Unqualified costs consultants

There has been another challenge to the legality of the work done by non-lawyer costs consultants.  It did not go anywhere because of deficiencies in the way the client (himself a lawyer) went about trying to prove in the Magistrates’ Court that the costs consultant in question (a struck off lawyer) had engaged in unqualified practice, and because of the limited nature of an appeal from a Magistrate. The Supreme Court’s judges also emphasised the exactness of proof necessary to establish a breach of s. 2.2.2 Legal Profession Act 2004‘s prohibition on unqualified practice, given that it sets up an indictable criminal offence punishable by up to 2 years’ jail.  Such exactness is needed even in civil proceedings which obviously do not carry criminal consequences.

But as three judges of the Supreme Court made clear, all this means is that this was not the vehicle to decide just how much non-lawyers are permitted to do in the realm of costs law, and subject to what level of supervision by a lawyer, and there is little solace for unqualified costs consultants in the judgments.

The reasons of the Court of Appeal for not granting leave to appeal the Supreme Court’s dismissal of an appeal from a Magistrate are: Defteros v JS [2014] VSCA 154.  They are interesting for three reasons:

1.  They endorse comments made by the Costs Judge in a June 2010 decision as to the need for consideration of reform of the ‘mini-industry’ of costs consultants (Kaye J did so at [2014] VSC 205 at [85] and Santamaria JA (with whom Neave JA agreed) did so at [2014] VSCA 154 at [21]);

2.  They record an interesting submission of counsel, namely that the solicitor client was relying on his own contempt of the Supreme Court by asserting as a defence to a suit for fees a statutory prohibition on the recovery of money charged for the provision of legal services in contravention of the prohibition on unqualified practice — the contempt arose, so the argument ran, because the solicitor well knew at all relevant times that the costs consultant was not a practising certificate holder, and so had permitted the costs consultant to engage in unqualified practice if it had occurred, contrary to s. 2.2.10 of the Legal Profession Act 2004; and

3.  They emphasise the modern trend of leaving to the Costs Court questions which have traditionally been dealt with by certificates of the trial judge (e.g. certification for two counsel).

It will not be too long before someone takes a grip of this issue and runs a test case carefully.  An alternative battle ground might be found if the unqualified costs lawyers seek to influence the makers of the forthcoming Uniform Rules of professional conduct so as to provide an exemption for unqualified costs lawyers from the prohibition on unqualified practice: see s. 10(3), Legal Profession Uniform Law (Vic).  That seems to me to be the most efficient means of resolving the question.  In my books, if there is to be a place for the continued operation of unqualified practitioners there may be a case for restricting the exemption from unqualified practice to existing practitioners and closely defining the permissible ambit of their activities, perhaps to party-party disputes.

The quality of advice received in relation to costs disputes is, I think, more variable than in most aspects of the law.  The best costs lawyers know the Costs Court well and can predict closely how a bill of costs in itemized form will tax.  So too can they predict by looking at a file how much such a bill might be drawn at, without actually drawing it.  These are skills which are not an incident of ordinary legal practice and can only be acquired by practice. Some costs lawyers are also remarkably knowledgeable about certain aspects of civil procedure, especially that relating, for example, to statutory schemes for compensating the injured and to class actions, as they need to be in order properly to argue the necessity or reasonableness of claims made for costs.

These days, however, the hitherto remarkably static law of costs (very old texts remain a valuable resource in this area of law) has been intruded upon by the Civil Procedure Act 2010 which is embraced with ardour by the Costs Court, by radically renovated scales of costs, by re-written rules of Court in relation to costs, and — in the realm of disputes between clients and their own lawyers — by the Legal Profession Act 2004, many of the key provisions of which require serious statutory interpretation work within taxations.  For these reasons, and most especially in relation to disputes between clients and their own lawyers, generalist legal skills are essential, especially since the number of barristers with an applied knowledge of costs law at the Victorian Bar is small.

So: choose your costs lawyer carefully.  Do not assume that costs lawyers who excel in party-party disputes will be good at disputes between lawyers and their own clients.  All of the accredited specialists are, so far as I know, good, and to choose from the list of such specialists would be the sensible thing to do if you do not have a better source of recommendations.  But not all of the outstanding costs lawyers are accredited specialists and some of the best costs lawyers are one or two-man (or perhaps more often, one or two-woman) bands out in the suburbs.  Also: barristers are not allowed to sit for accreditation; it’s a solicitor thing.  And non-lawyers obviously are not, either.

Then, there is a whole host of non-lawyers practising as ‘costs consultants’ some of whom are plain rogues.  Since things were shaken up a bit by the 2010 decision of the Costs Judge, some have retreated behind the supervision of a lawyer with whom they have teamed up.  I wonder about how nominal that supervision may be.  Some of them are lawyers forced to get out of the game such as the one involved in the case the subject of this post.  Some are no good.   Some are better than some lawyers practising in the field.  They do not seem to charge any less than the qualified; rather the contrary in my admittedly anecdotal experience, and some draw irresponsibly ambitious bills which are notorious amongst the community of costs lawyers for being savaged on taxation.  I get the impression that the Costs Court is becoming more active in referring lawyers who go to taxation on these kinds of inflated bill to the Legal Services Commissioner for investigation of overcharging, and that the opportunity to draw inflated bills (and so garner a higher remuneration, since such bills have traditionally been charged for on a percentage of the bill as drawn) is narrowing.

But the reason why this little outpost of the unqualified advising in relation to litigation involving large sums of money has survived so long is presumably that there is a tradition of unqualified costs draftsmen.  I never knew him, but the doyen of costs law in Victoria was for a long time John Ahern, employed by the Law Institute of Victoria.  The Legal Services Commissioner has publicly commented on how in his long career as a plaintiffs’ personal injuries litigator he generally assumed that the costs consultants he retained to cost his clients’ files were unqualified and got excellent service from them.  It is worthwhile noting that this historical experience is apparently one of argument about party-party costs in an area of practice where the application of the costs rules were well-established and during a period of comparative constancy in the letter of and aspirations of the costs law.

In the 2010 decision of the Costs Judge, his Honour said this:

‘There has clearly evolved over time a mini industry of unqualified individuals who have become involved in the area of costing. Their status and the lack of transparency, regulation and confusion around their status are issues that may need to be addressed by legislation or considered by the Legal Services Commissioner or Law Institute of Victoria.’

The Chief Justice then wrote to the Commissioner and the Commissioner set about discussions with lawyers and with costs consultants.  So vitriolic was the response to his initial forays that he cancelled the planned forum to discuss it while everyone took a chill pill.

Following that consultation, the Commissioner published comments which say:

*  the 2010 decision is not authority for the proposition that a costs consultant without a practising certificate is carrying on legal practice;

* he is not so sure that the activities of costs consultants neatly fit within the definition of ordinary work carried out by a legal practice;

* since the decision, costs consultants without practising certificates are now at risk of being unfairly accused of engaging in unqualified practice;

* for the time being, self-regulation by costs consultants is vital.

Since 2010, the only legislative development has been the commencement of the Civil Procedure Act 2010 which imposes overarching obligations on all associated with litigation.  Having made some enquiries for the purposes of this post, I am unaware of talks about self-regulation having got anywhere or of any activity on that front for a long time.