The Three-Day Week, two general elections and Watergate may be what 1974 is best remembered for. But it was also an important year for the legal profession. The Solicitors Act passed into law – and has been the bedrock of both regulation and costs ever since. While the regulatory element of the act was updated by the Legal Services Act 2007, the costs component has yet to be. This is despite the pretty much unanimous view – from the bench and the bar to solicitors and costs lawyers – that it desperately needs reform.
So last month’s long-awaited report from the Civil Justice Council’s (CJC) Solicitors Act working group was a pivotal moment. The report is suitably radical in its recommendations for solicitor-client disputes.
The 1974 act, the report rightly says, ‘reflects the concerns of a time when there was no developed system of regulation for solicitors. It is complex, formalistic and outmoded. Moreover, its complexities provide perverse incentives for costly litigation about costs’.
You might think that costs lawyers – if anybody – would want to continue with arid arguments over statute, interim statute and Chamberlain bills, and contentious and non-contentious costs, the distinctions between which the working party wants to abolish.
But we find them as frustrating as everyone else. In the interests of clients and the court system, we should be spending our time debating the substance of costs, not the form. There needs to be some form, of course, but the CJC says this aspect should be governed by the Solicitors Regulation Authority’s code of conduct.
The core recommendation is essentially that all contested bills worth up to £50,000 should go to the Legal Ombudsman (LeO), while for bigger bills or complainants outside LeO’s jurisdiction (such as large companies), clients would first have to go through compulsory ADR before seeking recourse to the courts.
In both cases, the client would first have to exhaust the law firm’s internal complaints procedure. The CJC says: ‘For those cases which do result in court proceedings, we envisage that in many of them the fact that there are agreed terms explaining the basis of charging will be enough to justify concluding that the charges are reasonable.’
The test, for both the ombudsman and the court, would be that costs are ‘fair and reasonable’ by reference to the matter in question, ‘judged on an objective basis but taking account of the characteristics of the parties and nature of the matter’.
The recommendations are not a surprise given the comments of master of the rolls (and CJC chair) Sir Geoffrey Vos in the landmark 2022 Belsner ruling. He said it was ‘unsatisfactory that solicitors like checkmylegalfees.com can adopt a business model that allows them to bring expensive High Court litigation to assess modest solicitors’ bills in cases of this kind.
‘The Legal Ombudsman scheme would be a cheaper and more effective method of querying solicitors’ bills in these circumstances, but the whole court process of assessment of solicitors’ bills in contentious and non-contentious business requires careful review and significant reform.’
In principle, shifting responsibility for smaller bills to LeO is attractive if it makes their resolution quicker and cheaper. But the current state of LeO – which has been open about the need for radical reform of its own in the face of a fast-growing caseload and ever-longer waits for complainants – raises questions about how practical this is, at least for the foreseeable future.
LeO’s 2026/27 business plan says that the time from accepting a complaint to resolving it – already 260 days – will be between 330 and 390 days by the end of 2027/28. Adding thousands of solicitor-client costs disputes will make this statistic even more dismal.
Similarly, while many of the failures we see in costs cases are indeed matters of professional conduct – such as not providing clients with adequate costs information – the SRA is also reporting increasing complaints and is going through a turnaround process of its own. Can it cope with a new stream of solicitors to investigate?
We support the greater use of ADR but – as has been the case across the profession for many years – solicitors need to buy in to the idea too.
Overall, the message is clear: costs disputes should generally not trouble the courts. As a regulated costs professional, I do not have a problem with this, so long as the alternatives work. My members are qualified and regulated costs professionals. If anything, their expertise should come to the fore even more.
But what the report points to is the need for a culture change away from squabbles about content and form, if we are to deliver a regime that works in the interests of all.
David Bailey-Vella is chair of the Association of Costs Lawyers
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