Fixed costs – Another Jackson myth

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At this year’s Association of Costs Lawyers’ National Conference, one of the guest speakers, a regional costs judge, observed that the introduction of fixed fees for fast-track personal injury matters was not something that those present needed to be concerned about as most fast-track matters were currently dealt with by way of summary assessment.

The logic was presumably that costs lawyers did not currently see much fast-track costs work as this was dealt with by way of summary assessment at the conclusion of a trial and the introduction of fixed fees would therefore make no real difference to costs lawyers’ workloads.

It is noteworthy that even a judge with a genuine interest in legal costs related matters should have reached this conclusion. This is much the same mistake that Lord Woolf made with his civil justice reforms. He assumed that the costs of preparing for trial would have to be incurred at some stage in any event and it therefore made sense for such costs to be incurred at an early stage in the hope that this would increase the likelihood and speed of settlement. What he overlooked was the fact that the vast majority of cases settled pre-trial and often with limited disclosure. His front-loading of case preparation meant that a large amount of expensive work is now unnecessarily incurred.

Members of the judiciary, inevitably, only see the cases that are litigated and assume that these are typical with a large number of these making it all the way to trial. In reality, of course, the vast majority of cases settle pre-proceedings. For litigated matters, most settle well before trial. Even for those cases that do run close to trial, a high proportion still settle before they actually reach the door of the court. None of these cases are dealt with by way of summary assessment. For all these fast-track claims it is necessary for someone at the receiving party’s end to quantify the costs that have been incurred and then for someone at the paying party’s end to scrutinise the costs claimed. Some of those cases will make it all the way to detailed assessment.

For most law costs draftsmen working in the personal injury field, fixed costs for the fast-track is indeed something to worry about.

Costs budgeting

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Is costs budgeting and costs management going to come to the rescue of costs lawyers and law costs draftsmen once Jackson in implemented?  My article on this topic can be read on the Solicitors Journal website.


New legal costs businesses

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Gibbs Wyatt Stone has just celebrated its fifth anniversary. (During that time GWS has gone from strength-to-strength … blah, blah, blah … growing reputation … blah, blah, blah … ever growing list of important clients … blah, blah, blah.)

Traditional wisdom is that the first year for any new business is the most difficult, and the period during which most fail, but if a business can reach the five years mark then it has very good prospects for the long term.

However, with recent announcements, I suspect the next five years are going to be just as “challenging” as the first five.

Interestingly, despite Jackson casting his shadow over the costs world, the last couple of years seem to have seen a very high level of new start-up costs ventures. Why should that be? Has it been wishful thinking that Jackson would not happen? Has it been an acknowledgment that Jackson would happen, the gravy train was about to end, but a hope to make as much money as possible before the end, with self-employment seen as the best opportunity? Has it been an acknowledgment that some firms were unlikely to survive – and would certainly not be continuing to pay generous wages before the end – and decisions have been taken to jump (into self-employment) before being pushed being pushed (into unemployment) in the hope of carving out a niche in the market ahead of Jackson implementation?

I’d be interested to hear readers’ views, although for once I think we’d all understand if these were anonymous.

New Association of Costs Lawyers’ Council member

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I spent much of Saturday being carried aloft by crowds of cheering costs lawyers following my surprise election to the Association of Costs Lawyers’ Council.

The election as a whole was a surprisingly close run thing, with the voting suggesting a fairly wide, and possibly relatively evenly balanced, range of views amongst the membership about the future. Now that these differences have been fully aired, I am sure that the whole Council (with its new member) will shift the focus onto the common ground (and the differences have perhaps been overemphasised at the expense of overlooking the large amount of common ground). Although I will be but a single voice on the Council, I will strive to advance as many of my stated goals as possible.

Over the weekend, and before the election results had been declared, a number of those attending the ACL National Conference informed me that I had received their vote. Various different reasons were given as to why I had received their votes, but they mainly boiled down to: “we’d rather have you on the inside pissing out than the outside pissing in”. I guess that’s the closest I’ll ever get to a ringing endorsement.

Association of Costs Lawyers launch

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The following is an edited version of the address given by Iain Stark, chairman of the Association of Costs Lawyers, at the recent launch of the Association’s new name, which appeared in Costs Lawyer magazine, and is reproduced with his kind permission:

Henry Ford once said that coming together is the beginning. Keeping together is progress. Working together is success.

