Gibbs Wyatt Stone is looking to recruit a junior law costs draftsman to join its niche defendant practice with an unrivalled reputation for excellence. This is a fantastic opportunity for someone interested in pursuing a serious career in costs.
Visit www.gwslaw.co.uk/recruitment/ for more details.
Association of Costs Lawyers’ press release:
The number of people choosing to train as a Costs Lawyer has almost doubled during 2011 as the impact of several major forces – including the Jackson reforms and the Legal Services Act – are felt in the costs sector.
The Association of Costs Lawyers received 112 applications to take its join its rigorous training programme this year, compared to 65 in 2010. Study leads ultimately to qualification as a Costs Lawyer, an authorised person under the Legal Services Act with independent rights of audience and to conduct litigation.
Iain Stark, chairman of the Association of Costs Lawyers, said one major factor was the growing insistence of the courts that only those with rights of audience can appear in costs hearings – law costs draftsmen, who are not members of the ACL, have to rely on an out-of-date “legal fiction” that they are temporary employees of their instructing solicitor and so can “borrow” their rights of audience.
Mr Stark explains: “Following the recent costs management pilot in Birmingham and the current nationwide pilot in Mercantile Courts and Technology and Construction Courts across England and Wales arising out of the Jackson reforms, the profile and importance of costs has never been higher. As such, judges increasingly want to hear from those with the relevant experience and recognised level of qualification.
“All litigators will have to get to grips with costs budgeting as part of these reforms and we are seeing more firms – including some of the largest in the City – deciding to bring costs expertise in-house so they can manage costs from the start.”
The increased status of costs professionals coupled with the continued downturn in the legal jobs market has changed people’s attitude towards a career in costs, Mr Stark continues. “The unprecedented rise in student numbers demonstrates that people are starting to realise that there are other routes to a successful and rewarding legal career. Under the Legal Services Act, Costs Lawyers undertake reserved legal activities and enjoy the same benefits and status of many other legal professionals – including partnership in legal disciplinary practices.”
The Costs Lawyer route to qualification also supports the social mobility agenda in the legal profession, as students need only a minimum of four GCSEs to begin the training – those who have completed law degrees or postgraduate legal education can gain exemptions from parts of the programme.
A couple of recent Blog posts (“Success fee cap plus uncapped ATE?” and “No cap in non-PI cases”) commented on the potential reductions to claimants’ damages that we may see with the end to recoverability of success fees and how the suggested cap may operate.
Kerry Underwood has reminded me that he explored these issues all the way back in 1999 in his book No Win No Fee No Worries (well worth tracking down an old copy on Amazon).
The following sample letter was produced in the book as an example of what not to send to a client despite being compliant with the regulations as they were. In future, in non-personal injury claims with a 100% maximum success fee, but no cap, this letter may be quite useful:
“Dear Mr Jones,
I am pleased that the Judge found in your favour and indeed I have already received the damages cheque for £5,000.
My Firm’s costs total £6,000 of which I have recovered £4,000 from the other side.
You will recall that under the terms of the conditional fee agreement we agreed that I could increase my costs by 100% if you won. We agreed that figure because this was a risky case as shown by the fact that it went to trial.
The effect of increasing my costs by 100% is that they now total £12,000 and, as mentioned above, I have received £4,000 costs from the other side leaving a shortfall of £8,000, but I have applied the £5,000 damages and so the balance due to me from you is £3,000. To make this easy to follow I have prepared a little table.
|
|
£ |
|
My firm’s basic costs |
6,000 |
|
Success fee |
6,000 |
|
Total |
12,000 |
|
Less costs from other side |
4,000 |
|
Balance |
8,000 |
|
Less damages applied to costs |
5,000 |
|
Balance due to me from you |
3,000 |
Please let me have your cheque in due course.
You will recall that for £85 we insured against you having to pay the other side’s costs and our own disbursements if we lost. This means that if you had lost it would have cost you nothing but as you have won it has cost you £3,000.
Never mind. It’s a funny old world.
I recall that you wanted the conditional fee scheme because you could not afford lawyer’s fees. A wise decision!
I will be pleased to act for you again in the future – after your forthcoming bankruptcy has finished.
Alternatively next time you are a passenger in a bus and you get injured you might find it cheaper just to admit liability.
