This becomes most pertinent in the event you do end up in the Small Claims Court (SCC). The gold standard is undoubtedly to have signed Ts&Cs. However, you may make a commercial decision with a client you know well (from a business perspective) and where you consider the risk is very low e.g. NHSR panel solicitors.

With a client you are less confident about or do not know, you should not start work until you have received signed terms. This would be another good commercial decision.

If amendments to contract are offered by either side the most recent version becomes the version in place. Consequently you do need to address any terms sent to you, subsequent to your own being agreed.

A typical example is when a client writes into a letter of instruction that: “At the conclusion of the case your fees may be subject to costs assessment and if reduced by the court, they will expect repayment (if they have already paid) or make a deduction from the amount due (if they have not already paid).”

If this is not acceptable to you (which I hope it is not) you must respond. Such a statement can only be enforced if contractually agreed.

Discussions on terms may have consequences; for example if a client says they cannot pay you until the end of the case, and you do not agree such terms, the client may choose not to instruct you.

You may have plenty of work and not be concerned about losing a case, or you may be starting out and wanting to develop your practice; thus cases are important.

Having signed Ts&Cs do not guarantee payment, but they make the expectation clear to the payer, and they will stand you in good stead if you end up in the SCC

4. Fees and Payment Terms

You need to understand the market, and your clients’ constraints.

Be realistic and reasonable. You may be at the top of your field, and sticking your head above the parapet, so charge an appropriate fee. However, the costs of litigation are persistently the political football of our time and expert witnesses should be mindful of this when setting fee levels which should be relevant for your level of expertise without being arrogantly excessive or unreasonable, especially when considering cancellation fees.

Cases can go on for years and will accrue costs. Experts should be mindful of what you are being instructed to do and that there are indeed constraints on costs. Invoices should be raised regularly as work is completed, and not accumulated - landing a lawyer with an unexpectedly large bill is asking for trouble. Typical commercial terms are 7 days or perhaps 30 days, but in the medico-legal market this will not work for most clients. You may therefore consider a range of payment terms:

30 days – for clients who are not waiting for funding sources e.g. MROs

90 days – for clients with funding such as LAA, insurer or NHSR, giving time for your instructing solicitor to be put in funds from his payer

Deferred payment terms – 1 year or more, depending on what your cash flow will allow; these are mainly for Claimants to allow time for settlement, interim payments etc.. Where deferred payment terms are given a premium should be added for this “credit facility”. CPR allows for deferral of payment, but not payment terms that are contingent upon the outcome of a case (There was a slight amendment in the 2014 Guidance, but the author believes this remains the position for 99.9% of cases).

If providing deferred payment terms, it is recommended that you do not give end of case terms, but specify a payment date. If a case is adjourned, goodness knows when you will get paid.

Some MROs are financed to allow end of case terms and therefore if your client insists they cannot pay you and will not sign anything other than end of case terms, you could suggest they instruct you via one of the MROs, such Premex.

Within your terms, ensure that you have a clear statement about disputes of fees, and time frames. It is totally not acceptable for clients to accept your work, ask you to do more, accept that too, and then complain nine months later that the work was not up to scratch and they are not going to pay you!

Once a case is settled, the bills are not paid immediately as the issue of costs needs to be concluded. Thus there may still be a delay in clients being put in funds. Some will pay you from their own funds in the knowledge they will receive costs in the near future; some will ask you to wait. You may consider waiting a “reasonable” time is acceptable and sensible if you value the relationship.

5. Tactics!

Invoices must:

• be sent out on time ie when the work is done

• be clear what instruction they relate to; it is best to invoice separately for each instructed piece of work, although you may lump obvious tasks together such as reading new evidence and attending conference, if all within a short time frame

• have a breakdown showing how the bill is made up itemising time spent reading, report writing, assessment, travelling etc, along with a clear statement of expenses

• include the due payment date

• include the client’s and your references

It is advisable to send out monthly statements! If your invoice “never arrived” the monthly statement will act as back up, and should invoke a query!