We have now formally marked the birth of the Association of Costs Lawyers, which reflects the hard work of my predecessors since the inception of the Association in 1977.

The rights and responsibilities attaching to Costs Lawyers mean that no longer can members of the Association be constrained to the description of draftsmen, charge predominantly with the task of preparing a calculation of legal costs.

You will have read elsewhere in this issue that the standing of a Costs Lawyer has been elevated by the introduction by the Legal Services Commission of a policy providing that a Costs Lawyer with a practicing certificate, who is an authorised litigator in accordance with the Courts and Services Act 1990, will henceforth be able to sign forms.

This will be welcomed by Costs Lawyers, their clients and employers. It will speed up the process of claims for the claimant and will also enable independent Costs Lawyers to add an extra service to their clients. This right will become all the more important if and when online billing is introduced. Will this be the catalyst for the preparation of bills of costs to become a reserved activity?

Solid foundation

As a profession, we’ve undertaken change and must continue to evolve if we are to keep pace with the current reforms in relation to legal costs generally. We must look to the future and embrace the reforms by diversifying and utilising our new-found status as Costs Lawyers to facilitate growth within our profession. Failure to do so and to remain stagnant will lead to our demise.

The unification of the membership provides a solid foundation upon which to grow. He who rejects change is the architect of decay. The only human institution which rejects progress is the cemetery.

An element within the legal costs community fear for their jobs. The inference drawn from Lord Justice Jackson’s report led many practising within the legal costs industry to fear for the future of the profession. This has been further amplified by the invitation to frontline regulators to respond to the consultation for the reform of legal aid funding in England and Wales.

We are entering a period of great change where the Association as frontline regulator must have a voice in moulding the future of legal costs. The recognised status of the Costs Lawyer can provide a platform from which to do this.

As I look back to 2006/7, it is clear that part 1 of the Legal Services Act has been the driving force behind the inevitable changes that had to occur if, as an Association, we were to have a future. I strongly believe that regulation affords us the opportunity to aspire to become the driving force in legal costs.

The Legal Services Act contains ‘professional principles’. These apply to services provided by authorised persons, including services which do not involve the carrying out of activities which are defined as reserved legal activities, such as bill preparation.

The professional principles are that an authorised person should act with independence and integrity. An authorised person should maintain proper standards of work. An authorised person should act in the best interests of their clients. That persons who exercise before any court a right of audience or who conduct litigation, must act with independence in the interests of justice. And that the affairs of their clients should be kept confidential.

As authorised persons, professional principles are what set Costs Lawyers apart from those within the legal costs industry who are not regulated. In my firm opinion, this must be to our advantage.

Embracing regulation

With the passage of the Legal Services Act and a necessity for regulation within the legal community generally, the importance of a Costs Lawyer affords assurances for the wider legal profession and public. The Act defines a Costs Lawyer by complying with professional principles. To retain a Costs Lawyer ensures professional standards through regulation. It is not only important that as an Association we embrace regulation. It is vital for our future if we are grow and fulfil our role as a frontline regulator.

With the advent of the Costs Lawyers Standards Board, the retention of the services of a member of this Association guarantees standards akin to any other regulator professional practising within the law. As such, the skill of a Costs Lawyer must be viewed as an integral part of any litigation.

With this in mind, it is my wish that only individuals entitled to carry out reserved activities appear in the future. With the status of Costs Lawyer, it is my hope and aspiration that the current trend to allow individuals who have not been granted rights of audience cease. To ignore the status of a Costs Lawyer when appearing in court is a discourtesy to those who have worked so hard to obtain recognition.

So, what for the future? Well, it must be for the Association to continue to raise the bar insofar as standards are concerned within the legal costs community at large. To encourage those non-members practicing within legal costs to join the Association. And as an Association and frontline regulator, we must continue this proactive approach.

Put simply, the Association has come of age and through regulating members we must become an integral component in the future of defining legal costs. If success is measured by what is as an Association we have achieved to date, whilst I accept we’ve got a long way to go, we are reaching our goals.

I may have read too much into this but I thought I detected a subtle nod of approval for my candidacy for the ACL Council.