Yours sincerely”
Even where there is a 25% cap in place, which will apply to personal injury claims, Kerry’s book gives the following example of the impact on damages:
“Cap on Success Fee only
|
|
£ |
|
Base costs |
6,000 |
|
Less received from other side |
4,000 |
|
Balance |
2,000 |
|
Success fee (£6,000 but capped at 25% of £5,000) |
1,250 |
|
Charged to client |
3,250 |
|
Damages |
5,000 |
|
Balance due to client |
1,750 |
Actual success fee (£1,250 on £6,000) = 20.833%
Thus, in applying the 100% success fee and limiting that success fee to 25% in accordance with the Law Society’s agreement the solicitor actually takes £3,250 from the client’s £5,000. I have excluded VAT for the sake of simplicity (!) but you are entitled to add that to the £3,250 and thus:
|
|
£ |
|
3,250.00 |
|
|
VAT at 17.5% |
568.75 |
|
Total costs |
3,818.75 |
|
Balance to client |
1,181.25 |
|
Total |
5,000.00 |
You might like to undertake an exercise to compose a letter to Mr Jones explaining that his cheque for £1,181.25 out of £5,000.00 damages really does represent 75% of his damages and that the £3,818.75 taken by you out of his £5,000.00 really is a 25% cap on the success fee.”
Actually, with costs draftsmen and costs lawyers looking for the opportunities that Jackson may create, composing letters likes this to clients may be a nice little earner.
Many thanks to Kerry for permission to reproduce these extracts.
Further to my post last week about the lawyers accused of legal aid fraud, readers may be interested to hear the outcome of the trial (particularly the anonymous reader who posted a comment asking if I “actually have the facts about the costs draftsman or are you basing your judgement of what Metro reported?”.
The Law Society Gazette reports (hey, I’m going to trust them on this), that “a criminal defence solicitor and a costs draughtsman [sic] have been jailed for a £430,000 legal aid scam. Solicitor Reuben Ewujowoh … was sentenced to five years’ imprisonment. Costs draughtsman Robert Odong … was sentenced to two-and-a-half years and recommended for deportation, as he is a failed asylum seeker. Legal case worker Lloyd McDonald … was entirely cleared by the Croydon Crown Court jury. … Describing the two convicted defendants as ‘remorseless and ruthless in their behaviour’, Judge John Tanzer said they had pocketed £430,000”.
The costs draftsman was not a Costs Lawyer and therefore not regulated. On the other hand, the solicitor was regulated. This coincides with the recent report on will writing suggesting regulated solicitors and unregulated will writers were equally responsible for substandard wills.
This story just highlights the limitations of regulation. Although it will be interesting to see if the Costs Lawyer Standards Board starts to implement spot checks on Costs Lawyers’ files to check for “irregular” billing.
The Legal Services Board is to investigate will writing after the board’s consumer panel found that solicitors and will writers were equally responsible for substandard wills. The LSB will consider whether to make will writing a reserved activity meaning it could be regulated.
There can be no doubt that will writing should be regulated but this largely misses the point. Solicitors are currently regulated but apparently their will writing skills are no better than those who are unregulated.
Regulation allows for complaints to be made if something goes wrong and, for the worst cases of clear negligence causing loss provides the opportunity of compensation via compulsory insurance. However, alone it does not address the underlying problem and trying to bring a successful negligence claim, even where there is insurance in place, can be a long and difficult task. It also fails entirely to deal with the substandard work where the client does not realise that it is substandard or has caused a loss. (How many people are unaware they should have been beneficiaries but for a negligently drafted will?)
The problem, which regulation alone, fails to address is poor standards.
In the legal costs field there are plenty of solicitors, barristers, legal executives, law costs draftsmen, costs lawyers and legal costs negotiators providing poor advice.
Some are regulated and some are not.
Regulation is not synonymous with, and no substitute for, high standards. That is where the focus should be.
The amount of the claim for costs in the case of Motto & Ors v Trafigura Ltd & Anor [2011] EWHC 90201 (Costs) (15 February 2011) – £104,707,772.72 – was truly eye-watering. This was, on any analysis, a complex group action involving 30,000 claimants. So, what did Master Hurst have to say about the appropriate hourly rates to allow for the law costs draftsmen who prepared the bill of costs in what must be one of the largest and most complex legal costs claims ever seen?
“The final matter raised by Mr Bacon was the rate payable to the costs draftsmen. He suggested this should be the grade D rate, and criticised the various mistakes which had been thrown up in the way in which the bill had been drawn. I have no details of the number of costs draftsmen involved, but am aware that Mr Ellis, who is a very experienced costs draftsman, has been in court throughout the hearing. I would expect Mr Ellis to be charged at the grade C rate, and for other more junior costs draftsmen to be charged at the grade D rate. This is a matter which may have to be argued further when the details of the costs draftsmen’s involvement are known.”
One of the most well respected costs draftsman in the country, dealing with one of the most complex costs matters, and the provisional view was that grade C rates were appropriate with everyone else at grade D.
