Professional Ethics

CONTENTS PAGES

CHAPTER 1 OUTCOMES 2 INTRO TO LAW AND MORALITY 3-12 RIGHTS FREEDOMS AND EQUALITY 13-24 ACCEPTANCE AND INTENTION TO CREATE LEGAL RELATIONS 25-33 CHAPTER 2 OUTCOMES 34 PROFESSIONALISM 35-38 REGULATION 39-46 LEGAL ENTITIES AND THE ABS 47-54 COMPLIANCE OFFICERS 45-58 CHAPTER 3 OUTCOMES 59 COSTS LAWYERS 60-66 AUTHORISED RIGHTS 67-69 UNDERTAKING RESERVED LEGAL ACTIVITIES 70-81 CHAPTER 4 OUTCOMES 82 COMPLAINTS 83-90 THE POTENTIAL LIABILITY OF A COSTS LAWYER 91-100

Chapter 1 Learning outcomes After studying this chapter you should understand the following main points:

þ distinguish between legal positivism and natural law; þ the relationship between law and morality; þ the origins of rights and freedoms; þ how rights may be enforced; þ equality and diversity; and þ justice and English Law.

1.1 An Introduction to Law and Morality

1. Introduction

Both law and morals are described as being normative. This means that they specify what ought to be done; marking the boundaries between acceptable and unacceptable conduct. Moral rules tend not to be backed by sanctions whereas most legal rules do. Pressures, such as the disapproval of family or friends, often reinforce moral rules.

As society changes over time, so do moral values; the same applies to its laws. In English law, legal changes have tended to follow moral ones. The changes have tended to come only when the process of moral acceptance is well advanced. In the reverse, law can sometimes bring about changes in social morality.

2. The definition of law

Law is not a term that lends itself to easy definition. Many academics, philosophers and lawyers have attempted to define the term. There are two distinct theories that may help to define it. These are legal positivism and natural law.

2.1 Legal positivism

Positivists believe that a law is a legal rule and if that rule has been made in the manner recognised by the legislative power in the state it is valid irrespective of its content. In other words, as long as an elected parliament debates and makes the law everyone must abide by it.

John Austin (1790 -1859) was a noted British jurist and published extensively concerning the philosophy of law and jurisprudence. Austin is best known for developing the command theory of law. Austin argued that a law is a command from a sovereign whom the population at large is in the habit of obeying and it is reinforced by a sanction. Put simply, laws are orders backed by threats.

A law may therefore be described as the express wish of the sovereign and is distinguishable from other commands such as those from God or from an employer. Austin has been criticised for this rather simplistic view of law because it is difficult to identify a sovereign in many states but also because many areas of law such as contract, which grant powers to people, do not fit neatly into such a definition.

Herbert Lionel Adolphus Hart (1907–1992), a British legal philosopher and a major figure in moral and political philosophy, was one of Austin’s biggest critics. As a legal positivist, Hart insisted on the separation of law and morality. However, he developed a much more sophisticated model than Austin’s to explain the nature of law. He argued that there is a distinction between two categories of rules, called primary and secondary rules. These rules, in combination, form the basis of a functioning legal system. Primary rules either impose legal obligations, as in criminal law, or they grant powers, as in the power to enter into a contract.

The rule of recognition which sets criteria for identifying primary legal 1 rules. These criteria would include reference, for example, to Acts of Parliament and judicial decisions. Rules of change identify how legal rules can be formed, amended or repealed. For example, in the case of an Act of Parliament, reference 2 would be made to the various readings in the House of Commons and the House of Lords, and to the need for royal assent. Rules of adjudication enable the courts not only to settle disputes, but 3 also to interpret the law.

Hart argued that the union of these two sets of rules establishes a legal system. However, there are two further conditions required for this system to function:

1 People in general must be in the habit of obeying the primary rules. Public officials must accept the rules of recognition, change and 2 adjudication.

As a legal positivist even a morally repugnant law may be legally valid. However, that does not mean we must obey laws that are morally repugnant. Obedience remains a matter of personal decision or conscience.

2.2 Natural law

Natural lawyers believe that the validity of man-made laws is dependent upon their compatibility with a higher moral authority. Laws lack validity where they do not satisfy the requirements of this higher moral authority. There are two main types of natural lawyers:

þ those that believe in laws from a god; and þ those that do not believe in god but that society has an unwritten moral code that laws should follow.

Thomas Aquinas (1225-1274) was a Catholic philosopher and theologian, who devoted his life to scholarship and in particular to the study of Aristotle. His major work, the Summa Theologica, contains his explanation of four different types of law.

1 Eternal Law 2 Natural Law 3 Divine Law 4 Human Law

One of them, Divine law is concerned with the standards man must conform to in order to attain salvation. Divine law is revealed to mankind by inspiration or revelation, as for example the Ten Commandments contained within the Bible. This type of law removes the need for mankind to be in any doubt about the moral rules he should be following for his own good.

Natural law was derived from eternal law (in God) and deals with general rules of conduct that govern the behaviour of all of us possessing reason and free will. This theory prescribes © Association of Costs Lawyers Training 2020 4 that God, as part of our nature, implants it in us and so we have a natural inclination to behave in a way that fulfils our purpose in life. These inclinations include the preservation of life, to procreate, and to live within society. By reasoning upon natural law, certain general rules of conduct can be developed:

1 To do good and avoid evil. 2 Not to commit suicide, reflecting the inclination to preserve life. 3 To rear and care for offspring, reflecting the inclination to procreate. 4 To develop our rational and moral capacities.

Lon Fuller (1902–1978) was professor of jurisprudence at Harvard Law School. He was a natural lawyer in that he rejected legal positivism; he refused to accept the belief that law has no higher authority than that of a sovereign authority. Fuller viewed law as serving a purpose. That purpose was to ‘achieve social order through subjecting people’s conduct to the guidance of general rules by which they may themselves orient their behaviour’. For laws to be able to achieve this purpose, they must satisfy eight particular principles. These principles make up an ‘inner morality of law’ which Fuller describes as a procedural version of natural law. According to these eight principles, laws should be:

1 In existence, not ad hoc. 2 Promulgated, i.e. published. 3 Prospective, rather than retrospective. 4 Clearly stated and comprehensible. 5 Consistent with each other. 6 possible for people to obey. 7 Constant, i.e. relatively long-lasting and not constantly changing. 8 Applied and administered as stated.

Failure to comply with these eight principles doesn’t render an individual law invalid; it results in something that cannot be properly called a legal system at all. Professor Hart, while not critical of the eight principles themselves, argued that Fuller was not justified in calling them a morality. He illustrated his objection by reference to the art of poisoning. Like law-making, poisoning is an activity with a purpose. The poisoner will develop principles to render his art effective. However, nobody would consider calling these principles the ‘inner morality of poisoning’. In other words, he accuses Fuller of confusing efficacy (how effective is the legislative system) with morality (is it good or bad).

2.3 The conflict between natural law and positivism

As we have seen, positivists believe that a law is a legal rule that, if made in the manner recognised by the legislative power in the state, is valid irrespective of its content. In other words, as long as an elected parliament debates and makes the law everyone must abide by it. Conversely, natural lawyers believe that the validity of man-made laws depend upon their compatibility with a higher, moral authority. Laws lack validity where they do not satisfy the requirements of this higher moral authority. There are two main types of natural lawyers; those who believe in laws from a god and those who do not believe in god, but that society has an unwritten moral code that laws should follow.

The Hart-Fuller debate (1958) describes an exchange between Lon Fuller and H.L.A. Hart published in the Harvard Law Review in 1958 on morality and law, which demonstrated the divide between the positivist and natural law philosophy. Hart took the positivist view in © Association of Costs Lawyers Training 2020 5 arguing that morality and law were separate and Fuller’s reply argued for morality as the source of laws binding power. Hart held that there is no necessary relationship between a legal system and the ideas of justice or morality. A legal system can function effectively though it is neither just nor moral. The Nazi regime would be a good example of this point. In Hart’s view it was a legal system. The Nazis argued that racial distinctions were relevant and reflected the morality of their society. It was, therefore entitled to discriminate and still claim it was treating like cases alike. Hart argues that the question of what is law must be separated from the question of whether it is moral or just. Conversely, Fuller maintained that law and morality cannot be so neatly distinguished and that the post-war courts were entitled to hold Nazi rules not to be law. To call the Nazi system legal and to call its rules law, was a false description of what they were; he believed they were instruments of an arbitrary and tyrannical regime.

3. Morality

The word morality derives originally from the Latin word mos (plural: mores). The standard meaning of this word is a custom, habit or usage that is determined by man’s will rather than by law. Marcus Tullius Cicero (106 BC–43 BC) was a Roman philosopher, politician, lawyer, orator, political theorist, consul and constitutionalist. He once wrote that law and custom (mos) must both be obeyed, illustrating their parity. Custom formed the bedrock of Roman society in Cicero’s day, with duties and obligations balanced by rights and privileges.

The 19th century saw the emergence of a liberal approach between law and morality; the state should not make any laws against an individual unless it will cause harm to another. John Stuart Mill (1806-1873), a moral and political theorist, stated that protection is necessary against suppression by the elected majority. Also during the 19th century, David Emile Durkheim (1858 –1917), a sociologist, built on the idea of custom and referred to a traditional society. In a traditional society people had much in common where shared beliefs and custom ensured compliance to set unwritten rules. However, at the time of writing, society was becoming more fragmented because of two factors:

Labour was becoming specialised, with workers developing expertise in 1 increasingly narrow fields, thereby becoming alienated from each other. A common religious and ethnic background could no longer be taken 2 for granted within society.

These factors served to promote an individual consciousness at the expense of the collective consciousness, leading to a pluralist society where there is a diversity of views. He argued that such a pluralist society is much harder to control through laws as it is difficult to find a “collective” morality for society. Implied in this argument is that laws should encourage a collective morality if order is to be maintained in society. Durkheim argued that the speed of change in his time had led to confusion in moral outlooks and led to the breakdown of traditional norms of behaviour (or customs). Durkheim used the word ‘anomie’ to describe this result, meaning a condition in which society provides little moral guidance to individuals. Durkheim believed that society would disintegrate unless a strong collective consciousness with shared values and beliefs was maintained.

Both law and morals are concerned with setting standards, which are essential for governing the behaviour of individuals within society.

Take a moment to consider: To avoid unnecessary death and injury, the law requires us to drive on the left. However, it is a long-established custom or a moral rule that drivers will slow down to allow ambulances to pass when their emergency lights are flashing. Both rules are concerned with the behaviour of drivers and the saving of life. However, one is the law and the other is a moral duty that society as a whole chooses to observe.

Another similarity is the language used. Legal and moral rules employ similar language; they distinguish between right and wrong, and they speak of duties, obligations and responsibilities.

Take a moment to consider: þ Murder which is regarded as wicked under both the legal and moral codes of conduct. þ Parents have a legal duty and a moral duty to ensure that their young children are provided with shelter and nourishment.

Law and morality often coincide or overlap; for example, the Ten Commandments given to Moses on Mount Sinai continue to serve as a moral code for many today. Indeed, these commandments contain a number of prohibitions which are to be found in the laws of even the most primitive societies. Today:

þ ‘Thou shalt not kill’ is reflected in the common law on murder; þ ‘Thou shalt not steal’ is currently contained within ss1–6 of the Theft Act 1968; and þ the principle of the virtue of honesty, which lies behind the command not to give false witness, can be seen in the development of the law in areas such as fraud (crime), misrepresentation (contract), and defamation (tort).

4.1 Where legal rules and morals seem at odds

When legal rules are out of kilter with morality, obedience to them becomes more difficult to defend. It might be argued that strict liability offences are like this; they require no proof of intention. Legal rules are given greater validity by their moral content and these offences do not punish because of moral blameworthiness but to encourage conformity and the protection of society as a whole. These offences punish for conduct alone, they are primarily regulatory offences aimed at businesses in relation to health and safety to ensure the collective are safeguarded. In Smedleys Ltd v Breed (1974) AC 839, the discovery of a caterpillar in a tin of peas does not seem to breach any moral rule but there was a breach of the law. Another case that does not appear to breach a moral rule is the case of Harrow LBC v Shah (1999) 3 All ER 302, where a shopkeeper was fined for the selling of a lottery ticket to a 15-year-old boy who had the appearance of someone much older.

There are many moral rules that are not enshrined in law; for example there is generally no liability in English criminal law for omissions or for failure to take positive action. However,

© Association of Costs Lawyers Training 2020 7 under the common law you may be liable for failure to act if that failure falls within one of the recognised exceptions where there is a duty to act, such as:

þ a duty to children as in the case of R v Gibbons and Proctor (1918) 13 Cr App Rep 134; or þ a duty through a contract of employment as in the case of R v Pittwood (1902) TLR 37.

In other words, there is no statutory requirement in English law to act as the ‘good Samaritan’; this can be contrasted with the position in France where there is such a rule.

Take a moment to consider whether you think law should require us to: þ provide assistance to the man beaten and left to die; þ rescue the child drowning in a pool of water; þ prevent a blind old person from being hit by a speeding lorry.

Clearly there is a potential moral argument that we should legally be required to assist our neighbour. However, whilst we may escape criminal liability, we will not escape the contempt in which we might be held for our failure to do so. The current position means a defendant may accept the existence of a moral obligation but argue that this does not imply any legal liability. The case of R v Webster (2006) EWCA Crim 415 illustrates this point. This case concerned a medal awarded to Captain Gill for services in Iraq. Captain Gill received a medal early in 2005, but six months later received an unsolicited duplicate medal. He gave the duplicate to his staff support assistant, Webster, who sold it on eBay for £605. Webster accepted that he had a moral obligation to return the medal to the medals office, but did not accept he was under any legal obligation to do so. However, the court decided that the medals office retained a proprietary interest in this particular duplicate medal and was therefore entitled to call for its return.

4.2 The influence of law and morality upon each other

As society changes over time, so do moral values; the same applies to its laws. In English law, legal changes have tended to follow moral ones; the changes have tended to come only when the process of moral acceptance is well advanced.

Statutory reform introduced as a result of public concern over the existing law

To see the impact of morality on statutory reform we will look at the specific issue of abortions. Historically, under s58 of the Offences against the Person Act 1861, abortion was punishable by up to life imprisonment even if performed for good medical reasons. The Infant Life Preservation Act 1929 allowed a limited exemption from this general prohibition in cases where the abortion was carried out in good faith for the sole purpose of preserving the life of the mother.

In R v Bourne (1939) 3 All ER 615 Bourne, an eminent surgeon, carried out an abortion on a 14-year-old girl who had become pregnant as a result of a violent gang rape by soldiers. Bourne argued that the operation had been necessary to preserve the mental health (but not the life) of the girl. The trial judge proved sympathetic to this argument and Bourne was acquitted. Following the decision in this case, wealthy women began to find acquiescent psychiatrists to enable them to have their abortions. Those without the financial resource

The Abortion Act 1967 is an example of statutory reform introduced as a result of public concern over the existing law. This Act introduced a wider range of grounds upon which abortions could be carried out, although the decision remained with doctors. Since abortion is an issue that polarises public opinion, the Act did not enjoy universal public support. However, the law had changed in response to changing public concerns.

Legislation introduced ahead of, and in order to promote, a change in the collective consciousness

Now, conversely legislation may impact upon societies’ values. The law on anti- discrimination is an example of this; the Race Relations Act 1965 was passed in order to counter overt discrimination in public places. Before this Act, colour prejudice, as it was then known, was widely practised in Britain with signs such as ‘No Blacks’ seen on the fronts of guesthouses and ‘non-whites’ were turned away from some restaurants and public houses.

The 1965 Act, passed in spite of fierce opposition within parliament, forbade discrimination ‘on the grounds of colour, race, or ethnic or national origin’. However, it applied only to public places such as hotels and restaurants and did not apply to places of employment. The powers of enforcement were also minimal; a Race Relations Board was empowered to listen to complaints, and to attempt to negotiate with the parties to stop further discrimination. Where the discrimination continued, the only option was for the matter to be referred to the Attorney-General who could seek a court injunction.

Three years later, in 1968, jurisdiction was extended to cover both housing and employment under the Race Relations Act 1968. Although these two Acts did not eliminate discrimination, they made a robust official statement about the values of British society. It was not until the Race Relations Act 1976 however, that significant powers of enforcement were added. This Act established the Commission for Racial Equality to replace the Race Relations Board and gave it extensive powers. It distinguished between direct and indirect discrimination:

þ direct discrimination occurred where a person was treated less favourably than another in similar relevant circumstances on the grounds of colour, race, nationality, ethnic or national origins. þ indirect discrimination, which was much more subtle, occurred when a condition is applied equally to all employees, but one racial group is disadvantaged because it cannot comply as easily as other groups with that condition.

These provisions have done much to mitigate harsh, overt racism. One of the other most heavily legislated areas in the last 50 years has been the law on homosexuality, and here lies a further example of how a change in law has affected morality.

In 1957, the Wolfenden Report recommended that ‘homosexual behaviour between consenting adults in private should no longer be a criminal offence’. The committee further recommended that the age of consent be fixed at 21, which at that time was the age of majority in Britain. Ten years were to pass before the Sexual Offences Bill was presented to © Association of Costs Lawyers Training 2020 9 parliament, time enough for many to reflect on the principles underpinning Wolfenden, and time perhaps for parliamentarians to muster up the boldness required to secure the passage of the Bill in the face of some earnest opposition. The Bill contained the two most significant recommendations of the Wolfenden Committee:

þ that homosexuality be decriminalised for private consensual homosexual activity; and þ secondly, that the age of consent be set at 21.

