Bailey-Vella: Significant shortcoming of the current regulatory regime
A judge’s comments on the lack of recourse against an unregulated costs draftsman should focus minds on this hole in legal regulation, the Association of Costs Lawyers (ACL) has argued.
As we reported last week, Costs Judge Jennifer James reduced a bill claimed at nearly £260,000 to zero after finding widespread misconduct in its preparation.
She referred the solicitor involved for investigation by the Solicitors Regulation Authority but said she could not do the same to the costs draftsman who assisted her and appeared at the hearing. He was named as Mr S Kumar of Nathan Associates.
The judge said. “If [he] were a Costs Lawyer, I would report him to the ACL, but as he is not practising in the regulated sector, I simply note that I consider his conduct also warrants investigation.”
However, there is nobody to investigate him as the Costs Lawyer Standards Board, the regulator of costs lawyers, does not have jurisdiction over costs draftsmen.
The ACL argued that there was no other part of the legal profession where unregulated providers working for unregulated businesses were able to do exactly the same work of regulated ones but without any of the consumer protections in place.
It said the lower courts, despite lobbying, did not demand that they have rights of audience or rights to conduct litigation under the long-standing ‘legal fiction’ that costs draftsmen are temporary employees of instructing law firms.
The ACL has argued that this practice should end now that there is a group of regulated lawyers who have earned these rights through their qualification.
ACL vice-chair David Bailey-Vella said: “Costs Judge James’s ruling highlights a significant shortcoming of the current regulatory regime. Costs has become a very specialist an area of law and it is not for those without rigorous training and oversight.
“It is hard to understand why solicitors are willing to put their costs recovery at risk by not ensuring they take expert advice from properly trained and regulated professionals. That is, after all, what they advise their own clients to do.
“We would urge the Legal Services Board to work with us and the Costs Lawyer Standards Board to ensure that situations like this – where the court clearly frustrated by the absence of any way to take action – do not occur in future.”
The ACL said the case was the kind of situation that Professor Stephen Mayson cautioned about in his independent review of legal regulation in 2020.
In it, he said: “Unqualified and unregulated costs practitioners are carrying on non-reserved costs activities, and conducting costs litigation, under the ‘supervision’ of authorised persons who have neither the skills nor the resources to perform this supervision adequately or effectively.
“Without some regulatory approach that can require assurance of specialist and up-to-date knowledge and experience of this technical area of practice in respect of all who offer their services commercially or for reward, consumers are at risk of significant detriment.”
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