Keep pedalling

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In recent years the call for ever closer European integration has grown much quieter. Those in this country who argued that joining the single currency would lead to growth and economic stability have fallen strangely silent in light of events in Greece, Ireland, etc.

However, going back a few years, those at the heart of the European project used to use the analogy of the EU being like a bicycle and that if members stopped pedalling forwards it would fall over. This naturally begged the question as to what the ultimate destination would be. Single taxation system? Single legal system? Single language? Single country?

As an analogy it was never very convincing. If I use a bicycle, it is to get from A to B. When I get to B, I stop pedalling and get off. Call me old fashioned.

Whatever the valid arguments were in favour of closer EU integration, avoiding the total collapse of the EU has never been one of them.

In fact, whenever an argument for change is presented on the basis that we “must move forward” in a certain direction or such-and-such an organisation will “die”, you can be sure that you are being presented with a false choice and faulty logic is being deployed to seek support for the particular change of direction favoured by the proponents of that new direction.

This is the type of false choice much loved by politicians. “This reform is designed to help the poorest and most vulnerable is society”. Implicit in the statement is that those who want to help the “poorest and most vulnerable” will have to support the policy and that those who oppose the policy are cruel and wicked people who don’t care for the poor and vulnerable. It avoids having to engage in the arguments as to whether it actually is a good policy or whether it will even achieve its stated aims. It becomes a simplistic “good vs evil” proposition. Change for the good vs maintaining the evil status quo.

Naturally, all organisations must be willing to adapt to a changing world. This does not just mean being willing to move forward from where one was five years ago. It may also mean that sudden developments in the last year or two might mean it is appropriate to review the direction that was set out upon three or four years ago. To quote John Maynard Keynes: “When the facts change, I change my mind. What do you do, sir?”.

Changing times almost invariably bring difficult choices. But to suggest that the choice is always limited between choosing one direction or choosing total self-destruction is rarely true.

Sorry, I don’t know what brought this on. I usually try to steer well clear of discussing European politics on the Legal Costs Blog.

Lawtel subscription rates

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I recently commented on some of the benefits of membership of the Association of Costs Lawyers (ACL) which included discounted subscription fees for Lawtel. I’m now going to have to remove that benefit from the list.

When the existing annual Lawtel subscriptions of some ACL members were coming up for renewal those members had the temerity to ask Lawtel for their subscriptions to be renewed on the same discounted terms that the ACL had negotiated. This was done for no better reason that:

They were also ACL members.

They thought that Lawtel might be prepared to recognise their Lawtel loyalty by extending the same discounted rates as had been offered to various Johnny-come-latelies who had not been previous Lawtel users.

Well, Lawtel was obviously not going to put up with any of that kind of nonsense. They immediately:

Threw their toys out of the pram.

Withdrew the ACL discount for other ACL members.

Cancelled their stall at the forthcoming ACL Annual Conference.

I guess it takes years of training in sales and marketing before it’s possible to run such a smooth operation.

The future for Costs Lawyers?

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Following on from the last couple of posts, today I’m going to explore a possible future for a regulated costs profession.

My own view is that the ACL’s training programme’s current modular structure should remain, with some possible adjustments, and a further specific advocacy module be added. Training for individuals should be adaptable for the needs of those joining. This is, after all, a vocational course. If a member worked for a volume negotiating firm they might chose just to take the General and Civil Costs module. If they also wanted to exercise rights of audience, they could choose to take that additional module. Those who worked in legal aid only could take the corresponding module. I don’t see this as being a case of dumbing-down. Indeed, this might be an ideal opportunity to review the decision to lower the academic standard of Costs Lawyers to the old Association standard from the previous Fellow standard. Post-Jackson there will an increased need for true expertise amongst those left, not less. There is no self-evident reason why Costs Lawyer status should not be granted to members on the back of this suggested model. I don’t know the first thing about legal aid law and they let me in as a Costs Lawyer. I can’t be the only one. There is no reason to suppose that Costs Lawyers of the future will need a broader knowledge of costs law than at present (especially in relation to a dwindling legal aid market). They may well need a deeper knowledge.

One of the counter arguments to the above is that some other professions (eg the Bar) do indeed require those training to study areas of law where they probably will not actually practise (eg studying criminal procedure despite having already secured a pupillage in a purely Chancery chambers). To which my response is: so what? I fail to see any reason to impose unnecessary training/entry requirements on this profession. Costs Lawyers should be properly trained for the work they actually do.

