12 October, 2010
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 This was repealed and replaced by the Legal Services Act 2007 (“the Act”) on 1 January 2010.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 instructions 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  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.