Earlier this year, the High Court ruled that a Senior Courts Costs Office (SCCO) master was entitled to stay a consent order relating to detailed assessment because the clients were planning professional negligence proceedings against the solicitors.
Riordan and others v Moon Beever Solicitors (a firm) arose from an underlying claim where £2.2 million in damages and £3.5 million in costs was lost by the client as a result of, in their case, negligence on the part of the solicitors (and previous solicitors). The resulting Solicitors Act 1974 assessment on Moon Beever’s billed costs of £1.2 million had been previously struck out by Master Howarth following the missing of a deadline to file and serve evidence by the client.
On a relief from sanctions application, a consent order was made for assessment on the condition of a significant payment on account of £650,000. Provision was made for the client to seek an extension of time and that application was made together with the application to stay the order as a result of a material change (the appreciation by the client of the professional negligence proceedings).
Master Howarth was not made aware that the client had, some significant time prior to the date of the application, articulated in correspondence an intimation to issue such a claim. As a result, the stay was ordered and Foskett J in the High Court upheld the stay on the basis that the master was entitled to come to the decision regardless of whether a material change was required (as the consent order allowed for such a position). In any event, he found that there was arguably also a “significantly changed position” since the earlier “unspecified and general allegation of negligence”.
So we are left with High Court support for a stay in a Solicitors Act assessment as a result of a nebulous professional negligence claim. This is what caught my eye on the straplines for coverage of this case. In my experience, it is not uncommon for conflict to arise between two such claims. Both are, to a degree, impactful on the other. As in this case, a significant (as pleaded) negligence claim could make any assessment of the costs obsolete.
On a Solicitors Act assessment, the costs judge is specifically excluded from making any findings of negligence or taking into account any such allegations (if they remain undecided). They would therefore allow costs on the basis that there had been no negligence. Later findings of negligence have the potential to render the assessment entirely, or at least partially, a pointless and expensive exercise; this was no doubt a position recognised by both Master Howarth and Foskett J.
The flip side of this position would be the pursuit of expensive and time-consuming negligence proceedings where a Solicitors Act assessment may well distil the parties’ minds on the commercial reality of the position. This is a position I have been in and it takes an early judgment call. There is a tension between which proceedings should be heard first and that is a decision that is taken by whichever forum comes on first.
Added to this conundrum are the strict timelines within the Solicitors Act with regard to the client’s rights to an assessment and, no doubt (but out of my field), the appropriate limitations on bringing any professional negligence claim.
My first piece of advice on any Solicitors Act instruction, once my client and I have considered the position and as much detail as is available, is that “there are no winners on a Solicitors Act assessment” (thanks and any copyright on that must go to my former partner David Wilson, retired costs lawyer).
The whole position in either set of proceedings arises as a result of a breakdown in a relationship. Unless heads are banged together, it is highly unlikely that commercial views will be taken by the parties. As a result, they will soon find themselves entrenched in expensive and time-consuming proceedings. The full cost is never encapsulated in the final order, with significant levels of energy (which could presumably be utilised to greater effect by both the solicitor(s) and client(s) involved) wasted.
It is a tough call for a solicitor to hold his or her hands up at an early stage and make any admissions whatsoever (particularly when insurers are most likely involved from the outset, prohibiting such a pragmatic approach). Similarly, a client is looking to revisit issues it may or may not have flagged at an earlier stage; it is not uncommon for such issues to be brushed under the carpet during the course of the litigation while there is still a chance that a win, and costs shifting to the opponent, is a reality.
That position is the obvious final piece in the puzzle (and it is a puzzle, not a solution). Discussing the thought process for this blog with my new colleague, Matthew Kain, he astutely reminded me of the position where a client is disputing fees on a Solicitors Act basis where a favourable costs award has been made in the litigation (obviously not a position in Riordan).
It is not uncommon for a client to have expectations that he or she has been overcharged to a greater or lesser degree, but to also have the benefit of an order for assessment in his or her favour. With the timelines in the Solicitors Act, he or she cannot afford to wait for the between-the-parties assessment to play out and he or she, and his or her solicitors, have to face the issues of certifying the bill of costs presented to the opponent as to liability/accuracy (not payment, thankfully).
Cue pressure from the lawyer to have the client forgo his or her rights to a Solicitors Act assessment (which would take place after the between-the-parties assessment); and cue a client expecting the full reductions from any between-the-parties assessment to apply on any subsequent Solicitors Act assessment.
Francis Kendall is vice-chairman of the Association of Costs Lawyers and a practising costs lawyer at Kain Knight.