Leading authority on legal costs law

I recently received the following exciting email from Lawyer Monthly magazine (never heard of it):

Lawyer Monthly Magazine

Legal Focus – UK – Costs Law

Dear Simon,

In the next edition of Lawyer Monthly, the Legal Focus editorial will be reporting on a number of key legal issues companies and organisations face relating to costs law within the UK.

Legal costs are a complex area of the law and it is constantly developing. As the profession of the costs draftsmen/lawyer evolves with current reforms, dealing with legal costs has become progressively more complex. The role of a costs lawyer has increased rights and responsibilities attached to it; a costs lawyer no longer deals predominantly with the task of preparing a calculation of legal costs but a lawyer now has the right to litigate on cost related matters and the right to an audience.

Costs lawyers are concerned with costs relating to all areas of the law and deal with every conceivable type of legal matter that touches upon the subject of costs. A costs lawyers’ skill is as essential to successful litigation as that of a solicitor or barrister, ensuring that their client’s potential risks are minimized and claimant solicitors are exposed to a dramatic cost risk if unsuccessful.

Lawyer Monthly will be delivering a feature on costs law, specifically focusing on the key legal challenges firms and organisations face and examining a number of key areas including:

• Overview of costs law and the role of a costs lawyer
• Developments in legislation
• The preparation of cost estimates
• Detailed assessment bills of costs
• Points of dispute
• The legal issues companies need to consider
• The role of a Costs Lawyer in commercial litigation

We are now seeking experienced professionals who practice in costs law to take part in this highly topical feature, commenting on the wider legal activity within this sector.

If you would like to take part two options are available.

Option 1 – £395.00GBP

1 x full page Q&A style interview discussing your practice area and your analysis of key sectors (max 400 words).

Option 2 – £495.00GBP

2 x full pages to include a Q&A style interview discussing your practice area and your analysis of key sectors (max 700 words).

In addition to your Q&A interview your personal or firm biography will be incorporated over 1/3 of a page, to include your logo, photograph and contact details.

Pricing structure:

If you would like to accept the proposal to become part of this feature, in the next edition of Lawyer Monthly magazine, then please contact me immediately.

Alternatively you can confirm your participation and entry by email confirmation, by replying to my email stating:

‘I confirm that I would like to participate in the feature under OPTION 1 at £395.00 GBP plus VAT where applicable’


‘I confirm that I would like to participate in the feature under OPTION 2 at £495.00 GBP plus VAT where applicable’

Upon confirmation, our Lawyer Monthly editorial team will be in contact with you to coordinate your response.

Kind Regards,
Chloë Tongue
Lawyer Monthly Magazine

I responded:

Dear Chloe,

I write further to your earlier email.

I currently write costs law related articles for a number of other legal publications including Costs Lawyer, Solicitors Journal, New Law Journal and Personal Injury Law Journal. However, it is always nice to be recognised as a leading authority on the subject by other legal publications.

Your proposed fee of £495 for a two-page article seems somewhat low for a writer of my status but, as a good will gesture, I am prepared to agree. If you can send a cheque for £495 plus VAT, made payable to “Gibbs Wyatt Stone” to the address below then, upon receipt, I will contact you to discuss further.

Yours sincerely,
Simon Gibbs

Strangely, I heard nothing further from them and can only assume there was a breakdown in communications. Hopefully they managed to find someone else to interview.


District Judge Richard Chapman, senior vice-president of the Association of Her Majesty’s District Judges, recently wrote in the Solicitors Journal:

“Senior Costs Judge Hurst has recently decided that interest on costs starts to run from the date of the costs certificate, not from the date when the order for costs was made, and further that such interest belongs to the client, not to the solicitors”

I think that may be a bit of an oversimplification of the Trafigura decision, although I note that my quick summary of the judgment when it came out said something similar.

Costs Law Articles Archive

Costs law is such a pervasive and ever changing area of law that even more generalist legal publications are a source of endless interesting articles on the subject. Unfortunately, many of these articles go the way of so many other legal articles and are read once and then disappear under a pile of other old legal journals never to be read again or go straight into the recycling bin.

In an effort to put this right, the Legal Costs Blog is delighted to announce the launch of the Costs Law Articles Archive over on Legal Costs Central.

This will feature an archive of costs law related articles written by some of the leading experts in the area. Because this is an archive of older articles it should be treated as no more than a starting place for research as many of the articles will inevitably have been overtaken by subsequent changes in the law.

