Only properly qualified and regulated Costs Lawyers should be allowed to handle costs litigation and advocacy, and the title should be legally protected like it is for solicitors and barristers, a major review has recommended.
The ACL – which actively engaged with the review – has strongly welcomed the proposals, which form part of a wider blueprint for reform of legal regulation.
Stephen Mayson (pictured), honorary professor of law at University College London, also proposed abolishing the Costs Lawyer Standards Board and all the other legal regulators, replacing them with a single regulator for all legal services.
His report, Reforming legal services: Regulation beyond the echo chambers, has been submitted to the Lord Chancellor following a two-year independent review.
In a section on Costs Lawyers, Professor Mayson said that “too often” costs work was being carried out by “other authorised persons [i.e., other qualified lawyers] who lack the relevant knowledge and experience of costs law”.
He continued: “Similarly, unqualified and unregulated costs practitioners are carrying on non-reserved costs activities, and conducting costs litigation, under the ‘supervision’ of authorised persons who have neither the skills nor the resources to perform this supervision adequately or effectively.
“Without some regulatory approach that can require assurance of specialist and up-to-date knowledge and experience of this technical area of practice in respect of all who offer their services commercially or for reward, consumers are at risk of significant detriment.”
Professor Mayson observed that unregulated costs draftsmen could carry out “almost identical activities” to Costs Lawyers, including the reserved activities of litigation and advocacy as employees of another authorised person, usually a solicitor.
“Indeed, authorised persons can personally conduct costs litigation, even though they do not ordinarily practise costs law. However, with costs law becoming increasingly complex and specialised, the scope and level of knowledge of these authorised persons is limited, leading to harmful ‘dabbling’.
“Errors can lead to significant and avoidable shortfalls in costs recovery, to the detriment of the lay client who had incurred these costs.”
The report cited a case study which saw a couple whose relationship with their solicitor broke down after being awarded costs use a Costs Lawyer, while the solicitor used a costs draftsman. The couple ended up receiving more than twice the costs originally put forward by the solicitor’s draftsman.
Professor Mayson recommended that the exercise of rights of audience and the conduct of litigation in costs proceedings should be restricted to Costs Lawyers who have “personal authorisation for these services”.
For other legal services relevant to costs, the regulator could impose practice conditions, such as specific accreditation.
All legal professional titles should have the benefit of statutory protection, Professor Mayson added.
ACL chair Claire Green said: “Professor Mayson’s recommendations that costs work should be the preserve of properly trained and regulated costs professionals accurately identifies the shortcomings of the current system.
“He is right to describe this as an increasingly complex and specialised area of law that requires expert handling… and we also strongly welcome his call to protect all legal professional titles, including that of Costs Lawyer.
“There is much to digest in his report about the overall structure of legal regulation, and it will hopefully form a major stepping stone to a regime where those needing advice on costs receive it from those who have demonstrated their expertise and have proper consumer protections in place.”
The report more widely recommended that all providers of legal services, whether legally qualified or not, should be registered and regulated by a single regulator, a Legal Services Regulation Authority (LSRA).
The Ministry of Justice recently indicated it has no plans for major reform in this area, and Prof Mayson has also recommended a series of shorter-term measures because, during the review, he became “increasingly convinced that some change is needed sooner rather than later”, especially with the public not generally understanding the difference between regulated and unregulated providers.
The LSRA would replace the reserved legal activities by categorising all legal services according to risk and apply differing levels of protections as required. Regulatory scope should apply to “advice, assistance, representation and document preparation in pursuance of or in connection with legal rights and duties arising under the law of England and Wales”.
All providers would be subject to minimum requirements, such as giving clients access to a beefed-up legal ombudsman; compliance with a code of conduct applicable to all regulated legal services, against which they could be disciplined; a minimum level of professional indemnity insurance; and disclosure and transparency in relation to regulatory status, terms of engagement, pricing (in some areas) and complaints.
For practice areas that are at an ‘intermediate’ level of risk, there would be additional obligations, such as for handling client money, higher levels of insurance and CPD, while those providing services that are of high public importance or high risk to consumers would require prior authorisation, such as through a qualification.
There would be a single public register. The LSRA would have the power to approve the requirements for registration, regulation and the award and removal of professional titles, but the ‘ownership’ and award of titles would remain with the established professions.
“This would not prevent professions from maintaining and promoting higher professional standards than those required by the regulatory minimum where they believe that it is in their best interests to do so.”