Costs Lawyers delegating work

By on May 28, 2019 | 0 comments

The case of Allen v Brethertons LLP [2019] EWHC B3 (Costs) has received a fair amount of commentary in relation to the entitlement of non-Costs Lawyers to undertake certain “reserved activities”.

Costs Judge Master Leonard had no difficulty accepting that where a costs draftsman prepared a bill of costs under the supervision and instruction of a Costs Lawyer, that, although bill preparation amounted to a “preparation of a reserved instrument” and was therefore a “reserved activity”, the costs draftsman became an “exempt person” in this situation and the costs of preparing the bill are recoverable in principle.

Further, in relation to a costs draftsman attending a costs hearing:

“The issue of his right to appear as an advocate on costs hearings has come up before. His case is probably on all fours with Kynaston v Carroll but it is in any event my practice, for the avoidance of doubt, to grant him a right of audience.  That was the basis upon which I heard him on 15 January.  He was, for the purposes of that hearing, an exempt person, and his costs of preparation for and attending that hearing are, insofar as reasonable and proportionate, recoverable.”

The case of Kynaston was as far back as 2011 and it is surprising that the same tired arguments keep being re-run.

Nevertheless, re-run it was and appears to have been, at least in part, inspired by (or at least support sought from) a guidance note published by the Costs Lawyers Standards Board (CLSB).  Master Leonard summarised the contents of that guidance as stating:

“That guidance emphasises that the CLSB authorises and regulates individual costs lawyers, not authorised entities or licensed alternative business structures: and in consequence, that a Costs Lawyer cannot delegate reserved legal activities such as the exercise of a right of audience or the conduct of litigation.”

The CLSB guidance note is titled Reserved Legal Activity Rights and was apparently published on 18 July 2018, although I do not recall the CLSB circulating it to Costs Layers.  It states:

“This guidance has been written to clarify the authorised rights of a Costs Lawyer (as defined). It has been approved by specialist regulatory counsel, Gregory Treverton-Jones QC.”

It is worth setting out in full what the guidance says in relation to rights of audience:

3. RIGHT OF AUDIENCE

(i) Definition under the LSA

Schedule 2, paragraph 3(1):

A “right of audience” means a right to appear before and address a court, including the right to call and examine witnesses.

(ii) Can a Costs Lawyer delegate this right?

No. The CLSB authorises and regulates individual Costs Lawyers, and under s.18 it is the Costs Lawyer who is authorised in relation to this reserved legal activity. Under s.13 only an entitled (authorised) person may undertake a reserved legal activity, and the LSA makes no provision for the delegation of this specific right by an entitled (authorised) person.

Therefore, subject to paragraph 1(7) of Schedule 3 (set out below), if a Costs Lawyer sends a colleague to a Court hearing, that individual will not be entitled (authorised) to address the Court unless they are entitled (authorised) as a Costs Lawyer, or they are permitted to address the Court by the Court itself in the exercise of its discretion.

(iii) Exemptions to an offence under s.14

Schedule 3, paragraph 1:

(2) The person is exempt if the person-

(a) is not an authorised person in relation to that activity, but

(b) has a right of audience granted by the court in relation to those proceedings.

(3) The person is exempt if the person-

(a) is not an authorised person in relation to that activity, but

(b) has a right of audience before the court in relation to those proceedings granted by or under any enactment.

(7) 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.

(8) This sub-paragraph applies to-

(a) any authorised person in relation to an activity which constitutes the conduct of litigation;

(b) any authorised person who by virtue of section 193 is not required to be entitled to carry on such an activity.”

The guidance note expressly recognises the exemption set out in paragraph 1(7) of Schedule 3.  However, I struggle to understand the purpose of a “guidance note” that sets out an exemption but then conspicuously fails to explain in what situation this exemption will apply.

Even those who have, in the past, sought to put the most limited interpretation on “being heard in chambers”, have treated this as permitting (where instructed and supervised) a non-regulated person (eg costs draftsman) to attend a hearing in private (eg trial ordered to be in private on national security grounds; although this is, admittedly, not an example usually put forward by those arguing for this interpretation of “in chambers”).  But, even on this interpretation, it clearly would permit a Costs Lawyer to send a colleague to a Court hearing where the hearing is “in private”.

In truth, of course, “in chambers” does not mean “in private” and on a proper analysis (ie the analysis applied in Kynaston and applied daily by the Senior Courts Costs Office), “in chambers” will cover any detailed assessment hearing (and, almost certainly, any costs management hearing).  For the purposes of the day-to-day work of Costs Lawyers, and those to whom they might delegate attendance at court, the guidance note is simply wrong.  Paragraph 1(7) of Schedule 3 probably only prevents delegation in respect of appeals or hearings concerning what costs order to make at the conclusion of a case.

Other interpretations are available (see Friston on Costs at 3.85-3.90 for an analysis of the competing arguments) but it is less than helpful if the CLSB issues guidance notes stating as fact something which is, at best, highly debatable.  I say: “highly debatable”; the High Court in Kynaston said such: “arguments have no merit at all”.  Master Leonard’s decision certainly reflects what I understand to be the Senior Courts Costs Office’s belt-and-braces approach to the issue: costs draftsmen instructed in this way are probably covered by Kynaston but, if not, the court would exercise its discretion as a matter of routine.

What is interesting about the Allen decision is how this has been greeted by the Association of Costs Lawyers (ACL).  Responding to the decision, incoming ACL chair Claire Green said:

“Master Leonard has firmly dismissed this attempt to undermine the work of Costs Lawyers, who play a vital role in ensuring that the costs regime works smoothly and fairly. We are independent, regulated lawyers, with the attendant benefits and responsibilities that such status brings. This ruling should halt in their tracks what the judge called ‘arid technical objections’ to the recovery of the costs of our work.”

It may be remembered that the ACL had previously been very vocal in attempts to exclude costs draftsmen from detailed assessment hearings and limit rights of audience to Costs Lawyers (and, perhaps, begrudgingly, costs counsel).  Now, it sees it as a positive development that Costs Lawyers can delegate attendance at detailed assessment hearings to costs draftsmen.

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