Profession 'eating itself': survey finds clients being encouraged to sue former lawyers

The latest member survey conducted by the Association of Costs Lawyers (ACL) has found almost half of costs lawyers (46 per cent) have seen an increase in the number of solicitors being sued by former clients.

The increase is likely due to the fast-growing industry of personal injury clients being encouraged to sue their former lawyers for deductions made from damages awarded to the client, following the ruling in Belsner v Cam Legal Services [2020] EWHC 2755 (QB).

In Belsner, the judge ruled the solicitors had not provided enough information to their claimant client about the potential costs and so their client was unable to give informed consent to deductions from damages.

The profession eagerly awaits the Court of Appeal hearing, which it is hoped will clarify what constitutes a client’s informed consent to deductions from damages.

Some lawyers have criticised this type of work, saying the profession is ‘eating itself’. 31 per cent of survey respondents believed it gives costs professionals a bad name; however, 52 per cent said if the rules were broken, litigation of this nature is fair.

The survey also highlighted some positive trends. Encouragingly, 51 per cent of respondents said they were busier than ever, compared to 37 per cent six months ago.

Only 8 per cent said work had declined since the start of the pandemic, compared to 15 per cent last year, showing signs of recovery for the legal market. 13 per cent said they had seen greater interest in using alternative dispute resolution to resolve costs disputes.

One in seven (14 per cent) said their firms were recruiting to increase capacity; however, 13 per cent reported clients are taking longer to pay bills.

Remote hearings appear to have been embraced, with almost half (48 per cent) praising the courts’ response to the pandemic, saying it would be hard to go back to pre-pandemic processes, up from 39 per cent six months’ ago.

Another post-pandemic change is that nearly a third (31 per cent) are now working from home permanently.

The survey found muted enthusiasm for the interim conclusions of the review of guideline hourly rates (GHR).

The Civil Justice Council working group on the GHR is currently reviewing responses its consultation which proposed modest increases to the current rates.

23 per cent of respondents considered the proposals a reasonable outcome to be welcomed by solicitors, while 36 per cent said “it’s not great but it’s better than nothing”.

One in five said basing the GHR on the rates awarded by judges – rather than fees charged by lawyers – made them pointless, as they simply perpetuated the status quo, while a similar number said a fundamental review of the purpose of the GHR was required instead.

ACL chair, Claire Green, commented: “We hope that the GHR working party is listening to the ACL and others, and rethinking its proposals.

“Basing its proposed figures on the small number of cases which have reached detailed assessment risks the GHR merely reflecting what judges awarded on assessment rather than informing courts of the ‘broad costs of litigation’ – which was their original intention.”