What Future For Costs Negotiators?

Chief Master Hurst, Senior Costs Judge, held in Sajida Ahmed -v- P Powell (Supreme Court Costs Office, 28 January 2003) that where there are standing instructions from liability insurers for costs to be dealt with by costs negotiators and the panel solicitors involvement comes to an end, and the costs negotiators are paid by results then (i) the costs negotiators did not have a right of audience in relation to detailed assessment hearings

(ii) the terms of payment to costs negotiators to appear at detailed assessment hearings were champertous

The case concerned the status of costs negotiators instructed by liability insurers to act on their behalf in relation to the question of costs. Costs negotiators have come to prominence recently and are typically paid by results in that they receive a percentage of the reduction in the amount of costs which they achieve on behalf of the liability insurer.

The Facts

Any person may set themselves up as a costs negotiator without passing any examinations or joining a professional body. There is an Association of Law Costs Draftsman which requires its members to undergo training, to pass exams and to abide by a code of conduct.

On 5 November 2000 the Claimant was injured in a Road Traffic Accident. Proceedings were commenced and followed the usual course with Defence, allocation and listing before settlement was reached. It was not possible to agree the Claimant's solicitor's costs and detailed assessment proceedings were commenced on 29 January 2002. Points of Dispute were served and the issue of costs came before a District Judge. The solicitors for the Claimant raised the question of whether the costs negotiators appointed by the Defendant's insurers had a right of audience.

The Issues

(i) did costs negotiators have a right of audience in relation to the detailed assessment hearing ?

(ii) were the terms of payment to the costs negotiators champertous?

Counsel for the Claimant submitted that the costs negotiators did not have rights of audience in the detailed assessment hearing for three main reasons:

(i) they were not properly instructed as agents of the solicitor on the record and cannot be said to be in the "temporary employ" of the solicitors on the record.

(ii) the basis upon which they charge for their work (including attending hearings) is based on a illegal contingency fee agreement.

(iii) costs negotiators are not regulated by any professional body or organisation.

The Law

Rights Of Audience

Section 27 of the Courts and Legal Services Act 1990 deals with the rights of audience

"27. Rights of Audience.

(1) The question whether a person has a right of audience before a court or in relation to any proceedings, shall be determined solely in accordance with the provisions of this part.

(2) A person shall have a right of audience in relation to any proceedings only in the following cases:

(a) where -

(i) he has a right of audience before the court in relation to those proceedings granted by the appropriate authorised body; and

(ii) that body's qualification regulations and rules of conduct have been approved for the purpose of this section to the granting of that right; ÖorÖ

(b) where -

(i) he is employed (whether wholly or on part) or is...