REUTERS | Russell Cheyne

Avoiding detailed assessment: a cultural shift in approach to counsel’s fees?

I am a barrister, specialising mainly in personal injury and clinical negligence work. This is split between claimants and defendants, in roughly equal proportions. This piece is about my perception of a changing culture in the approach to agreement or assessment of the receiving parties’ costs in such cases, normally now only in relation to claimants’ costs, because of qualified one-way costs shifting (QOCS). To me, this change is most obviously marked (whatever its causes may be) by the fact that counsel are now regularly being asked by their solicitors, or the latter’s costs lawyers / draftsmen, to forego significant parts of the fees, even before any challenge has been raised to them by the paying party (and often without any suggestion as to why this may be justified), simply in order to facilitate agreement of an overall discount, and therefore to avoid those costs being sent for detailed assessment.

The purpose of this piece, then, is to kick off a conversation about why this is happening, whether it represents a problem, and, if it does, how to resolve it.

What follows is a typical example of numerous requests I have received over the last two years, this one emailed to my clerks by solicitors a few months ago:

“This case has now concluded, and I am dealing with recovery of costs. We have commenced negotiations with the Defendant prior to receipt of Points of Dispute. The Defendant’s initial offer is at a level which we consider poses some risk in proceeding to Detailed Assessment. We hope to achieve settlement for around 80% of our profit costs. To facilitate that settlement we would be grateful if Counsel would kindly consider accepting a similar reduction in his fees of 20%.”

I have received eight requests in similar terms over the last year or so; two in the last month. I have chosen this older one to quote, not only because the costs issues have now been resolved, but for two further reasons: it was an extreme example of its type; and it was couched in refreshingly transparent terms. An extreme example because my fees must have been a very small part of the overall bill, since I had done very little work on the case; I was involved in a single interim hearing some years ago. Refreshingly transparent because it is entirely open about a number of things: first, that I was being asked to accept a reduction in fees simply pro rata to that which my solicitors were anticipating having to swallow; secondly, that I was being asked to do so without there having been any reasoned challenge (or indeed any challenge at all) to my fees by the paying party, and thirdly, without there having been any suggestion as to why my fees might be thought excessive or disproportionate.

These are common features to which I will return below. However before I do so, I should make it clear that I quite understand that the following have for some time been givens in the world of inter partes costs recovery:

  • That we are not automatically entitled to payment of all of our fees by the paying party: the old difference between solicitor and own client costs and party and party costs still applies, albeit with different terminology.
  • That many lawyers (solicitors and barristers alike) have always reserved the right to seek any shortfall from their own client, whether out of damages or otherwise; but
  • That often, ironically particularly in the context of conditional fee agreements (CFAs), claimant lawyers have undertaken (and barristers have been asked by their clients to commit to this in advance) not to seek more from their client than is paid by the other side, for example, “CFA lite” agreements.
  • That in the light of all this an occasional practice did arise whereby we as barristers might be asked to take a slight hit (maybe 10%) in order to facilitate settlement with the paying party. This might not be reasoned on any basis, and was probably illogical, but presumably accepted nonetheless as expedient.

I am also aware of course that there is now a much more robust approach to the assessment of costs taken by costs lawyers (and costs judges). Generally, this can be seen as necessary (and appropriate) as a consequence of the Jackson reforms, and in the context of a cost budgeting culture where judges are more energetic in their involvement. However it also (worryingly in my view) takes the form of inappropriate application of the new proportionality rules (already a loose cannon whose true effect remains to be tested in the Court of Appeal), so that they spill over into areas where they are technically inapplicable.

In any case, what happens now seems to me to be as follows.

  • We are regularly asked to reduce our fees by significantly more than 10%.
  • This request is often made by the solicitor before there has been any challenge by the paying party to our fees at all, let alone any reasoned basis for such challenge.
  • It is made without any suggestion that the fees are disproportionate or excessive, or relate to non-recoverable work (something which it would normally be difficult for the solicitor to assert since we simply do the work we have been instructed to do, and should in principle be entitled to payment by them for it in any event).
  • It appears to be made to give the solicitor more headroom for bargaining in relation to its own profit costs, almost invariably the true battleground in these cases, whether because of hourly rates or allegedly excessive work done, and because (in my experience anyway!) they always represent the very great proportion of the overall bill.
  • There is palpable sense on our part, which I stress I recognise may be incorrect, that the costs draftsman dealing with the claim is more concerned to protect the solicitors’ fees than those of the barrister; something which might be predictable, particularly where the costs draftsman is in-house.
  • This sense is often exacerbated by the difficulty of getting detailed advice (even when the case is, further down the line, going to detailed assessment) from the costs draftsman as to the merits of the challenges to counsel’s fees, and even more so of the comparative merits of the challenges to the solicitors’ fees. Both would of course be necessary in order to be able to form a reasoned view (alongside the solicitor) as to what to do in negotiation of the detailed assessment.

I wish to stress that these factors are by definition impressionistic, and I do not want to suggest that these things happen in every case, or indeed that they are necessarily typical. But what is the practical answer when they do arise?

My own view is that counsel confronted with a request for a reduction without any justification should (a) make the point, where it is correct, that we are as a matter of principle entitled now to our fees from the solicitor as a matter of contract; (b) ask what point has been taken in respect of the fees; and (c) make it clear that if no point has been taken, no reduction will be offered unless or until there is a reasoned point of dispute, and advice has been given as to the relative merits of those points both in relation to counsel’s fees and in relation to the profit costs.

But as I have said, I am wanting to start a conversation rather than conclude one. So what do others think?

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