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09 July 2014
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Costs lawyers have earned their long-awaited right to litigate, says Sue Nash

It is now more than seven years since costs lawyers were granted independent rights to conduct litigation and advocacy, but that fact is not stopping some other lawyers challenging their legitimacy.

The evidence we have to date is anecdotal, but there have been enough reports from our members of ambushes at hearings to take it very seriously. There is no basis in law for these challenges; the only possible reason is the hope of a tactical advantage by removing an experienced costs lawyer from the game.

Absolute right

We instructed well-known costs counsel Roger Mallalieu of 4 New Square to set out the position, and his advice could not have been clearer: Costs lawyers have an absolute right as conferred upon them by the Legal Services Act 2007 to conduct all costs proceedings within the limits of their statutory powers (essentially, all costs matters)—regardless of the circumstances in which they are retained or employed.

The challenges have largely arisen where costs lawyers are working in organisations that are not themselves regulated and so not authorised to conduct litigation or provide advocacy. There is, the advice notes, an unfortunate “jarring” between the Legal Services Act—which anticipates entity-based regulation— and the fact that, at present, there is no such scheme in place for us.

Entity regulation

But our regulator, the Costs Lawyer Standards Board, is currently consulting on introducing entity regulation next year, and in any case the Act specifically exempts costs lawyers from having to work in such organisations (so-called “authorised bodies”) until entity regulation is introduced.

The opinion states: “The fact that a costs lawyer is employed, for example, by a partnership which is not itself an authorised body does not invalidate or undermine that costs lawyer’s right to conduct litigation or rights of audience.”

Some confusion

But we appreciate that, for now, the situation of a costs lawyer being on the record in his own name when the retainer is with their firm can look confusing to a judge—until it has been fully explained, at least. The opinion is a resource that members can use to counter any challenges.

It also counters any challenges on the basis of the indemnity principle. Mr Mallalieu writes: “Provided the client has a liability to pay the costs lawyers’ fees, it should not matter, as a matter of law, how many layers of agency or employment that liability passes through. Whether the costs lawyer is engaged directly, through a partnership, as an employee of a firm, or, frankly, by a client, through his litigation friend who in turn instructs a solicitor who in turn instructs a solicitor agent who in turn, with authority, instructs a firm of costs draftsmen who, in turn have an employed costs lawyer who goes on the record and conducts the litigation and exercises rights of audience is irrelevant provided the court can be satisfied that there is a proper chain of agency (and therefore instruction) and of contractual liability for fees (and therefore no breach of the indemnity principle).

Robust position

In order to ensure their position is as robust as possible, Mr Mallalieu’s advice states that costs lawyers should have systems in place to ensure that any non-authorised persons they work with are not engaging in reserved activities.

In relation to the right to conduct litigation specifically, the advice says that costs lawyers are entitled to use unregulated persons to assist them with tasks such as drafting, correspondence, secretarial services, general advice and assistance, without fearing that their litigation rights could be successfully challenged. What amounts to the conduct of litigation is likely to be narrowly construed.

A new breed

It took many years for the Association of Law Costs Draftsmen, as it then was, to make the case for independent rights of practice for its members and have it accepted by government and Parliament. This has given birth to a new breed of highly professional and accountable costs lawyers who are regulated as vigorously as any other lawyer.

Challenges to these hard-earned rights go to the heart of our raison d’être and will be resisted with the same determination that won them in the first place. We are keen to hear from any costs lawyers who have, or are currently experiencing, any challenges to their audience rights, and if appropriate, the Association would consider being joined as an interested party to the relevant proceedings.

It is important that a clear legal precedent is established to prevent further unwanted satellite litigation of this kind.

This article was first published in the New Law Journal

Sue Nash is a costs lawyer & chair of the Association of Costs Lawyers (www.associationofcostslawyers.co.uk)

 

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