A quarter of a century was to pass before the age of consent was reduced to 18 in the Criminal Justice and Public Order Act 1994, but only six years until it was further reduced to 16 under the Sexual Offences (Amendment) Act 2000, thereby equalising the age of consent for heterosexual and homosexual activity. This last reform attracted determined opposition within the House of Lords and the powers of the Parliament Acts had to be invoked to secure passage of the measure. It is difficult to gauge whether those promoting or those opposing these Acts more accurately reflected public opinion on this issue, but what is evident is that the years since 1957 have seen not only substantial legislative activity, but also a major shift in public attitudes in this area. Today, we have the Civil Partnership Act 2004 allowing same sex unions to be legally recognised and the Marriage (Same Sex Couples) Act 2013, which allows same sex couples to be legally married.

4.3 Legal realists and moral relativism

There are two other theories on law and morality that you should be aware of. Firstly, legal realism which asserts that we should understand law by looking at the administration of justice to determine how much morality actually influences the system. These thinkers accept that morality does influence how laws are made and changed. However, they believe that individuals responsible for administering justice may influence how law is interpreted and applied. For the legal realist, the question is not whether morality beliefs have changed laws but rather how those laws are interpreted by the people in power. Remember, it was the trial judge in Bourne that was sympathetic to the doctor’s arguments that led to his acquittal and eventually contributed to the change in law on abortion.

The second theory is moral relativism; this is a philosophy that asserts that there is no global, absolute moral law that applies to all people for all time and in all places. Instead of an objective moral law, moral relativism takes a subjective view of morality, especially concerning individual moral practice where personal and situational encounters supposedly dictate the correct moral position.

It is the second of these theories that must be borne in mind when we consider the development of the law on matrimonial rape. In the History of the Pleas of the Crown, which was an influential legal text on criminal law published in 1736, Sir Matthew Hale had declared that ‘a man cannot rape his wife’ based upon the doctrine of implied consent. This meant that a woman, by entering into marriage, gives indefinite consent to sexual relations with her husband. At the time of publication this was not controversial. However, as time progressed society changed, as did moral values. In R v Clarke (1949) 2 ALL E.R.448, the courts removed this immunity where there was a legal separation order and in R v O’Brien (1974) 3 All E.R. 663, the courts succeeded in removing this immunity where a decree nisi (the decree of entitlement to divorce) had been issued. Further developments ensued, for example in R v Steele (1977) 65 Cr App R 22, the courts removed this immunity

© Association of Costs Lawyers Training 2020 10 where a non-molestation order (an injunction) had been imposed. It was not until 1991 that the judiciary absolved this immunity altogether in R v R (1992) 1 AC 599, when Lord Lane declared that ‘the idea that a wife by marriage consents in advance to her husband having sexual intercourse with her whatever her state of health or however proper her objections is no longer acceptable’1. In this way, the law eventually caught up with perceived public morality, in accordance to the views of the moral relativists as morality changed in society. The common law, or the judiciary, facilitated this change and the Legal realists would suggest this change had taken place because of the way the law had been interpreted.

5. Does and should law reflect moral values?

Today, Britain is a pluralist society containing a diversity of moral views. This section explores the questions of whether, and to what extent, the law should seek to enforce any particular moral views. This is not merely a subject of academic debate; judges are often forced to consider these questions before determining the law

You will recall that John Stuart Mill asserted that protection is necessary against suppression by the elected majority; there must be limitations on the power of the government to prevent the ‘tyranny of the majority’. Mill accepted that rules governing an individual’s conduct must be imposed but that the difficulty came when identifying where society should, and where it should not, be permitted to interfere with individual liberty. He developed the ‘harm principle’ as the appropriate test to be used when considering this issue which prescribed that the law should only intervene where individuals’ positive actions (not omissions) are likely to cause harm to others. This would operate as a limitation on the power of the government to prevent the ‘tyranny of the majority’. Mill made a distinction between the harmful act itself and its particular consequences.

Take a moment to consider whether: the law should intervene to prevent drunkenness itself or whether it should have the right to interfere where a man, through his drunkenness, is in breach of his duty to his family or his creditors, or if he was a soldier or a policeman on duty.

Mill believed that where there was definite damage to an individual or to the public that an individual’s freedom should be interfered with by morality or law but where there was no breach of duty to society and the damage affects only the individual, then society should bear any inconvenience for the greater good of human freedom. In short, Mill believed that the liberty of the individual is too precious to be sacrificed merely to ease another’s feeling of revulsion or repugnance.

In the 20th century, Lord Devlin (1905 –1992), a Law Lord became involved in the debate on morality and the law. He asserted that a society means a community of ideas and that without shared ideas on politics, morals, and ethics, no society could exist. He believed that even private wickedness and immorality may be punished because they are harmful to society. Devlin therefore developed a second objective test. The test was set out that it was for the reasonable (or ordinary man), to help decide where the boundaries are to be

1 R v R (1992) 1 AC 599, p609 © Association of Costs Lawyers Training 2020 11 drawn; only where immoral conduct is regarded by this ordinary man with ‘intolerance, indignation or disgust’, should it be prohibited by law.

1. Introduction

Most democratic countries have a written Bill of Rights laying down the rights that can be enjoyed by the citizens of that country. These rights have to be respected by the courts, parliament, the police and private citizens unless the Bill of Rights allows otherwise (for example, some rights may be suspended in times of war or when it is necessary in the interests of national security). Such a Bill may form part of a written constitution or sit alongside such a constitution. Whether the constitution is codified or not, it will usually have a status which is superior to that of ordinary law, in that it can only be changed by a special procedure. Legislation that is protected in this way is said to be entrenched. Britain is unusual among democratic countries because to date it has neither a Bill of Rights nor a written constitution; our rights and freedoms are not enshrined in any unitary document.

2. The origins of rights and freedoms in English law

In this country, rights and freedoms are traditionally protected by a presumption that we are free to anything that is not specifically forbidden by either legislation or the common law, we then are left with ‘residual rights’. Britain does however have some codified civil rights and civil liberties dating back at least to the Magna Carta in the 13th century. Whilst successive governments have repealed most of the Magna Carta over the past 200 years or so, its guarantee of due process of law remains in effect. Another source of such codified rights is the Bill of Rights 1689 which contains some civil liberty provisions that continue to apply today.

Parliament can be said to be the ultimate guarantor of civil rights and civil liberties in Britain. Between 1642 and 1651, the English Civil War was fought over the rights of Parliament and the rights of the King. Parliament was victorious and became the supreme legal authority in the country. The supremacy of parliament remains a cornerstone of the constitution. So, theoretically, parliament may pass any law it wishes, although in practice there are limitations to this power. Examples of such limitations are the doctrine of the rule of law and the principle that anyone prevented by the state from doing something that they are legally entitled to do should have a remedy against that state. The idea that a person is free to do anything not specifically prohibited by law also applies to the state, so that the government may violate individual freedom even though it is not formally empowered to do so, on the ground that it is doing nothing that is prohibited. This means that in England we can be said to have residual rights and liberties, meaning that our freedoms are effectively the conduct that is left with no prohibition.

A significant change in the British position was made by the Human Rights Act 1998 which came into force in October 2000. The Act made the European Convention on Human Rights (ECHR) part of the law of the UK. While the Convention had been part of the international law that was recognised by the UK, it had never been integrated as part of our domestic law. While the Human Rights Act 1998 represents a major shift in approach to civil liberties, it still fails to give the UK a Bill of Rights because the Act is not entrenched and can be repealed by a future Act of Parliament. How it could be repealed by an Act is open to debate. Lord Justice Laws stated in Thoburn v Sunderland City Council (2002) 3 WLR 247, that the Human Rights Act 1998 was a constitutional Act that could only be

3. Enforcing Rights

Rights are only worthwhile if there are adequate remedies for their enforcement. The fact that we do not yet have a Bill of Rights, but only a collection of laws detailing what we may not do, has inevitably meant that remedies are similarly scattered. Some of the main remedies available are covered below.

3.1 Judicial Review

Where a public body (such as a local authority, the police, or a government department) acts illegally, the result will often be an infringement of an individual’s rights. In some cases these decisions could be challenged in the courts, this procedure is known as judicial review.

3.2 Habeas corpus

Personal liberty is regarded as the most fundamental of all freedoms, and where individuals are wrongfully deprived of their liberty, the fact that, on release, they can sue their captor for damages under the ordinary civil law is not regarded as sufficient. Habeas corpus is an ancient remedy that allows a person detained to challenge the legality of detention. If successful, this will result in that individual securing a quick release. It does not punish the person responsible for the detention, but once the detainee is set free, they can still pursue any other available remedies for compensation or punishment. Habeas corpus may be sought by, among others:

þ convicted prisoners; þ those detained in custody pending trial or held by the police during criminal investigations; þ those awaiting extradition; þ psychiatric patients; and þ those with excessive bail conditions imposed on them.

An application would need to be made to the Divisional Court and takes priority over all other court business.

3.3 Civil Action

Where a public body breaches a person’s rights in such a way as to amount to a tort, that body may be sued in the same way as a private citizen would be; since the Crown Proceedings Act 1947, this includes the Crown. As far as civil rights are concerned, this remedy is of particular importance in relation to illegal behaviour by the police, possible actions include:

þ assault; þ malicious prosecution; þ false imprisonment; þ wrongful arrest; and © Association of Costs Lawyers Training 2020 14 þ trespass to property or goods.

A jury usually hears these cases, and exemplary damages may be awarded against the police even where there has been no oppressive behaviour or other aggravating circumstances.

In the past, the police have benefited from an effective immunity from liability for negligence in their investigations. This immunity stems from the case of Hill v Chief Constable of West Yorkshire (1988) 2 WLR 1049. The case looked at whether the police owed a duty of care to a victim of Peter Sutcliffe, known as the Yorkshire Ripper. The House of Lords ruled that public policy prevented any action for negligence lying in respect of police strategies for the investigation and prevention of crime.

In Osman v UK (1998) EHRR 101, the European Court of Human Rights cast doubt on the future of this immunity. In that case, a teacher had developed a fixation with a 14-year-old boy at his school. He gave him money, took photographs of him and sometimes followed him home. Graffiti of a sexual nature appeared in the neighbourhood and the parents’ house and car suffered criminal damage. However, the teacher denied any involvement. The teacher changed his name by deed poll to include the boy’s name. He was suspended from his position as a teacher and he indicated that he was thinking of ‘doing a Hungerford’ by which it was assumed he meant he might use firearms to kill the deputy headmaster and other victims at random. In December 1987 the police sought to interview the man in connection with allegations of criminal damage but he had disappeared. Two months later he went to the boy’s home, shot and wounded him and killed his father. He also went to the home of the deputy headmaster, shot and wounded him and killed his son. He was convicted of manslaughter and placed in a psychiatric hospital. The pupil with whom he had had an obsession and the mother brought a civil action against the Metropolitan Police for negligence. They claimed that the police had been negligent in not apprehending the man before the incident that led to the killing. Relying on Hill v Chief Constable of West Yorkshire, the Court of Appeal upheld a ruling to strike out the case as disclosing no cause of action. The Court of Appeal treated that case as laying down a watertight defence. It was contended before the European Court of Human Rights that the rule of public policy preventing the action for negligence breached the European Convention on Human Rights. The European Court ruled that Art. 6 of the Convention, which guarantees the right to a fair trial, had been violated. It considered that the exclusionary rule formulated in the Hill case should not be used as a blanket immunity, but that the existence of competing public policy issues had to be considered. The approach of the Court of Appeal had amounted to an unjustifiable restriction on the right of access to a court to have a claim determined on its merits.

This interference by the European Court into the substantive law of tort has not been well received by some academics and judges in the UK. It has been argued that the right to a fair trial under Art. 6 should be restricted to looking at procedural matters rather than examining the substantive law of the country.

There are some signs that the European Court may be reconsidering its approach. In Z v UK (2001) 2 FLR 612, the European Court of Human Rights acknowledged that it had not fully understood the English law as laid down in the Hill case. It stated:

© Association of Costs Lawyers Training 2020 15 ‘The Court considers that its reasoning in the Osman judgment was based on an understanding of the law of negligence...which has to be reviewed in the light of the clarifications subsequently made by the domestic courts and notably the House of Lords.... In the present case, the Court is led to the conclusion that the inability of the applicants to sue the local authority flowed not from an immunity but from the applicable principles governing the substantive right of action in domestic law. There was no restriction on access to the court of the kind contemplated in the Ashingdane v United Kingdom (1985) ECHR 8 judgment.’

The European Court appears at least to be restricting the impact of Osman. In TP v UK (2001) ECHR (28945/95), the European Court distinguished the Osman case and ruled that there had been no breach of Article 6 when the UK courts had struck out a case because the case was doomed to fail.

3.4 Compensation

Where there has been a failure in the trial process leading to a miscarriage of justice, an award of compensation can be made by the state under s. 133 of the Criminal Justice Act 1988, though the sums awarded were reduced in 2006 and the maximum payable is now £500,000. Controversially, when calculating the award, the House of Lords confirmed in R (O’Brien) v Independent Assessor (2007) UKHL 10, that deductions can be made to take into account the fact that the claimant did not have to pay for food and lodging while in prison, and previous criminal convictions and conduct leading to their wrongful imprisonment. Under the Criminal Justice and Immigration Act 2008, deductions can be made from an award of compensation to take into account the claimant’s conduct that contributed to their wrongful conviction and any previous convictions.

In the past, discretionary payments could also be awarded by the Home Secretary where there had been gross misconduct that fell outside the statutory scheme. This discretionary scheme was abolished in 2006, on the pretext that the money should be spent on the victims of crime, ignoring the fact that people who have been wrongly held in prison are themselves victims.

3.5 Criminal Proceedings

Criminal proceedings may be brought for false imprisonment or assault, if necessary, by means of a private prosecution. In 2003, 195 police officers were convicted of a criminal offence; of these 61 were for non-traffic offences. Sadly, not one police officer accused of malpractice arising from the many high-profile miscarriages of justice put right by the Court of Appeal since 1989 has been convicted of a criminal offence.

The Criminal Injuries Compensation Scheme (CICS) is a state scheme to compensate victims of violent crime. A non-statutory scheme was first introduced in 1964, but statutory schemes were introduced under the Criminal Injuries Compensation Act 1995. There have been three schemes under this Act: the original one, which came into force in 1996 and two subsequent ones in 2001 and 2008 respectively. The CICS is a government funded scheme that allows blameless victims of violent crime to get a financial award. Under the scheme, each type of injury is given a value. The values together form a list that we call ‘the tariff’. The award can never fully compensate for all the injuries suffered, but is recognition of public sympathy for the blameless victim. The scheme costs the government © Association of Costs Lawyers Training 2020 16 over £200 million per year, and, in 2011-2012 a total of £449 million was paid out in criminal injuries compensation payments.

Injuries are graded into 25 tariff bands for the payments for pain and suffering, according to their seriousness. These range from £1,000 for injuries such as fractured fingers and sprained ankles (tariff band 1) through to £250,000 for quadriplegia or severe brain damage (tariff band 25). In some cases, the tariff band an injury falls into will depend on how long the effects last as well as the nature of the injury. Loss of earnings and special care is only payable where the applicant has been incapacitated as a result of the injury for at least 28 weeks (because statutory sick pay is available for the first 28 weeks). The maximum total award in any one case is £500,000 including loss of earnings and special care.

3.6 Disciplinary Procedure

Misconduct by the police can be punished by internal disciplinary procedures. The Home Office report, Police Complaints and Discipline (Cotton and Povey (2004)) found that, in 2003, disciplinary misconduct charges were brought against 1,529 police officers and these led to 115 police officers being dismissed or required to resign.

In the past, complaints against the police could be made to the Police Complaints Authority. Following persistent criticism of this organisation both by the public and the police, the Police Reform Act 2002 abolished this body and replaced it with the Independent Police Complaints Commission (IPCC). The IPCC has itself been the subject of some criticism, as being ineffective and too close to the police. The Legal Action Group produced a damaging report on the subject in 2007. In 2008, a hundred lawyers refused to continue to work with the organisation because they were concerned the IPCC was not handling complaints effectively.

Since then, there have been significant changes to the police complaints system contained in the Police Reform and Social Responsibility Act 2011, which came into effect on 22 November 2012. For more details on the scheme you are advised to read the 2013 Statutory Guidance.

3.7 The admissibility of evidence

Where police officers commit serious infringements of a suspect’s rights during the investigation of an offence, the courts may hold that evidence obtained as a result of such misbehaviour is inadmissible in court; the idea being to remove any incentive for the police to break the rules.

Under s. 76(2) of the Police and Criminal Evidence Act 1984 (PACE), confession evidence is inadmissible where it was obtained by oppression or in circumstances likely to render it unreliable and, if the defence alleges that this is the case, the onus is on the prosecution to establish otherwise2. Oppression is defined as including ‘torture, inhuman or degrading treatment, and the use or threat of violence (whether or not amounting to torture)’3. The

2 s. 76(1) of the Police and Criminal Evidence Act 1984 3 s. 76(8) of the Police and Criminal Evidence Act 1984 © Association of Costs Lawyers Training 2020 17 definition of ‘oppression’ was considered in R v Fulling (1987) 2 All E.R. 65. In that case, the police had persuaded a woman to make a confession by telling her that her lover was being unfaithful. The court held that this did not amount to oppression and stated that the term should carry its ordinary meaning, that of unjust treatment or cruelty, or the wrongful use of power. Excluding evidence is potentially a powerful safeguard against oppressive treatment by the police, since there is little point in pressurising a suspect to confess if that confession cannot be used to obtain a conviction. However, the extent of this protection is diluted by s. 76(4) of PACE, which states that, even if a confession is excluded, any facts discovered as a result of it may still be admissible. Parts of an excluded confession may also be allowed, if relevant, to show that the defendant speaks or writes in a particular way. This means that the police can use oppressive treatment to secure a confession that will help them find other evidence.

