Time for review of costs management rules and limits, Senior Costs Judge says

It may be time to review the criteria for costs management and look again at requiring it for cases worth more than £10m, the Senior Costs Judge (SCJ) has suggested.

Andrew Gordon-Saker (pictured) also said that in-person hearings at the Senior Courts Costs Office (SCCO) could return on a widespread basis by the end of the year.

Speaking at last week’s Costs Law Reports annual conference, held at Lincoln’s Inn, the SCJ noted the recent comments of Master Davison that many judges did not think costs management controlled costs better than detailed assessment.

“It may be that the time has come to review the criteria for costs management,” he said. “The government has recently decided to extend costs budgeting to ‘heavy’ judicial review cases, so it’s not going away, but is it needed in every multi-track case up to £10m? And why not cases over £10m?

“I’m in the course of a detailed assessment of a £53m bill, of which £24m were the fees of accountancy experts. We spent 12 days on those fees and I couldn’t resist saying in my decision that, in a case where the expert evidence was going to be so substantial, wasn’t it better for the parties to seek a costs management order in respect of it rather than spend 12 days at detailed assessment?”

He also reiterated his call for part 3 of the Solicitors Act 1974 to be revised. The SCCO was seeing more solicitor and own client disputes and more going on appeal too.

“Too many solicitor and client assessments are preceded by an expensive hearing about whether the bill is a final bill, or an interim statute bill, or one of a series of bills that makes a final bill, or a request for payment on account.

“So this is great for lawyers who specialise in costs, but personally I think it’s a bit embarrassing, particularly for the legal profession, that there’s so much dispute about what the bill is before you get to actually deal with what the client’s grievance is.”

The SCJ said there have only been a handful of in-person hearings in the SCCO – where, for example, there was a substantial amount of oral evidence or a party had a “particular characteristic” that meant they could not attend remotely – and the “physical constraints” of the Thomas More Building meant a return to in-person hearings would take time.

He said the practice note on the conduct of proceedings at the SCCO he issued last August remained in force.

From next month, most costs judges would be conducting most of their hearings from court – but, at least to begin with, most would not be in-person for the parties.

“Only once confidence levels have improved will most hearings be in-person. I anticipate that may be towards the end of the year.”

Hybrid hearings, where at least one of the parties was remote, would be rare for the SCCO because it had to use the court service’s Cloud Video Platform for this and the office only has one set of the equipment.

The SCJ added that, because of the “imbalance” caused by having one party present and one absent, the SCCO would only hold a hybrid hearing where there was a specific need, such as if a party was in prison or overseas.

Like other courts, he said, short hearings (up to an hour or so) would likely continue by phone or video after the pandemic has passed.

His experience was that video hearings were slower and took longer than in-person hearings. He found advocates tended to be “more formal in how they make their submissions”, sticking to prepared scripts and not responding as much to “the mood of the hearings”.

“I suspect also… that less is agreed in advance [than] if you were physically in court with your opponent and there are probably fewer settlements at the doors of court. So I don’t think video hearings will become norm for detailed assessment.”

Electronic bundles should be the norm, however, although the SCJ said he was struck by the different level of costs sought for doing this: “I’ve seen small sums for huge bundles and huge sums for small bundles.” Delegation was clearly a key part of doing them right.

On the guideline hourly rates, the SCJ recognised that “the new rates aren’t perfect”.

He continued: “There are anomalies – the obvious anomaly is the grade D rate for London 1 – but the working group decided to follow the data rather than massage it and the figures are probably about right…

“In so far as there are anomalies, these are only guidelines. There is now a cigarette paper between National 1 and National 2, which may seem odd to most people, because work done in the centre of a major city is likely to cost more than work done on the edge of a small rural town.

“But if the work done in the major city was substantial and complex, then a higher rate than the guideline rate will be justified.

“And if the work done in the major city and small rural town was effectively the same – perhaps a modest-value PI claim – then why shouldn’t the rate be similar?”

He noted that claimant lawyers thought the rates too low and defendant lawyers too high. “The answer to both sides is, if not these rates, then what rates?”

The Master of the Rolls has said another review, taking into account the impact of increased home working, should be held in the next two years, and Master Gordon-Saker said he was looking for “bright ideas” as to how this could be conducted – an expense of time survey did not count.

He highlighted too paragraph 28 of the new Guide to the summary assessment of costs, which says the guideline rates may be a helpful starting point for detailed assessment. This “should reduce points of dispute by at least two pages”.

Electronic bills were “still a work in progress” and points of dispute were an outstanding issue. However, “most people are being sensible and we’re getting points of dispute which identify groups of items where the same point is being taken”.

His preference was for points separate from the bill but with an extra column in the bill identifying the specific objection on each item.

Work on an electronic bill for Court of Protection cases was advancing, he added.

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Costs News
Published date
30 Sep 2021

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