Better budgeting

There has been a noticeable rise in the number of unhappy clients challenging their solicitors’ bills, particularly in personal injury cases. This is borne out by various rulings from the county court right up to the Court of Appeal (CoA) in Herbert v HH Law Ltd [2019] EWCA Civ 527. The increase has been encouraged by a handful of law firms targeting this as a new area of work; and a recent survey of members of the Association of Costs Lawyers (ACL) indicates that costs specialists are, indeed, seeing this as a potential new avenue for work. As regulated lawyers with the right to conduct litigation and with rights of audience, costs lawyers are able to act directly for clients on these cases. Some 59 per cent of the 126 respondents to the survey said they saw opportunities in acting directly for clients in challenging solicitors’ bills. Fewer than half that number (28 per cent) said they did not, and the rest were not sure. Solicitors have only themselves to blame. It is now six years since the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) and we are still seeing personal injury lawyers struggling with having to deduct their success fee from clients’ damages; and others displaying sloppiness in some of their billing.

But while there are opportunities for costs lawyers to help clients who feel they have been overcharged, we are also the answer to the problem: if law firms used a costs lawyer to ensure their billing was on a solid footing in the first place, challenges would not get off the ground. Our six-monthly survey – carried out at our national and regional conferences – proves a useful bellwether of changing attitudes and practices in costs. For example, one in six costs lawyers (17 per cent) said the solicitors they dealt with now stick to their budgets – up from 10 per cent last year and just 5 per cent in 2017. However, 22 per cent said solicitors always went over what was budgeted; while a further 54 per cent said they sometimes went over. Around 22 per cent of lawyers also reported more applications to revise budgets, but the same proportion said they had still never seen one. The message about the need to stick to or revise budgets is getting through too slowly.

Solicitors are putting themselves at risk if they have to take the route of convincing the judge on assessment that they had a ‘good reason’ to exceed the budget. This task is not proving easy in many cases, leaving solicitors out of pocket. The survey also showed that costs lawyers are becoming more comfortable with the electronic bill of costs: 57 per cent said they were getting used to it compared to 41 per cent in 2018 – but 36 per cent still think it is making things worse, and 24 per cent described it as a hard sell to solicitors. A mere 5 per cent said solicitors were getting the hang of the electronic bill. Nearly three quarters of costs lawyers said the electronic bill had increased the costs of assessment, which is unsurprising as users get to grips with it. The recent guidance provided by the CoA on the proportionality test will have been welcomed by members (the ACL survey was carried out before the ruling in West & Demoupilied [2019] EWCA Civ 1220), with 57 per cent saying that up until now “everyone has their own approach” to the test with 59 per cent noting that it depended on which judge you were before.

Nearly half also called for a comprehensive review of the costs provisions in the Solicitors Act 1974, a view shared by many in the costs world. In a case last year (Allen v Brethertons LLP [2018] EWHC B15), a costs judge chided a firm of solicitors for not treating the costs lawyer on the other side with “the same professional courtesy as a solicitor would expect”. Three-quarters of the costs lawyers surveyed by the ACL said solicitors treated them with appropriate professional respect and courtesy, though a fifth said they did not. The survey shows the continuing and important role that costs lawyers play in the legal market. I am confident in our members’ ability to adapt given the increasingly central role that costs play in the conduct of litigation.