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28 June 2021
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“Busy” costs lawyers see rise in solicitor-own client disputes

Half of Costs Lawyers are busier than ever as the legal market continues to recover from the depths of the pandemic, with former clients suing their solicitors a fast-growing area of practice, new research has shown.

But the latest member survey carried out by the Association of Costs Lawyers (ACL) found mixed feelings over such litigation, as well as muted enthusiasm for the interim conclusions of the review of guideline hourly rates (GHR).

Some 128 costs lawyers – approximately a fifth of the profession – completed the survey and 51% said they were busier than ever, compared to 37% who said so six months earlier. Only 8% said work has dropped off since the start of the pandemic, whereas 15% said the same last year.

While one in seven (14%) said their firms were having to recruit to keep up, less positive were the 13% reporting that clients were taking more time to pay their bills. For nearly a third (31%), working from home has become permanent.

The six months between surveys showed a move towards an acceptance of remote hearings, with nearly half (48%) praising how the courts have responded to the pandemic and saying it would be hard to go back to how it was before, up from 39% last time.

Strikingly, 46% of costs lawyers said they have seen an increase in the number of solicitor/own client challenges, which is likely to reflect the growing industry of personal injury clients being encouraged to sue their previous lawyers for deductions made from their damages.

The practice was strongly criticised by Slater & Gordon earlier this month after it fought off an attempt to challenge after-the-event insurance premiums through a Solicitors Act assessment, and other lawyers have criticised this type of work too as the profession ‘eating itself’.

Just over half (52%) of costs lawyers believed that, if the rules were broken, then litigation of this nature was fair enough. However, 31% reckoned it was giving costs professionals a bad name.

The Civil Justice Council working group on the GHR is currently reviewing the responses to the consultation it issued indicating modest increases in the current rates.

Only 23% of costs lawyers considered the proposals a reasonable outcome that solicitors should welcome, while 36% were more grudging in agreeing that “it’s not great but it’s better than nothing”.

One in five said that basing the GHR on the rates awarded by judges – rather than the fees charged by lawyers – made them pointless, as that way they just perpetuated the status quo, while a similar number said there instead needed to be a fundamental review of the purpose of the GHR instead.

Other findings included that 27% of costs lawyers have seen an increase in the number of applications to vary a budget in light of the new rule 3.15A that came into force last October, while 13% have seen greater interest in using ADR to resolve costs disputes.

ACL chair Claire Green said: “Costs lawyers have delivered when their clients needed them most by maximising the proper recovery of costs due to them at a time when cash flow has never been more important.

“Costs law has become increasingly complex and solicitors are realising that, in the same way they market themselves as specialists, they should go to the experts on costs.

“We hope that the GHR working party is listening to the ACL and others, and rethinking its proposals.

“Basing its proposed figures on the small number of cases which have reached detailed assessment risks the GHR merely reflecting what judges awarded on assessment rather than informing courts of the ‘broad costs of litigation’ – which was their original intention.”

This article was published in Litigation Futures on 28 June 2021

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