For those of you with nothing better to do on New Year's Eve than read the Legal Costs Blog (this post was written in advance and published automatically) spare a thought for the Master of the Rolls who was due to receive an advance copy of Lord Justice Jackson's final report on his Review of Civil Litigation Costs by today (due to be published on 14 January 2010). If it's anything like his Preliminary Report the Master of the Rolls will have some serious reading to do.
The lobbying in advance of Lord Justice Jackson’s final report on his Review of Civil Litigation Costs continued to the last moment with The Times (see link) reporting on excessive legal costs in clinical negligence matters. No doubt all true, but it didn’t seem to add much to a similar article from The Times headed “Lawyers get more than victims in NHS compensation scandal” (see link) published back in March 2009.
Anyone looking for a new job for next year might want to consider one of two posts being advertised for costs judges in the Senior Courts Costs Office (salary £102,921 plus £4,000 London allowance). You'll have to be quick though as the closing date is 7 January 2010.
Under the old Conditional Fee Agreement Regulations 2000 a solicitor had a duty, before entering into a CFA, to inform the client “whether the legal representative considers that the client's risk of incurring liability for costs in respect of the proceedings to which agreement relates is insured against under an existing contract of insurance” (Regulation 4(2)(c)). Failure to comply would generally render the CFA unenforceable (see Myatt v National Coal Board  EWCA Civ 1017).
The CFA Regulations have now been revoked. Does that mean that a powerful weapon has been lost to defendants and that sloppy claimant solicitors can rest easy? Not necessarily. A fascinating decision has recently emerged from the Senior Courts Costs Office that suggests this issue may still be a live one.
The decision in Thomas v Butler and Other T/A Worthingtons Solicitors  EWHC 90153 (Costs) concerned a solicitor/own client assessment but there is no reason to suppose the decision would have been any different if this had been an inter partes assessment. The key issue that arose was whether the solicitors had complied with their duties under the Solicitors Costs Information and Client Care Code 1999 that was in force at the time (and remained in force until 30 June 2007) which states:
“4. Advance costs information – general
The overall costs
(a) The solicitor should give the client the best information possible about the likely overall costs, including a breakdown between fees, VAT and disbursements.
Client's ability to pay
(j) The solicitor should discuss with the client how and when any costs are met, and consider:
(i) whether the client may be eligible and should apply for legal aid (including advice and assistance);
(ii) whether the client's liability for their own costs may be covered by insurance;
(iii) whether the client's liability for another party's costs may be covered by pre-purchased insurance and, if not, whether it would be advisable for the client's liability for another party's costs to be covered by after the event insurance (including in every case where a conditional fee or contingency fee arrangement is proposed); and …”
Having considered the evidence presented, Master Campbell concluded:
“Having considered this course of events revealed by the contemporary documents, I am satisfied that Worthingtons [the Claimant’s solicitors] did not comply with the Code and I reject Mrs Nicholaou's [the fee earner] evidence that she used her “best attempts to ‘discover’ pre-existing legal expenses insurance, none was identified” as the points of reply contend. Whilst it may be correct that Mrs Nicholaou examined Mr Thomas' home insurance policy for LEI cover and found none, Mrs Nicholaou knew from the papers she had received from Irwin Mitchell that there was a policy with Lawclub. Accordingly she had a duty under paragraph 4(j) (ii) and (iii) of the Code to explore that policy further.
In breach of the Code, Mrs Nicholaou failed to discuss funding options adequately and compounded the problem by omitting to contact Lawclub.
It follows, for the reasons I have given, that I consider that Worthington's costs have been unreasonably incurred in this case. Had Mrs Nicholaou followed the Code correctly and investigated the availability of the Lawclub policy as Mr Thomas had instructed her to do, he would not have been obliged to meet Worthington's costs out of his own pocket; either the firm would have acted for him under a CFA backed by Lawclub or he would have taken his case elsewhere to another firm which would have done so. Under CPR 44.4(1) the court “will not allow costs which have been unreasonably incurred.” Accordingly, the fees that have been unreasonably incurred must be disallowed and any sums that Mr Thomas has paid to Worthingtons fall to be returned to him with interest.”