A second objection is how will members of the public (or more often the wider legal profession) know that a Costs Lawyer is competent to deal with any given area if not all Costs Lawyers have trained in every area of costs law? To this there are a number of answers:

• How do they know now? I’m a Costs Lawyer and I wouldn’t be remotely competent to deal with a legal aid matter (or at least not without no small amount of research).

• Members of the Bar may be “allowed” to accept instructions in any area of law once qualified but they are also under a professional duty not to accept instructions in a case if the barrister “lacks sufficient experience or competence to handle the matter”. Exactly the same should apply to Costs Lawyers (if it doesn’t already) and nothing further should be needed.

• If something else is considered needed, a simple rule could be introduced that Costs Lawyers may not act in an area of costs law where they have not completed the corresponding module.

What about the removal of entry to the ACL by examination route? Reintroduce. I do not accept that this route represented a “smear on the association’s history” as one reader recently suggested. Perhaps I am just saying that by virtue of the fact that this is the route by which I gained entry. However, it was no cakewalk. I would see the examination route mirroring my proposed four training modules. To gain Costs Lawyer status would require passing an examination based on at least one of the first three modules. To be able to exercise rights of audience would require passing the corresponding examination/test (probably something equivalent to that required for solicitors gaining higher rights of audience). Of course, it would be a matter for the CLSB to set the standard for entry by examination and I would encourage them to set it at an appropriately robust level.

(There seems every possibility that the CLSB will decide in any event that existing members should be subject to an advocacy accreditation process if they are too continue to exercise rights of audience.)

Now is the time to recognise that the “traditional law costs draftsman” is an important part of the costs world but in a (growing?) minority. The relaunching of the Association of Costs Lawyers is the ideal time to start to recognise this and have a membership structure that also recognises this. This may encourage the legal aid draftsmen to stay in the Association. It may also encourage the large numbers outside the Association that now is the time to consider joining.

Goodbye traditional law costs draftsmen?

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Some of you may know the story of the boy who was appearing in a parade. His proud watching mother is heard to say: “Ooh look – our Archie’s the only one marching in step”.

Laughs all round.

Actually, the mother may not be as silly as she sounds. For a number of years I had to march on a daily basis to a full marching band. (By a strange coincidence I believe Lord Justice Jackson marched to the same band.) Now, I have no understanding of things musical, but I did learn that the big drums in the band beat out not only the pace of those marching but also dictate the “left, right” part. It is therefore perfectly possible to be the only one marching in step.

I always console myself with this thought when finding myself in a minority of one.

This post continues yesterday’s on the subject of whether all Costs Lawyers need to fit into the same mould.

A number of years ago, during the heyday of the costs negotiating industry, the ALCD, as it was, held discussions with a number of the major costs negotiating firms to explore the idea of employees of those firms joining the Association. This appeared to be a sensible initiative. This was back at the height of the costs wars and before the introduction of the predicable costs regime when that part of “industry” was at its peak. The Association had a chance to become truly representative of a far larger proportion of the costs profession/industry than it then was and there were potential benefits to the costs negotiating firms of an Association that was, at the time, beginning to introduce a proper costs training programme. I attended a joint meeting with other costs firm and representatives from the Association as I was, at the time, a senior manager with one of the major costs negotiating firms. Although the discussions were positive, nothing further happened.

When the issue was subsequently resurrected I wrote to the Association and the letter was subsequently published in the ALCD Journal (see letter). This is all the way back in June 2003. The thrust of my letter was that the training programme required at the time for those joining the ALCD was too wide for those who practised in the cost negotiating industry. The ALCD training programme required proficiency in all types of costs work (including for example legal aid and solicitor/own client work) whereas cost negotiators tended to work in the limited area of between-the-parties costs disputes (and predominantly personal injury at that).

From memory, and others may be able to correct me on this, the Association considered whether to introduce a reformed training programme to take into account the more limited needs of non-traditional costs draftsmen. I believe that a decision was taken to make concessions for those costs draftsmen who undertook just legal aid work but the training requirements were otherwise left unaltered. Presumably, and this is where I simply speculate, the members of the Association as the time (or at least the Council) decided that the Association should remain one designed for traditional independent law costs draftsmen and that alterations of the kind I had suggested would change, for the worse, the nature of the Association.

