Legal costs shortfall

The press has been reporting on The British Chiropractic Association (BCA) dropping their libel action against science writer Simon Singh. The BCA had sued Dr Singh over a newspaper article in which he alleged that the organisation promoted “bogus treatments”, such as chiropractic for childhood asthma and colic, which were not supported by evidence.

Now, I know nothing about chiropractors and so I’m in no position to comment on whether or not they are nothing but a bunch of quacks peddling a lot of twaddle. You can read the original article from The Guardian here and form your own view.

Another example of quacks trying to use English libel law to stifle criticism can be read here: The Doctor Will Sue You Now. (I say “another” in the general sense of the word rather than to imply that the BCA’s libel claim was the previous “example” of quacks acting in this way, for the benefit of any libel lawyers who haven’t got anything better to do with their time.)

Interesting though this all is, and crucial from a free speech and scientific investigation perspective, what caught my eye was the report in the The Times claiming that Dr Singh stands to “lose £60,000 in legal costs despite winning. … Although Dr Singh’s lawyers will pursue the BCA for costs, he is likely to recover only 70 per cent of the £200,000 he has spent on defending himself. … [His solicitor] noted, however, that defendants rarely recovered more than 70 per cent of their costs even when libel actions were dropped”.

Why should Dr Singh only recover 70% of his costs? It is certainly entirely common on a between the parties detailed assessment for bills to be reduced by at least 30%. That, however, is not the same thing as saying that the unrecovered balance is “reasonable” on a solicitor/own client basis. Those working in the field of legal costs law will recognise the idea of “solicitor/own client” costs that cannot be recovered from the other side. As Ian Moxton, writing in the Association of Law Costs Draftsmen’s Costs Lawyer magazine, recently recognised, there appears to be no definitive definition of what falls into this category.

It would generally be recognised, for example, that a solicitor’s time spent travelling to the home of a client who was perfectly able to travel themselves would be solicitor/own client in nature. A fit client would be expected to travel to his solicitor. Very nice if the solicitor is prepared to come to you but you cannot expect the other side to pay for this “luxury”. Equally, a demanding client who wants to be updated every 5 minutes on the progress of a claim is likely to produce additional unnecessary work that would be classed as “solicitor/own client”. However, in normal cases this element of a claim is likely to be very small. It certainly would not account for a 30% shortfall.

The 30% element is likely to fall into one or more of the following categories. Firstly, a court might conclude that the hourly rates agreed between Dr Singh and his solicitors are too high and award, as against BCA, an amount that it considers to be reasonable and proportionate. Dr Singh would be potentially liable for the shortfall.  However, if his solicitors are charging the "going rate" for that type of work then normally the court would allow those rates.  Secondly, a court may consider that the fees of Counsel are too high. Again, the same considerations apply as for the hourly rates. Of course, the fact that a solicitor/own client assessment is on the indemnity basis whereas most between the parties assessments are on the standard basis may make a difference in the rough-and-tumble of detailed assessment. The third area where significant reductions might be expected is in relation to document time. It is fairly common for significant reductions to be made to time spent working on documents. However, this is usually because too long is being claimed for the work. If a judge has decided on a between the parties assessment that the time claimed is too long then exactly the same should apply on a solicitor/own client assessment. A client should never find themselves faced with having to pay a “shortfall” because his solicitor has taken too long over a task.

Cook on Costs recounts the story of Lord Benson asking Mr Justice Templeman what the difference between solicitor and client costs and party and party costs was and receiving the reply: “33 1/3”. Although that may have been about right at the time, Cook on Costs goes on to quote Jeremy Rawkins, President of the Association of District Judges, summarising the position in 2005 that: “The valuable demarcation between solicitor/client costs and party/party costs has been eroded so that there is no practical distinction”. That being the case, a successful defendant to a liable action should never find themselves with a 30% shortfall unless they have been overcharged by their lawyer. Of course, this is only my opinion and should not be treated as an assertion of fact.

The topicality of this issue is that for most personal injury claims it has become the norm for clients to have no interest in the level of costs that are being incurred because their solicitor will never pursue them for any shortfall. Lord Justice Jackson wants to revert to the position where clients do have an interest in the level of costs being incurred.

This also ties in with the news that the attempt to limit success fees in libel cases to 10% failed after a Commons’ committee voted against the proposal and as a result of the General Election being called.