Shortcomings in costs

Professor Stephen Mayson’s recent report on a new approach to legal services regulation provides much food for thought. 

His report on reform envisages that all providers of legal services, whether or not legally qualified, should be registered and regulated by a single regulator to differing degrees, depending on the risk to the public interest of their work.

There is a lot more to his 340-page report and I recommend that anyone interested in the future of the profession should read it. Two pages of the report are dedicated to costs lawyers. Professor Mayson says that “too often” costs work was being carried out by “other authorised persons [ie other qualified lawyers] who lack the relevant knowledge and experience of costs law”.

He continues: “Similarly, unqualified and unregulated costs practitioners are carrying on non-reserved costs activities, and conducting costs litigation, under the ‘supervision’ of authorised persons who have neither the skills nor the resources to perform this supervision adequately or effectively.

“Without some regulatory approach that can require assurance of specialist and up-to-date knowledge and experience of this technical area of practice in respect of all who offer their services commercially or for reward, consumers are at risk of significant detriment.”

Professor Mayson observes that unregulated costs draftsmen could carry out “almost identical activities” to costs lawyers, including the reserved activities of litigation and advocacy as employees of another authorised person – usually a solicitor.

“Indeed, authorised persons can personally conduct costs litigation, even though they do not ordinarily practice costs law. However, with costs law becoming increasingly complex and specialised, the scope and level of knowledge of these authorised persons is limited, leading to harmful ‘dabbling’. 

“Errors can lead to significant and avoidable shortfalls in costs recovery, to the detriment of the lay client who had incurred these costs.”

The report cites a case study of a couple whose relationship with their solicitor broke down after being awarded costs. The solicitor sent the case file to an unregulated costs draftsman to prepare the bill, but it was defective and deprived the clients of a significant proportion of their costs. The clients obtained the case file and gave it to an independent costs lawyer who secured over £20,000 – more than twice what they would have received under the first bill.

Professor Mayson recommends that the exercise of rights of audience and the conduct of litigation in costs proceedings should be restricted to costs lawyers who have “personal authorisation for these services”.

For other legal services relevant to costs, the regulator could impose practice conditions such as specific accreditation. He adds that all legal professional titles should have the benefit of statutory protection.

In recommending that costs work should be the preserve of properly trained and regulated costs professionals, Professor Mayson accurately identifies the shortcomings of the current system.

You have only to see the number of rulings coming out every month on, for instance, Solicitors Act assessments, costs management and part 36 offers, to understand how specialist an area of law this has become. It is not for dabblers and it remains a wonder that solicitors are willing to put their costs recovery at risk – particularly now when cash flow is such a focus – by not ensuring they take expert advice from properly trained and regulated professionals. That is, after all, what they advise their own clients to do.

There is much to digest in Professor Mayson’s report about the overall structure of legal regulation. It will hopefully form a major steppingstone to a regime where those needing advice on costs receive it from those who have demonstrated their expertise and have proper consumer protections in place.  

Claire Green is chair of the Association of Costs Lawyers associationofcostslawyers.co.uk