Due date – no payment

Straight away you should send a nice friendly reminder requesting immediate payment, adding “If your cheque is in the post please ignore this reminder, and may I take this opportunity to thank you.”

What you are really looking for is real communication, i.e. communication explaining the delay and when to expect payment. When this is forthcoming, showing patience is advisable. Promises of payment “soon” are likely to be empty promises, and it is recommended that you try to agree specific dates and ensure such communications are in writing (very helpful if you do end up in a SCC).

Methods of communication are worth considering – Is email ideal or sufficient? Will it get to the right person? Is the fee earner still there? Digital communications are the norm these days, but if email does not work, send your next reminder in the post, when others in the firm may be alerted to your issue.

Consider who will communicate. You may have a very efficient Accounts Manager, but it’s funny how an email from the expert involved in the case, often gets the most delightful response, and even an apology! Sometimes it’s the phone call that just embarrasses into submission.

Dealing with the “Gatekeepers”. There is a strange phenomenon that occurs when people owe money – every time you call they are in a meeting, or just left the office for the day, or on annual leave! But persistence often pays and it is worth calling again, daily if necessary.

It is advisable to speak to the main fee earner, not the paralegal administrating the case. If you are getting nowhere you may even consider contacting another partner in the firm.

Take a view:

1. How many communications are reasonable over what length of time before you decide to get tough? Don’t just keep sending the same old email month after month if getting no response. You need to deal with the issue.

2. Big clients who have funds but are just “poor managers” – you will probably want to persist for longer; indeed are you ever going to sue them? Possibly not, but then you are more likely to get paid eventually.

3. Smaller clients who you do not have a valued relationship with – give them a few opportunities to communicate reasonably, but take action sooner rather than later.

6. Interest Payment

You can apply late payment interest and then agree to defer payment; clients may prefer this where a case has not settled, and they do not have funds. Late payments of commercial debts legislation allows for interest to be charged, but it is also advisable to specify the same in your terms.

You may start by threatening to charge interest, if the payment is not received by x date; but give a reasonable time frame to enable them to revert to their client if necessary.

If you receive no response, or no satisfactory response, apply the interest charges.

Reasons for going down this route (rather than suing) might include:

1. If the case is on-going and you are likely to be required to do more work

2. If the client is communicating well with you.

Generally clients do not want to pay more than the fee they signed up to, so they will not want to pay interest. However you cannot get blood out of a stone and if people do not have the funds, e.g. the case has gone on for much longer than anticipated, they may welcome agreed deferment and accept late payment interest.

Keep good tabs on the case though. It is helpful to know if the case has been issued; ask for court orders which may give you an idea as to time frames on the case and the stage it is at.

When the client is “never there” you can ask the receptionist or assistant to check if the case is still on-going. Sadly some clients do not want you to know if a case has settled because then they will have to pay you! This may especially be the case if the firm is having financial difficulties, and it becomes even more important for you to attempt to get your payment before they go into administration!

7. When to Sue?

1. Case on-going

If the case is on-going and your input not concluded, you may be advised to take the decision not to get too heavy, and to go down the charging interest route. However, the client is also in an awkward position – they want to keep you reasonably happy too in case they want to instruct you further on their case. But it does not sit comfortably with me to sue your client who is still instructing you on a case!

2. Case concluded

You may start by threatening to “have no option but to take legal advice” i.e. to sue; this usually gets a reaction and often achieves a result! But if not .... then sue.

Consider taking legal action if you are getting no satisfactory resolution or communication.

My advice is not to go down this route lightly.Consider your position very carefully.

• It is time consuming

• It is costly

• It is extremely unlikely you will recover all your costs (if you consider your own time spent dealing with this process)

• You may lose!

• You will almost certainly, lose a client – and probably you will be delighted to do so, if you have reached this stage

However, the times we have sued we have done so “on principle” where we have believed very strongly we are in the right and our client has behaved badly and should not be allowed to get away with it. But we have weighed up the options very carefully.

