This month’s edition of Costs Lawyer magazine contains at article from the Association of Law Costs Draftsmen’s Chairman Iain Stark continuing the discussion on the issue, raised by an earlier article by District Judge Hill, of whether independent law costs draftsmen, who are not costs lawyers, are able to appear in court. (See my previous posts on the subject of Rights of audience of law costs draftsmen.)

The article, unsurprisingly, largely supports DJ Hills views.

One interesting point that was raised was the following:

“the ALCD at present regulates only individuals and not entities. As a consequence the rights conveyed to a costs lawyer are as an individual and cannot be extended to other persons. For example, where a costs lawyer is on the record, they cannot delegate their right of audience to a non-costs lawyer. Delegation is only permitted to another costs lawyer or member of the legal profession in receipt of such rights.”

If this is true, it is contrary to my reading of the Act. I am more than happy to be corrected here and the Legal Services Act 2007 has probably not won any Plain English awards.

Employed staff without rights of audience have traditionally been able to attend hearings heard “in chambers”. The Costs Lawyer article seeks to suggest that detailed assessment hearings cannot fall within this category because CPR 39.2 now treats such hearings as being “in public”.

I don’t believe that conclusion follows. PD 1.14 of CPR 39 states:

“References to hearings being in public or private or in a judge’s room contained in the Civil Procedure Rules (including the Rules of the Supreme Court and the County Court Rules scheduled to Part 50) and the practice directions which supplement them do not restrict any existing rights of audience or confer any new rights of audience in respect of applications or proceedings which under the rules previously in force would have been heard in court or in chambers respectively.”

A detailed assessment hearing can be treated as being both “in chambers” and “in public” with no apparent conflict so far as rights of audience are concerned.

Consider again paragraph 1(7) of Schedule 3 of the Act, which deals with “Exempt Persons” for the purpose of rights of audience:

“The person is exempt if -

(a) the person is an individual whose work includes assisting in the conduct of litigation,

(b) the person is assisting in the conduct of litigation -

(i) under instructions given (either generally or in relation to the proceedings) by an individual to whom sub-paragraph (8) applies, and

(ii) under the supervision of that individual, and

(c) the proceedings are being heard in chambers in the High Court or a county court and are not reserved family proceedings.”

Sub-paragraph (8), so far as relevant, refers to “any authorised person in relation to an activity which constitutes the conduct of litigation”. So a costs lawyer, who is authorised to conduct costs litigation, instructs a non-costs lawyer to undertake the advocacy in relation to a specific detailed assessment hearing. So long as the individual being instructed is properly supervised (whatever that means) do they not fall into the category of “exempt person”?

Even if DJ Hill is correct and rights of audience generally are restricted to direct employees of solicitors, in the context of costs proceedings this would apply equally to those working directly with/for costs lawyers (so long as supervision could be shown to be in place).

If my interpretation is correct (and I sleep soundly knowing there will be plenty to correct me if I am mistaken) the ALCD’s recent decision to upgrade large numbers of its membership to costs lawyer status has, for all practical purposes, also granted rights of audience to the very large number of non-costs lawyers who work with/for costs lawyers.

This follows on from yesterday’s post concerning rights of audience of law costs draftsmen. You will need to read that first to avoid any confusion over what follows.

(The ALCD was granted Authorised Body Status by The Association of Law Costs Draftsmen Order 2006 (S.I. 2006 no 3333) which came into force on 1st January 2007. As a result the Association may grant rights of audience and rights to conduct costs litigation to its members. Such members hold the title “Costs Lawyer”.)

Advocacy in detailed assessments was previously governed by the Courts and Legal Services Act 1990. This was repealed and replaced by the Legal Services Act 2007 (“the Act”) on 1 January 2010. Advocacy is treated as being a “reserved legal activity”. Costs Lawyers are authorised persons who can undertake the reserved activity of advocacy.

The Legal Services Act 2007 also allows “an exempt person” to perform certain reserved activities. In the words of District Judge Hill:

“An exempt person, see section 19, is a person determined as such by paragraph 1 of schedule 3 to the 2007 act. By this provision, the 2007 act recognises, as did the 1990 act, that, in certain circumstances, a person who is not authorised in accordance with the statutory scheme to exercise rights of audience may nevertheless do so.