The Association therefore took the decision to remain a body exclusively for what I will term “traditional law costs draftsmen”. It also meant, of course, that the large numbers working in costs but not as “traditional law costs draftsmen” did not join. As at 31 December 2009 there were 764 members of the ALCD. The Association estimates there are currently “5,000 people working as unqualified and unregulated costs draftsmen”. (It is not clear whether this includes the large number who work in-house for firms of solicitors and are therefore regulated but not by the ACL.)

When the ALCD was a purely representative body, it could choose who it wanted to represent and how. Now the ACL is regulated by the CLSB. If the ACL is to encourage, as it has set out to do, the other 5,000 people to join the Association, or if the ACL were to achieve protected body status and the whole costs profession was thereby required to join, or if the profession has had protected body status all along and it is only a question of time before this is appreciated and non-members come flocking to join, then I am of the view the question of what a costs draftsman/costs lawyer is needs to be re-examined.

This is particularly import given the recent decision of the ACL to scrap the Fellowship entry route to membership and require henceforth all new members to complete the full modular training course.

If the CLSB is, or is to become, the gatekeeper to entry to the costs profession, what should this mean? Who should they be letting in and who should they be keeping out?

If there ever was a time when the majority of those working in costs were all “traditional law costs draftsmen”, I would suggest that time has long gone. Although there are no doubt many who would still fall into that category, I would suggest they are a minority. A far larger number will deal exclusively in a limited area, such as between-the-parties costs or legal aid.

The ACL modular training programme, from a quick glance at its website, is broken down into the following three modules:

• General and Civil Costs.

• Solicitor and Client Costs, Special Courts and Tribunals.

• Public Funding/Legal Aid.

Each of these modules is therefore now compulsory for new members. The cost of each module is about £1,000. As a general proposition, I would suggest the ACL is going to struggle to increase membership on a voluntary basis amongst established costs draftsmen given the combination of cost, time commitment and the possible requirement to study an area where one has no intention of practising.

Frankly, given the likely legal aid shakeup, in a couple of years time there will be more people in the country who can say they were once a contestant on Big Brother than will be able to say they currently undertake legal aid costs work. It is entirely sensible to retain a module for this area for those who work or want to work in it, but I see no need or advantage in making it compulsory for the majority who do not and will not. Indeed, if the legal aid shake-up is half as bad as feared, the last thing the profession needs is more people trained in this area.

The Association should celebrate diversity amongst it members and the CLSB should accommodate it. It’s possible, for example, to become a barrister (or at least it was when I was training) having never studied family law. Is it right for it to be impossible to become a Costs Lawyer without studying legal aid costs? The CLSB, if it is to regulate the whole costs profession, should do so by recognising the reality of the composition of the wider profession and not be constrained by a rather outdated ALCD model which was designed to cater for a small sub-section of those who worked in costs.  

Tomorrow I’ll explore the alternatives.

Everyone a Costs Lawyer?

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There are a number of interesting developments occurring in the costs world at the moment, a number of which interlink. The Jackson implementation consultation and legal aid reform consultation both close today (although parts of Jackson are already being implemented by the courts) , this week sees the relaunch of the Association of Law Costs Draftsmen as the Association of Costs Lawyers (ACL), the Costs Lawyer Standards Board (CLSB) is being established to regulate Costs Lawyers, the ACL has announced plans to encourage the “5,000 people working as unqualified and unregulated costs draftsmen” to join the ACL, the recent publication of District Judge Hill’s article suggesting that the ACL had already – at least so far as advocacy is concerned – achieved protected body status (to the surprise of some), the ACL continues (presumably) to work towards achieving protected body status (in case DJ Hill proves to be incorrect), and upcoming elections to the ACL Council.

The March 2010 edition of Costs Lawyer magazine explained the ACL’s action plan:

“At present, the ALCD has four tiers of membership: Costs Lawyer, Fellow, Associate and Student. Eventually [emphasis added] the ALCD should emulate other regulators, having two membership levels: trainee and full”

At the ALCD AGM in March 2010 the Association voted overwhelmingly in favour of the proposal:

“The ALCD seeks the support of its membership to continue to meet its obligations as an authorised regulator, given the additional expense required to do so”

Although “overwhelmingly” should be put in the context that only around 20% of eligible members bothered to vote (such is democracy).