Section 78 of PACE provides that in any proceedings, the court may refuse to admit evidence ‘if it appears to the court that, having regard to all the circumstances, including the circumstances in which the evidence was obtained, the admission of the evidence would have such an adverse effect on the fairness of the proceedings that the court ought not to admit it’. This provision covers all types of evidence, not just confessions. It is generally invoked only if the police have committed serious breaches of PACE, such as refusing a suspect access to legal advice over a long period.

3.8 The right to exercise self-defence

Any citizen may use reasonable force to prevent unlawful interference with their person or property, or to protect others from such interference. This can affect both civil and criminal liability.

3.9 Parliamentary controls

One of the basic functions of parliament is to act as a watchdog over the rights of citizens, protecting them from undue interference by government. A number of methods are available, from questions directed to Ministers in Parliament, to committees designed to scrutinise legislation. However, this function has suffered as a result of the strength of party discipline, which means that many MPs appear to put loyalty to their party above loyalty to the citizens they represent. The result is that even measures which clearly restrict fundamental rights can be voted through if the government has a clear majority.

3.10 The Ombudsman

The Parliamentary Commissioner for Administration, known as the Ombudsman, has a role in protecting individual rights.

3.11 The European Court of Human Rights

Finally, a person whose rights have been breached may find that they have an eventual remedy in the European Court of Human Rights.

As we know, the Human Rights Act 1998 makes the European Convention on Human Rights (ECHR) part of the law of the UK. It is important to recognise that we all have human rights. Human rights provide a standard for how the government should treat its citizens and they are there to protect individuals. There are 16 basic rights in the Human Rights Act 1998 – all taken from the European Convention on Human Rights.

As you would expect, they concern matters of life and death, like freedom from torture and being killed, but they also cover rights in everyday life, such as what a person can say and do, their beliefs, their right to a fair trial and many other similar basic entitlements. The rights are summarised below:

A person has the right to have their life protected by law. There are only certain very limited circumstances Article 2: Right to life where it is acceptable for the state to take away someone’s life, e.g. if a police officer acts justifiably in self-defence. A person has the absolute right not to be tortured or Article 3: Prohibition of subjected to treatment or punishment that is inhuman torture or degrading. Article 4: Prohibition of A person has the absolute right not to be treated as a slavery and forced slave or to be required to perform forced or compulsory labour labour. A person has the right not to be deprived of their liberty – ‘arrested or detained’ – except in limited cases Article 5: Right to liberty specified in the article (e.g. where they are suspected and security or convicted of committing a crime) and provided there is a proper legal basis in UK law. A person has the right to a fair and public hearing within a reasonable period of time. This applies both to criminal charges against them and to cases concerning their civil rights and obligations. An independent and impartial tribunal established by law must carry out Article 6: Right to a fair hearings. It is possible to exclude the public from the trial hearing (though not from the judgment) if it is necessary to protect things like national security or public order. If it is a criminal charge, the person is presumed innocent until proven guilty according to law and has certain guaranteed rights to defend himself. A person normally has the right not to be found guilty of an offence arising out of actions that at the time they Article 7: No committed them were not criminal. They are also punishment without law protected against later increases in the maximum possible sentence for an offence. Article 8: Right to A person has the right to respect for their private and respect for private and family life, their home and their correspondence. This family life right can be restricted only in specified circumstances. A person is free to hold a broad range of views, beliefs Article 9: Freedom of and thoughts, and to follow a religious faith. The right to thought, conscience manifest those beliefs may be limited only in specified and religion circumstances.

© Association of Costs Lawyers Training 2020 19 A person has the right to hold opinions and express their Article 10: Freedom of views on their own or in a group. This applies, even if expression those views are unpopular or disturbing. This right can be restricted only in specified circumstances. A person has the right to assemble with other people in Article 11: Freedom of a peaceful way. They also have the right to associate assembly and with other people which includes the right to form a association trade union. These rights may be restricted only in specified circumstances. Men and women have the right to marry and start a Article 12: Right to family. National law will still govern how and at what marry age this can take place. In the application of the Convention rights, a person has the right not to be treated differently because of Article 14: Prohibition of their race, religion, sex, political views or any other discrimination personal status, unless this can be justified objectively. Everyone must have equal access to Convention rights, whatever their status. A person has the right to the peaceful enjoyment of Article 1 of Protocol 1: their possessions. Public authorities cannot usually Protection of property interfere with things people own or the way they use them, except in specified limited circumstances. Article 2 of Protocol 1: A person has the right not to be denied access to the Right to education educational system. Elections for members of the legislative body (e.g. Article 3 of Protocol 1: Parliament) must be free and fair and take place by Right to free elections secret ballot. Some qualifications may be imposed on who is eligible to vote (e.g. a minimum age). Article 1 of Protocol 13: These provisions abolish the death penalty. Abolition of the death penalty

Sometimes your human rights might conflict with another person’s human rights and may need to be balanced. When human rights conflict, they need to be balanced by one human right being limited or restricted. What this means in practice is that some human rights are absolute in that they cannot ever be limited or restricted in any way. However, the majority of rights are non-absolute and can be limited or restricted in certain circumstances where there is a need to take into account the rights of other individuals or the wider society.

An example of which is the right to protection from torture and Absolute rights inhuman and degrading treatment (Article 3). The state can never withhold or take away these rights. An example of which is the right to liberty (Article 5). These rights Limited rights may be limited under explicit and finite circumstances. Require a balance between the rights of the individual and the needs of the wider community or state interest. These include: the right to respect for private and family life (Article 8); the right to Qualified rights manifest one’s religion or beliefs (Article 9); freedom of expression (Article 10); freedom of assembly and association (Article 11); the right to peaceful enjoyment of property (Protocol 1, Article 1); and, to some extent, the right to education (Protocol 1, Article 2).

þ there is a clear legal basis for the interference with the qualified right that people can find out about and understand; þ the action/interference seeks to achieve a legitimate aim. Legitimate aims are set out in each article containing a qualified right and they vary from article to article. They include, for example, the interests of national security, the prevention of disorder or crime, and public safety. Any interference with one of the rights contained in Articles 8–11 must fall under one of the permitted aims set out in the relevant article; and þ the action is necessary in a democratic society. This means that the action or interference must be in response to ‘a pressing social need’, and must be no greater than that necessary to address the social need.

All rights and freedoms should be enforceable by all individuals irrespective of individual characteristics.

5. Diversity

Britain, down to its deepest roots, has always been a diverse nation. Our diversity is a result of invasion, expansion, empire and Commonwealth, and being a safe haven for people fleeing danger. For over 2000 years people have arrived in Britain, contributing their own cultural influence. Much of our diversity comes from the British Empire, which at its height governed over one quarter of the world’s population – that’s 458 million people! After the British Empire collapsed, people from the Commonwealth migrated to Britain, and countries such as the Caribbean and India were invited to help strengthen our workforce.

Today, people continue to move all around the world. The expansion of the European Union has seen a number of Europeans come to the UK in recent years. Our current population of over 60 million people includes a mix of people from different racial, religious and cultural backgrounds.

Romans invaded, bringing the first black people with them from North 43-410AD Africa. A few hundred years later they returned to Italy leaving those who wished to stay. African and Afro-Caribbean people arrived because of Britain’s 1555-1833 involvement in the slave trade. 1700 Indians and Chinese arrived because of Britain’s growing Empire and trade onwards with far off countries. 1840 Many people came to England to escape a terrible famine in Ireland. After the Second World War many refugees came to Britain from Eastern 1946 Europe. Immigrants continue to arrive from the EU and around the world, adding to Today the diversity of our country.

When we talk about diversity, we don’t just talk about race and ethnicity. Diversity includes all different people, each contributing their own uniqueness, making Britain a more interesting place to live. So, diversity includes people of different gender, ages, sexual orientation, disability, religion, beliefs and more. It is important that everyone respects and © Association of Costs Lawyers Training 2020 21 celebrates each other’s differences so we can all get along, learn from each other and share an exciting mix of cultures and experiences. From our previous readings we can also see that without having a society open to the diverse cultures we are unable to agree a common set of customs upon which we all adhere or agree.

Discrimination is treating someone unfairly, because of their identity or in other words, because of a particular characteristic. It is because there are so many characteristics of an individual that the law on discrimination has been a piecemeal development.

6. Equality

Equality is having equal opportunities and rights and being able to enforce those rights equally despite individual characteristics. It is being treated fairly. Inequality is when people aren’t given equal opportunities and rights. They are treated unfairly and experience discrimination. Over the years, laws have been introduced to tackle discrimination and to help ensure people with particular characteristics are treated fairly. These laws are called civil laws. As we know, civil law mostly involves disagreements between people, companies or other organisations. It is enforced by one person suing another person or corporation and the case will end up in a civil court.

One reason the Equality Act 2010 was considered necessary is because the discrimination law needed to be consolidated into one Act that adopted a united and clear approach. The Act was also considered necessary because having a strong piece of domestic law would allow for a strong blueprint for further progress on equality in society. Much of the legislation that protected individuals historically was repealed, for example the Equality Act 2010 has repealed the whole of the Sex discrimination Act 1975. The Equality Act 2010 makes it law that every private, public and voluntary organisation must not discriminate against employees and people that use their services because of particular characteristics. Section 29 (1) of the Equality Act 2010 defines these service providers as those that are concerned with the provision of a service to the public for payment. The Act brings together all previous equality laws, making them simpler, more effective and easier to understand. The Equality Act 2010 makes sure that people with particular characteristic are protected from discrimination. These are known as protected characteristics under section 4 of the Equality Act 2010:

þ Age þ Disability þ Gender Reassignment þ Marriage and civil partnerships þ Pregnancy or maternity þ Race þ Religion or belief þ Sex þ Sexual orientation (Gay, lesbian or bisexual).

Under section 118 (1)(a) of the Equality Act 2010, a complainant has 6 months to claim against a service provider, which starts to run on the date of the alleged breach. However, if the county court thinks that it is just and equitable to do so, then the time limit may be

© Association of Costs Lawyers Training 2020 22 extended to what is deemed necessary by the court4. Section 119 of the Equality Act 2010 prescribes the following remedies may be available to the complainant, which are dependent on the type of discrimination that has taken place (direct or indirect):

þ damages, for example compensation for injured feelings; þ an injunction; or þ declaration.

7. The Equality Act 2010 and the ECHR

The Equality Act 2010 is the main anti-discrimination legislation for disabled people in the UK. However, the European Convention on Human Rights may help fill in some gaps. Article 14 of the Convention says that the enjoyment of the rights and freedoms set forth in the Convention must be secured without discrimination. Under the Human Rights Act 1998, as you know, European Convention rights can be directly enforced in UK courts against a public authority. However, to argue these rights against anyone else, one needs some other right of action, for example a claim under the Equality Act 2010. The Equality Act 2010 and other laws have to be interpreted in accordance with the Convention rights so far as possible, whether or not the claim is against a public authority.

Key points on Article 14 are:

þ Coverage of disability; þ Only applies within scope of another Convention right; and þ 'Discrimination' and 'justification'.

7.1 Coverage of disability

Disability and various health conditions have been held to fall within Article 14. It can therefore be said to have a wider meaning. Glor v Switzerland (2009) 13444/04, was the first case in which the European Court of Human Rights applied article 14 (non-discrimination) of the European Convention on Human Rights to disability. The court held that Switzerland had unlawfully discriminated against the applicant. The applicant had been turned down for military service due to his diabetes (his disability), but was nevertheless taxed for not performing military service. The case of G.N. v Italy (2009) 43134/05, concerned claims against the Italian Ministry of Health in relation to people who had contracted HIV or hepatitis C as a result of infected blood transfusions. The Ministry made an out-of-court compensation settlement with hemophiliacs (or their heirs) that had been infected by transfusions, but not with people with thalassemia who had been infected in this way. This case was brought by relatives (mainly) of those with thalassemia.

Both hemophilia and thalassemia are blood disorders of genetic origin, obliging the person to receive blood or blood products. It was held by the European Court of Human Rights there was discrimination in breach of Article 14 of the European Convention of Human Rights in conjunction with Article 2 (right to life). The court also held there was a breach of

4 Section 118 (1)(b) of the Equality Act 2010

© Association of Costs Lawyers Training 2020 23 Article 2 itself. The more recent decision in Kiyutin v Russia (2011) ECHR 439 saw the extension of the definition to those that are HIV positive. An important UK case is Burnip v Birmingham City Council (2012) EWCA Civ 629, where the court gave a broad interpretation to the Convention and held that UK housing benefit rules were in breach of it where they did not allow for two rooms in a property where a carer was needed for a disabled tenant. Please note that this decision is not regarding the current situation with regards to the ‘bedroom tax’.

7.2 Only applies within scope of another convention right

Article 14 can be used only in a situation that falls within the 'ambit' (i.e. scope) of another convention right. There is no general right against discrimination under the European Convention. However, there are convention rights relating to education, welfare benefits, and a right to a fair trial, amongst others. So, the anti-discrimination provision should apply in these areas, as well as others covered by the convention.

7.3 'Discrimination' and 'justification'

What counts as 'discrimination' is wide, for example it includes indirect discrimination. Where there is potential discrimination the state may be able to show that the relevant difference in treatment is 'justified'.

1. Introduction

Achieving justice is often seen as one of the most basic aims of a legal system. When areas of that system go wrong, the result is often described as injustice. But what is justice and what is its relationship with law? Writers, throughout the centuries, have addressed these questions.

2. Defining Justice

Defining justice is not easy, it has traditionally been defined by reference to the Latin maxim ‘suum cuique tribuere’ meaning to allocate each to their own. Aristotle, the ancient Greek philosopher made a distinction between distributive and corrective justice which remains relevant to this day, when considering issues of justice. Below is an exploration of some of the theories on justice.

2.1 Distributive justice

Distributive justice concerns the appropriate and proportionate distribution of wealth, privilege, honour, burdens, work etc between the members of a society. Aristotle argued that there should be a proportionate distribution of such goods and burdens. What he did not mean by this is that there should be an equal distribution of goods and burdens. Indeed, he went so far as to maintain that some people of limited capacity were unable to obtain or appreciate the good life, and therefore argued that those people should act as slaves to support others in society.

2.2 Corrective justice

Corrective justice relates to circumstances where a just distribution has been disturbed, the rights of one party have been violated and another party has gained from that violation. In such circumstances, a re-distribution of goods is required to correct that injustice and return to the situation of proportionate distribution.

2.3 Retributive justice

A further form of justice is retributive justice. One of the aims of the criminal justice system is to punish the guilty in some way for breaking the law. This can be distinguished from corrective justice, in as much as the guilty party may not have gained from the unlawful action. Neither is the aim of punishment necessarily to benefit the injured party, although the victim may well take satisfaction in seeing the guilty party receive a proportionate penalty for their wrong.

2.4 Utilitarianism

Utilitarianism was first introduced in the 19th century by Jeremy Bentham and further developed by John Stuart Mill. The fundamental proposition of the principle of utility is that that which increases happiness should be promoted, while that which increases pain should be avoided to increase happiness and diminish pain. So, following a utilitarian view

Utilitarianism is subject to criticism because in its simple form, it does not take into account the rights of the individual; the suffering of a small number of individuals would be justified if it increased the happiness of the greatest number, i.e. benefited society as a whole. Thus, it may increase the overall happiness of 90 per cent of the population if they were able to force the remaining 10 per cent into slavery to serve the majority’s interests.

2.5 Hart’s definition

We have already come across the work of Hart. Hart offers a theory of Justice focusing on the need to treat like cases in a like manner. Hart pointed out that such a definition of justice requires further differentiation; it is possible to imagine an unjust law that was administered justly. For example, the Nazi laws forbidding inter-racial marriage may have been, by Hart’s definition, administered justly, in that it was equally applicable to all but the law itself is surely be unjust.

Hart thus establishes a link between justice and morality and suggests that a society accepts that its members should be protected from certain forms of harm. This concept gives rise to legal rights and duties; rights not to be harmed and duties not to harm others. Such rights apply equally to all members of society; conversely, all share the same duties not to harm others. Thus, like cases are treated alike. However, if an individual breaches their duty and violates the rights of another not to be harmed, then the law must act justly to restore the balance by demanding compensation from the violator, some form of retribution, and where possible, awarding compensation to the victim. It is clear that Hart’s theory of justice is a development of Aristotle’s concept of corrective justice.

2.6 John Rawls

John Rawls produced his work ‘A Theory of Justice’ in 1971. This is essentially a distributive theory of justice and proved to be an influential one. He offers a thought experiment to analyse how social and economic benefits and burdens can be justly distributed in a just society. He suggests that we should imagine an original position before any such goods and burdens were distributed, and where the members of the society in which the goods were to be distributed would debate how best they should be shared out. Interestingly, this discussion is to take place behind a ‘veil of ignorance.’ By this, he means that each member of society would have to decide how the goods would be distributed without knowing what their position in that society would be or what their particular mental abilities, age, sex and desires would be, beyond what is common to all human beings.