The combined effect of sections 13 and 19 and paragraph 1(7) of schedule 3 to the 2007 act is to provide that, in certain circumstances, a person whose work includes assisting in the conduct of litigation is an exempt person for the purpose of exercising a right of audience.”

The crucial section of the Act appears to be paragraph 1(7) of Schedule 3 which deals with “Exempt Persons”:

“The person is exempt if -

(a) the person is an individual whose work includes assisting in the conduct of litigation,

(b) the person is assisting in the conduct of litigation -

(i) under instructions given (either generally or in relation to the proceedings) by an individual to whom sub-paragraph (8) applies, and

(ii) under the supervision of that individual, and

(c) the proceedings are being heard in chambers in the High Court or a county court and are not reserved family proceedings.”

The key passage in DJ Hill’s article was:

“Before the 1990 act, solicitors’ general rights of audience in both the High Court and the county courts when the court was sitting in chambers, extended to their responsible representatives, in particular, to solicitors’ clerks and legal executives. For many years persons employed by solicitors have been entitled to appear before the court when the court is sitting in chambers. This is recognised by long usage and it was not the purpose of the 1990 act, nor is it of the 2007 act, to restrict these long-established rights. But as I have already said, a disciplinary process is integral to a right of audience. If an employee of a solicitor misled the court or misbehaved, the firm which employed him would be liable and could be held accountable in a wasted costs order or in some other appropriate way. Furthermore, the Law Society has power to direct that no solicitor can employ a certain person where the person has been found guilty of inappropriate behaviour. So there is a disciplinary process that extends not only to solicitors, but also their employees.

With a self-employed agent there is no employer or disciplinary body to which he can be reported if he were to behave in an inappropriate way.”

It is interesting to note that DJ Hill does not appear to suggest there is anything within the wording of the Act which has caused a fundamental change in who may appear before the courts.

The crucial issue identified by DJ Hill is the existence of a disciplinary process. This places the focus firmly on regulation and not quality. A 16 year-old school leaver employed directly by a firm of solicitors would have a “right” to appear in court but the experienced and skilled independent costs draftsman would not as he is “unregulated”. In this context, the recent decision of the ALCD to lower the standard required from Costs Lawyers, much criticised in some quarters, does not look so strange. Regulation is to be seen as a tool to discipline those who “behave in an inappropriate way”, not to ensure high quality per se. (The Legal Services Institute has recently published an interesting paper, Reserved Legal Activities: History and Rationale, questioning the basis for various reserved legal activities including rights of audience.)

Examining the concerns of DJ Hill, the first problem he identifies is that where an “employee of a solicitor misled the court or misbehaved, the firm which employed him would be liable and could be held accountable in a wasted costs order or in some other appropriate way”, but this option would not apparently be open where a non-solicitor agent (eg independent costs draftsman) was instructed. Why not? The courts obviously could make the wasted costs order against the non-solicitor agent. But there would be nothing to prevent, and everything to encourage, such an order being made against the firm of solicitors who had instructed him. The firm would be highly unlikely to instruct the agent again and this should provide a powerful way to drive out those non-solicitor agents that the courts deem unsuitable.

Secondly, it is suggested that although the “Law Society has power to direct that no solicitor can employ a certain person where the person has been found guilty of inappropriate behaviour” this power would apparently not extend to those not employed directly. Again, why not? It would render the power of the Law Society somewhat empty if a solicitor could nevertheless instruct such a person to act as their “agent” so long as they were not directly “employed”. Given, in the past, the right of independent costs draftsmen to appear in court always rested on the principle that they were treated as being temporarily employed for the purposes of the hearing, the Law Society can surely direct that no solicitor was to employ (ie instruct) such an independent costs draftsmen and that would, effectively, end their costs career.

The courts appear to have more than sufficient powers to drive out “undesirables”.

Let’s examine paragraph 1(7) of Schedule 3 of the Act in more detail. It is to be noted that there is no mention of “employed”. Firstly this means that any sweeping statement that only individuals employed directly by the authorised person can appear before the courts is simply not supported by the wording. It also strongly implies that the Act envisaged situations where individuals other than those directly employed might indeed be instructed to appear in court. This itself strongly suggests that independent costs draftsmen are not automatically excluded.

