11 October, 2010
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  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  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.