Rawls argues that a society organised on principles arising out of a rational debate from the original position behind this veil of ignorance would lead to a just society. It would guarantee a minimum standard for all members, as no one would agree to a system that could possibly sacrifice their own future interests, simply for the good of others in the society. Rawls suggested that those behind the veil would take care to ensure a minimum standard for the worst-off, because they might one day find themselves in such a situation. As a result, such a discussion would give rise to two principles:

þ Basic freedoms would be available to all; and © Association of Costs Lawyers Training 2020 26 þ No-one would wish to sacrifice rights such as freedom of thought, speech, conscience, religion etc.

Social and economic goods would, in principle, have to be accessible by all. Inequality of distribution could only be justified if it benefited the least well off. So, paying doctors more than milkmen is justified because the skills offered by a doctor are more beneficial or useful to the whole of society than those possessed by the average milkman.

2.7 Robert Nozick

Robert Nozick’s view, expressed in Anarchy State and Utopia (1974), is radically different to Rawls’. He suggests that we have a number of natural rights and that justice depends on giving them due respect. Individuals have the right to enjoy liberty, life and property without interference from anyone, whether it be other individuals or the state. Indeed, he argues that it is the role of the state to protect the rights of the individual and to order compensation where these natural rights are infringed. Thus, the criminal law and the law of tort are important in providing protection of these natural rights, and hence justice, according to Nozick.

According to Nozick, property rights are a result of historical entitlement and can be justly acquired either by inheritance, transfer (gift or sale) or as a result of compensation for the infringement of other rights. But property cannot be forcibly redistributed for social purposes such as the funding of the NHS as this violates the natural right to hold property. We have no right to redistribute property from rich to poor any more than we have the right to take a kidney from a woman with two healthy kidneys and give it to a child with only diseased kidneys. Being rich is as much a matter of chance as being healthy.

2.8 Karl Marx

Held that it was impossible for a capitalist society to be just; such a society was organised with the aim of upholding the interests of the ruling class, rather than securing justice for all. For Marx, a just society would distribute wealth ‘from each according to his capacity, to each according to his needs’; individuals should contribute what they can to society, and receive what they need in return.

2.9 Natural Justice

We have already encountered the idea of natural law in relation to our study of the law and morality. Thomas Aquinas argued that the natural law should reflect the law of God, and that a just law would be one that reflects the natural law. Any law that did not, would not be just, and such an unjust law is not a true law at all. Remember the Latin maxim ‘lex injusta non est lex’ – an unjust law is not a true law. The problem with this view is how to determine what the natural law or divine law actually is, if it exists at all. Many modern thinkers have questioned the notion of a divinely ordained law of nature. Indeed, Jeremy Bentham described it as ‘nonsense on stilts’.

3. Justice and English Law

In assessing whether the English legal system assures justice much will depend on the definition of justice used. It is impossible to consider justice in England without having regard © Association of Costs Lawyers Training 2020 27 to the rule of law. The rule of law is another difficult concept to define clearly. The ‘World Justice Project’ define it as a system in which the following four universal principles are upheld:

1. The government and its officials and agents as well as individuals and private entities are accountable under the law; 2. The laws are clear, publicised, stable, and just; are applied evenly; and protect fundamental rights, including the security of persons and property; 3. The process by which the laws are enacted, administered, and enforced is accessible, fair, and efficient; and 4. Justice is delivered timely by competent, ethical, and independent representatives and neutrals who are of sufficient number, have adequate resources, and reflect the makeup of the communities they serve.

In 2010, one of the United Kingdom’s most distinguished jurists in the last hundred years, Lord ‘Tom’ Bingham, published the seminal work ‘The Rule of Law’. Lord Bingham’s book built upon an academic paper which he had delivered four years earlier in 2006 and in which he had looked at what exactly is meant by the rule of law. In his 2010 book, Lord Bingham identified the core principle of the rule of law as being:

‘….that all persons and authorities within the state, whether public or private, should be bound by and entitled to the benefit of laws publicly and prospectively promulgated and publicly administered in the courts.’

He went on to outline 8 principles which he saw as being the key ingredients necessary to support that aim. In brief these were:

þ The law must be accessible, intelligible, clear and predictable; þ Questions of legal right and liability should ordinarily be resolved by the exercise of the law and not the exercise of discretion; þ Laws should apply equally to all; þ Ministers and public officials must exercise the powers conferred in good faith, fairly, for the purposes for which they were conferred – reasonably and without exceeding the limits of such powers; þ The law must afford adequate protection of fundamental Human Rights; þ The state must provide a way of resolving disputes which the parties cannot themselves resolve; þ The adjudicative procedures provided by the state should be fair; and þ The rule of law requires compliance by the state with its obligations in international as well as national laws.

Formal definitions of the rule of law, as above, look to the presence or absence of specific, observable criteria of the law or the legal system. There is no definitive list of formal criteria and different formal definitions may use different standards. The main advantage of a formal definition of the rule of law is that it is very clear, and relatively objective once the formal criteria are chosen. You will appreciate that choosing which standards to include may be controversial. However, once the standards are made explicit, it becomes easier to measure the degree to which countries meet or don’t meet the standards.

© Association of Costs Lawyers Training 2020 28 It appears that there are some commonalties with formal definitions; the main one being that the "rule of law" is measured by the conformity of the legal system to these explicit standards. Formal definitions suffer from two major drawbacks, however:

þ they may place too much emphasis on the "law in the books" and not pay sufficient attention to the "law in action"; and þ the criteria are chosen because there is a presumption that those formal characteristics will lead to a just outcome, when in fact, the rigidity of the definition may not enable justice to be achieved.

This suggests a flaw in such a definition. What we really should be interested in – that is, is the essence of the rule of law – which is the substantive or operational outcome. It may be useful to distinguish between substantive and operational justice. Substantive justice is achieved when the outcome is a just one and operational Justice concerns itself with ensuring that the process by which a decision is reached is fair and applied impartially.

3.1 Substantive justice and the distribution of wealth

Assessing whether the law provides substantive justice depends in turn on the view one takes of what a just society actually is. Certainly, the courts do not advocate the redistribution of wealth in a way that would provide justice, as Rawls would understand it.

However, although private property is protected in the English legal system, there is compulsory redistribution of wealth through tax law. Those earning high salaries have to pay more to the state than those earning lower salaries or earning no money at all. Nozick would argue that this is unjust.

Again, on a natural law view of justice, it is arguable that the laws allowing abortion, for example, are unjust because they violate the divinely ordained law of nature. Indeed, it is possible to argue that some questions of substantive justice are essentially political matters. These are dealt with by Parliament which is the proper forum for deciding what the most just form of society is. As it is, the sovereign power of the state has the power to shape the law to meet that end.

3.2 Substantive justice or fairness in individual cases

It is occasionally claimed that the law failed to achieve a just outcome in a particular case. This is also a question of substantive justice. To what extent are the courts able to impose a fair solution to the conflicting claims of two parties to a trial? Has a fair decision been reached in a particular instance?

There are numerous examples of miscarriages of justice which show that at times, the courts have not delivered substantive justice or a fair outcome for the individuals concerned. Arguably, it is inevitable that any system of justice administered by fallible human beings will at times, fail to deliver justice in particular circumstances. However, it is also possible to identify instances where the law has developed mechanisms in order to attempt to deliver fair decisions in particular circumstances.

The development of equity as a distinct form of law from the 13th century aimed to deliver substantive justice. The law of equity was developed and administered by the Court of Chancery up until the 19th Century. It allowed the Court of Chancery to deliver fair outcomes in cases where the common law had become too rigid and inflexible to deliver substantive justice.

Equity developed principles to ‘fill the gaps’ in the common law. Since the 19th century, equity is no longer administered in a separate court, but can be applied in any civil court.

3.2.2 Judicial precedent

The mechanism of judicial precedent provides some scope for the law to be developed, in order to do justice in particular circumstances. As you are aware, the higher courts have the ability to overrule past decisions and thus to modify the law to meet the demands of fairness or substantive justice in the case before them.

3.2.3 The doctrine of proportionality

This has been imported from European law via the development of the European Union and is also used in the jurisprudence of the European Court of Human Rights in interpreting the European Convention on Human Rights (You should be aware of the importance of this document since its incorporation into UK law via the Human Rights Act 1998). The concept is used to ensure that individual rights under the convention are only lawfully interfered with, limited or infringed when it is necessary to do so, and only to an extent that is necessary to meet the aims of the restriction. It is summed up in the phrase ‘don’t use a sledgehammer to crack a nut’.

Its operation can be seen in cases such as Dudgeon v UK (1981) 7525/76 ECHR 5, where the Northern Irish law criminalising homosexual acts was found to be in violation of Article 8 (the right to privacy). This restriction of the right to privacy was considered to be disproportionately severe, when balanced against the need to protect morality generally, as the law was rarely enforced, and there was no evidence that moral standards had been compromised as a result.

The difficulty in trying to deliver substantive justice or a fair result in a particular case depends upon on how one interprets and applies the concept of justice. Cases on euthanasia illustrate this point. In R v Cox (1992) 12 BMLR 38, Dr Cox was prosecuted for the mercy killing of an elderly patient who repeatedly asked to die. In Pretty v DPP (2001) UKHL 61, the House of Lords refused to guarantee that Diane Pretty’s husband would not be prosecuted under the Suicide Act 1961 for assisting her to commit suicide. Whether justice was done in these cases depends in what sense the term is used. Both cases may have been conducted according to procedure, and therefore just, in that the parties were given the opportunity to put their case and the decision was probably made with due care and impartiality. However, whether substantive justice was done or a fair outcome achieved depends upon the view one takes of how the claims of one individual are to be balanced against the wider interests of society. Many argue that finding in favour of Ms Pretty might put pressure on vulnerable elderly or sick to agree to euthanasia if they feel themselves to be a burden on relatives or the state. © Association of Costs Lawyers Training 2020 30 3.3 Operational justice and English law

Operational justice considers whether the laws established by Parliament and the common law are administered and applied in a just manner. This type of justice is related to Aristotle’s notion of corrective justice and Hart’s idea of treating like cases in a like manner. English law will be operationally just if it is seen to treat like cases in a like manner, to allow anyone with a legitimate grievance to come before the court and have their case heard in a fair and impartial way. We will now examine the extent to which the English legal system is able to achieve operational justice, again, it will be useful if we examine this question by defining two types of operational justice:

þ Formal Justice; this means treating like cases alike. þ Procedural Justice; this means following rules and procedures that try and ensure that a case is dealt with fairly.

A variety of mechanisms exist within the law which aim to ensure formal and procedural justice. We will examine each in turn, but it can be noted that some mechanisms overlap, providing both procedural and formal justice. It is a fundamental principle of English Law that all are equal before the courts and like cases should be treated alike. This principle is safeguarded in a number of ways:

þ No-one is above the law þ Access to justice þ Use of lay people þ The concept of certainty þ Admissability of evidence þ Appeals

3.3.1 No-one is above the law

Not even the government of the day is above the law, this is shown in the process of judicial review which we considered briefly last week. This allows the actions of government, usually undertaken by ministers, to be scrutinised before the High Court to ensure they are acting within the law.

3.3.2 Access to justice

Any individual is entitled in theory to bring a case to court. An individual is able to represent themselves as a litigant in person in any court in the country. However, the notion that the courts are truly open to all depends upon a system of fair legal funding. As Judge James Matthew is reported to have remarked in the 19th century:

‘In England, justice is open to all, like the Ritz Hotel.’

The courts can only really be genuinely accessible if all parties concerned are able to afford adequate representation. There is a system of legal aid to provide funding for those who are unable to afford to pay for their own legal advice or representation. However the provisions for legal aid were reduced by the Access to Justice Act 1999. This Act restricted the types of cases for which legal aid was available, and for cases such as personal injury claims and defamation, it was completely replaced by mechanisms such as ‘no win no © Association of Costs Lawyers Training 2020 31 fee’ arrangements. Following the Legal Aid Sentencing and Punishment of Offenders Act 2012 the scope of this scheme has narrowed dramatically. You cannot get legal aid for most areas of civil law and where you can there are limitations, for example:

þ In propery matters it is only available where a mortgage provider initiates possession proceedings and the client can demonstrate they may face homelessness; and þ Section 23 of Schedule 1 of the Legal Aid Sentencing and Punishment of Offenders Act 2012 limits clinical negligence to unborn children or children injured during the first 8 weeks of life resulting in neurological injury.

3.3.3 Use of lay people

Arguably, the use of lay people in the legal process is a mechanism to safeguards the delivery of formal justice. The theory goes that, if we are judged by our peers, we are more likely to be treated fairly. The use of lay people in the form of magistrates and jurors is much more common in the criminal justice system, where the consequences of losing a case are usually much more serious than in the civil law, not least as an individual’s liberty is at stake. In theory, lay people bring their common sense to bear on the justice system and, as they are representative of society as a whole, it is a fair and democratic way to dispense justice.

The existence of jury equity is a practical expression of the influence of lay people in the justice system. However, the use of lay people in the judicial system is not without its problems. The fact that the majority of magistrates are between 45-65 and middle-class illustrates that they are not as representative as they need to be, if the aim of trial by one’s peers is to be achieved.

Deliberations in the jury-room must remain secret under the Contempt of Court Act 1981, which means that it is not always clear whether the jury made their decision for the right reasons, or whether they decided not on the merits of the case but on the colour of the defendant’s skin or even, in extreme cases, by contacting the spirit world.

3.3.4 The concept of certainty

In order to treat like cases alike it is important that it is certain what the law is on a particular topic. Certainty depends upon consistency. The rules regarding judicial precedent show that a high premium is placed on consistency and certainty. However, there are occasions when the common law develops in a way that undermines certainty. For example, the Practice Statement 1966 allows the House of Lords to overrule its own previous decisions when it appears right to do so, which can lead to uncertainty. Also, given the declaratory theory of the common law there are occasions, such as the case of R v R (1991) UKHL 12, where an act which is lawful at the time it is performed becomes unlawful retrospectively.

3.3.5 The rules of natural justice

There are two rules of natural justice which must be borne in mind here, they are:

þ no-one should be a judge in their own cause; and þ each side has a right to be heard.

© Association of Costs Lawyers Training 2020 32 We shall examine the first of these, which aims to ensure formal justice by ensuring all cases are treated alike on their merits and are not treated differently simply because the judge has an interest in the case. Essentially this tries to ensure the impartiality of the judge. You will recall an example of this from the last module, Re Pinochet (1999) UKHL 1.

The second rule of natural justice tries to ensure procedural justice. This is a rule that both sides have the right to be heard in a legal dispute. It is manifest in a number of procedural rules, such as the right of a defendant to cross-examine prosecution witnesses or the right to bring witnesses to support the defence case. As a general rule, the more serious the penalty the greater the opportunity given to the defendant to call witnesses etc to support their case. In such cases, the defendant is also allowed more time to prepare their case. In R v Thames Magistrates Court ex parte Polemis (1974) 2 All ER 1219, a Greek sea captain was convicted for polluting a London dock. The conviction was quashed because as the summons for the charge was delivered at 10:30 and the trial was heard at 4pm on the same day, the Captain had not been given enough time to prepare his case, especially as he spoke very little English. The court held that natural justice could not have been served.

3.3.6 Admissibility of evidence

The rules relating to the admissibility of evidence were considered in more detail last week. These are designed to safeguard the interests of procedural justice. As we have already discussed, under the rules in the Police and Criminal Evidence Act 1984, the judge has the discretion to exclude evidence which has been unlawfully or improperly obtained. The consequence of evidence obtained in an oppressive manner can be seen in the case R v Miller (1992) 97 Cr App R 99. This case concerned a defendant with a mental age of 11, who had denied being at the scene of the crime 300 times before finally confessing that he might have been there at the scene but could not remember. The defendant’s conviction for murder was quashed when it emerged the police had used overbearing and oppressive interview techniques which lead to a confession which was later retracted.

The courts do however also have the discretion to admit evidence that had been obtained unfairly, and sometimes do allow such evidence to support a conviction. For example, in the case of Jeffrey v Black (1978) QB 490, a student had been arrested for stealing a sandwich, and officers searched his flat unlawfully and found drugs. The High Court ruled that this evidence should be admitted.

3.3.7 Appeals

The existence of the appeal courts attempts to ensure that miscarriages of operational justice can be rectified. The Criminal Appeals Act 1995 enables the Court of Appeal to allow an appeal if the conviction is seen as unsafe. This is not quite the same thing as saying that the defendant is innocent. As you will recall from last modules materials, there have been a number of high profile miscarriages of justice, evidencing that the legal system does not always deliver justice.

© Association of Costs Lawyers Training 2020 33 Chapter 2 Learning outcomes After studying this chapter you should understand the following main points: þ the concept of professionalism; þ the regulatory bodies in the legal service sector; þ outcome focused regulation; þ entity regulation; and þ compliance officers.

2.1 Professionalism

1. Introduction

When a profession is fully developed, it may be described as a body of men and women identifiable by reference to some register or record. This body is recognised as having a special skill and learning in some field of activity in which the public needs protection against incompetence, the standards of skill and learning being prescribed by the profession itself.

2. The legal profession

Sometimes in the public imagination, lawyers earn high salaries with little visible benefit to society so people often forget the function of lawyers. The preamble of the Code of Conduct for Lawyers in the European Community 1988 includes a helpful description of a lawyer’s role:

‘A lawyer must serve the interests of justice as well as those whose rights and liberties he is trusted to assert and defend and it is his duty not only to plead his client´s cause but to be his adviser. A lawyers function therefore lays on him, a variety of legal and moral obligations towards the client, the courts, the legal profession in general and each fellow member in particular and the public.’