To win you must have all your ducks in a row.

• Your communications must be really good and demonstrable; so this is where your business communication system comes to the fore.

• Your terms must be in place, and preferably signed.

You can take the matter through the SCC yourself or appoint a solicitor. The process is:

1. Ask your solicitors to send a legal letter; For them to do this you must provide them with your case and your evidence. (First time consuming task)

2. Your solicitor sends a legal letter essentially threatening suit if payment is not made, setting out the key points. Solicitors do not want CCJ against them and will take this seriously. Payment may be forthcoming and no further action is needed.

3. The client may respond defending the non payment, making a counterclaim and / or offering to negotiate / mediate.

4. Consider the response; does he have a point? (Unlikely as I hope this would have come to the fore before now if he does). Decide whether to continue or withdraw.

5. If you continue, SCC proceedings are issued

6. You will be asked to sign a “Witness Statement” as will any of your associates involved in the case. These are sent to the Defendant client. Your legal advisor can draw this up but in my experience it is better for us to draw up the statement, with the legal advisor then improving or correcting it from a legal perspective. (More time ++, countered by a slightly lower fee from our solicitor). I say this because we generally know the case inside out by this stage, plus we have direct access to all of the communications.

7. You will then receive a Defence.

8. You will be expected to go through mediation, but if you have already made offers to settle, you may consider this is pointless. Do bear in mind that in mediation you will be expected to give, and it is likely you have already made offers to settle in the interests of cost and your sanity!

9. You can decide whether to appoint a barrister to handle your case in the small claims court. This is done through an agent and is not costly. Personally, I consider it as money well spent – I was not prepared to lose the case for the sake of a few hundred pounds; principle being an important factor. It really shows you mean business too. We did not regret it – on one case our barrister was so good we came away with an even better settlement than we thought we would.

So the costs of going down the SCC route are:

• Your time and that of any other associate / staff involved – not claimable (For case preparation and court attendance)

• Court fee – recovered if you win; dependent on value claim (£185 for claim values £3k-£5k)

• Your solicitor – if you use one ????? (our cost in 2016, was £1,500 - £2,000)

• Barrister for court, via an agent – about £200

You are bound by LP legislation. You can claim interest on money owed.

‘Statutory interest’ – this is 8% plus the bank of England base rate for business to business transactions (currently 0.5%) for the number of days overdue. Send invoices for late payment charges.

Plus you can charge a fixed sum for the recovery of a late commercial payment: £1 to £9,999 – £70

You can also claim for reasonable costs in recovering debt. For information re SCC: https:www.gov.uk/make-court-claim-for-money

8. Debt Collection

You can go down this route. There is a cost but it should reduce your own time. If you do go down this route it is advisable to use a firm that understands our market.

Eg Debt Collection for Expert Witnesses

“is the no-nonsense way to deal with recalcitrant solicitor debtors for debts greater than £750. We don’t mess around with the debtor. We will initiate action (unless there is in our view a valid defence) either under the Civil Procedure Rules or the Insolvency Rules. Because of this, our modus operandi invoices you assigning the right to payment to us. This is designed to insulate you from any claims for costs which may arise in the recovery process. You, for yourself and any business partners you may have, assign the debt to us using a Deed of Assignment we supply. Once your fees have been recovered, we will forward the money to you less our agreed fee.

Our fee is based on results. We charge a flat 18.5% of fees recovered. So if we aren’t successful, you don’t have to pay us anything. E-mail This email address is being protected from spambots. You need JavaScript enabled to view it.

I should point out that I have no experience of this service, and I must state that there are undoubtedly other providers of such services!

9. Can I refuse to do more work?

On the question of “If my client is refusing to pay my bill can I withdraw from the case or refuse work until the invoice is paid”:

- This may depend on what you have written in your Ts&Cs which are key. If you have a statement in your contract to the effect this is what you will do, it will be hard for the solicitor to criticise you

- You can try it, and see if you get a positive response i.e. payment.

