Adjudication for Specialist Sub-Contractors – Sharing the risk – “Fee Flex”
Peter Vinden, CEO of The Vinden Partnership (“TVP”), explains TVP’s Fee Flex approach to assisting specialist sub-contractors recovering disputed accounts through the adjudication process.
There is no doubt about it. Adjudication is simply no longer the quick D.I.Y. process that, perhaps, parliament intended it would be when the original act of parliament was first introduced in May 1998. 21 years of legal and practice developments have undoubtedly morphed the process into one which is, in my view, more akin to fast track arbitration. There is no doubt that these developments have taken their toll on the process and frightened off many a potential claimant in adjudication.
Multiple submissions, jurisdiction challenges and hearings are now the order of the day and, perhaps not surprisingly, many specialist sub-contractors are simply shying away from using a process which, although arguably was introduced for their benefit, is now one which is fraught with difficulties.
How many specialist sub-contractors have valid claims against contractors but are not prepared to run their claims in adjudication because of perfectly valid concerns over the cost of representation?
Is there an answer to this problem?
How does a specialist sub-contractor decide if its advisors really believe in the case?
Could it be that the advisor is just along for the fees?
Is the answer to entice your representative to have some or all of “its skin in the game”?
No win no fee representation?
Is TVP prepared to run “no win no fee” adjudications for specialist sub-contractors? The answer to this question is yes, but nobody should pretend that there is such a thing as a free lunch and, just like any other firm, we have to price in the risk of failure to such arrangements. So “no win no fee” adjudication representation has to include an upside for TVP if we are to share in the risk of the outcome, good or bad.
TVP’s Fee Flex approach to sharing risk in adjudication
The initial assessment of the prospects for success in a dispute is the key to deciding whether or not a specialist sub-contractor should abandon its claim, negotiate (if this is a realistic option) or adjudicate if this is an available option.
TVP charges a fixed assessment fee of £2,250.00 plus VAT to assess a case which includes:
- meeting with a prospective client
- discussing the background to the dispute
- conducting a limited review of the available documents
- providing a letter of advice detailing the prospect for success, recommendations and a menu of fee options for the client to consider.
Going forward and in relation to the menu of Fee Flex options, this includes everything from a straight “no win no fee” arrangement, with TVP taking an agreed percentage of the award, reduced time charges and a reduced percentage of the award, through to normal time charges. The client decides which option it prefers.
As an illustration, on a disputed interim application for payment for £100,000, TVP’s client might be given the opportunity to choose from three potential fee options:
- OPTION A
No win no fee. Based on 20% of the decision. Fee on full recovery of claim = £22,500 plus VAT. TVP actual total fee (£2,250 + £20,000 = £22,250 + VAT) as a percentage of actual recovery = 22.25%
- OPTION B
Partial success fee. Based on £75 per hour plus VAT and 10% of the Decision value. Estimated fee on full recovery based on 70 hours of time = £17,500 plus VAT. TVP actual total fee (£2,250 + £5,5250 + £10,000 = £17,500 + VAT) as a percentage of actual recovery = 17.50%
- OPTION C
Straight time charges. Based on time charges at £175 per hours. Estimated fee on full recovery based on 70 hours of time at £175 per hours = £12,250 plus VAT. TVP actual total fee (£12,250) as a percentage of actual recovery = 12.25%
What is not included
TVP does not include any fees in its proposal for enforcing an adjudicator’s decision or in seeking a formal legal opinion from Counsel if required.
Why does this mechanism work?
Whilst it is completely against the ethos of TVP to advise any client to consider launching an adjudication that we do not believe in, the reality is that specialist sub-contractors are rightly cynical, believe that words are cheap and consider that any advisor worth its salt should have skin in the game.
Offering clients a menu of fee options with different levels of risk participation is TVP’s way of demonstrating that it is listening to industry concerns.
For a private and confidential discussion on any dispute you are involved in, contact us by email at [email protected] or call us on 0845 504 9733.