Members of the legal profession hold themselves out as being willing to serve the public, voluntarily submitting themselves to standards of ethical conduct beyond those required of the ordinary citizen by law. Lawyers undertake to take personal responsibility to those whom they serve for their actions and to their profession for maintaining public confidence. Modern professional codes of ethics cover relationships between employees and employers, between the professional and their clients and the public in general. Sir Thomas Lund in 1960 (The Guide to Professional Conduct 1960) stated that:

“You may well ask for a short summary of a solicitor’s duties. I suppose really it is the old principle of “Do unto others as you would they should do unto you.” If I had to advise very briefly, the young solicitor on the guiding principles of conduct when he comes into the profession, I think I should say to him that it is clear that only the very highest conduct is consistent with membership of this profession of ours. Your clients’ interests are - paramount - that seems to be clear - except that you should never do, or agree to do, anything dishonest or dishonourable, even in a client’s interests or even under pressure from your best and most valuable client; you had better lose him. Though you may be prevented by the rules affecting your client’s privilege from disclosing something dishonourable which you feel you ought to disclose, you should refuse to take any personal part in anything which you yourself think is dishonourable; you should withdraw and cease to act for that client, even if he presses you to go on. So far as you possibly can, consistently with not actually letting your client down, you should be completely frank in all your dealings with the Court, with your brother solicitors and with the members of the public generally. Finally, I think I would say that where your word has been pledged, either by yourself or by a member of your staff, you should honour that word even at financial cost to yourself, because his reputation is the greatest asset a solicitor can have, and when you damage your reputation, you damage the reputation of the whole body of this very ancient and honourable profession of ours.” © Association of Costs Lawyers Training 2020 35 For those that are regulated, like costs lawyers, there is a restriction on their right to practice based on evidence of their qualification – physiotherapists and social workers are both examples of regulated professions. With unregulated professions there is no restriction on a right to practice – these include economists and archaeologists. This does not mean they are not qualified, just that they do not need to be registered with a regulatory body in order to do their job.

Individuals practicing a regulated profession need to be able to show evidence of registration with the appropriate regulatory body. Those in unregulated professions demonstrate their competence through evidence of experience or regulated education and training. Recognition is also given to those holding a ‘protected title’ in an unregulated profession; you need to demonstrate the right to use such a title.

The legal profession is a regulated profession. Authorised persons become authorised by the very nature of the fact they are regulated. Once regulated, authorised persons are able to undertake reserved legal activities. The values (or principles) of the legal profession in England are now clearly outlined in section 3 of the Legal Services Act 2007:

þ authorised persons should act with independence and integrity; þ authorised persons should maintain proper standards of work; þ authorised persons should act in the best interests of their clients; þ persons who exercise before any court a right of audience, or conduct litigation in relation to proceedings in any court, by virtue of being authorised persons should comply with their duty to the court to act with independence in the interests of justice; and þ that the affairs of clients should be kept confidential.

Historically, there were similar principles outlined in rule 1 of the (now amended) Solicitors Practice Rules 1990. One of the problems with the old rules and principles of professional conduct was that there was no clear statement on the basic principles which underlay ethical principles; now they are easy to understand for lay people. Additionally, these principles were found in each branch of the professions own rules and regulations and there appeared to be no overreaching rules to which all lawyers must comply.

3. Ethics in the legal profession

As we have seen, many philosophers have written about morality and law, argued whether the development of the law has been influenced by morals, and whether it is moral to enforce morals. Some philosophers say that words, morals and ethics are interchangeable. Ethics represent a system of morality comprised of norms of behaviour. Lord Delvin, in the Enforcement of Morals (1965), expressed the view that the primary function of the law was to maintain public morality.

Aristotle and Plato wrote a lot about ethics. However, it is important to remember that Aristotle, for example, stated that it is the function of slaves to obey their masters, and that women should naturally obey men. So it is fair to say that philosophy and ethics takes place within a particular society and reflects its values.

There are two relatively modern ethics theories:

The main idea of utilitarianism can be represented by the phrase; the only purpose for which power can be exercised over any member of a civilised community against his will is to prevent harm to others. The Latin phrase Fiat justitia ruat caelum (let justice be done, though the heavens fall) represents the theory of Deontology and means that justice must be realised regardless of the consequences. There is a long history of ethics within the profession and many academics have published papers and books on this subject area. However there is broad agreement on the below definition of ethics within the legal professions:

‘The arrangements made by society for the delivery of legal services and in particular of the legal profession, its structures, roles and responsibilities (sometimes termed as macro legal ethics); the roles and responsibilities of individual lawyers in the provision of legal services together with the ethical implications of those roles (sometimes termed micro legal ethics); and the wider social context, especially the philosophical, economic and sociological context in which lawyers work with a view to identifying and, if possible, resolving the ethical difficulties which face professional lawyers so to enable them to view legal practice as morally defensible and therefore personally satisfying.’

R. O'Dair Legal Ethics: Text and Materials (London: Butterworths, 2001) p.5.

The law society have forwarded a definition as:

‘ the relationship between morality and Law, the values underpinning the legal system, and the regulation of the legal services market, including the institutions, professional roles and ethics of the judiciary and legal professions.’

Ethics have governed the manner in which the legal profession operate since the unwritten codes of conduct existed. Over time, with the development of society and the professions and the legal system, ethics still play a pivotal role in informing the rules and principles that govern the conduct of lawyers today. Spanning from the duty to the client, avoiding bias, conflicts of interests, confidentiality and a duty to the court. Members of the legal profession have an overarching duty to work contribute and play a part in the administration of justice with competency and integrity. It is a broad duty placed upon all lawyers generally and within the lawyer client relationship.

4. Cost Lawyers

The Legal Services Act 2007 saw the formation of a new organisation called the Legal Services Board (LSB) who are the overarching regulators of the profession, responsible for the regulations of the approved regulators and independent regulatory bodies. The independent regulatory body for costs lawyers is the Costs Lawyer Standards Board (CLSB). It publishes and enforces the code of conduct, practise rules, disciplinary rules and procedures. It is ultimately responsible for the costs lawyer profession. There are 7 principles under the Costs Lawyer Code of Conduct which have the effect of transferring the values and principles enshrined in section 3 of the Legal Services Act 2007 into the code of conduct that governs a costs lawyer’s behaviour. The principles are as follows:

© Association of Costs Lawyers Training 2020 37 þ Principle 1: Act with integrity and professionalism. þ Principle 2: Comply with your duty to the court in the administration of justice. þ Principle 3: Act in the best interests of your client. þ Principle 4: Provide a good quality of work and service to each client. þ Principle 5: Deal with the regulators and Legal Ombudsman in an open and co- operative way. þ Principle 6: Treat everyone with dignity and respect. þ Principle 7: Keep your work on behalf of your clients confidential.

In summary, costs lawyers are a profession in their own right but are part of a much larger profession that deliver legal services. Costs lawyers are required to maintain the integrity and comply with ethical standards applicable to the wider legal profession.

1. Introduction

The Legal Services Act 2007 saw the formation of a new organisation called the Legal Services Board (LSB). The statute authorised the LSB to reform and modernise the legal service market by placing the interests of the consumer at the heart of the system and oversee the regulation of lawyers across England and Wales through authorised regulating bodies.

The LSB’s role is to oversee the regulation of legal activities in England and Wales. The LSB has 8 regulatory objectives:

1 Protecting and promoting the public interest. 2 Supporting the constitutional principles of the rule of law. 3 Improving access to justice. 4 Protecting and promoting the interest of consumers. 5 Promoting competition in the provision of services. 6 Encouraging an independent, strong, diverse and effective legal Profession. 7 Increasing public understanding of the citizen’s legal rights and duties. 8 Promoting and maintaining adherence (by authorised persons) to the professional principles.

In achieving the above 8 objectives the LSB supervises the work of the various approved regulators, which are permitted by law to regulate the supply of legal services. Schedule 4 of the Legal Services Act 2007 provides a list of approved regulators, as defined under section 20 of the Legal Services Act 2007. Since the Legal Services Act 2007 was passed, however, each of these bodies has been required to separate its representative and regulatory functions.

Approved Regulator Independent Profession (Representative Reserved legal activities regulated Regulatory body Body)

Solicitors Law Society Solicitors þ The exercise of right of audience Regulation þ The conduct of litigation

Authority þ Reserved instrument activities þ Probate activities þ The administration of oaths

Barristers Bar Council Bar Standards þ The exercise of right of audience

Board þ The conduct of litigation þ Reserved instrument activities þ Probate activities þ The administration of oaths

Legal Chartered Institute of ILEX Professional þ The exercise of right of audience

Executives Legal Executives Standards Limited þ The conduct of litigation þ The administration of oaths

Licensed Council for Licensed þ Reserved instrument activities Conveyancers Conveyancers (regulatory body for þ Probate activities Licensed Conveyancers, no representative body) © Association of Costs Lawyers Training 2020 39 þ The administration of oaths

Patent Chartered Institute of Intellectual þ The exercise of right of audience Attorneys Patent Property þ The conduct of litigation Attorneys(CIPA) Regulation Board þ Reserved instrument activities Trade Mark Institute of Trade þ The administration of oaths Attorneys Mark (Regulatory body Attorneys (ITMA) for both CIPA and ITMA) Costs Lawyers Association of Costs Costs Lawyer þ The exercise of right of audience

Lawyers Standards Board þ The conduct of litigation þ The administration of oaths

Notaries Master of the Faculties (regulatory body þ Reserved instrument activities for Notaries, no representative body) þ Probate activities þ Notarial Activities þ The administration of oaths

The Notaries Society, the Society of Scrivener Notaries and the Society of Licensed Conveyancers are not part of the Legal Services Act 2007 as approved regulators and do not fall under the LSB remit.

2. Regulatory Bodies

Regulatory bodies exercise a regulatory function, that is:

þ imposing requirements; þ restrictions and conditions; þ setting standards in relation to any activity; and þ securing compliance, or enforcement.

However, within these self-regulating professional bodies there is a clear separation between the two functions.

The approved regulators of the legal service market are listed in paragraph 1 of Schedule 4 to the Legal Services Act 2007 or designated as an approved regulator by an order under paragraph 17 of that Schedule. You will note that ACL is named as the approved regulator for costs lawyers. As of 31 October 2011, the ACL delegated the responsibility for regulation of its members to the Costs Lawyer Standards Board (CLSB). The ACL had to do this because the Legal Services Act 2007 provides that the trade union and representative functions of a professional body are to be independent of the regulatory functions. Thus, the ACL created the CLSB, which it owns but which is otherwise wholly independent. Other professional bodies did the same; however many did it much earlier (such as the Bar Council creating the Bar Standards Board). The work of the CLSB includes:

þ the education and training requirements that need to be met before a trainee costs; þ lawyers can apply for a practising certificate as a costs lawyer; þ the continuing professional development required of costs lawyers; þ the professional conduct of costs lawyers when they are practising; and © Association of Costs Lawyers Training 2020 40 þ the disciplinary mechanisms for any costs lawyer who might fall short of the professional standard expected of them.

In order to do this, they publish a number of rules, regulations and guidance notes. The rules and regulations are updated periodically and you should familarise yourself with them.

3. Representative Bodies

A representative body is an organisational body that has a common goal that all the members believe in. The table below sets out the different functions of regulatory and representative bodies:

Regulatory Body Association/Professional Body þ Acts in the interest of the public and þ Acts in the interest of the Profession. has processes open and þ Independent of the regulatory body. accountable to the public and the þ Promotes and supports the profession. practitioners and the profession. þ Independent of professional bodies. þ A membership organisation of þ Promotes the process of regulation. professional practitioners. þ Administers a single register of þ Ensures members meet its own practitioners who meet agreed standards which are at least those criteria. required by the regulatory body but þ Works with the profession to agree may exceed them. and oversee minimum standards. þ Many professional bodies provide þ Sets requirements for generic information on insurance for continuing professional development members. (CPD). þ Ensures members meet requirements þ Publishes codes of conduct and/or for CPD. ethics. þ Have codes for members, which þ Has a ‘council’ or governing body would be at least that required by the which includes lay and professional regulatory body. representatives. þ May also have a council or governing þ Has published complaints & body with lay representation. disciplinary procedures. þ May also have complaints & þ Provides information to the public disciplinary procedures. about the therapy and what to þ If necessary, will liaise between expect. practitioners and the regulatory body þ Liaises with government and other in the case of a complaint. organisations when required. þ Provide information to the public. þ Operates Fitness to Practise þ Ensures courses cover the core procedures to remove practitioners curriculum. from the register. þ Some professional bodies are linked to specific schools so would run and develop courses. Others hold lists of suitable schools. þ Professional bodies may also liaise with other organisations and government, but not as the ‘voice’ of the discipline. þ May operate their own Fitness to Practise procedures for their own membership.

The ACL is the representative body for costs lawyers – regulated legal professionals who specialise in the law relating to legal costs. The ACL promotes the interests of costs lawyers and lobbies on their behalf. It also provides education and training for its members and the wider legal profession. The Association of Law Costs Draftsmen (the “ALCD”) was founded in 1977 to promote the status and interests of the profession of law costs draftsmen (now costs lawyers) in England & Wales, ensuring the maintenance of the highest professional standards of its members.

ALCD was designated an Authorised Body for the purposes of sections 27 & 28 of the Courts and Legal Services Act 1990 under The Association of Law Costs Draftsmen Order 2006 (SI 2006 no 3333) which came into effect on 1 January 2007. The ALCD changed its name to the Association of Costs Lawyers on 1 January 2011.

4. Outcome Focused Regulation

The global financial crisis, which began in mid 2007, prompted a number of fundamental questions about the regulation of the financial service sector. The appropriateness of principles-based regulation was called in to question. UK regulators, including legal regulators, have since focused their efforts in ensuring adherence to judgment-based regulation, centered around outcomes, not principles.

Outcome-focused regulation is designed to create a more robust and efficient regulatory system. Instead of focusing on failure to comply with detailed rules, this regulation shifts the focus to what firms are achieving in terms of outcomes or objectives. It is because these objectives allow an element of discretion that the phase of transformation was said to have ‘deregulated’ the legal profession. That being said, it has long been recognised that prescriptive definitions or rules may result in substantive justice not being achieved.

The implementation of such outcome focused frameworks saw greater responsibility put on the profession in terms of compliance and risk management. By design, this approach moved from what may have been seen as a “tick box” approach to regulation and placed the onus on the firm or professional to achieve regulatory targets instead of simply meeting administrative requirements.

5. The CLSB

The CLSB was set up in 2011 to enable the ACL to separate its representative role from its regulatory role in accordance with the Legal Services Act 2007. They publish and enforce the code of conduct, practice rules, disciplinary rules and procedures. The CLSB also governs the training and CPD rules. The relationship between the ACL and the CLSB is governed by a memorandum of understanding and an operational protocol. In instances where differences between the two cannot be resolved they may seek guidance from the Legal Services Board.

The current Costs Lawyers’ Code of Conduct was made pursuant to the Legal Services Act 2007 and sets out the principles to be followed by costs lawyers. Furthermore, it sets out their authorised rights and works in conjunction with prevailing legislation in such a way as to regulate what costs lawyers can and cannot do under their authorisation. Under section © Association of Costs Lawyers Training 2020 42 176(1) of the Legal Services Act 2007, costs lawyers must comply with the Code. Breach of the Code may result in disciplinary proceedings being brought against them by the CLSB.

There are 7 principles under the Code of Conduct which have the effect of transferring the values and principles enshrined in section 3 of the Legal Services Act 2007 into the Code of Conduct that governs a costs lawyer’s behaviour. The principles are as follows:

Principle 1 Act with integrity and professionalism. Principle 2 Comply with your duty to the court in the administration of justice. Principle 3 Act in the best interests of your client. Principle 4 Provide a good quality of work and service to each client. Principle 5 Deal with the regulators and Legal Ombudsman in an open and co-operative way. Principle 6 Treat everyone with dignity and respect. Principle 7 Keep your work on behalf of your clients confidential.

6. The SRA

The Solicitors Regulation Authority (SRA) implemented outcome-focused regulation on 6 October 2011 when they fundamentally transformed their approach to regulation and the SRA Handbook was introduced. So, the SRA started to look at what it required firms to achieve by way of outcomes rather than be ensuring adherence to strict rules. The SRA Handbook set out the outcomes (standards and requirements) that individual lawyers and firms were expected to achieve and observe for the benefit of clients and in the general public interest.

The SRA’s rules are changed regularly. Each rule change is subject to approval by the LSB. The SRA has since replaced the SRA Handbook with their Standards and Regulations, which came into force on 25 November 2019. The SRA Handbook went through 21 versions between its introduction in October 2011 and November 2019, when it was replaced by the Standards and Regulations. The new rules are shorter and less prescriptive. The SRA believes that this will offer solicitors greater flexibility. As a result, there will need to be a greater use of professional judgement to ensure compliance.

6.1 The SRA Standards and Regulations

In November 2015, the SRA published its position paper “Looking to the Future and it committed to a phased review of the SRA Handbook and its overall approach to regulation. Also, at this time, the SRA proposed a new regulatory model with two distinct strands:

To regulate individuals through education and entry standards, Strand 1 on-going competence and ethical behaviours. To regulate firms, with emphasis being on their systems and Strand 2 controls.

