Solicitors and the wider public should take note of the recent decision in Kapoor v Johal [2024] EWHC 2853 (SCCO), which highlights the importance of instructing a qualified and regulated Costs Lawyer, whether that is to undertake work as a receiving or paying party.
Solicitors rightly advise their clients (and unrepresented opponents) to obtain expert advice from properly trained and regulated professionals, so why do so many solicitors instruct costs draftsman when it comes to their costs?
What are costs
Costs are the legal fees a client incurs for legal representation, to include their solicitor’s (or as an unrepresented person, reimbursement of their own) fees, charges, disbursements, expenses and remuneration.
The general rule is that the ‘loser’ (known as the paying party) pays the ‘winners’ (known as the receiving party) costs. A receiving party is entitled to recover its costs in a process known as: Detailed Assessment.
When might you need a Costs Lawyer and what does a Costs Lawyer do
The services of a Costs Lawyer are mainly sought by firms of solicitors; however, Costs Lawyers can be instructed by businesses, public bodies and unrepresented members of the public.
Costs Lawyers not only undertake work once a claim and a receiving party has been determined (Detailed Assessment) but can advise on client retainers, costs estimates, costs management (known as ‘budgeting’), costs of interim applications, settlement offers and their costs consequences, Costs-Only Proceedings, fixed costs and advice generally as to costs.
What is the difference between a Costs Lawyer and a Costs Draftsman?
Costs Lawyers are qualified and regulated experts in legal costs and have the right to conduct litigation and the right to appear in court on behalf of their clients on matters relating to costs.
Costs draftsman are unqualified and unregulated, but despite this can work within all areas of costs and have the authority to conduct litigation, but only as a solicitor’s ‘temporary employee’ during a matter – i.e. the instructing solicitor or unrepresented litigant, who is unlikely to have the skills and/or resources to adequately supervise such work, is ultimately accountable for the work undertaken.
The Case in point
Costs Judge Jennifer James, in Kapoor v Johal [2024] EWHC 2853 (SCCO), exercising the Court’s powers under CPR 44.11, assessed a Bill of Costs, drafted by an external costs draftsman, which was claimed in the sum of £258,583.78, at nil and awarded the paying party’s costs of detailed assessment on the Indemnity Basis, as drawn.
A plethora of inexcusable claims for costs and drafting errors were identified within the Bill of Costs, led to the Judge to state, “I have found the Bill to be riddled with claims that (regrettably) I find dishonest, and unreasonable and improper”.
The errors identified included, to name but a few:
- Claiming full costs as incurred against those that had already been summarily assessed and at lower amounts;
- Failure to divide the bill of costs pre and post 1 April 2013, which is required due to the change in the proportionality test;
- Lack of detail within the bill of costs as to orders made;
- The Notice of Commencement (N252) did not include all matters in which costs were claimed;
- The 4 separate matters were not divided into separate parts;
- The bill of costs included costs with respect to a matter which had been struck-out;
- Included costs where there was no order as to costs or orders that were silent as to costs;
- Failed to re-draw the bill of costs, thereby including costs which were disallowed on Appeal;
- Costs claimed within the bill of costs were greater than those claimed within previous Statements of Costs;
- Costs were claimed within the bill of costs that were previously stated as fixed, to include those of previous solicitors;
- The hourly rates claimed within the bill of costs were greater than those claimed within previous Statements of Costs;
- The amounts claimed within the bill differed from those costs charged to the client within interim statute bills, breaching the Indemnity Principle.
The Judge indicated that she would be reporting the solicitor to the Solicitors Regulation Authority, having concluded that the files contained hundreds of non-contemporaneous attendance notes, which were found to have been added at a much later date, stating: “That is a matter of the gravest seriousness.”
The Judge further commented, with regards to the solicitor signing the Bill of Costs as being both accurate and complete: “…signature below the – clearly untrue – Certificate, is a serious disciplinary issue.”
However, the Judge could not report the costs draftsman, stating:
“If [he] were a Costs Lawyer, I would report him to the ACL but as he is not practicing in the regulated sector, I simply note that I consider his conduct also warrants investigation…
Per Gempride Limited v Bamrah [the solicitor] cannot shift responsibility for signing the Certificate to Parts 3 to 5, onto [the costs draftsman]. Nor can RP do so in respect of Parts 1 and 2. The Misconduct in doing so is their own, and the Court’s power to reduce the Bill accordingly under CPR Part 44.11, could not be more clearly indicated. This is the worst example of tampering with a file of papers that I have ever encountered and the fact that the files of [the solicitor’s] two predecessor firms have also had the same treatment, is even more extraordinary.”
Despite such comments, the Costs Lawyer Standards Board (CLSB) does not have jurisdiction over costs draftsman and therefore there is nobody or no body to investigate and sanction him.
Court’s powers in relation to misconduct – CPR 44.11
“Court’s powers in relation to misconduct
(1) The court may make an order under this rule where:
(a) a party or that party’s legal representative, in connection with a summary or detailed assessment, fails to comply with a rule, practice direction or court order; or
(b) it appears to the court that the conduct of a party or that party’s legal representative, before or during the proceedings or in the assessment proceedings, was unreasonable or improper.
(2) Where paragraph (1) applies, the court may:
(a) disallow all or part of the costs which are being assessed; or
(b) order the party at fault or that party’s legal representative to pay costs which that party or legal representative has caused any other party to incur.”
Regulation and Governance of Costs Lawyers
The CLSB regulates Costs Lawyers in England and Wales and exists to protect the interests of consumers and the wider public. The CLSB set professional standards that Costs Lawyers must meet and can take action where a Costs Lawyer’s conduct falls below those standards.
The CLSB is a wholly owned subsidiary of the Association of Costs Lawyers (ACL). ACL is the profession’s representative body, and it is named in the Legal Services Act 2007 (LSA) as the approved regulator of the Costs Lawyer profession. However, as a representative body, it must delegate its regulatory functions to another organisation. It has therefore delegated its regulatory functions to the CLSB.
Costs Lawyers are held to the principles (of which there are 7) within the Costs Lawyers Code of Conduct which must be complied with pursuant to section 176(1) of the LSA. These principles include and provide that a Costs Lawyer must act with honesty and integrity; must not mislead, attempt to mislead, or allow the Court to be misled; and provide a good quality of work and service to clients, such standards that the costs draftsman in this case did not perform, nor was bound to in any event.
ACL vice-chair David Bailey-Vella addressed the issue, when speaking with legalfutures, state:
“Costs has become a very specialist area of law and it is not for those without rigorous training and oversight… It is hard to understand why solicitors are willing to put their costs recovery at risk 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.”
How we can help
Whether you are a solicitor, public body or an unrepresented person, and whether you are receiving or paying costs (during or after a claim), our costs team has the knowledge, experience, skills and resources to give the care and attention that your matter deserves. Whether that be to either maximise costs recovery or to challenge/reduce a costs liability, we pride ourselves on our accuracy and attention to detail within our document drafting and advice, with all work either being completed by or supervised by a qualified and regulated Costs Lawyer.
For further information, please contact Senior Associate & Costs Lawyer, Richard Waters on 01227 763939.
