REUTERS | Christian Hartmann

Acting for yourself? What costs can you recover?

Acting for and representing yourself: to what extent will your time and trouble be recompensed by your opponent if you win?

The short answer is that you are entitled to a litigant in person’s (LIP) rate (currently £19 per hour: see Practice Direction 46.3.4) unless you can demonstrate “financial loss” under CPR 46.5(4)(a) on the basis that, but for the time you had to spend working on your case, fame and fortune would have been yours for the taking. Proving such loss, however, is much more difficult: see Mealing-McLeod v Common Professional Examination Board, where the absence Inland Revenue tax returns, showing what the claimant had earned in the years before she had had to devote her time to the case, proved fatal to her claim for £80 per hour, so the then LIP rate of £9.25 an hour applied.

What happens if the winning party is not an LIP but a solicitor who has instructed a firm of solicitors to act on his or her behalf, and who just happens to be a consultant in that firm? Those were the facts in Robinson v EMW Law LLP, where the issue was the extent to which Mr Robinson and his firm Fidelity Law LLP could recover the costs (if at all), which had been awarded in his favour, in proceedings before the Companies Court.

The background is straightforward. Mr Robinson had been a partner at EMW but, after a falling out, insolvency proceedings had been brought by the firm against him. Within those proceedings, Mr Robinson had obtained a permanent injunction restraining the presentation of a bankruptcy petition and EMW were ordered to pay 80% of his costs.

At the material times, Fidelity had been acting for and on behalf of Mr Robinson and had gone onto the court record. It was common ground that a Mr Richard Brown and Mr Robinson himself had undertaken work on the case. However, as matters unfolded, the costs could not be agreed and Mr Robinson’s bill was referred for detailed assessment.

By way of a preliminary issue, EMW contended that there was no evidence that a valid and enforceable retainer had ever existed between Mr Robinson and Fidelity and that, accordingly, by operation of the indemnity principle, there were no costs for the firm to indemnify, so EMW’s liability under the bill was nil.

That submission had prevailed before the costs judge, but was reversed by Roth J on appeal. He held (relying on the old authorities of Adams v Improved Motor Coach Builders Ltd and R v Miller), that the relevant question to have asked was whether it had been agreed between Mr Robinson and Fidelity that under no circumstances would he be liable for the firm’s costs. It was common ground that there was none. It followed that, in principle, Mr Robinson’s costs were recoverable, save for work which he had done himself on his own case. Below, there had been evidence that Fidelity had agreed with Mr Robinson that there was an understanding that the firm would not charge for his time, a finding which had not been challenged on appeal. That meant that Mr Robinson was liable for all other costs of Fidelity, specifically including those of Mr Brown.

Having dealt with the indemnity principle, the issue for Roth J was thus: even though Mr Robinson’s costs for work he had done on his case as a practising solicitor could not be encompassed within his liability to pay costs to Fidelity, nor was he eligible for the £19 per hour as a LIP, was there any other route he could take to recover those costs? Expressed differently, notwithstanding the agreement that he had with Fidelity that the firm would not charge for the time he spent working on his case against EMW (that was unsurprising, Roth J found, as it would be strange for Mr Robinson to expect to be liable to pay his solicitors for work he did himself), could those costs still be recovered from EMW?

The answer lay, as so often, in a short, pithy Victorian judgment steeped in wisdom and simply expressed: see London Scottish Benefit Society v Chorley. This blog is neither remiss nor indolent in reciting a large part of Brett LJ’s judgment, as trenchant now as it was when he delivered it, save that, for emphasis, paragraph breaks have been added:

“I should have thought that a person wrongly brought into litigation ought to be indemnified against the expenses to which he is unjustly put; but there cannot be a perfect indemnity, because it is impossible to determine how much the costs is incurred through his own over anxiety.