The Costs Law Articles Archive is not intended to compete with legal print publications and those should always be the first port of call for those wanting to stay up to speed with latest developments (after reading the Legal Costs Blog of course). Rather, this is designed to compliment those publications by bringing under one roof a selection of articles that might otherwise be largely lost.

The first selection to be uploaded are some articles from the specialist costs team at Kings Chambers that were first published in the New Law Journal and includes discussions on staged success fees, VAT on legal costs and costs estimates. Many thanks to Kings Chambers and the New Law Journal for giving permission to reproduce these articles here. These articles are worth revisiting if for no other reason than to see how quickly matters have progressed in certain areas of costs law between then and now.

Over the coming weeks and months this archive will be added to. Readers should feel free to submit their own articles for inclusion although selection will ultimately be a matter for arbitrary editorial discretion.

Happy reading: Costs Law Articles Archive.

The alternative to a referral fee ban?

Dominic Regan, the Association of Costs Lawyers’ new special adviser, in an article about to appear in the New Law Journal, will suggest that those opposing the introduction of a ban on referral fees are making a mistake. Some solution is required to excessive costs in RTA claims and the alternative might well be an increase in the small claim track to £5,000. In Dominic’s words: “No costs, no referral fees and, oh yes, no solicitors. Is that what they want? It is what they might get”.



Howell v Lees-Millais – Costs management

The Association of Costs Lawyers’ new special adviser Dominic Regan, writing in the New Law Journal, discussed the case of Howell v Lees-Millais [2011] EWCA Civ 786.

This case concerned a Beddoes application (see Re Beddoe, Downes v Cottam (1893) 1 Ch 547). A trustee is enabled to seek guidance from the court on whether an action should be brought or defended at the expense of the estate. Here, unbelievably, the application took over 12 days of court time with 3,000 pages of evidence and costs exceeding £1,000,000.

Dominic commented:

“Having watched the costs pilot scheme in Birmingham under the firm but fair expert hand of HH J Simon Brown QC, I am now an utter convert to the idea of having a thorough directions hearing wherever possible. A competent judge will force the parties to take a realistic, proportionate approach. … Bring on Sir Rupert Jackson and quickly, please.”

Although it is difficult to object to the principle of firm case management by a judge, the problem is that it relies on suitably skilled and trained members of the judiciary. The original judge in this matter had strong case management powers but had allowed the original hearing of the application to run for eight days (an application which other judges have said should normally require “comparatively small expense” and was an “inexpensive method” of getting a decision). He then allowed a time estimate of a further ten days for argument as to who should pay the costs of the application.

Further, Dominic’s article also referred to some of the critical comments made about another judge’s conduct who had been involved in the same case at an earlier point. The management of a case is only as good as the judge with conduct.

The attitude of many judges to anything costs law related does not fill one with confidence that costs management will be a 100% success.

Costs incurred in litigation about estates

One of the amendments to the 57th Update to the Civil Procedure Rules, which comes into force on 1 October 2011, introduces costs capping rules in relation to trust funds.

What is peculiar about this change is, so far as I can see on a brief review, it does not give any guidance as to the factors the court is to take into account when deciding whether to make such an order. It purports to supplement CPR 44.17-20 which introduced the restrictive approach to such orders. However, the very introduction of the rule for this type of case and the fact the court is specifically permitted to consider making such an order of its own initiative implies that these may be made much more frequently than generally. The explanatory note reads: “Minor amendments are made to streamline the process and minimise work and costs incurred in litigation about estates”. Are costs capping orders coming back into vogue?

The relevant changes to the Costs Practice Direction are:

(1) After paragraph 23A.5, insert—


23B.1 In this Section “trust fund” means property which is the subject of a trust, and includes the estate of a deceased person.

23B.2 This Section contains additional provisions to enable—

(a) the parties to consider whether to apply for; and
(b) the court to consider whether to make of its own initiative,
a costs capping order in proceedings relating to trust funds.

It supplements rules 44.17-20 and Section 23A of this Practice Direction.

23B.3 Any party to such proceedings who intends to apply for an order for the payment of costs out of the trust fund must file and serve on all other parties written notice of that intention together with an estimate of the costs likely to be incurred by that party.