The person is exempt if each of the following four conditions is satisfied:

1. “the person is an individual whose work includes assisting in the conduct of litigation”,
2. “the person is assisting in the conduct of litigation under instructions given (either generally or in relation to the proceedings) by an individual to whom sub-paragraph (8) applies”. Sub paragraph 8 basically refers to a person himself authorised in relation to the activity and simply means that you can only be instructed by an authorised person.
3. “the person is assisting in the conduct of litigation under the supervision of that individual”
4. “the proceedings are being heard in chambers in the High Court or a county court and are not reserved family proceedings”

An interesting (honestly) point arises out of 2 above but, generally, it is perfectly clear that an independent costs draftsman satisfies 1, 2 and 4 without any difficulty.

The only issue over which there could be any doubt is whether they are assisting under “supervision”. DJ Hill’s article makes no mention of this requirement and does not suggest anything hinges on this.

The question of supervision is an important one and combined with the courts powers discussed above should deal with any concerns about representation. “Supervision” is a concept susceptible to different standards of compliance and will be fact sensitive. Again, the idea that a non-solicitor agent/independent costs draftsmen could never meet this requirement is simply not what the rule says or suggests.

At one end of the scale is the solicitor who instructions an independent costs draftsmen with “full delegated authority” in relation to costs and has no further involvement in the matter until the costs are resolved. This would be, I would suggest, a clear case of there being a total lack of supervision. Given independent costs draftsmen should not be signing Bills of Costs, Points of Dispute or Replies it is doubtful whether this total absence of involvement ever occurs, at least where a matter has proceeded all the way to assessment.

At the other end of the scale, I would suggest, is the situation where the solicitor properly checks (I’m sure some really do) any Bill of Costs, Points of Dispute or Replies drafted, is involved in any negotiations (at least in terms of granting authority) and then agrees for the matter to proceed to a detailed assessment hearing and instruct the costs draftsman accordingly. It is hard to see what further “supervision” would be required. The solicitor is involved throughout the process.

Let us now return to Master Hurst’s decision in Ahmed v Powell [2003] EWHC 9011 (Costs), a decision concerned with the law as it was before the Act:

“The Defendant was properly represented by solicitors throughout and it was their responsibility to arrange for appropriate representation at the detailed assessment proceedings and to supervise that representation. There is nothing in my view inherently wrong in a requirement by an insurance company that, when costs come to be determined, a particular firm of costs draftsmen should be instructed. Those instructions must come from the instructing solicitors who have themselves been properly instructed and who are required to consider the claim for costs and advise the client.”

This decision was not concerned with Costs Lawyers (there being no such thing at the time) but with independent costs draftsmen. Despite the law at the time not using the term “supervise”, Master Hurst recognised that this was the key to independent costs draftsmen being allowed to appear in court. This decision can be treated as a clear authority (even if not binding and based on a slightly differently worded act) that an independent costs draftsmen would be entitled to appear before the court on detailed assessment under the Act so long as there is proper supervision and the solicitors properly consider the costs themselves.

In so far as DJ Hill’s views impact on independent costs draftsmen, and they clearly do, they depart radically from the way the courts have traditionally approached the issue. The fact that the Association of Law Costs Draftsmen was granted Authorised Body Status in 2007 was designed as no more than an “enabling” provision. It was designed to allow it to do what it had not previously been able to do (grant rights to certain members that they had previously not been able to exercise without instructions from solicitors). It was not designed as a limiting provision to restrict the rights of others. The ALCD clearly recognises this as they continue to seek protected body status.

There are no doubt strong arguments as to why those not directly regulated should not be allowed to appear before the courts, notwithstanding being properly supervised by a solicitor. However, this would require a dramatic change in the traditional approach of the courts. Such a step should require primary legislation.

The Senior Courts Costs Office shows no immediate signs of changing its practice of allowing independent costs draftsmen to appear before it.  It would be unfortunate if an unpredictable situation developed where different courts and different judges approached this important issue in different ways.  Those instructing law costs draftsmen, or those being instructed, are entitled to certainty over such a basic issue.

Given I’m a Costs Lawyer, perhaps I shouldn’t worry.

The following article will be of interest to the wider legal costs profession, those who instruct law costs draftsmen and particularly to independent costs draftsmen.

I am aware that members of the judiciary also read the Legal Costs Blog. They are likely to find this article particularly useful as they are likely to see an explosion in challenges in relation to those who appear before them.

