Belsner, costs and the Solicitors Act

The Court of Appeal’s landmark decision in Belsner v CAM Legal Services Ltd [2022] EWCA Civ 1387 will shift the focus of costs disputes, rather than curbing them altogether, according to members of the Association of Costs Lawyers (ACL). Costs lawyers taking part in the ACL’s annual survey also hoped the ruling would trigger a review of the provisions of the Solicitors Act 1974, which are now widely agreed to be outdated and in urgent need of reform.

The ruling

In October’s ruling, the Court of Appeal held personal injury cases that settle in the Claims Portal are non-contentious business for the purposes of costs – and deprecated those who brought claims to recover deductions of small amounts of costs from claimants’ damages, saying complaints should be directed to the Legal Ombudsman instead. Asked about the impact of the ruling, some costs lawyers (30 per cent) thought it would mark the end of court-based challenges to deductions, but 60 per cent reckoned there would still be challenges based on the ‘fair and reasonable’ test for non-contentious costs. Just over half (53 per cent) hoped it would be the trigger for a review of the 1974 Act, with four in five saying reform was needed, especially to remove the preliminary arguments over whether a bill is actually a bill (eg final bills, interim bills, statute bills, Chamberlain bills). The ACL, the Senior Costs Judge and the Law Society are among those backing a review.

The Act

Given the particular authority of the bench that sat in these cases, my specific hope is the process to reform the costs provisions in the 1974 Act will finally begin. All roads lead back here, and change is needed urgently. Legal practice has evolved a great deal over the past 49 years and the regime is simply not up to the task of settling costs disputes quickly and efficiently. Without this, and despite the court looking to close down challenges to deductions from damages, we will still see plenty of cases on solicitors’ bills and retainers. The survey, I am pleased to report, also found costs lawyers are in ever-increasing demand, with 58 per cent saying their practices or departments have grown in the last year (35 per cent by up to 10 per cent, 23 per cent by more), leading nearly half of employers to recruit more staff.

Fixed recoverable costs

There was concern about the impact of the extension of fixed recoverable costs on the profession; while nearly half said it would not affect them personally, around a third feared the impact on other costs lawyers. At the same time, 47 per cent said there would still be plenty of disputes arising out of fixed costs – such as the appropriate banding for a claim – while a similar number thought it would create opportunities for costs lawyers to adapt and adjust what they do, such as offering project management. Consistent with previous years, only 19 per cent of costs lawyers said solicitors stuck to budgets – 44 per cent said they sometimes, and 23 per cent always, went over budget. More positively, 45 per cent said they were seeing more applications to vary budgets. Last year, research commissioned by the regulator, the Costs Lawyer Standards Board, called for a review of regulation with the aim of strengthening the role of costs lawyers as “independent actors in the sector” – more akin to barristers and more open to instructions directly by clients.

A majority (56 per cent) of respondents supported this, with only 14 per cent against it. The results were similar over the report’s call to introduce a form of entity regulation for specialist costs firms. Fixed costs will reduce the number of disputes in lower-value cases, but our system of litigation means there will always be demand for the expertise of costs lawyers – as shown by how many of our members are busier than ever. We recognise the pressure to reduce ‘the costs of the costs’, which is why costs lawyers are developing a range of skills beyond pure bill drafting to do this, from project management to mediation. With the relaunch of the costs lawyer qualification coming in 2023, it is an exciting time for the profession.

Jack Ridgway is chair of the Association of Costs lawyers and is an associate costs lawyer at Bolt Burden Kemp: boltburdonkemp.co.uk