Scandalous Costs

SL2056

 

Between 29 October and 5 November 2014, Mr Justice Mostyn heard a financial remedy dispute between two embattled divorcing parents.

Their home was worth £291k, a property portfolio worth £317k, pensions of £115k and two businesses valued at £2080k.

By the Financial Dispute Resolution appointment on 12 March 2014, they had spent £226k in costs.  However, eight months later on 6 November, their legal costs rose to a staggering £920k – nearly one third of their assets.

In another case, the current President of the Family Division (in 2008 as a High Court judge) spoke of excessive costs constituting to “a scandal which must somehow be brought under control“. In 2012 Lord Neuberger had a go at costs in his lecture to the Association of Costs Lawyers, saying that hourly billing confused “cost with value”.

To avoid “the grotesque leaching of costs”, like Lord Neuberger before him, Mostyn J proposes fixed costs legal services to replace hourly billing, together with costs caps – and is to send the issue back to the President of the Family Courts for action.

This blogger has always been ambivalent towards hourly rate billing, believing that ‘time spent’ varies according to expertise. The lazy or inept lawyer can spend considerable time doing what the expert will do in an instant. With hourly billing, one is overpaid, whilst the other is inadequately rewarded.

But has the judiciary really grasped the nettle of costs?

The simple flaw lies deeper, in the fact that two firms of litigators, whose interests are served by protracting conflict, are permitted to take their clients into headlong battle, for which both the public and their clients pay at an hourly rate.

What do they pay for? Frequently, the ‘what is there?’ – the identity and value or the assets – is not the problem. Where divorcing couples can’t agree, they get an independent valuation. The real issue is to determine ‘what to do’ with what is there; and that is the job for their barrister.

The impenetrable form E – the court designed document intended to set out a financial picture probably fails in every regard, other than to raise rancour. What is needed is a simple schedule of assets, liabilites and income. After all, the court will attend to these (as did Mostyn J) – not the aspirations and wishes of the parties, nor tactical positions crafted by their solicitors. Why, then, should the preparation (and possible agreement) of such a schedule not be made a pre-requisite of a financial remedy claim?

What to do with the assets is frequently fairly obvious. Up and down the country District Judges hear contested cases in a matter of hours and give extempore judgments immediately following the evidence. More frequently, matters resolve at the financial dispute resolution stage when a judge (without hearing evidence) makes sage suggestions.

Why the battle lines? Why two lawyers and an adversarial process? What is wrong with simple experienced and impartial analysis to help resolve these issues? That the parties won’t agree is simply an excuse by an over-priced, unwieldy adversarial system – made possible and perpetuated by the court process.

Regrettably, what Mr Justice Mostyn did not evaluate was the significant cost to the public of hearing the case – numerous appearances before the lower court, a Deputy District Judge, Judge Bancroft’s salary, Mostyn J’s own salary over seven days, the Family Court and High Court buildings, court staff, heating and lighting – to deal with a ‘delinquent’ couple who had spent £920,000 with their lawyers.

How bizarre is it having public courts dedicated to this massively costly process, paid for at huge cost to taxpayers?

 

 

Down the High Street or direct to Counsel?

Welcome to Clerksroom Direct – a recent web presence to be rolled out to the public on 1 January 2015, providing a new service for barristers, clerks and chambers with a portal designed to be an end-to-end solution for the Public Access Bar.

Clerksroom say that their portal will invite enquiries from the public, obtaining quotes from barristers and allowing the public to select the appropriate service. It is to be free for barristers, clerks and chambers as the client will pay a small additional administration fee for using the portal, importantly, giving client choice.

Direct access has been with us in one form or another since 1999 when I set up and ran the first BarDirect pilots that gave corporate and institutional clients free access to the Bar. Since then, metamorphosing into Public Access, with regular training sessions for barristers and the Bar Council’s directory of practitioners, direct access has become part of the legal landscape.

The Bar’s need to compete in the private client market was accelerated by the Law Society‘s insistence on obtaining higher rights of advocacy for their members. This led to the Bar Standards Board declaring,

“Whilst the referral model remains robust for those cases which require and can afford a division of labour between advocate and litigator, there is a need to allow greater flexibility in service provision in cases where this is not so.”

“The BSB anticipates a market for privately funded work where clients involved in litigation have a choice between the traditional referral model, one-stop services supplied either by solicitor-advocates or by barristers who also provide litigation services, public access services where the barrister provides advocacy and advice but the client conducts the litigation and ‘spot’ purchases by self-represented litigants of advice or assistance with particular aspects of their case.”

With the reduction in legal aid contracts and the hike in legal aid entry criteria for firms of solicitors, combined with the removal or reduction of legal aid from areas of legal work, high street solicitors have been feeling the strain.

Some solicitors are now expressing dissatisfaction with the concept of direct access to the Bar, seeing this as the latest nail in the high street coffin.

The question to be asked by us all is whether these changes are here to stay? A quick web search says that they are. The professional bodies slip stream government policies – and appear to agree.

So, is not now the time to recognise change, rather than adopt Luddite responses of denial? Direct Access may not yet be a legal ‘combined harvester’, but the signs are that this is a distinct possibility. Clients gravitate towards two incentives – cost cutting, and expertise. And this is where the Bar is unique.

The Bar will continue to increase its direct client market share. The professions will have to re-configure their relationships to reflect this. But those ahead of the game -like Clerksroom Direct -may have the steal on us all.