The May 2010 edition of Costs Lawyer magazine contained an interview with Association of Law Costs Draftsmen (ALCD) chairman Iain Stark. It was reported:

“Mr Stark feels more immediate progress might be had in persuading the courts not to hear costs draftsmen without rights of audience. ‘The judiciary promotes the idea of professionalism among costs draftsmen, so it is has to start there. The mythical temporary employee was done away with in Crane’. He is especially puzzled that the practice continues in the Senior Court Costs Office. Mr Stark recognises it is also up to ALCD members ‘to stand up [in court] and say “he’s not a member”’.”

I had been planning on writing a response to those views at some point but the matter has now shot to the top of the costs agenda.

A recent article in the Law Society Gazette, from District Judge (and Regional Costs Judge) Hill, analysed the rights of audience of non-solicitor agents (see link). An edited version of the article has just appeared in Costs Lawyer magazine. The conclusion of the article, which was itself based on a recent judgment in York County Court, was that a non-solicitor agent had no right to appear when the court is sitting in chambers. Although the article was not concerned specifically with costs proceedings, it is clear that this would apply equally to law costs draftsmen who are not employed directly by a firm of solicitors and who are not qualified Costs Lawyers.

Costs Lawyers have rights of audience by virtue of being regulated by the ALCD.  For the rest of this article I will use the term “costs draftsmen” to refer to those who are not Costs Lawyers.

We need to go right back to basics here.

Rights of audience were previously governed by Section 27 of the Courts and Legal Services Act 1990 which, so far as relevant, read:

“27. Rights of Audience

(1) The question whether a person has a right of audience before a court or in relation to any proceedings, shall be determined solely in accordance with the provisions of this part.

(2) A person shall have a right of audience before a court in relation to any proceedings only in the following cases:

…

(e) where –

(i) he is employed (whether wholly or in part) or is otherwise engaged to assist in the conduct of litigation and is doing so under instructions given (either generally or in relation to the proceedings) by a qualified litigator; and

(ii) the proceedings are being heard in Chambers in the High Court or a County Court and are not reserved family proceedings.”

Detailed assessments, whether in county courts or in the Senior Courts Costs Office, are heard in chambers.

s27(2)(e)(i) was drafted widely and covered individuals employed (whether wholly or in part) or otherwise engaged to assist. In-house law costs draftsmen were clearly employed and were therefore covered. When an independent costs draftsman (ie one not working in-house) was instructed by a solicitor to appear on detailed assessment he was treated by the courts as being “temporarily” employed for the purposes of the assessment and allowed to appear by that route. In fact, on a close reading of the rules there was no requirement for the individual to be “employed”. It was sufficient that they were “engaged to assist in the conduct of the litigation”. This clearly covered independent costs draftsmen who had been properly instructed.

In Ahmed v Powell [2003] EWHC 9011 (Costs), Master Hurst considered the matter in some detail:

“Note 47.14.7 ‘Rights of audience on detailed assessment’ in the White Book is the note referred to by the District Judge at the hearing on 10 July 2002. That note is as follows:

“In detailed assessment proceedings, rights of audience may be exercised by any counsel properly instructed by solicitors, any solicitor or employee of a solicitor representing one of the parties to the proceedings. If the party is legally represented costs consultants, cost draftsmen and the like can only be heard on the basis that they are temporarily, and for the purpose of those detailed assessment proceedings, employees of the solicitors representing the party. The solicitors are responsible for the conduct of the detailed assessment proceedings and cannot avoid that responsibility merely by instructing a costs draftsman.”

The note then goes on to quote the decision of the Court of Appeal in Waterson Hicks v Eliopoulous, 14 November 1995 CA; Costs Law Reports (Core Volume) 363. That case involved the ostensible or actual authority for costs draftsmen instructed in detailed assessment proceedings. In the circumstances of the case it was not necessary for the court to reach a final decision on the point but certain views were expressed, first by Neill LJ (at 372):

“On the facts of the present case, however, I do not find it necessary to reach a final decision as to the ostensible authority of an independent costs draftsman, but I am inclined to the view that where a solicitor sends a costs draftsman to a taxation the other parties to the litigation are entitled to assume in the absence of any information to the contrary or unless the sums involved are very large, that the costs draftsman has the same authority as to the solicitor would have had to consent to orders which are not plainly collateral to the matters before the taxation officer.”

and second by Evans LJ (at 373):

“As regards the authority, actual or apparent, of an independent costs draftsman who attends before the taxing officer, it should be remembered that he can appear on behalf of the party only as a duly authorised representative of the solicitor who has instructed him to be there. The scope of his apparent authority would be the same, in my judgment, as that of any costs draftsman employed by the firm. It is unnecessary to decide in these proceedings where his authority would be co-extensive with that of the firm or of the solicitor himself.””