(One odd thing to note about this judgment is that the Code states that certain information “should” be discussed. Not “must”. Master Campbell has previously interpreted “should” as being no more than a recommendation (see Metcalfe v Clipston  EWHC 9005 (Costs) and Cullen v Chopra  EWHC 90093 (Costs). On this occasion he appears to have treated “should” as introducing a mandatory requirement.)
If correct, not only does this decision reintroduce Regulation 4(2)(c) challenges by the back door but throws open a whole host of other challenges for failure to comply with the Code. Although the 1999 Code is no longer in force, similar requirements now appear in the Solicitors' Code of Conduct 2007.
One should perhaps be cautious about reading too much into this case as it was very fact specific. What was no doubt at the front of Master Campbell’s mind was the fact that the Claimant had given clear instructions that he wished his claim to be dealt with by way of a CFA backed by his legal expenses policy. This was not done.
However, it has been a question that has long troubled legal costs practitioners as to whether switching the consumer protection element from the Regulations to the solicitors’ rules really ended the scope for challenges. As Cook on Costs 2010 puts it:
“It is supremely optimistic to hope that transferring regulation to the SRA will put an end to future costs satellite litigation. If the solicitor contravenes the code of conduct, which has the same statutory force as the revoked regulations, cannot the client still contend that the retainer is unenforceable … thereby enabling the paying party to rely on the indemnity principle to avoid liability for payment?”
I recently received a telephone message asking if my firm did pro bono work. (The answer is “no”, by the way.) But this did cause me to pause for thought as it coincided with a report in the Law Society Gazette that: “The value of pro bono work done annually by lawyers has soared to more than £400m. … That figure does not include the contribution made by in-house solicitors or other legal professionals such as barristers or legal executives”.
You wouldn’t telephone a plumber and ask if he did pro bono plumbing. I doubt you would do this regardless of how poor you were or how bad the leak was. So why are lawyers viewed differently? Why are some lawyers prepared to give so much of their time for free? Undoubtedly, a lot of pro bono work is undertaken by lawyers working for Magic Circle firms or leading barristers who earn more money than they can spend and feel the need to “give something back”. However, this is not the whole answer and there are clearly those on far more modest incomes who also give their time freely. Well done you.
There are probably a number of legal aid lawyers out there who feel they would be better off switching entirely to pro bono work. The pay would be about the same but there would be far less forms to complete.
If there are any costs draftsmen out there who do pro bono work, let us know.
As the tension mounts as to what might be going through the mind of Lord Justice Jackson as he prepares his final report on his civil costs review, might he be influenced by the litigation landscape north of the boarder? The recently published Report of the Scottish Civil Courts Review states that the majority of damages claims in Scotland are pursued on the basis of "speculative fee arrangements" (no win, no fee agreements). This is despite the fact that: "Unlike in England and Wales, success fees and ‘after the event’ insurance premiums are not recoverable and will have to be paid by a successful [claimant] from the damages recovered, unless they are waived or absorbed by the [claimant's] solicitor". Jackson LJ's Preliminary Report raises a number of concerns about the English system of recoverable success fees and ATE premiums. If non-recovery seems to work in Scotland, why not here?
And while Jackson LJ may be looking north of the boarder, they are looking back. The Scottish report concludes: "We have given careful consideration to the use made of speculative fee arrangements in this country and the experience of conditional fee agreements in England and Wales. We consider that it would be premature to recommend any changes to speculative fee agreements as they are presently constituted in Scotland. The civil costs review in England and Wales chaired by Lord Justice Jackson should be monitored for its research findings and its conclusions"
The Law Gazette has reported the case of a Norfolk solicitor who charged clients based on the weight of their files, “by weighing the files in his hand”, and was struck off after a hearing before the Solicitors Disciplinary Tribunal. You mean there’s another way to cost a file?