"No" to entity regulation for costs firms
Today I continue my examination of the calls for the Costs Lawyer Standards Board (CLSB) to introduce entity regulation of costs firms, in light of the decision in Kynaston v Carroll  EWHC 2179.
There appear to be two further arguments as to why entity regulation is required.
The first one is that if Costs Lawyers can delegate their rights of audience to non-Costs Lawyers there is a danger that many costs firms will decide there is no need, or advantage, to employing a large number of Costs Lawyers. They will only need one Costs Lawyer per firm to enable them to exercise all the rights of Costs Lawyers. The number of those paying for a Costs Lawyer practicing certificate will rapidly decline and a disproportionate burden will be carried by the few remaining. (It would be pure speculation as to how many of those who recently joined the Association of Costs Lawyers joined on the back of rights of audience concerns pre-Kynaston.) Therefore we need entity regulation to cover the costs of Costs Lawyer regulation.
This argument, I suspect, places too much weight on the advantages that come with Costs Lawyers’ “rights”. There are a significant number of Costs Lawyers who work in-house for solicitors. They have never needed Costs Lawyer’s rights (beyond possibly costs appeals, which I doubt are utilised other than in the rarest of cases). Equally, there are those who do only Legal Aid work and never use their “rights”. Costs Lawyer status must therefore be viewed by many as having a value beyond the rights that come with it.
In similar fashion, the number of practising solicitors continues to spiral ever upwards despite much of the work done by solicitor firms not being regulated work and despite the fact that much litigation work is indeed done by unqualified paralegals acting under the supervision of a single qualified solicitor. Again, the perceived benefits of being a qualified solicitor appear to go beyond the rights that go with it.
Now that Kynaston has established that detailed assessment hearings are “in chambers” and anyone may attend if properly instructed by an authorised person, the rights of audience that come with Costs Lawyer status are of limited value. That is increasingly going to be the case once fixed fees are extended across the fast-track. The rights of audience “right” is of limited value where the same right can be exercised via ones instructing solicitor. The “problem” is not the fact that Costs Lawyers can delegate to non-Costs Lawyers, it is rather the ability of solicitors to delegate rights of audience to those who are themselves unqualified.
People will retain, or aspire to, Costs Lawyer status, or not as the case may be, regardless of whether Costs Lawyers can delegate some of their individual rights. Whether the other benefits of Costs Lawyer status are sufficient to be attractive (or are available at a proportionate cost) is another issue.
The other argument, with which I have rather more sympathy, is that it is “unfair” for one costs firm to employ one Costs Lawyer and then for that individual to delegate his rights of audience to another ten costs draftsmen, but only pay one practising certificate fee, whilst another costs firm’s fee earners are all Costs Lawyers each paying a full practising certificate fee. Although there are a number of arguments in response to this point, the simple one is that it does not require entity regulation. Some Costs Lawyers clearly do “delegate” their rights to a number of other costs draftsmen. There will be plenty of others who do not. It should be a relatively simple task for the CLSB to request data at the time of practising certificate renewal as to which individuals delegate and how often. (As officers of the court they can be trusted to provide this information accurately.) A simple formula could then be produced that imposes a higher practising fee on those who most delegate their rights (with a corresponding reduction for those who don’t).
The last thing a profession that is about to rapidly shrink needs is an extra layer of unnecessary regulation.
“No to entity regulation” says this Costs Lawyer.