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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?

At this year’s Association of Costs Lawyers’ National Conference, one of the guest speakers, a regional costs judge, observed that the introduction of fixed fees for fast-track personal injury matters was not something that those present needed to be concerned about as most fast-track matters were currently dealt with by way of summary assessment.

The logic was presumably that costs lawyers did not currently see much fast-track costs work as this was dealt with by way of summary assessment at the conclusion of a trial and the introduction of fixed fees would therefore make no real difference to costs lawyers’ workloads.

It is noteworthy that even a judge with a genuine interest in legal costs related matters should have reached this conclusion. This is much the same mistake that Lord Woolf made with his civil justice reforms. He assumed that the costs of preparing for trial would have to be incurred at some stage in any event and it therefore made sense for such costs to be incurred at an early stage in the hope that this would increase the likelihood and speed of settlement. What he overlooked was the fact that the vast majority of cases settled pre-trial and often with limited disclosure. His front-loading of case preparation meant that a large amount of expensive work is now unnecessarily incurred.

Members of the judiciary, inevitably, only see the cases that are litigated and assume that these are typical with a large number of these making it all the way to trial. In reality, of course, the vast majority of cases settle pre-proceedings. For litigated matters, most settle well before trial. Even for those cases that do run close to trial, a high proportion still settle before they actually reach the door of the court. None of these cases are dealt with by way of summary assessment. For all these fast-track claims it is necessary for someone at the receiving party’s end to quantify the costs that have been incurred and then for someone at the paying party’s end to scrutinise the costs claimed. Some of those cases will make it all the way to detailed assessment.

For most law costs draftsmen working in the personal injury field, fixed costs for the fast-track is indeed something to worry about.

Is costs budgeting and costs management going to come to the rescue of costs lawyers and law costs draftsmen once Jackson in implemented?  My article on this topic can be read on the Solicitors Journal website.

 

Gibbs Wyatt Stone has just celebrated its fifth anniversary. (During that time GWS has gone from strength-to-strength … blah, blah, blah … growing reputation … blah, blah, blah … ever growing list of important clients … blah, blah, blah.)

Traditional wisdom is that the first year for any new business is the most difficult, and the period during which most fail, but if a business can reach the five years mark then it has very good prospects for the long term.

However, with recent announcements, I suspect the next five years are going to be just as “challenging” as the first five.

Interestingly, despite Jackson casting his shadow over the costs world, the last couple of years seem to have seen a very high level of new start-up costs ventures. Why should that be? Has it been wishful thinking that Jackson would not happen? Has it been an acknowledgment that Jackson would happen, the gravy train was about to end, but a hope to make as much money as possible before the end, with self-employment seen as the best opportunity? Has it been an acknowledgment that some firms were unlikely to survive - and would certainly not be continuing to pay generous wages before the end – and decisions have been taken to jump (into self-employment) before being pushed being pushed (into unemployment) in the hope of carving out a niche in the market ahead of Jackson implementation?

I’d be interested to hear readers’ views, although for once I think we’d all understand if these were anonymous.

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