The May 2010 edition of Costs Lawyer magazine gave the ALCD’s chairman’s view that:

“Mr Stark is convinced that Associate and Fellow levels need to be abolished, so that there are either students or costs lawyers. He does, however, appreciate that this change is going to have to be sold [emphasis added] to those Associates and Fellows who have no need for the rights costs lawyer status brings.”

The July 2010 edition of Costs Lawyer magazine announced, with no obvious attempt in the interim to “sell” this change, that with immediate effect all Associates would be upgraded to Fellow status and by 1 January 2012 all existing Fellows would need to attend the Costs Lawyer course so only trainees and Costs Lawyers would remain. The chairman explained:

“If one compares the current membership structure of the ALCD with other frontline approved regulators such as the Law Society (trainee solicitor and solicitor) and the Bar (pupil and barrister), it is clear that the entire membership must be regulated and conform to recognised practice. … It is inevitable that these major changes will attract criticism from some members.”

In a response by the ALCD Council to a previous posting on the Legal Costs Blog it was explained:

“The ALCD is leaving behind its status as a trade association and is becoming (or, more accurately, is creating) a regulatory body. The rights which it will regulate include rights of audience and rights to provide legal services, and may in due course include the right to practise reserved legal activities. This means that the relevant test has to be one of competence, not excellence. The ALCD would be failing in its duty to entrants and the public if it were to set the bar so high that only a select few could clear it.”

Now, I’m going to stick my neck out here and suggest that the decision to reduce the categories of members to two had little or nothing to do with bringing the Association in line with other regulated bodies, modernisation or ensuring that the bar was not set to high, but was all to do with cost.

But, let’s examine the justification given in passing:

• Bar – pupil, barrister, QC (OK, I know I’m stretching that one)

• Law Society – trainee solicitor, solicitor, solicitor with higher courts rights of audience, solicitors with membership of various accreditation schemes

• ILEX – Student, Affiliate, Associate, Graduate, Fellow

There was an inevitable cost to the ALCD of remaining a regulated body due to the need to set-up and fund the CLSB. There were two ways to cover these costs. The first was for existing Costs Lawyers – who can take advantage of the rights that are available by virtue of that status – to pay the additional cost. The alternative was to spread the cost as widely as possible across the full membership, including those who had no need to exercise such rights. The Council opted for the latter approach by upgrading everyone to Costs Lawyer. There was a perfectly arguable case for this decision as the cost to each member of the ACL remaining a regulated body had to remain proportionate to the benefits. However, this debate was never opened with the membership.

The October 2010 edition of Costs Lawyer magazine had the chairman state:

“The cost of regulation must be borne by the entire membership; there is therefore no alternative to the reform of the membership structure.”

It’s not clear why the second conclusion follows the first or why the first is even true. It certainly does not follow that all members must pay the cost equally if they do not all benefit equally. Why, for example, should someone who is retired but wishes to remain a member pay towards the costs of regulation at all?

The end result it that some members have seen significantly increased membership fees for no personal benefit. Some seem to have voted with their feet and have not renewed their membership. Others have renewed this year in the hope that something can be done but may well not renew next year if there is no change.

Now, the ACL should not be blackmailed by any one part of its membership. On the other hand, this is not really the time for the ACL to be shedding members unnecessarily.

My firm, thank God, doesn’t do legal aid work – and it is those who work in this area who are probably most effected. However, I tend to agree that fairness dictates that the cost of regulation should be borne by those, such as myself, who benefit from the rights, such as they are. It may, of course, be that redistributing the cost of regulation would more sharply focus the mind on whether the cost of regulation is worth the benefit. So be it.

Absolutely fascinating though this all is, what this post is actually leading up to – in a typically long-winded fashion – is what should a regulated costs lawyer look like? Is there room for those who practise just in the field of legal aid? Does one size fit all? These questions are now passing out of the hands of the ACL and moving into the hands of the CLSB. If the ACL wishes to persuade a larger proportion of those who work in costs to join the Association and become regulated, or non-members find they are forced to join (because costs already is, or becomes in the future, a reserved activity) this question needs to be properly explored. Which is what I will do tomorrow.

Click image to enlarge:

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