Association questions CJC’s idea of Legal Ombudsman taking on smaller costs disputes
The concept of the ‘statute’ or ‘statutory’ bill should not be abolished, the Association of Personal Injury Lawyers (APIL) has said – while casting significant doubt on the suggestion that the Legal Ombudsman (LeO) take over handling smaller costs disputes.
In its response to the Civil Justice Council’s consultation on reform to part III the Solicitors Act 1974, APIL said it agreed “in principle” with the recommendations to simplify and modernise the Act, and create a principles-based statutory code supplemented by professional conduct rules.
But it noted that there was no data to suggest that a large number of clients were dissatisfied with the current process. “We query whether a complete overhaul of how these disputes are handled is required, over and above the need to modernise and simplify the legislation.”
Like others, it had concerns about the capacity and resources of LeO to take on the resolution of complaints involving bills below £50,000.
“We are also unclear on what basis LeO would deal with disputes, and from where the power to do so would be derived. Members also report from experience of LeO that they do not often make ‘robust’ decisions at present, which indicates that the proposals in the CJC’s paper are quite far removed from LeO’s current role,” it said.
“LeO’s focus, rightly, is on consumer protection, and its scheme is set up for this specific standalone purpose. This purpose of addressing concerns in relation to the quality of service is an entirely different question from whether a solicitor has charged a reasonable amount for their work.
“If LeO is to deal with challenges relating to solicitors’ costs, this may also waver into the area of regulatory complaints, which is rightly the purview of the Solicitors Regulation Authority and firmly outside of the remit of LeO.
“There are questions as to whether LeO can and properly should take on this broader role, and whether LeO has the vires to act in this way.”
If these issues were addressed, APIL recommended that any roll-out should be limited, at least initially, to cases worth up to £10,000.
A further concern was the process to appeal any decision made by LeO; this is usually via judicial review and the administrative division of the High Court, which APIL said “should not be the destination for routine appeals in LeO costs cases”.
Yet another worry was that LeO’s current decision-making powers did not allow for the process that occurred at the end of a solicitor-client assessment, namely an order for payment, which converts a solicitor’s charge from an unliquidated sum into a liquidated debt, which can then be sued upon and enforced.
The LeO process would also need to provide for the rare occurrence of a solicitor seeking an assessment of their fees where there was a dispute in relation to them.
APIL pointed out too that, in the absence of the one-fifth rule, “there is a danger that the LeO will become inundated with costs challenges”.
Though the ACL and others have welcomed the idea of doing away with statute bills, APIL did not.
“We believe that the case law is settled on what a statutory bill is. Rather, we would welcome a template example of a statutory bill, and detail about what should be included in a bill, consolidating the established case law in this area.
“We would agree, however, that the content and format of bills could be set by conduct rules and rules of court. The key point is to ensure that clients are fully informed, understand the work undertaken, on what basis they are being charged and the amount being claimed; and that they are aware when payment of the bill is due and what their rights are to challenge the bill.”
APIL accepted that interim statutory bills raised issues but these related to the terms of the retainer and could not be dealt with by statute.
“The Solicitors Act should codify the case law in this area, which states that in order to deliver statutory bills during a case, this needs to be agreed in the retainer between the solicitor and client.”
On other points, APIL urged caution on adopting ‘fair and reasonable’ as the overriding principle in costs. “There are many conflicting definitions of what ‘fairness’ is, and this is context dependant.”
While the concept of ‘fair and reasonable’ already featured in the assessment of non-contentious costs, “there has been little scrutiny or consideration of the test, compared to the ‘reasonableness’ test used for contentious matters… It would be worthwhile maintaining this clarity going forward, and incorporating it into any new test of ‘fair and reasonable’.”
Mandating ADR for cases that fall beyond LeO’s remit “may simply be an expensive ‘tick box’ exercise, with one or both parties simply going through the motions, with no intention of working towards a settlement of the dispute.
“There is also no power for the CPRC to mandate pre-court ADR, so we query how this proposal would be implemented in practice.”
APIL also suggested that a six-month time limit for challenges would be better than a year. “One year is a long time for a solicitor to have to wait with the uncertainty as to whether they will be paid or how much they will be paid.”