- Negative response – you can put it in writing that you are withdrawing from the case providing your reasons, but then the client a) will almost certainly not pay the unpaid bill and b) may request payments already made are re-paid on the basis he will have to get another expert to start the case again (Guidance 27 is not very helpful). You may be glad of this outcome but you should consider whether there may be an argument for professional negligence!

- You can put in writing that you will not undertake further work until the bill is paid – in this case you may be in contempt of a court order, in which case this should only be done a) if not related to a court order and b) if you ask the court for directions

- You can approach the court for directions – but you would need to draw up the letter to the court and send this to your client in the first instance stating that you will continue to send the letter to the court unless the client resolves the issue

At the end of the day you must remember that experts have an overriding duty to the court when they become expert witnesses. Whether or not that overriding duty trumps the contract is a legal question, and there are plenty of court cases where the court is dealing with the consequences of an expert withdrawing without criticising the expert who withdrew.

So I would recommend you consider the circumstances of the case before deciding what action to take; the closer the case is to trial, the dimmer the view the judge may take of an expert who for purely commercial reason, upsets the court timetable!

10. Orders

Are you receiving court orders?

CPR 35 / PD8 – Where an order requires an act to be done by an expert, or otherwise affects an expert, the party instructing that expert must serve a copy of the order on the expert. The claimant must serve the order on a single joint expert.

This is important as it is especially difficult to refuse instructions if they have been ordered by the court. But you may be able to ask the court for directions.

11. Know the Rules (CPR)

If acting as an advisor pre-proceedings, the CPR do not apply.

Take note of the rules as if work is done outside “the rules” costs may not be recovered, and/or sanctions could be applied, including non payment.

The Guidance (10) reminds us that the overriding objective is that courts deal with cases justly and that experts are under obligation to assist the court in this respect. This includes dealing with cases proportionately (keeping work and costs in proportion to the value and importance of the case to the parties), expeditiously and fairly (CPR 1.1).

CPR 35:

35.4(2)-“When parties apply for permission (to instruct an expert) they must provide an estimate of the costs of the proposed expert evidence ...

” Costs Budgeting: You will be required to provide an estimate of all costs for all Expert Witness tasks at the outset of the case. My recommendation is not to be lazy and simply give an estimate for what your clients ask; often the person asking does not know the case and what may or may not be required. I suggest you give an estimate for all tasks that you are typically asked to do on any case; make sure your estimate is “handsomely reasonable” ie not ridiculously excessive but may include a contingency, as it is likely to be impossible to change it later unless there is a clear reason why the assumptions on which the first estimate was based, have changed.

(3B) - Soft tissues claims – fixed costs reports

38.5 (3a) (4a & b) (5) SJE – payment of fees & expenses

PD35:

6.2 – Payment related to part 35.6 questions to experts.

The Guidance (17) clearly outlines the terms of appointment:

17. Terms of appointment should be agreed at the outset and should normally include:

a. the capacity in which the expert is to be appointed (e.g. party appointed expert or single joint expert);

b. The services required of the expert (e.g. provision of an experts report, answering questions in writing, attendance at meetings and attendance at court);

c. Time for delivery of the report;

d. The basis of the experts charges (e.g. daily or hourly rates and an estimate of the time likely to be required, or a fixed fee for the services). Parties must provide an estimate to the court of the costs of the proposed expert evidence and for each stage of the proceedings (CPR.35.4(2) ;

e. Travelling expenses and disbursements;

f. Cancellation charges;

g. Any fees for attending courts;

h. Time for making the payments;

i. Whether fees are to be paid by a third party;

j. If a party is publically funded, whether the experts charges will be subject to assessment; and

k. Guidance that the experts fees and expenses may be limited by the court

See also Guidance 26 (terms), 37 & 40 & 41 (SJE), 88 (Conditional fees “strongly discouraged”), 91a (cost penalties)

Alison Somek, CEO Somek & Associates, October 2017

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