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law costs draftsmen
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will not appeal to many.’
The ALCD told Jackson that it supports extending fixed fees across the fast track but not to multi-track cases, which it said benefits from the most sophisticated, detailed assessment system ‘in the world’.
Jon Williams, partner at Cardiff-based Williams Associates, admits that fixed costs are a worry, but wonders whether they might reignite the costs war of the past decade as defendant insurers look for ways to challenge them.
This is certainly Ashton’s view. When fixed costs were introduced for low-value road traffic accidents in 2003, ‘people said we would be out of business in 12 months’, she recalls. ‘Now 20% of our work is from fixed costs.’ This arises out of issues like VAT, after-the-event insurance and disbursements. ‘As long as there is some [judicial] discretion, there is going to be something for defendants to challenge,’ Ashton says.
Fraser Whitehead, chairman of the Law Society’s Civil Justice section, reckons that while fixed fees will reduce routine work, costs draftsmen will be even busier dealing with cases that fall outside the regime, as insurers will really target them.
The 2003 regime aimed to simplify costs and Edmondson notes the irony that ‘there has been an increase in costs work’ since then, a reaction he expects to see repeated next year when the government introduces its new process for road traffic claims, again with fixed costs. ‘With these consequences for one of the least complex areas of personal injury litigation, any attempt to expand a fixed-costs regime under the Jackson review beyond personal injury will likely lead to further costs disputes.’
Strong demand
Generally, however, with fee-earners both poor at billing and under ever-greater pressure to deliver income, this is a good time to be a costs draftsman – recruitment consultants report no let-up in demand.
Michael Kain, chairman of leading costs drafting firm Kain Knight, says most of his firm’s business is commercial work – it acts for 35 of the top 100 solicitors’ practices – and this backs the view that this work can be lucrative. He recounts a recent multi-million-pound claim where the costs of the detailed assessment alone were £300,000. ‘These are disputes that people can afford to litigate,’ he says.
ALCD fellows have eagerly taken up the chance to become costs lawyers as recognised under the Legal Services Act, and two of them – Anil Virji, head of costs at northern home counties firm Pictons, and David Cooper of Peterborough-based defendant costs practice Taylor Rose Law – have made history by becoming partners in legal disciplinary practices (LDPs).
ALCD chairwoman Wendy Popplewell is another of those considering her options. She practises at Essex and London firm Equity Law Costing in partnership with her sister, Suzanna, who has managed the impressive treble of qualifying as a solicitor, ALCD fellow and fellow of the Institute of Legal Executives. That first qualification would allow Equity to become an LDP and ‘we could then carry out solicitor-type work’ that is a natural extension of their present caseload, explains Popplewell, such as debt collection and enforcing costs certificates.
Most costs draftsmen would say that the right to conduct costs litigation and rights of audience conferred by costs lawyer status have had a greater symbolic benefit to their standing in the profession than hugely impacting on day-to-day practice.
However, Jon Williams, who mainly handles defendant work, says it has ‘helped immensely’ because he no longer needs a solicitor to act as a middleman for accepting service, and so on. Harman says it has added a new string to draftsmen’s bow: ‘It allows us to take the right case all the way.’
Edmondson adds: ‘The increasing importance and complexity of costs matters has led to a need for more qualified and specialist cost draftsmen to meet the growing needs of clients.’
Separation anxiety
Perhaps the greater impact is on the ALCD itself, which as one of the eight approved regulators has to meet the requirements of the Legal Services Board, such as separating its regulatory and representative functions. This is a particular challenge for the ALCD as a voluntary body with one full-time administrator and a membership of around 800, the smallest of the regulators.
Popplewell says she has been assured by the LSB that timetables will generally be tailored to each approved regulator and its finances will be taken into account. ‘Hopefully this will mean that the financial burden on us will not be too onerous.’
But talk of regulation also highlights one of the curious aspects of the costs drafting profession – membership of the ALCD is voluntary and it is thought that there are anywhere between 1,000 and 4,000 non-ALCD costs draftsmen operating in England and Wales totally unregulated.
Unsurprisingly, the ALCD wants all costs draftsmen required to join. ‘I have raised it with the Ministry of Justice, the Legal Services Board and the Office for Legal Complaints,’ says Popplewell, ‘and I have been notified that when the LSB publishes a consultation on its draft business plan in mid-December, reference will be made to the unregulated parts of both our profession and other legal professions. I urge anyone who is interested to respond to that consultation paper.’
While the chance to become a costs lawyer may attract some back into the fold, for as long as courts continue to give draftsmen permission to appear anyway, the incentive will not be that great to make the move voluntarily.
Kain is an ALCD council member and says he is ‘amazed’ by how many solicitors simply ‘put the file in the box and send it off to someone they’ve never heard of because they think they might save themselves 10 pounds’. There are, of course, highly regarded costs draftsmen who feel no need to join the ALCD, but solicitors need to be aware that such draftsmen are under no obligation to carry indemnity insurance, and there is no external complaints procedure. ‘You could be a window-cleaner and set yourself up as a costs draftsman,’ says Kain. ‘I see so many complaints against these people.’
Heavy industry
Another feature of the last decade has been the growth of costs as an industry – the big firms such as Kain Knight, Compass, Masters, John M Hayes and Jennings are now significant concerns with up to 100 staff and operate, says Kain, ‘exactly like law firms’, with marketing departments, executive boards, trainee programmes and so on.
In fact, Ashton adds, they effectively act as outsourced billing departments for all but the largest solicitors. ‘All they do is check [the bill] and sign it. We serve it and deal with everything else... To keep the sort of skill sets we have here on staff would be vastly expensive.’ Compass also handles credit control for some clients.
‘The recession hasn’t affected us. If anything, it has assisted us because more firms had trouble getting funding [from their banks] and so come to firms like to us to keep up their cashflow.’ Compass projects that its turnover in the year to 31 January 2010 will be £5.3m, compared with £3.8m in the previous 12 months.
This development has also seen the emergence of solicitors’ firms targeting costs work – such as Just Costs, whose name reassures other solicitors that they will not look to poach their clients – and specialised costs counsel. A decade ago, says Harman, you never saw barristers in costs disputes – ‘now you can’t go to the Senior Court Costs Office without bumping into dozens of them’.
The profession’s demise has been predicted many times but it has emerged stronger each time, says Kain. Jon Williams agrees. ‘There were prophets of doom in 1986 with the advent of the Rules of the Supreme Court and in 1998 with the advent of the Civil Procedure Rules,’ he says. ‘Is this any different? Probably not.’ n
Neil Rose is a freelance journalist and editor of the ALCD journal, Costs Lawyer
Legal Services Directory 2010
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