The Costs Question

Dear Sir,

With reference to the article ‘Costs specialist blasts Woolf proposals’ (IHL News, March 1999), I do not share the pessimistic view of the author Mr Diamond of the likely consequences of the new summary assessment of costs procedure.

The new procedure is designed to discourage the tactic of making numerous interlocutory applications to the court to make the litigation so expensive for an opponent that they can no longer afford to pursue it.

Previously, the position was that the party who obtained a ‘costs order in any event’ would have to wait until the end of the case before being able to recover its costs.

The new procedure is to be welcomed if it results in an end to the practice of starving out litigants and frees up the courts to deal with meritorious interlocutory applications.

In addition, the new procedure does not necessarily require the input of the costs draftsman, as Mr Diamond Appears to assume. The form to be completed setting out the summary costs is a straightforward document. It is relatively easy to draw up if the solicitor’s papers are in good order. The real danger in the summary assessment of costs procedure is that judges assessing costs may not have sufficient experience to arrive at a figure which is realistic. The party in whose favour the costs order is made may recover too little. However, one would hope that with the experience and with time this difficulty would be ironed out.

Ian De Freitas, Paisner & Co

James Diamond responds

My analogy was based on the information at that time. Now having attended the ‘leading’ costs conference, chaired by the Chief Taxing Judge, Judge Cook and Tony Girling (a former president of the Law Society), and ploughed through all the various draft rules, I believe, if anything, my figures are on the low side. In my opinion, production of a schedule of costs by a London Solicitor could fall foul to an argument on proportionality (Rule 44.5).

Two further issues follow this:

1: Corporate clients generally receive monthly/quarterly bills, if for whatever reason this global bill is reduced, this should be proportionately reflected in the costs schedule. (See “Legal Costs Dilemma” Solicitors Journal, 30 October 1998, Page 980)

2: The full Impact of the Truscott case will be taking effect when instructing London firms conducting business in courts outside London. Fee-earners will, therefore, in relation to the ‘easy’ task of preparing the costs schedule, need to be au fait on the hourly rates allowed by the various courts.

The reason why I believe my figures are now on the low side, is twofold.

1: Estimates of costs (Rule 43 s4) in all cases outside the scope of the small claims track, parties represented by solicitors must file at least two estimates of costs. The handout given at the seminar indicate that the costs estimate given at listing is likely to be binding.

2: In-house solicitors

Companies can be litigants in person (Rule 48.6) and can recover costs for work done by the company as well as work done by any firm of solicits it instructs.

(Mr Diamond is managing director of Legal Costs Services)