In its June 2016 consultation document “Looking to the future – flexibility and public protection”, the SRA accepted that the 2011 Code did not reflect the variety of modern solicitor practice and that the SRA was having to develop workarounds to the regulatory arrangements to reflect the increasingly diverse range of business models. The structure of the new standards and regulations seeks to resolve this weakness by making the approach

© Association of Costs Lawyers Training 2020 43 of the SRA more explicit which is to focus both on the behaviour of individuals and the systems, policies and culture of firms. There are now two distinct codes of conduct:

One for individuals SRA Code of Conduct for Solicitors, RELs and RFLs. One for firms SRA Code of Conduct for Firms.

The Code for Individuals describes the standards of professionalism expected of individuals authorised by the SRA. The Code for Firms describes the expected standards and business controls for SRA authorised firms.

6.2 Costs Lawyers as employees or managers of SRA regulated firms

Section 207 of the Legal Services Act 2007 provides definitions which include the following:

Person Includes a body of persons (corporate or unincorporate). Reserved legal activities Services provided by a person which consist of or include reserved legal activities carried on by, or on behalf of, that person. The services referred to Are any services provided by a person who is an authorised person in relation to an activity which is a reserved legal activity, and any other services provided by a person which consist of or include a legal activity carried on by, or on behalf, of that person.

As employees or managers of SRA regulated firms, Costs Lawyers need to comply with the SRA’s Standards and Regulations. These include, in particular, the SRA Principles and the SRA Code of Conduct for Firms.

Rule 8.1 of the SRA Code of Conduct for Firms means that managers are jointly and severally liable for any breaches by the firm. The introduction of the SRA Code of Conduct for Firms makes it clear that a serious failure to meet their standards or a serious breach of their regulatory requirements may lead to the SRA taking regulatory action against the firm itself as an entity, or its managers or compliance officers, who each have responsibilities for ensuring that the standards and requirements are met. It goes on to say that the SRA may also take action against employees working within the firm for any breaches for which they are responsible.

Costs Lawyers working in SRA regulated firms should therefore familiarise themselves with the Code of Conduct for Firms. Rule 2.1 of the SRA Code of Conduct for Firms requires firms to have effective governance structures, arrangements, systems and controls in place that ensure their managers and employees comply with the SRA's regulatory arrangements which apply to them which means firms should be in a position to provide appropriate training as part of their obligations to ensure that their employees comply with the rules.

Costs Lawyers as employees or managers of SRA regulated firms will be dual regulated. They will remain personally regulated by the CLSB and will be required to comply with the Costs Lawyer Handbook as well as the SRA’s Standards and Regulations that apply to them as an employee. Section 52(4) of the Legal Services Act 2007 provides that in the event of a conflict between the CLSB’s rules that apply to Costs Lawyers as an individual practitioner and the SRA’s rules that apply to them as an employee, the rules of the regulator © Association of Costs Lawyers Training 2020 44 authorising the firm (i.e. the SRA) prevail over the rules of the regulator authorising the person (i.e. the CLSB).

In practice it is unlikely that there will be a conflict between the rules. The core principles and Codes of both regulators overlap to a considerable degree.

6.3 Further relevance of the SRA Codes of Conduct to Costs Lawyers when undertaking their role

Costs lawyers are instructed to deal with a wide range of issues arising from legal costs by either solicitor clients or lay clients. Both sets of instructions require a detailed understanding of the regulations that govern solicitors because the right to recover costs may be dependent on conduct. Finally, in all cases, the ability to recover costs is dependent on the existence of a retainer between solicitors and their clients, unless the costs lawyer is acting for a litigant in person.

It is of benefit to form a basic understanding of retainers, a retainer is the contract for legal services. Historic guidance to the Solicitors Code of Conduct defined a retainer as:

“…a contractual relationship and subject to legal considerations”.

This was found in the guidance to Rule 2 Solicitors Regulation Authority Code of Conduct 2007. This definition is not included in the new codes of conduct or the SRA Glossary but remains valid and important. The case J H Milner & Son v Percy Bilton Ltd (1966) 1 WLR 1985 is authority that the retainer is fundamental to the right to recover costs. Without a valid retainer the solicitor is not able to recover costs from his client. Where there is no retainer there is no entitlement to charge because there is no business relationship. The retainer is a contract for services by the solicitor. The usual rules of contract apply and as a general rule it isn’t always necessary for the retainer to be in writing. The case of Groom v. Crocker (1939) 1 QB 194 is authority that the retainer will be presumed if the conduct of the two parties shows that the relationship of solicitor and client has in fact been established between them. In Parrott v Etchells (1839) 3 J.P. 771, the leaving of files at the office of a solicitor was sufficient evidence that there was a retainer.

It is advisable that the retainer between a solicitor and his own client is in writing in order for a solicitor to evidence that rule 8.6 of the SRA Code of Conduct for Solicitors, RELs and RFLs is complied with. This rule requires that SRA regulated lawyers give clients information in a way they can understand so that they are in a position to make informed decisions about the services they need, how their matter will be handled and the options available to them. Additionally, a written retainer will also help evidence that rule 8.7 of the SRA Code of Conduct for Solicitors, RELs and RFLs has been complied with. Rule 8.7 of the SRA Code of Conduct for Solicitors, RELs and RFLs requires that SRA regulated lawyers ensure that clients receive the best possible information about how their matter will be priced and, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of the matter and any costs incurred.

The failure by solicitors to properly set out their fees in writing (or historically fail to comply with the terms of paragraph 2.03 of the Solicitors Code of Conduct 2007), has led to difficulties being encountered on the detailed assessment of costs. For example, when the solicitor has not been able to prove that a reasonable estimate of the prospective costs © Association of Costs Lawyers Training 2020 45 was given to the client when instructions were given or that information has not been updated as the matter progressed. It should be noted that the Law Society’s Solicitors’ Costs Information and Client Care Code 1999 did not require, but merely recommended, that costs information should be in writing. Also, the case of Moy v. Pettman Smith (a Firm) (2002) EWCA Civ 872 confirms that if the contract of retainer is not rendered unenforceable by the failure to give an estimate but the judge must take any failure into account in assessing costs. Where the terms of the retainer are disputed, the courts prefer the client’s version. Where the solicitor has given an estimate of costs to his client but failed to revise it during the course of proceedings, the solicitor is likely to have some of his costs disallowed.

1. Introduction

Legal services regulation has seen unparalleled reforms and modernisation since the Legal Services Act 2007. There have been reforms to:

þ remove barriers to market access; þ reduce regulatory burdens; and þ promote consumers’ interests.

The Legal Services Act 2007 allowed regulators to take steps to open up the market, providing opportunities for the development of new ways of delivering legal services. There are currently five authorities with power to license Alternative Business Structures (ABS), which are business models that permit non-lawyer investment in and ownership and management of law firms for the first time. This is said to be stimulating growth and allowing both existing and new legal service providers to innovate, theoretically offering consumers greater choice and wider access. This handout will explore both the new alternative structures and the concept of the regulated entity.

2. The Regulatory Framework

Regulation of legal services in England and Wales is predominantly provider based. It is also built around the list of reserved activities set out in the Legal Services Act 2007. Only persons who are authorised by an approved regulator that has been designated to regulate that activity under the provisions of the Legal Services Act 2007 may deliver a reserved legal activity. These reserved legal activities are detailed in section 12 of the Legal Services Act 2007. This brings the authorised person, defined in section 18 of the Legal Services Act 2007, within the scope of legal services specific regulation for the reserved activities that he undertakes. Certain professions, for example solicitors, have regulated all legal services that regulated individuals perform.

There are currently only six areas of legal activity that parliament has determined must be reserved. These six reserved activities are listed at section 12 and schedule 2 of the Legal Services Act 2007. The reserved activities are:

þ the exercise of rights of audience (i.e. appearing as an advocate before a court); þ the conduct of litigation (i.e. managing a case through its court processes); þ reserved instrument activities (i.e. dealing with the transfer of land or property under specific legal provisions); þ probate activities (i.e. handling probate matters for clients); þ notarial activities (i.e. work governed by the Public Notaries Act 1801); and þ the administration of oaths (i.e. taking oaths, swearing affidavits etc).

The majority of legal activities are not listed as “reserved activities” and are not explicitly required by statute to be brought within the scope of legal services specific regulation. This includes the services that most people use and understand to be legal services and might instinctively expect to fall within the regulatory net (for example, general legal advice, transactional corporate advice, will-writing and employment advice). In practice, these

© Association of Costs Lawyers Training 2020 47 activities can be provided by anybody who wishes to do so, irrespective of qualifications or expertise. In doing so, the general competition and consumer protection framework applies but not the additional requirements, protections, constraints and costs of legal services specific regulation.

Traditionally, most legal activities are regulated because those individuals that undertake such work also undertake a reserved activity; or, because they wish to maintain a protected title. For solicitors and barristers, the conditions of professional membership extends the regulatory rule book to all of the work that they undertake, whether or not it has been determined an area in need of particular protections. In other words, they still become subject to legal services specific regulation when undertaking legal activities that have not been reserved. This is not the case for costs lawyers, the CLSB only regulate the undertaking of reserved legal activities.

There are also ownership and management restrictions, such as the Solicitors Regulation Authority’s separate business rule that provides that firms are not able to conduct certain non-reserved legal activities through a separate unregulated business. This stops solicitors from taking advantage of the limitations of the business.

Today, in accordance with section 18 of the Legal Services Act 2007, the reservation of these activities may be to an individual or an entity. Although the approved regulators currently take reservation of an authorised person to mean reservation to individual lawyers such as solicitors and barristers, this is not a requirement of the Legal Services Act 2007. This means that there is considerable scope for applying regulatory arrangements in different ways and for amending existing requirements. Under section 18(1)(b) of the Legal Services Act 2007, an authorised person includes a licensable body which, by virtue of such a licence, is authorised to carry on the relevant activity by a licensing authority in relation to the reserved legal activity. Therefore, an entity is a business that provides legal services to the public and is regulated by an approved regulator to provide those legal services.

An entity does not have to have a separate legal personality, i.e it does not have to be incorporated and may be, for example, a partnership. An entity therefore includes:

A lawyer-owned entity is a business wholly owned and managed Lawyer-owned entities by regulated persons i.e. barristers, solicitors, CILEx etc. Alternative Business An ABS is an entity which can be wholly owned or managed by a Structure (ABS) non-lawyer or another company. An LDP was a form of ABS and therefore a regulated entity that Legal Disciplinary supplied legal services and was managed primarily by lawyers, Practice (LDP) but it could have a percentage of non-lawyer ownership. A Multi-Disciplinary An MDP is a licensed body that combines the delivery of reserved Business legal activities with other legal and other professional services.

3. Lawyer Owned Entities

3.1 Solicitor’s Regulation Authority (SRA)

A sole practice run by a solicitor is a lawyer owned entity, as is a partnership or LLP. It is important to remember that a solicitor is a lawyer who has been admitted as a solicitor by the SRA and whose name appears on the roll of solicitors. The roll is the list of solicitors of

© Association of Costs Lawyers Training 2020 48 the Senior Courts kept by the Law Society (under section 6 of the Solicitors Act 1974), although this function is now delegated to the SRA. A solicitor’s sole practice would be known as a recognised body, which is a body recognised by the SRA. For clarity, a recognised sole practice is a solicitor or REL (a Registered European Lawyer; a lawyer from a European state who registers with the SRA to practise law in England and Wales) authorised by the SRA.

3.2 Bar Standards Board (BSB)

Historically, the BSB regulated individual practising barristers. It should be noted that traditional chambers aren’t an entity because they are not a business, nor were they regulated. Instead, the barristers who work/worked within chambers are/were individually regulated to provide legal services. However, since April 2015, the BSB have been regulating authorised bodies. A BSB authorised body was previously known as an "entity" by the BSB. These are bodies fully owned and managed by authorised individuals, i.e. lawyers with current practising certificates. In combination with direct access and the ability to now conduct litigation, this is significantly increasing the range of services that the Bar can provide for clients.

Until January 2014, authorisation to conduct litigation had been limited to employed barristers. The BSB introduced safeguards to manage anticipated risks from this new area of work, making the necessary changes to its own systems and practices to regulate this area effectively allowing all barristers to apply to the BSB for an extension to their practising certificate authorising them to conduct litigation (barristers are not automatically authorised to conduct litigation).

3.3 CILEX Regulation

Since the enactment of the Legal Services Act 2007, CILEx Regulation has been designated as an approved regulator for:

þ conduct of litigation, þ reserved instrument; and þ probate activities.

This is in addition to powers to regulate the exercise of rights of audience and the administration of oaths. CILEx regulation refers to these as practising rights and these are not acquired simply by achieving fellowship status. By virtue of qualifying as a Fellow one can automatically conduct the reserved activity of Administering Oaths. One can also complete a qualification process to gain rights of audience. For the additional rights Fellows must apply for these additional rights having demonstrated competence.

CILEx Regulation now regulates what it calls authorised entities and, whilst a firm may also provide other non-reserved legal services which do not require authorisation, the firm will still be regulated by them for all legal services it provides.

4. Alternative Business Structures (ABS)

The Legal Services Act 2007 allows for the creation of Alternative Business Structures (ABS) for the provision of legal and advice services. The provisions in relation to alternative © Association of Costs Lawyers Training 2020 49 business structures are found in Part 5 of the Legal Services Act 2007. The powers are permissive. ABS allows firms to set up legal partnerships or businesses with non-lawyer managers or those with an interest, defined as shares or control over voting rights. Where non-lawyers are managers of, or have an interest in, an ABS, it must become a licensed body (section 72 of the Legal Services Act 2007). This means it must be licensed and regulated by a licensing authority under the Legal Services Act 2007. An ABS can therefore be defined as a firm where a non-lawyer:

þ is a manager of the firm; or þ has an ownership-type interest in the firm.

4.1 Licensing Authorities

When the Legal Services Act 2007 was first enacted, the only licensing authority was the Legal Services Board (LSB). Section 73(1) of the Legal Services Act 2007 defines a licensing authority to include the LSB or an approved regulator which is designated as a licensing authority under Part 1 of Schedule 10 of the Legal Services Act 2007 and whose licensing rules are approved for the purposes of the Legal Services Act 2007. By virtue of section 83(1) of the Legal Services Act 2007, the LSB was obliged to make suitable licensing rules in relation to authorising other licensing bodies. The Legal Services Board remains a licensing authority but of last resort.

Section 85(3) of the Legal Services Act 2007 enables a licensing authority, other than the Legal Services Board, to grant licences that authorise the licensed body to carry on activities which are reserved legal activities only if the licensing authority has the power in relation to the reserved legal activities in question. The following are licensing authorities:

Council for Licensed Licensing ABS for exercise of reserved instrument Conveyancers activities, probate activities and administration of oaths. Institute of Chartered Accountants Licensing ABS for probate activities. in England and Wales Licensing ABS for exercise of right of audience, conduct Intellectual Property Regulation of litigation, reserved instrument activities and Board administration of oaths. Licensing ABS for exercise of right of audience, conduct Solicitors Regulation Authority of litigation, reserved instrument activities, probate activities and administration of oaths. Licensing ABS for the exercise of a right of audience, the Bar Standards Board conduct of litigation, reserved instrument activities, probate activities and the administration of oaths.

The Institute of Chartered Accountants in England and Wales was the first new approved regulator under the Legal Services Act 2007. It was designated as an approved regulator and a licensing authority for probate in 2014. This means Institute of Chartered Accountants in England and Wales regulated individuals and firms could apply to provide this reserved legal activity to consumers. This development has the potential to increase choice, reduce costs and to enable firms to offer a more integrated service to consumers who, in non- contentious cases, will be able to use a single adviser.

© Association of Costs Lawyers Training 2020 50 In accordance with section 87(1) of the Legal Services Act 2007, each licensing authority must keep a register containing the names and places of business of all bodies which hold or have held licences granted by the licensing authority.

4.2 Licensed Bodies

Section 71(1) of the Legal Services Act 2007 provides that the provisions of part 5 of the Act have effect for the purpose of regulating the carrying on of reserved legal activities and other activities by licensed bodies. In other words, it is this part of the Act that regulates ABS and the undertaking of reserved legal activities by those businesses. Under section 71(2) of the Legal Services Act 2007 a “licensed body” is a body which holds a licence in force under part 5 of the Act, i.e. a license granted by a licensing authority as permitted by section 85 of the Legal Services Act 2007. Section 72 of the Legal Services Act 2007 sets out what a licensable body is; it includes bodies where unauthorised persons are managers or have an interest in the body.

Section 73(1)(b) of the Legal Services Act 2007 sets out that licensing authorities are approved regulators which have been designated as a licensing authority (under Part 1 of schedule 10 of the Legal Services Act 2007) and whose licensing rules have been approved.

4.3 Becoming an ABS

The ABS regime is facilitative. There is no obligation for a firm to become an ABS, although there may be some pressure from competitors who might influence whether a firm decides to become one. Section 84(1) of the Legal Services Act 2007 requires a licensing authority to determine any applications for a licence which is made to it. Licensing authorities may not grant an application for a licence unless it is satisfied, that if the licence is granted, the applicant will comply with its licensing rules (section 84(3) of the Legal Services Act 2007).

Under section 84(4) of the Legal Services Act 2007, if an application is granted, the licence must be issued as soon as reasonably practicable and, by virtue of section 84(5) of the Legal Services Act 2007, it will take effect from the date on which it is issued. Section 85 of the Legal Services Act 2007 requires that any license specifies:

þ the activities which are reserved legal activities and which the licensed body is authorised to carry on by virtue of the licence; and þ any conditions subject to which the licence is granted.

