Costs Lawyer insurance requirements


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The Costs Lawyer Standards Board’s Practising Rules for Costs Layers states:

“With the exception of those who are employees of a Solicitors firm, Costs Lawyer firm, Insurance firm or other alternative business structure on a PAYE basis, a Costs Lawyer shall ensure that:

(a) professional indemnity insurance is in place at all times with minimum cover of £100,000 together with loss of documents cover”

The rules do not appear to define a “Costs Lawyer firm” and, indeed, there is no entity regulation for Costs Lawyers meaning there are no insurance requirements placed on such firms.

Unless I have missed something, this means that although an independent Costs Lawyer or one in a partnership is required to have such insurance to practise, an employed Costs Lawyer is not.

Why?

My recollection is that the old Association of Law Costs Draftsmen’s rules required all members to have professional indemnity insurance whether personally or through their employer. That seemed perfectly sensible and workable. Is this not the case now?

Any don’t even get me started on the issue of whether £100,000 cover is a reasonable minimum.

Association of Costs Lawyers membership review?


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One of the requirements imposed on the Association of Costs Lawyers (ACL) by the Legal Services Act was the separation of its regulatory and representative roles. Therefore the Costs Lawyer Standards Board (CLSB) was created to deal with the regulation of Costs Lawyers and the role of the Association of Costs Lawyers is, in simple terms, now a purely representational one (a trade union for Costs Lawyers, if you like).

The CLSB’s recent consultation on the Practising Certificate Fee (PCF) for Costs Lawyers included the interesting comment, that appears to have received limited attention, that:

“Please note payment of the PCF does not afford membership of the ACL and further, that it is not a requirement that you are an ACL member to hold a practising certificate.”

This appears to mean that a Costs Lawyer does not need to be a member of the ACL to practice so long as they have paid their PCF. On one level, this is not a surprising development. In so far as the ACL’s role is now primarily that of a trade union, it should be optional as to whether Costs Lawyers wish to pay for such representation. The days of the “closed shop” have long since passed and this is now being recognised by the legal professions. The only requirement is that a Costs Lawyer is properly regulated and this task is now performed by the CLSB.

The interesting issue, of course, is where this leaves the ACL. It is interesting to recall that during the debate on whether the old ALCD should vote in favour of remaining an approved regulator, in light of the requirements imposed by the Legal Services Act, the then president of the Association said: “If we vote against, the Association will die today”. Now it turns out that the very decision to continue down the road of regulation has rendered the ACL “an optional extra” for Costs Lawyers.

Previously, the cost of membership of the ACL was the price to be a Costs Lawyer and have the status and the associated rights of audience, etc. Now those rights come simply by paying the PCF (plus the cost of CPD points, compulsory insurance, etc).

This does not, naturally, render the ACL redundant. Costs Lawyers may decide that as the ACL gains increasing recognition by the judiciary and other legal professionals they are happy to contribute to the costs of its representational role in supporting the interests of its members. Further, the direct benefits of membership will now increasingly be the focus of a decision to be a member. There is the excellent Costs Lawyer magazine, access to the ACL online form, and access to the very competitively priced training conferences (attendances at some conferences being necessary to obtain sufficient CPD points and therefore practice has a Costs Lawyer). The ACL will no doubt look to secure further benefits to its members to help justify the membership fees. Nevertheless, there is an obvious risk that some members may vote with their feet and not renew their membership.

Currently the only approved Costs Lawyer training course is that provided by ACL Training (which is owned by the ACL). However, given its current monopoly it would appear to be doubtful that it could insist that those wishing to undertake the training course had to also be members of the ACL.

Against this background, Iain Stark, chairman of the ACL, has raised the question of whether membership of the Association should continue to be restricted to just Costs Lawyers or whether there is a place for others within the legal profession working in costs, but not qualified as Costs Lawyers, to become members.

This seems a perfectly sensible suggestion, although some readers may recall this looks remarkably like revisiting the debate that was held at the time the decision was made to convert all members of the Association to Costs Lawyer status. The difference, of course, is that the impact of the Legal Services Act does not appear to have been properly appreciated the last time this debate was held.

It does raise the interesting possibility that there could be Costs Lawyers who are not members of the Association of Costs Lawyers and non-Costs Lawyers who are. Perhaps the decision to change the name from the Association of Law Costs Draftsman to the Association of Costs Lawyers was premature.

Light blue touch-paper and retire.