Are lawyers colluding on fees?

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Judges have highlighted a ‘conspiracy’ on lawyers’ fees in budgets.

In the past month, I’ve heard two judges addressing the issue - albeit briefly - of whether law firms collude to keep their fees high in costs budgets.

Speaking at the Law Society’s Commercial Litigation conference, Mr Justice Flaux, judge in charge of the Commercial Court, was discussing the topic of budgeting. He said that sometimes, budgeting felt like a ‘rubber-stamping’ exercise for the judge – and ‘what, as a judge, you have to watch out for, is the conspiracy of silence, where the two sides have agreed the budget’.

He said it was a bit like the way that, in hearings about costs, the ‘one thing’ that the barristers ‘hardly ever argue over’ is one another’s fees.

That last comment particularly riled one costs barrister to whom I spoke at the end of the event.

Then just a week later, speaking at the Law Society’s Civil Litigation Section conference, Sir Vivian Ramsey - the judge who was in charge of the implementation of the Jackson reforms before retiring last year - also raised the issue; possibly in response to Flaux’s comments.

Ramsey said that the risk that he had identified before the reforms came in - of a ‘Dog and Duck conspiracy’ of lawyers neglecting to challenge one another’s fees in budgets - had not come to pass. But the judge did admit that ‘in one or two cases where parties have agreed budgets, judges have felt a little uncomfortable’. He said this has been a ‘minority issue’, however.

So is this really just a minor problem? It’s clearly not something that would ever happen in areas such as clinical negligence, where budgets are almost never agreed. But in commercial, budgeting is going much more smoothly, precisely because parties are normally succeeding in reaching agreement on budgets.

Are lawyers shying away from attacking one another’s fees in these budgets? That is, of course, impossible to know for sure. But to do so would clearly be a breach of the lawyer’s duty to their client. And let’s not forget that only two years ago, the Mitchell judgment had lawyers launching knives at one another’s backs in procedural assaults and counterattacks.

Could firms really have moved so swiftly from that gruesome bloodletting, to a culture of cosy collusion?

As Ramsey intonates, this is probably a minor rather than major issue. But that is not to say that it could not become more of a problem in future.

Mr Justice Flaux commented that judges needed to ‘watch out’ for law firms behaving in this way. But it is worth remembering two things. One, that judges do not actually have any power to interfere in budgets that have been agreed between the parties (though they can still slash costs at the end of the case, assuming that it doesn’t settle).

Two, many judges do not want to get involved with costs, and when the two sides have agreed their budgets, this is the perfect get-out clause to avoid the need to delve into the figures. Some judges will be more prepared to have the wool pulled over their eyes than others.