There exists something of a disconnect between how busy costs practitioners tend to tell you they are and what the market would suggest.
Certainly, most costs lawyers and costs draftsmen would have you believe they are very busy and business is booming. Sadly, the visible evidence suggests everything is not quite so rosy.
Just Costs has just gone into administration (effectively for the second time). This is reported to have led to 26 redundancies. But to put this into context:
- Back in December 2016, it was explained that Just Costs had “consolidated” from four to two offices and reduced its headcount from 110 to 70.
- In October 2017, when they emerged from their previous administration, via a CVA, it was announced that this would save 46 jobs.
- A few weeks ago it was reported they had 33 staff.
Legal Futures reported Nick McDonnell, a director at costs firm Kain Knight – and a director of the original Just Costs for two years to April 2017 – as commenting:
“The changes to the legal costs industry continue to hit some costs firms very hard. The issue isn’t so much attracting work but, particularly in the personal injury sector, there is an expectation to offer deferred payment terms. This can mean deferring payment on costs management and budgeting work, for example, for up to 12 months. This significantly affects a firm’s cash flow and the administration of Just Costs Solicitors is the latest example of this.”
Long established costs drafting firm Neat Legal Services went into administration in 2018.
Cost Advocates was another casualty, ceasing to exist in 2017.
There have been numerous other job losses, redundancies, department closures, office closures and (probably) forced mergers over the last few years.
One of the online comments posted below the Law Society Gazette news report on this stated:
“What you are basically seeing is the larger, badly run firms falling by the way side. Big is not beautiful any more and Just Costs was always a bad business model anyway. They will not be the last multi-office firm to go under this year. I am in the game and I hear rumours all of the time about other firms. This all started as a cottage industry 30/40 years ago and that is where it will end up – i.e., bespoke one man band experts rather than big firms with high overheads that they cannot sustain in this declining market.”