News focus: CJC forum brainstorms costs reform

Rarely a week goes by without the higher courts ruling on a costs dispute. Whether it is issues related to the Solicitors Act 1974, firms rebuked for charging beyond the guideline hourly rates or the application of fixed costs, this is a minefield (or goldmine?) of satellite litigation.

So it felt like a can of worms was being opened two weeks ago when the Civil Justice Council opened a consultation on all issues relating to costs. No wonder the CJC advised that anyone submitting at least 20 pages in response was obliged to add a two-page summary to their submission.

The extent of the challenge facing anyone brave – or perhaps foolish – enough to contemplate wide-ranging reforms was borne out when the CJC invited lawyers and interested parties to a conference this week in central London. It was the first of four events aimed at thrashing out policies to take forward. The only certainty among a group of lawyers talking costs was uncertainty – plenty of opinions were offered but little consensus reached as delegates sweltered in a packed venue.

Costs budgeting may be the most contentious of the four pillars the CJC wants to discuss. An audible groan moved around the audience at its very mention, with one delegate throwing her head back in exasperation.

Few would advocate scrapping Sir Rupert Jackson’s flagship recommendation, which came into force 10 years ago, but most would not want to continue with costs budgeting as it stands.

‘We’re talking about finessing budgets rather than getting rid of them,’ said Jack Ridgway, chair of the Association of Costs Lawyers. ‘I don’t agree that we should abolish it altogether but in its current form costs budgeting doesn’t work. It is less likely to control costs and more likely to shift them. It is too adversarial and too “winner takes all”.’

Francesca Kaye, Chancery Master, pointed out that there are extra costs associated with budgeting that had not been anticipated by Jackson.

‘There should still be an exchange of costs information in a consistent and transparent way at some early stage of litigation,’ she said. ‘There should be a loosening of the rules but in some types of cases it provides a useful function.’

The conference also featured debate on the Solicitors Act 1974. One solicitor quipped that he was bound by rules so archaic that he was not even born when they were made. The legislation is at the heart of many solicitor-client disputes at various stages of litigation. The most notable is Belsner, which was due to be heard in the Court of Appeal this week before a barrister was struck down by Covid.

'We’re talking about finessing budgets rather than getting rid of them. I don’t agree that we should abolish it altogether but in its current form costs budgeting doesn’t work'

Jack Ridgway, Association of Costs Lawyers

A key question that needs to be answered by the CJC is when lawyers’ costs can become recoverable in a system which has been digitised and where settlement can be reached at an early stage in proceedings. What is contentious and non-contentious business – and can we even draw a distinction anymore?

Brett Dixon, a solicitor and secretary of the Association of Personal Injury Lawyers, said: ‘Previously I suspect when we started the clock on proceedings it was easy to identify. But times have changed. There is still a safe space for parties to negotiate before they take that next step that could be cost-bearing.

‘[The Solicitors Act] is out of date and needs some sort of reform, but it needs to be done in a careful and considered way as it will ripple across civil justice.’

Data appears to be the biggest challenge to coming up with guideline hourly rates that will keep everyone happy.

Last year Sir Geoffrey Vos, master of the rolls, accepted recommendations made by the CJC’s working group, led by Mr Justice Stuart, to revise the rates. They were last set in 2011. However, after concerns were raised during the consultation process about changes in working practice due to the pandemic, Vos agreed a further review within two years.

‘We should not abandon them but go back to basics,’ declared former Law Society president David Greene, head of class action and finance litigation at Edwin Coe. ‘The difficulty we always have is gaining the data… At least we now have a method. I’m not sure how empirically based it is. It is difficult to come up with an answer on this.’

What is or should be the purpose of guideline hourly rates? Greene says they should be an ‘easy reference’ for judges. Should they have a broader role? ‘I do not think the evidence is sufficient for a broader role. They should not be part of the detailed assessment process.’

Throw in the considerable debate over the fixed costs extension for most claims up to £100,000 – almost certainly on course to be implemented next April – and you have a number of issues for which there is no easy solution. It may be that those two-page summaries in consultation responses will come in very handy indeed.