Time for reform on costs?

Four in five of those responding to an Association of Costs Lawyers (ACL) survey said reform is needed, especially to remove the preliminary arguments over whether a bill is actually a bill (for example, final bills, interim bills, statute bills and Chamberlain bills). The Law Society, the ACL and the senior costs judge have also backed a review of the Act.

ACL chair Jack Ridgway said: ‘It is no surprise that costs lawyers are so keen on updating the Solicitors Act 1974—we see on a day-to-day basis how it is not conducive to the efficient and effective resolution of costs disputes.’

In October, the Court of Appeal held that personal injury cases that settle in the claims portal are non-contentious business for the purposes of costs, in Belsner v CAM Legal Services [2022] EWCA Civ 1387. Therefore, the court stated, complaints about deductions of costs from damages should be directed to the Legal Ombudsman rather than court.

The majority verdict on Belsner among costs lawyers is that it will shift the focus of costs disputes rather than curb them altogether. Some 30% of costs lawyers surveyed thought Belsner would spell the end for court challenges to deductions. However, 60% believed challenges would continue, based on the ‘fair and reasonable’ test for non-contentious costs.

Consistent with previous years, only 19% of costs lawyers said solicitors stuck to budgets—44% said they sometimes, and 23% always, went over budget. More positively, 45% said they were seeing more applications to vary budgets.

Some 58% of costs lawyers have grown their practices in the past year, 35% by up to 10%, and 23% by more than that. Some survey respondents expressed concern about fixed recoverable costs. However, 47% predicted fixed costs will give rise to disputes, creating work for costs lawyers.

A majority of respondents (56%) supported calls for regulatory review with the aim of strengthening the role of costs lawyers by, for example, making them more open to instruction directly by clients.