When an ordinary party to a suit appears for himself, he is not indemnified for loss of time; but when he appears by a solicitor, he is entitled to recover for the time expended by the solicitor in the conduct of the suit. When an ordinary litigant appears in person, he is paid only for costs out-of-pocket. He cannot himself take every step, and very often employs a solicitor to assist him.

When however we come to the case of a solicitor, the question must be viewed from a different aspect. There are things which a solicitor can do for himself, but also he can employ another solicitor to do them for him; and it would be unadvisable to lay down that he shall not be entitled to ordinary costs if he appears in person, because in that case, he would always employ another solicitor.”

Fry LJ agreed:

“I think that the conclusion at which we arrived will be beneficial to the public, because if the rule were otherwise, a solicitor who is party to an action would always employ another solicitor and whenever he is successful he would recover full costs; whereas under the rule of practice laid down by us, a solicitor who sues or defends in person will be entitled, if he is successful, to full costs, subject to certain deductions, of which his unsuccessful opponent will get the benefit”.

By way of explanation, those “certain deductions” would be the costs of taking instructions from and attendances upon himself. Accordingly, the principle in Chorley was that a solicitor was entitled to recover his costs for his time and trouble working on the case, excepting the “certain deductions” identified by Fry LJ since plainly, such a solicitor cannot be compensated for arranging a meeting with himself, travelling to himself or taking instructions from himself.

That, however, was not the situation here, contended EMW. Mr Robinson was not a solicitor acting for himself, but a consultant. Thus, he was not an employee, yet he was seeking payment under a consultancy agreement with no expectation of being paid consultancy fees working on his own case. Indeed, there was no evidence at all that Mr Robinson would otherwise have spent the time devoted to his own case, instead undertaking consultancy work.

That did not matter, held Roth J. This was a claim for expenditure in terms of measurable skill and labour. Accordingly, Mr Robinson was entitled to recover on the basis that it avoided another solicitor at Fidelity having to do the work. Not only that, there was a saving to EMW as the paying party because it was absolved from paying the costs of Mr Robinson attending upon and taking instructions from himself. Had he been a “mere” litigant, there would have been a charge for a solicitor at Fidelity meeting Mr Robinson as a client and taking his instructions. Nor was it a condition of recovery that Fidelity had to demonstrate that there was sufficient work for the firm’s solicitors to do for other clients, had they not been acting for Mr Robinson. For those reasons, notwithstanding the agreement between Fidelity and Mr Robinson that the firm would not charge him for work he did on his own case, there was an entitlement to recover costs for his time as a solicitor when doing so.

And the rate? The hourly rate was not that which Fidelity would charge out specifically for Mr Robinson services, nor the amount he would receive in such an event pursuant to the consultancy agreement, since he was not acting under that agreement, which was, accordingly, irrelevant. The rate to be allowed was what was reasonable for the litigation services which had been carried out by Fidelity, as assessed in the court below at £200 per hour. That was the rate which would be allowed.

So, the moral of the story is that if you are a solicitor acting for yourself, you are in a special position. A non-solicitor individual is limited to £19 per hour absent showing financial loss, but if you are a solicitor doing work either suing or defending, there is no such limitation. This is so even if you agree with the firm which has gone on the court record for you that no charge will be made for the time you spend working on your own case. What is recoverable is a rate which is reasonable for the litigation services so provided.

Whilst at first blush this may appear to fly in the face of the indemnity principle, closer scrutiny reveals that it does not. Indeed, there is a saving to the paying party because, instead of having to meet the charges of a solicitor taking instructions from the client since the client is the solicitor himself, there can be no costs involved in taking instructions from and attending upon himself. Thus, justice all round abounds. The paying party does not escape liability for the costs via a technical indemnity principle argument and has to pay the costs the court has ordered it to meet. However, the paying party takes the benefit of those costs being less than would have been the case had the winner employed a solicitor to take those instructions and attend upon the client. All sensible stuff. Hats off to the late Brett MR and Fry LJ whose judgments have stood the test of time.

Kain Knight Colin Campbell

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