A firm:

þ must have at least one "manager" who is authorised to provide the reserved legal activity delivered by the ABS; and þ must have at least one non-lawyer "manager" or owner.

The Legal Services Act 2007 requires all ABS to have a Head of Legal Practice (known as the HOLP) and a Head of Finance and Administration (known as the HOFA). The HOLP must be a lawyer and, by virtue of section 91 of the Legal Services Act 2007, is responsible for ensuring compliance with the terms of the ABS' license and for reporting to the licensing authority any failure to comply with the terms of the license. The duties of the HOFA are © Association of Costs Lawyers Training 2020 51 found in section 92 of the Legal Services Act 2007. The HOFA, who does not need to be a lawyer, is responsible for ensuring compliance with the licensing rules that relate to the treatment of money held by the ABS and for keeping accounts in respect of such money; and is also required to report any breach of those rules to the licensing authority.

4.3.1 SRA Framework

The SRA’s framework allows external investment. Non-lawyer owners with a 10% or more interest in an ABS will need to demonstrate their suitability. The ABS must appoint a Compliance Officer for Legal Practice (COLP) and a Compliance Officer for Financial and Administration (COFA). ABSs are entitled to provide all reserved legal services. A firm which has a small amount (less than 10%) of indirect non-lawyer involvement is not a licensable body and is required to apply for authorisation as a recognised body. The body is recognised as a low risk body.

4.3.2 Council for Licensed Conveyancers (CLC) Framework

Under the Council for Licensed Conveyancers’s (CLC) framework, an ABS can be partly owned by a non-authorised person and it can provide both legal and non-legal services. The ABS must appoint a Head of Legal Practice (HoLP) who is an authorised person in relation to reserved legal activities and a Head of Finance and Administration (HoFA). The CLC is able to licence and regulate ABSs providing conveyancing and probate services with a range of other non-legal services.

4.4 Ownership and duties

Section 89 and schedule 13 of the Legal Services Act 2007 contain provisions regarding the ownership of licensed bodies and the holding of certain interests in licensed bodies by non- authorised persons. Under the Legal Services Act 2007, the authorised body must approve the holding of a "material interest" by a "non-lawyer" in an ABS, as well as authorise the firm as a whole as being appropriate to provide legal services.

Paragraph 3 of schedule 13 sets out the tests for assessing at which point an interest in an ABS is "material" and therefore requires separate approval by the authorised body. As the LSA deals with a variety of potential business structures, the tests provide for a variety of methods for calculating at what point an interest becomes "material" in different types of firm and structure. By way of summary the tests look at:

þ who has ownership shares in the ABS firm; þ who has the power to make important decisions about how the law firm is run – "voting power" or "voting rights" in the ABS firm; þ who can exercise significant influence over the management of the ABS firm; þ whether any persons are "associated" with each other and may be acting together to influence how the ABS firm is run; and þ whether there is a parent business or there are parent businesses of the ABS firm (such as where the ABS firm is a wholly owned subsidiary of another company) and if so who owns, controls and influences the parent business or businesses.

In summary, the test for whether a non-authorised person (an individual or an entity) has a material interest in an ABS is whether that person: © Association of Costs Lawyers Training 2020 52 þ holds at least 10 per cent of the "shares" in either the ABS or a parent undertaking of the ABS (as above, "shares" can include ownership rights and responsibilities in unincorporated bodies such as partnerships); þ is entitled to exercise or control the exercise of: o 10 per cent or more of the "voting rights" in the ABS or the parent undertaking of the ABS (if decisions are taken at general meetings); or o "voting power" in the ABS or the parent undertaking of the ABS (which could include the right under the constitution to direct overall policy of the ABS or alter its constitution if there are no general meetings); þ is able to exercise significant influence over the management of the ABS by virtue of the person's "shares" or entitlement to exercise, or control the exercise, of voting rights in the ABS; or þ is able to exercise significant influence over the management of the parent undertaking of the ABS by virtue of the person's "shares" or entitlement to exercise, or control the exercise, of voting rights in the parent undertaking of the ABS.

Section 90 of the Legal Services Act 2007 details the duties of non-authorised persons. A non-authorised person who is an employee or manager of a licensed body (or a person who has an interest or an indirect interest or holds a material interest in a licensed body) must not do anything which causes or substantially contributes to a breach by:

þ the licensed body; or þ an employee or manager of the licensed body who is an authorised person in relation to an activity which is a reserved legal activity.

5. Legal Disciplinary Practices (LDP)

A Legal Disciplinary Practice (LDP) was a type of structure introduced on 31 March 2009 which allowed other “authorised persons” (e.g. Chartered legal executives, licensed conveyancers and barristers) and also non-lawyers, to become managers of a firm. They were a type of Alternative Business Structure (ABS) introduced by the Legal Services Act 2007 prior to the full ABS regulatory regime, which was introduced in October 2011.

LDPs were regulated by the Solicitors Regulation Authority (SRA) and the Council for Licensed Conveyancers (CLC). The composition, restrictions and services provided by an LDP were dependent on which of these organisations regulated the LDP. LDPs regulated by the SRA required at least one solicitor and up to 25% of managers could be non-lawyers provided the remaining 75% of managers were regulated lawyers. LDPs regulated by the CLC were referred to as Recognised Bodies. In a CLC Recognised Body the only restriction was that at least one of the managers had to be a licensed conveyancer. LDPs will all transfer to become ABS and can no longer be created.

6. Multi-Disciplinary Practices (MDP)

A multi-disciplinary practice (MDP) is a licensed body that combines the delivery of reserved legal activities with other legal and other professional services. “Reserved legal activity” and “legal activity” have the meaning prescribed by section 12 of the Legal Services Act 2007.

© Association of Costs Lawyers Training 2020 53 The SRA has changed its rules to avoid unnecessary and disproportionate regulation that was threatening to stifle the development of ABSs working as multi-disciplinary practices. The issue arose where non-reserved legal activity (such as tax advice by a chartered accountant or planning advice by a chartered surveyor) was provided as part of the exercise of a non-legal profession that is already regulated elsewhere. Now, when licensing an MDP, the SRA’s approach to regulation will be a flexible one, driven by the risks posed by the particular circumstances.

1. Introduction

The Legal Services Act 2007 requires all Alternative Business Structures (ABS) to have a Head of Legal Practice (known as the HOLP) and a Head of Finance and Administration (known as the HOFA). The HOLP must be a lawyer and, by virtue of section 91 of the Legal Services Act 2007, is responsible for ensuring compliance with the terms of the ABS' license and for reporting to the licensing authority any failure to comply with the terms of the license. The duties of the HOFA are found in section 92 of the Legal Services Act 2007. The HOFA, who does not need to be a lawyer, is responsible for ensuring compliance with the licensing rules that relate to the treatment of money held by the ABS and for keeping accounts in respect of such money; and is also required to report any breach of those rules to the licensing authority.

2. The SRAs Approach

The primary legislation and the SRA Handbook differ on the title of the Compliance Officer for Legal Practice (COLP) and Compliance Officer Finance and Administration (COFA) role, but this does not affect its substance. Paragraph 11 of Schedule 11 of the Legal Services Act 2007 requires all ABS to appoint a HOLP and HOFA, but there is no corresponding statutory requirement for solicitor’s practices. The SRA has changed the title from HOLP/HOFA to COLP/COFA and, under rule 8.5 of the SRA Authorisation Rules 2011, all SRA regulated firms were required to appoint a COLP/COFA. This requirement is now found in rule 8.1 of the SRA Authorisation of Firms Rules 2019.

All firms need to decide how the COLP and COFA operate within their business structure. The firm must have effective governance structures, arrangements, systems and controls to ensure its compliance officers are able to discharge their duties. This involves making sure systems are in place to allow the firm to operate effectively and in compliance with the SRA Standards and Regulations. In larger firms, or where the COLP and COFA are employees, as well as the right governance, the compliance officers must have clear reporting lines that empower them sufficiently to fulfil their roles. This is to make sure the COLP and COFA are able to implement changes or introduce new procedures to ensure compliance and good risk-management.

Irrespective of the size of the firm, it is up to the management of the firm to review the effectiveness of its COLP or COFA. If a sole practitioner is also the COLP and the COFA they need to review how well they are undertaking the roles.

3. Duties of the COLP

According to the SRA’s guidance Responsibilities of COLPs and COFAs 2019, the COLP must take all reasonable steps to:

1. Ensure compliance with the terms and conditions of the firm's authorisation. Ensure compliance by the firm and its managers, employees or interest 2. holders with the SRA’s regulatory arrangements which apply to them (except any obligations imposed under the Accounts Rules).

© Association of Costs Lawyers Training 2020 55 Ensure that the firm's managers and interest holders, and those they employ 3. or contract with, do not cause or substantially contribute to a breach of the regulatory arrangements. Ensure that a prompt report is made to the SRA of any serious breach of the 4. terms and conditions of the firm's authorisation, or the regulatory arrangements which apply to the firm, managers or employees.

COLPs should note that compliance with the conditions of the practice's licence includes compliance with all the SRA's regulatory arrangements including those within the SRA Standards and Regulations 2019. The SRA regulatory arrangements include all rules and regulations set by the SRA in relation to:

þ Authorisation þ Practice þ Conduct þ Discipline þ Qualification of persons carrying on legal activities þ Accounts þ Indemnification and compensation arrangements

With the exception of the Accounts Rules, COLPs must be in a position to be able to discharge these responsibilities.

3.1 General conditions of authorisation

General obligations are applied to all practices' upon authorisation by virtue of the SRA Authorisation of Firms Rules 2019. These include:

þ compliance with regulatory arrangements þ suitable arrangements for compliance þ management and control of a practice including approval of managers and owners þ provision of information to the SRA

The range of general obligations placed on a practice's authorisation means that a COLP's responsibilities relate to a broad range of requirements. COLPs should become familiar with the general obligations as well as any additional conditions placed on their practice's licence.

3.2 Compliance Systems

COLPs are responsible for ensuring systems are in place for compliance. COLPs may wish to consider systems that ensure:

þ undertakings are given appropriately, monitored and complied with þ appropriate checks are conducted on new staff or contractors þ regulatory deadlines are not missed, for example arranging indemnity cover, renewal of practising certificates and registrations, renewal of all lawyers' licences to practise and provision of regulatory information þ risks are appropriately monitored, reviewed and managed

© Association of Costs Lawyers Training 2020 56 þ issues of conduct are given appropriate weight in decisions the practice takes, whether on client matters or practice-based issues such as funding þ file reviews are conducted as required þ staff are developed and trained as necessary to carry out their role. þ necessary approvals of managers, owners and COLP/COFA are obtained þ arrangements are in place to deal with planned or unplanned staff absences þ compliance with General Data Protection Regulations

The existence of the COLP does not detract from the practice's and managers' responsibilities and their obligations to comply with the SRA's regulatory arrangements.

4. Duties of the COFA

According to the SRA’s guidance Responsibilities of COLPs and COFAs 2019, the COFA must take all reasonable steps to:

Ensure that the firm and its managers and employees comply with any 1. obligations imposed upon them under the SRA Accounts Rules Ensure that a prompt report is made to the SRA of any serious breach of the 2. Accounts Rules which apply.

To be in a position to discharge their role fully, the COFA's must consider whether they:

þ have access to all accounting records þ carry out regular checks on the accounting systems þ carry out file and ledger reviews þ ensure that the reporting accountant has prompt access to all the information needed to complete the accountant's report þ take steps to ensure that breaches of the SRA Accounts Rules are remedied promptly þ can report all breaches which are serious, either on their own or as part of a pattern, to the SRA þ can monitor, review and manage risks to compliance with the SRA Accounts Rules þ monitor constantly the financial stability and viability of the practice

5. Recording and reporting

Paragraph 2.2 of the SRA Code of Conduct for Firms 2019 places an obligation on firms to keep and maintain records to demonstrate compliance with its obligations.

The SRA therefore expect compliance officers to keep a record of all breaches that occur. These records are a key tool for firm’s in understanding the risks in their business and should help firms to identify where things have gone wrong and whether there are any systemic problems inherent to the firm's processes.

The SRA do not prescribe a method of recording breaches. When implementing recording procedures, firms should consider how best to do this in light of the fact they should be a tool in the firm's risk management strategy.

© Association of Costs Lawyers Training 2020 57 It is mandatory to report some matters to the SRA, these are called 'notifications' and are set out in Schedule 1 of the SRA’s Reporting and Notification Guidance 2019. Examples include those found in rule 7.6 of the SRA Code of Conduct for Solicitors, RELs and RFLs 2019 requires that the SRA are notified promptly if a lawyer is charged, convicted or cautioned with a criminal offence, become insolvent or become aware of any change to the information the SRA hold about a lawyer. For firms, there is an additional obligation, found in rules 3.6 and 3.8 of the SRA Code of Conduct for Firms 2019, to report any indicators of serious financial difficulty or an intention to stop trading.

Other matters will involve making a judgement about whether firms are obliged to report to the SRA. A summary of wider reporting obligations is set out in Schedule 2 of the SRA’s Reporting and Notification Guidance 2019.

6. Qualification and approval

The individual or individuals who are designated as COLP and COFA must be a manager or employee of the firm (unless they are already approved as compliance officer for a related firm and they are a manager or employee of that related firm). They must also consent to the designation and not be disqualified from acting as a compliance officer under section 99 of the Legal Services Act 2007. in the case of a COLP, they must also be an individual who is authorised to carry on reserved legal activities by the SRA or another approved regulator.

7. Liability for compliance breaches

The compliance officers sit at the heart of the firm’s regulatory arrangements. This does not mean the firm and its managers can abdicate responsibility for compliance simply by appointing compliance officers.

A serious failure to meet the SRA’s standards or a serious breach of its regulatory requirements may lead to the SRA taking regulatory action against the firm itself as an entity, or its managers or compliance officers, who each have responsibilities for ensuring the Standards and Regulations are met.

The SRA sees compliance officers as the formal points of contact for compliance in a practice. While the managers of a practice continue to bear the ultimate responsibility for a practice's compliance, compliance officers may also face regulatory action personally where they fail to meet their responsibilities. It is therfore important that compliance officers consider their personal liability and are satisfied that appropriate safeguards are in place. Individual compliance officers should reach an agreement with their practice as to the best way to protect against any potential liability. There are a number of potential options to consider, including:

þ an indemnity agreement; þ an amendment to your employment contract; þ an endorsement on the practice's professional indemnity insurance (PII) policy; or þ an insurance product (for example, Directors' and Officers' (D&O) cover or a specific COLP/COFA product).

© Association of Costs Lawyers Training 2020 58 Chapter 3 Learning outcomes After studying this chapter you should understand the following main points: þ the regulatory and representative body of costs lawyers; þ the distinction between a costs lawyer and a costs draftsman; and þ reserved legal activities;

3.1 Costs Lawyers

1. Introduction

The profession of costs lawyer has evolved from the previous area of practice as a law costs draftsman. The Association of Law Costs Draftsmen (ALCD) was formed in 1977 with objectives to promote the status and interest of the law costs draftsman and maintain professional standards. The ALCD was granted authorised body status by the Association of Law Costs Draftsmen Order 2006 (came into force on 1 January 2007). In January 2011 the ALCD started to trade as the Association of Costs Lawyers (ACL).

2. The Distinction from Costs Draftsmen

Following the Legal Services Act 2007, there is a clear distinction between an individual who calls himself a law costs draftsmen and one that is a costs lawyer. It should however be noted that costs lawyer is not a protected title. Both costs draftsmen and costs lawyers are specialist lawyers that deal with all aspects of legal costs but only regulated costs lawyers are authorised to undertake reserved legal activities (i.e. conduct litigation, appear in court and swear oaths) and are regulated. This means that as well as adhering to a code of conduct, costs lawyers have to undertake continuing professional development and carry professional indemnity insurance.

Sections 13 and 19 and paragraph 1(7) of schedule 3 of the Legal Services Act 2007 provide that, in certain circumstances, a person whose work includes assisting in the conduct of litigation is an exempt person for the purpose of exercising a right of audience. On the issue of “exempt person”, paragraph 1(7) of Schedule 3 states that the person is exempt if:

þ the person is an individual whose work includes assisting in the conduct of litigation; þ the person is assisting in the conduct of litigation - þ under instructions given (either generally or in relation to the proceedings) by an individual to whom sub-paragraph (8) applies, and þ under the supervision of that individual; and þ the proceedings are being heard in chambers in the High Court or a county court and are not reserved family proceedings.

Therefore, so long as a costs draftsman complies with all of the above, he may exercise a right of audience. So it would seem that the Legal Services Act 2007 was not designed to restrict the rights of existing costs professionals.

Regulation of costs lawyers moved from the Association of Costs Lawyers (ACL) to the Costs Lawyers Standards Board (CLSB) on 1 November 2011. There was a process of converting those who wished to from costs draftsmen into cost lawyers and those who didn’t convert were not authorised to perform the reserved legal activities (unless exempt) granted to costs lawyers under the Legal Services Act 2007. Further under the Legal Services Act 2007, costs lawyers have the same benefits and status of other legal professionals, which includes partnership in legal disciplinary practices.