On the facts of the case, given the lack of proper instructions from the solicitors on record and the charging arrangement, Master Hurst concluded the particular costs negotiators did not have rights of audience and, given the charging arrangement, it would not be right to grant such rights.

However, the general principle that, in this case, unregulated costs negotiators could appear on detailed assessment was not questioned. As Master Hurst said:

“As a general rule costs negotiators do not appear before this court but there is no reason to suppose, given the nature of the work which they do, that they lack competence in their own field, nor is there any reason, if certain necessary criteria are met, why they should not appear.

In Crane v Canons Leisure Centre [2007] EWCA Civ 1352 the Court was concerned with whether work undertaken by independent costs draftsmen (referred to in the judgment as costs consultants and apparently not members of the ALCD) could be treated as part of the instructing solicitors’ profit costs such as to attract a success fee. The judgment explained that the costs consultants were instructed to conduct the detailed assessment of the claimant’s costs under delegated authority from the instructing solicitors and they then conducted detailed assessment proceedings before a costs officer.

Lord Justice May stated:

“When Costings Limited conducted the costs assessment hearing, their rights of audience rested on a fiction that they were employed by the solicitors and derived from section 27(2)(e) of the Courts and Legal Services Act 1990. The terms of this section include that the person may be employed or otherwise engaged to assist in the conduct of the litigation doing so under instructions given by a qualified litigator. The solicitors urge this in this appeal as an indicator that Costings Limited are to be taken as their employee. I do not consider that a provision about rights of audience has much to do with whether Costings Limited’s charges are profit costs or disbursements.”

Lady Justice Hallett said:

“Costings required rights of audience and instruction by a qualified litigator. They were, therefore, deemed to be temporary employees of Rowley Ashworth and, as such, assisted Rowley Ashworth in the conduct of the litigation.”

Therefore, contrary to Mr Stark’s interpretation of Crane, it was accepted that independent costs draftsmen could be treated as temporary employees and thereby achieve temporary rights of audience. Lord Justice May recognised that this may be a legal fiction designed to allow rights of audience to costs draftsmen but did not suggest it did not represent the law as it was. As mentioned above, the “employed” element was not actually a requirement of the rules.

If the Court of Appeal had held a different view then the outcome in Crane would have been totally different. The question of whether the work done by the costs draftsmen attracted a success fee would have been answered on the basis that they had no right to do what they had done, they had acted unlawfully and there was no entitlement to recover any of their costs, let alone a success fee.

The fact that the costs consultants in Crane were apparently acting “under delegated authority” is an interesting one and I will come back to this.

The Supreme Court Costs Office Guide 2006 states at 1.2(d):

“At present independent costs draftsmen have no rights of audience as such but, by concession, are treated as if they are in the employ of the firm of solicitors instructing them. … It has been proposed that the Association of Law Costs Draftsmen should be authorised to grant rights of audience and rights to conduct litigation to certain of its members when participating in detailed assessments.”

Hoffman’s Costs Cases – A Civil Guide (3rd Edition, 2003) states:

“Costs draftsmen who are independently employed had been allowed to appear before costs judges on the basis that they are a clerk in the employment of the solicitors.”

Hurst’s Civil Costs (4th Edition, 2007) states in relation to detailed assessment proceedings:

“Costs consultants, costs draftsmen and the like, are heard on the basis that they are temporarily and for the purpose of those proceedings, employees of the solicitors.”

It is therefore clear that under the Courts and Legal Services Act 1990, the Court of Appeal, the Senior Costs Judge, the SCCO and costs text books, not to mention county courts up and down the country, recognised that independent costs draftsmen properly instructed by the solicitor on record could appear in detailed assessments.

I don’t recall the ALCD ever suggesting the position was anything other than this before they became able to grant rights of audience themselves.

The Courts and Legal Services Act 1990 was repealed and replaced by the Legal Services Act 2007 on 1 January 2010. Tomorrow we’ll examine what changes, if any, this has made to the rights of independent costs draftsmen.