23B.4 The documents mentioned in paragraph 23B.3 must be filed and served—

(a) in a Part 7 claim, with the first statement of case; and
(b) in a Part 8 claim, with the evidence (or, if a defendant does not intend to serve and file evidence, with the acknowledgement of service).

23B.5 When proceedings first come before the court for directions the court may make a costs capping order of its own initiative whether or not any party has applied for such an order.”.

Defamation Proceedings Costs Management Scheme

Costs lawyers and law costs draftsmen not engaged in defamation proceedings may be forgiven for not getting too exited about the 57th Update to the Civil Procedure Rules extending the Defamation Proceedings Costs Management Scheme for another year. However, to do so would be a big mistake.  It would equally be a mistake for those who do not work in costs law to think the scheme is of no interest.

This pilot may well be the blueprint for costs management in all multi-track claims in the future. The relevant practice direction for the pilot is being amended. Previously the key section (5.6) read:

The judge conducting a detailed or summary assessment will have regard to the budget estimates of the receiving party and to any view previously expressed by the court pursuant to paragraph 5.3. Unless there has been a significant change in circumstances the judge will approve as reasonable and proportionate any costs claimed which fall within the last previously approved budget. Save in exceptional circumstances the judge will not approve as reasonable and proportionate any costs claimed which do not fall within the last previously approved budget.

What this means is that so long as the costs come in “on budget” then unless there has been a significant change in circumstances the costs claimed will be allowed. The budget acts as a cap on what will normally be allowed.

This section is now being changed to:

When assessing costs on the standard basis, the court—

(1) will have regard to the receiving party’s last approved budget; and
(2) will not depart from such approved budget unless satisfied that there is good reason to do so.

In my view, this is a fundamental change. This seems to suggest that the budget figure might be allowed even if that level of costs has not been incurred. Arguably, of course, this would require a change to the indemnity principle. However, we already have fixed fee rules elsewhere that allow for greater costs recovery than may reflect the level of costs incurred.

What place for detailed assessment if a party is claiming costs of no more than the budget?

On the other hand, does the change from “unless there has been a significant change” to “unless satisfied that there is a good reason” represent a watering down of the test when a party seeks more than the budget?

Here are the amendments, coming into force on 1st October 2011:

(1) In paragraph 1.1(1), for “1 October 2009 to 30 September 2011” substitute “1 October 2011 to 30 September 2012”.

(2) In paragraph 2(3), in the inserted paragraph 6.5, for “following” substitute “which substantially follows”.

(3) In paragraph 5.1, after “the reputational” insert “and public interest”.

(4) In paragraph 5.3, for “either by agreement between the parties or after hearing argument,”, substitute “to the extent the budgets are not agreed between the parties,”.

(5) After paragraph 5.3 insert—

“5.3A For the avoidance of doubt, the court cannot approve costs incurred before the date of the first costs management conference. However, the court may record its comments on those costs and should take those costs into account when considering the reasonableness and proportionality of all subsequent costs.

5.3B When approving or disapproving a budget, the court will not attempt to undertake a detailed assessment in advance, but will consider whether the budgeted totals for each stage of the work are with the broad range of reasonable and proportionate costs.”

(6) In paragraph 5.5, after “is not being” insert “or is likely to be”.

(7) For paragraph 5.6 substitute—

“5.6 When assessing costs on the standard basis, the court—
(1) will have regard to the receiving party’s last approved budget; and
(2) will not depart from such approved budget unless satisfied that there is good reason to do so.”

(8) For the “Precedent HA” substitute “Precedent HA” at Annex C.

Compensation culture still a myth?

The Insurance Times has reported that the volume of whiplash claims has shot up by a third over the past three years. Figures obtained from the Department of Work and Pensions show that 571,111 whiplash claims were registered with the Compensation Recovery Unit in 2010-11. This is a one-third jump on the widely quoted figure of 432,000 whiplash claims in the ABI’s 2009 whiplash report.

What really struck me was that this was reported to be against a backdrop of a fall from 247,780 to 208,648 in the number of all road traffic accidents reported to the police, according to Department for Transport statistics.

If my maths is correct (and it rarely is), that must mean that for every RTA reported to the police there are a corresponding 2.7 people who suffer whiplash. Given the large number of vehicles on the road with only one occupant (probably the majority), that would represent a farcically high injury rate.

You couldn’t make it up.

Oh. Actually you can. That’s the problem.