Litigation firms 'expected' to have links with costs lawyers

A Senior Courts Costs Office decision has emphasised that firms should employ costs lawyers or risk paying a heavy financial price. 

The Association of Costs Lawyers (ACL) said a recent case should act as a warning to firms of the risk of failing to employ costs lawyers or having arrangements with external costs lawyers – “or at the very least not instructing them quickly when an issue arises”. 

The failure of the paying parties in National Bank of Kazakhstan & Another v The Bank of New York Mellon & Ors to instruct costs lawyers promptly after the claimants successfully applied for a default costs certificate (DCC) meant no draft points of dispute were submitted to the court for the application to set aside the DCC.

Even though the bill was substantial (for $3.7m), the costs judge found that the solicitors had provided no good reason for not supplying the draft points of dispute, therefore he had no basis on which to set aside the DCC.

An application to set aside the DCC was made quickly, but it took 13 days from being notified of the DCC for the defendants’ solicitors – who had no internal costs facility – to appoint costs lawyers. It then took a further 16 days to provide them with a copy of the file and electronic dataset in the required format. 

The hearing of the application was five weeks later – the defendant solicitors told the court they had needed more time to draft points of dispute.

Criticising the lack of urgency, the judge said: “I would have expected any litigation firm to have links with external costs lawyers so that instructions could be sent immediately. 

“In these days of costs budgets and costs and case management hearings, the interplay between costs lawyers and instructing solicitors goes far beyond the traditional instruction of a cost draftsman to prepare a bill (or points of dispute) at the end of a case when the substantive proceedings have concluded.”

Fiona Gillett, a partner at Stewarts who worked on the case with Joseph Dowley, senior costs draftsman at the firm, said: “However experienced a litigator you are, input from inhouse costs specialists is invaluable to a full-service client offering.

"Having the necessary in depth understanding and experience in practice of the costs rules and the SCCO Guide in-house at Stewarts undoubtedly resulted in a successful outcome for my clients in their continued enforcement of costs orders against the defendants.”

ACL chair Claire Green said: “This case serves as a salutary warning to solicitors that they cannot just ignore costs – there can, quite literally, be a very high price to pay for doing so. Our members who work inhouse add significant value to their firms, above and beyond drafting bills.”

She added that firms should at least make sure they have arrangements in place with costs lawyer specialists for when such problems arise. 

“The courts are showing less and less tolerance for delays”, she commented, “sometimes with drastic consequences, and that applies to costs just as much as other aspects of civil procedure.”