What a contrast with the views expressed in Cook on Costs:
“in heavy bills involving amounts considerably in excess of the fast track … the use of a Grade A or B draftsman … would be reasonable and proportionate”
Lord Justice Jackson’s most recent observations include:
“Even if no success fees were payable (and I am not advocating this), solicitors would still do much PI work. There would simply be less surplus to share out amongst claims management companies, ATE insurers, trade unions etc.”
I hope he wasn’t including law costs draftsmen and costs lawyers in the “etc”.
The debate as to whether non-Costs Lawyer costs draftsmen can appear before the courts on detailed assessment continues to rumble on. Although a further detailed analysis of this issue will have to wait for another day, I will briefly pick-up on some observations recently made in an article in Costs Lawyer magazine on the subject.
This reviewed a recent judgment from His Honour Judge Holman in Bank of Scotland v Whiteside (16 February 2011). The issue in that case was whether the court should grant a debt collection agency, which was not a firm of solicitors, the right to conduct litigation. That judgment also considered the earlier Court of Appeal decision of Clarkson v Gilbert [2000] 2 FLR 839. In that case the issue was whether it was appropriate to grant the claimant’s husband, who was not a qualified lawyer, rights of audience in relation to the claimant’s case. The court determined that it should only exercise its discretion to permit him to act if there was a ‘good reason’.
Judge Holman had noted: “Perhaps most significantly, the right to conduct litigation will only be granted in exceptional circumstances to those who are acting for reward”.
Interesting though this decision is, I would suggest it has no direct relevance to the issue of costs draftsmen’s rights of audience.
The Bank of Scotland and the Clarkson cases were dealing with the question of whether the court should exercise its discretion to grant rights of audience or rights to conduct litigation to those who otherwise did not have them. That was an issue of discretion and the conclusion was that the court would be slow to exercise such discretion in favour of the unauthorised company or individual.
In relation to detailed assessment hearings, the position was previously governed by section 27 of the Courts and Legal Services Act 1990. Law costs draftsmen, not otherwise having rights of audience, were permitted to appear by virtue of falling within s27(2)(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.”
The matter is now governed by the Legal Services Act 2007 and non-Costs Lawyer costs draftsmen are permitted to appear by virtue of being ‘Except Persons’. Paragraph 1(7) of Schedule 3 defines ‘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.”
Under both acts the costs draftsman was and is entitled to act by virtue of being properly instructed by a solicitor in relation to a hearing in chambers. There is no question of the court exercising its discretion one way or the other. The ‘right’ to appear is automatic if the conditions are met. This contrasts entirely with the position in Bank of Scotland and Clarkson where there was no instructing solicitor. An unrepresented claimant was seeking to have an unauthorised company or person exercise restricted rights. In that situation the court’s discretion came into play.
A costs draftsman acting for a litigant-in-person would equally have no ‘right’ to appear and would have to ask the court to exercise its discretion. It is very probable that persmission would not be given.
Of course, none of this answers the question as to whether rights of audience in detailed assessment hearings should be limited to Costs Lawyers. But, as the law stands, no such restriction applies.
Jennifer James writing in the New Law Journal on love and the law:
“Work colleagues who get together in what they alone believe to be a secret affair (while everyone else is placing bets on how it will end) are just one example; barristers and/or solicitors becoming entangled, sometimes literally, with experts, clients and (less often) costs draftsmen, are another.”
“Less often”. Speak for yourself love.
Jon Robins had a recent piece in the New Law Journal discussing how deregulation will affect the legal services market.
This examined how consumers choose between providers of legal services and the concept of quality. The article quoted from some comments taken from a recent report by the Legal Services Consumer Panel (Quality in Legal Services, November 2010) including:
Consumer B: “They’re all solicitors and qualified to a similar level, and so it doesn’t matter whether they’re charging you £200 or £800.”
Consumer C: “We put ourselves in their hands and because they’re qualified and they’re professionals, we just hope and presume that they’re going to give us the right information and do the job for us.”
The article commented:
As the researchers noted the search for quality did not strongly influence consumers’ choice of lawyer. “This is bad for competition as it means that good-quality firms are not differentiating themselves from poorer quality rivals,” they concluded; adding that it could lead to “an excessive focus on reducing price” to a level where quality was compromised.
In relation to the issue of various quality marks, Robins concluded:
But if—as consumers B and C imply—people assume all lawyers are competent, then why would they look for quality marks anyway?
Similar problems seem to exist when choosing amongst law costs draftsmen. It is understandable that members of the public might struggle to distinguish between the good, bad and indifferent in the event they need to instruct a costs draftsman. However, surely solicitors and insurers are much more sophisticated when making this decision. Well, all those who work in the legal costs field will be well aware that quality is in short supply and some firms and individuals are much more successful than any measure of “quality” would seem to justify.
How should a solicitor or insurer measure “quality” in a law costs draftsman or Costs Lawyer?