© Association of Costs Lawyers Training 2020 60 Costs draftsmen remain ‘unregulated’ and sometimes ‘unqualified’ operating in the arena of costs and do not afford their client’s recourse to either the Legal Ombudsman or the Costs Lawyer Standards Board (CLSB). Solicitors who instruct costs draftsmen run the risk of employing the services of someone without the reassurances and protection afforded by a regulated professional, for example, up-to-date CPD and mandatory indemnity insurance. Solicitors who instruct costs draftsmen are left supervising them despite not being experts in the law of costs.

A costs lawyer must also ensure that he has adequate supervision of those he employs/those under his control. Delegating tasks to other people, no matter how qualified, does not negate the costs lawyer’s responsibilities. If the costs lawyer has branches (or a number of officers), it should be clear which office the costs lawyer works from and there should be proper and adequate supervision of the branches.

3. The CLSB

The independent regulatory body for costs lawyers is the Costs Lawyer Standard Board (CLSB), this authority is delegated by the Association of Costs Lawyers who are the approved regulator under section 20(5) of the Legal Services Act 2007. Approved regulators regulate those undertaking reserved legal activities which are found in section 12 and Sch 2 Legal Services Act 2007) i.e authorised persons (section 18 of the Legal Services Act 2007) which can include an entity. The CLSB do not currently regulate entities but have, historically, explored this as an opportunity.

The CLSB was set up in 2011 to enable the ACL to separate its representative role from its regulatory role in accordance with the Legal Services Act 2007. Their work includes:

þ regulating the education and training requirements that need to be met before a trainee costs lawyer can apply for a practicing certificate; þ the continuing professional development required of costs lawyers; þ regulating the professional conduct of costs lawyers when they are practising; and þ the disciplinary mechanisms for any costs lawyers who might fall short of the professional standard expected of them.

They publish and enforce the code of conduct, practice rules, disciplinary rules and procedures. The CLSB also governs the training and CPD rules. The relationship between the ACL and the CLSB is governed by a memorandum of understanding and an operational protocol. In instances where differences between the two cannot be resolved they may seek guidance from the Legal Services Board.

4. The Code of Conduct

The current Costs Lawyers’ Code of Conduct was made pursuant to the Legal Services Act 2007 and sets out the principles to be followed by costs lawyers. Furthermore, it sets out their authorised rights and works in conjunction with prevailing legislation in such a way as to regulate what costs lawyers can and cannot do under their authorisation. Under section 176(1) of the Legal Services Act 2007, costs lawyers must comply with the Code. Breach of the Code may result in disciplinary proceedings being brought against them by the CLSB.

© Association of Costs Lawyers Training 2020 61 The CLSB has formed the Conduct Committee which considers costs lawyer conduct matters, as defined in the Costs Lawyers Disciplinary Rules & Procedures. These rules will apply where a complaint about the conduct of a costs lawyer has been referred to the CLSB by a complainant or by the Legal Ombudsman.

Each principle will be discussed briefly below giving examples of conduct and applying the principles. It is important that you familiarise yourselves with each of the principles and remember that the examples cited below is not an exhaustive list of how and when these principles need to be borne in mind.

4.1 Principle 1: Act with integrity and professionalism.

A costs lawyer must not mislead anyone with whom they deal and must not provide misleading information when publicising their business. Costs Lawyers should not enter unlawful agreements or act in any way which might diminish the public trust in their profession.

4.2 Principle 2: Comply with your duty to the court in the administration of justice.

A costs lawyer should always remember that their first duty is to the court; although they should represent the best interests of their client to the extent of their ability, this does not mean that the court can be misled.

Principle 2.1 requires that costs lawyers must at all times act within the law. Principle 2.2 requires that costs lawyers do not knowingly or recklessly either mislead the court or allow the court to be misled. Principle 2.3 requires costs lawyers to comply with any court order which places an obligation on you and you must not be in contempt of court. Principle 2.4 requires costs lawyers to advise clients to comply with court orders made against them.

4.3 Principle 3: Act in the best interests of the client

CLSB/SRA Code of Conduct Principle 3.1 requires costs lawyers to act at all times to ensure the client’s interest is paramount except where this conflicts with your duties to the court or where otherwise permitted by law. You must decline to act if it would not be in the client’s best interests or if that client’s interests conflict directly with your own or with those of another client.

© Association of Costs Lawyers Training 2020 62 All costs lawyers are required by the code of conduct to have a complaints procedure in place and to advise all clients of this fact. If a complaint is notified to a costs lawyer he should, in the first instance, comply with his own complaints-handling procedure. Where appropriate, the complaint should also be reported to his professional indemnity insurer, even if in the end the complaint is not upheld.

When taking on new instructions, there is a duty on costs lawyers to provide advice to their clients at the outset of an estimate of their fees, which should be updated if it becomes inaccurate. Additionally, costs lawyers should also be aware of the potential for conflicts of interest, whether because they are sent instructions on a matter they have already advised the opponent on (unlikely in many instances, but may happen in some firms), or possibly because they have been asked for a second opinion of a fellow costs lawyer with whom they are well-acquainted. In such circumstances, the clients should be advised of the conflict immediately and prior to any work being undertaken.

Principle 3.6 of the Costs Lawyer Code of Conduct specifies costs lawyers must not accept client money save for disbursements and payment of your proper professional fees. There is no mention of the CLs handling client money in the CLSB Practising Rules. There is no definition of client money within any rules set by the CLSB and therefore you must look to either CILEx or SRA rules for the definition.

4.4 Principle 4: Provide a good quality of work and service to each client

Costs lawyers should not attempt to act beyond their competence. Where a costs lawyer considers it appropriate to do so, advice should be sought from an expert; this should be with the prior approval of the client. In the alternative, a costs lawyer must decline any work for which he does not have the skill, knowledge or experience to undertake.

Costs lawyers must work in a timely manner with due regard for the level of service provided and a costs lawyer should keep the client updated as to the progress of his matter. He should keep accurate records of the work undertaken on any file so that clients can make informed decisions based on the work being undertaken and the costs of that work.

4.5 Principle 5: Deal with the regulators & Legal Ombudsman in an open and co-operative way

Whilst self-evident, it bears repetition that a costs lawyer should provide all documentation requested by a regulator or Ombudsman; this must be done within fourteen days of a request being made. A costs lawyer should not attempt to prevent anyone making a complaint against them.

4.6 Principle 6: Treat everyone with dignity and respect

A costs lawyer must treat his staff, opponents, clients and other persons with dignity and respect. You will note that this simply reflects the position under the Equality Act 2010. As with every other profession, costs lawyers must not discriminate against anyone on any grounds and must not refuse instructions or decline to instruct others on discriminatory grounds. Costs lawyers are required to have a written policy to this effect.

© Association of Costs Lawyers Training 2020 63 Treating others with respect includes not sending threatening, offensive or abusive emails to any party. An example provided in the guidance to the Solicitor’s Professional Codes of 1974 of an offensive e-mail was the following:

“You are a sinister little creature, a poisonous creature – an offensive little wretch.” The Law Society Gazette, 15 November 2012.

Severe misconduct, such as accusing an opponent of illegality or impropriety may additionally amount to harassment as can be seen in the case of Iqbal v Dean Manson Solicitors (2011) EWCA Civ 123.

4.6 Principle 7: Keep your work on behalf of your clients confidential

Again, it should be fairly self-evident that client information should be treated as confidential and/or privileged. This may be particularly relevant when a costs lawyer is sharing secretarial services with another business. Care should also be taken in respect of shredding any confidential waste.

Care should also be taken over the inputting of fax numbers or e-mail addresses in order to avoid any confidential information accidentally being sent to a third party. It has been known for a local authority to be fined a large sum for an accident breach of data protection when they sent confidential information using an incorrect fax number.

Where disclosure is required by law, then this should be provided, however, in any other circumstances, written permission should be obtained from the client with all the consequences of disclosure having been explained to them before any disclosure should be given.

Care should also be taken when speaking on the telephone to ensure that the other person is entitled to the information they seek; even if that person says that they have spoken to the solicitor client and obtained their consent, information should not be provided without checking with the solicitor client first.

5 The Costs Lawyers Practising Rules

Under Rule 1 of the Costs Lawyers Practising Rules, no person shall be entitled to practice as a costs lawyer unless they have fully qualified as a costs lawyer and they have a current practising certificate issued in accordance with the provisions of rule 2 of the Costs Lawyers Practising Rules. Rule 1 also states that in accordance to Rule 9.1, a costs lawyer must complete a minimum of 12 CPD points in each CPD year. The rules on CPD are contained within the CLSB CPD Rules 2017. Finally, under Rule 1, in accordance to Rule 10.1(a), costs lawyers shall ensure that they practice with the benefit of professional indemnity insurance of a minimum £100,000 (any one claim) to include loss of documents.

The importance of complying with CPD requirements is well established, consider for example the decision in the case of Hudgell, Yeates and Co v Watson (1978) QB 451 where one of the partners in a firm of solicitors forgot to renew his certificate rendering him unqualified and meant that it was illegal for him to practice. A partnership between a solicitor and an unqualified person at that time was prohibited by statute. It was held that the failure to renew his certificate brought the partnership to an end, the partnership © Association of Costs Lawyers Training 2020 64 became illegal and was automatically dissolved but the court held that the remaining partners could lawfully carry on the business of the partnership. The outcome of this case today would be different due to the Legal Services Act 2007. However, the principle behind the decision continues in that it is illegal for persons to conduct work that they are not authorised to perform.

The rights conferred on a practicing costs lawyer include rights of audience by virtue of section 12 of the Legal Services Act 2007, this right is limited by the CLSB Code of Conduct to being all proceedings being conducted under CPR Parts 43-48 (now CPR 44-47). The CLSB re-issued a Statement of Rights in October 2011, which was amended on the 26 March 2014.

By way of a reminder, as a costs lawyer you are a regulated person under the Legal Services Act 2007 and are authorised to carry on the following reserved legal activities:

þ the exercise of a right of audience; þ the conduct of litigation; and þ the administration of oaths.

As a costs lawyer, provided that you are instructed to deal only with matters that relate to costs, you may conduct proceedings and represent clients in any court or tribunal, including any criminal court or courts martial, the Supreme Court or the Privy Council where:

þ the proceedings are at first instance; or þ the proceedings include an appeal below the level of the Court of Appeal or Upper Tribunal, are on a first appeal (other than in the Court of Appeal) and the appeal itself relates to costs; or þ the proceedings do not fall within either of the categories above, but your instructions are limited to dealing with the costs of the proceedings; or þ the court or tribunal grants permission for you to conduct proceedings or to represent a client (or both).

Where proceedings relate to other matters, in addition to costs, the rights referred to above apply only to those parts of the proceedings (if any) that:

þ relate solely to costs; or þ when they relate to other issues, solely those issues that are not in dispute.

A matter ‘relates to costs’ if it relates to payments for legal representation, including payments in respect of pro bono representation under section 194 of the Legal Services Act 2007 and/or to payments made for bringing or defending any proceedings, but only if and to the extent that those monies are not damages. For the avoidance of doubt, this includes:

þ costs between opposing parties including costs management and budgeting; þ solicitor and client costs but not if and to the extent that issues of negligence arise when a Lawyer competent to deal with allegations of negligence ought to be instructed instead; and þ legal aid, criminal costs, wasted costs or costs against third parties. © Association of Costs Lawyers Training 2020 65 Furthermore, you may administer any oath.

Under Rule 4.5 of the Costs Lawyers Practising Rules, the CLSB may refuse an application for a practising certificate. An applicant applying for a practising certificate must disclose to the CLSB, in accordance to rule 4.5(c) of the Costs Lawyers Practising Rules, if they have entered into an individual Voluntary Arrangement under the Insolvency Act 1986 (as amended). Additionally, an applicant applying for a practising certificate must also disclose to the CLSB if they are or have been the subject of a money judgment which has been outstanding for more than 28 days in accordance with rule 4.5(j) of the Costs Lawyers Practising Rules. The practising rules govern the behaviour of costs lawyers whilst in practice and even account for the fact other legal professionals may choose to qualify with Rule 8.1(c); requiring an individual to notify the CLSB within 14 calendar days of their being made the subject of disciplinary proceedings as a lawyer of England and Wales, other than as a costs lawyer.

6 Complaints

Pursuant to Section 112(1) of the Legal Services Act 2007, it is a requirement that a costs lawyer (whether sole practitioner or part of a firm) has effective procedures in place for the resolution of complaints. Complaints can be made about the service provided by members or about their conduct.

Service complaints relate to the quality of the service that has been provided to clients. This may include allegations about delay, keeping clients updated on the progress of a case or other costs matters. All legal practices must have an in-house complaints handling procedure. Details of the procedure should be given to all clients when they initially instruct the practice or as soon as possible thereafter.

Conduct complaints are those complaints which relate to the conduct of authorised persons and may cover concerns over the competence of members and the misappropriation of money. Clients, employers, an opposing party, the courts or anyone else may make this type of complaint and it should be raised with the regulatory body, in this case the CLSB.

Should a complaint subsequently be referred to the Legal Ombudsman (LeO), they will look not just at the nature of the complaint, but also the way in which the complaint was initially dealt with by the costs lawyer. A costs lawyer should make a decision based on the evidence, impartially and without any discrimination or prejudice. A complaint must be resolved within 8 weeks of that complaint being made to the costs lawyer. In the event a complaint is not resolved in that time period or the complaint is not resolved to the satisfaction of the complainant, the complainant may refer the matter to the LeO.

1. Introduction

An authorised Costs Lawyer has rights to carry out reserved legal activities. These rights are sometimes referred to as “authorised rights” or “reserved legal activity rights”. By way of a reminder, as a Costs Lawyer, by virtue of being an authorised/regulated person under the Legal Services Act 2007 and are able to carry on the following reserved legal activities:

þ the exercise of a right of audience; þ the conduct of litigation; and þ the administration of oaths.

2. Clarification of Rights

These reserved legal activities are found in section 12 of the Legal Services Act 2007. A statement clarifying these rights in relation to Costs Lawyers was adopted by the Lord Chancellor in July 2007 and a revised version was approved by the Legal Services Board in March 2014. The statement is referred to in the Costs Lawyer Code of Conduct and reads as follows.

Provided that you are instructed to deal only with matters that relate to costs, you may conduct proceedings and represent clients in any court or tribunal, including any criminal court or courts martial, the Supreme Court or the Privy Council where:

Where proceedings relate to other matters, in addition to costs, the rights referred to above apply only to those parts of the proceedings (if any) that:

þ relate solely to costs; or þ when they relate to other issues, solely those issues that are not in dispute.

þ costs between opposing parties including costs management and budgeting þ solicitor and client costs but not if and to the extent that issues of negligence arise when a Lawyer competent to deal with allegations of negligence ought to be instructed instead; and þ legal aid, criminal costs, wasted costs or costs against third parties.

3. Entitlement to carry on a reserved legal activity

By virtue of section 13(1) of the Legal Services Act 2007, the question whether a person is entitled to carry on an activity which is a reserved legal activity is to be determined solely in accordance with the provisions of the Legal Services Act 2007. So, an individual Costs Lawyer’s right to carry out reserved legal activities derives from the Legal Services Act 2007.

Section 13(2)(a) of the Legal Services Act 2007 stipulates that a person is entitled to carry on a reserved legal activity where that person is authorised in relation to the activity in question. However, section 13(2)(b) of the Legal Services Act 2007 states that a person is entitled to carry on a reserved legal activity where the person is an exempt person in relation to that activity.

3.1 Authorised Persons

An authorised person is a person authorised by an approved regulator (section 18(1) of the Legal Services Act 2007). The independent regulatory body for costs lawyers is the Costs Lawyer Standard Board (CLSB), this authority is delegated by the Association of Costs Lawyers who are the approved regulator under section 20(5) of the Legal Services Act 2007.

An authorised person may be an individual or a non-natural person. The definition of a person includes a body of persons (corporate or incorporate), commonly referred to as an entity in the context of legal services regulation (section 207 of the Legal Services Act 2007). The CLSB does not authorise or regulate entities, only individuals. Certain other approved regulators, such as the Solicitors Regulation Authority, authorise and regulate entities.

3.2 Exempt Persons

If a person is not authorised, they may still be entitled to carry out a reserved legal activity if they are an “exempt person” in relation to the activity in question (section 13(2)(b) of the Legal Services Act 2007). A list of exempt persons can be found in Schedule 3 to the Legal Services Act 2007. Each reserved legal activity has its own distinct list of exemptions.

4. Duties of a regulated person

Part 8 of the Legal Services Act 2007 contains miscellaneous provisions about lawyers, including the duties of regulated persons. If a person is authorised by an approved regulator under the Legal Services Act 2007, then they are subject to that approved regulator’s rules because section 176 of the Legal Services Act 2007 places a duty on a regulated person to comply with all “regulatory arrangements” made by their approved regulator. Authorised Costs Lawyers are regulated by the CLSB and are “regulated persons” for the purposes of the Legal Services Act 2007. Costs Lawyers must therefore comply with the provisions of the Costs Lawyer Handbook, which includes the CLSB Code of Conduct, and any other rules or procedures implemented by the CLSB that make up its regulatory

© Association of Costs Lawyers Training 2020 68 arrangements. Regulated persons who are authorised to exercise a right of audience or conduct litigation have additional duties under the Legal Services Act 2007. By virtue of section 188 of the Legal Services Act 2007 these include a duty to the court to act with independence in the interests of justice.

By virtue of section 176(2)(b) of the Legal Services Act 2007, an individual who is not authorised by the CLSB but who is a manager or employee of an authorised person, is also considered a regulated person under the LSA and must comply with all relevant regulatory arrangements.

5. Offences under the Legal Services Act 2007

There are a number of offences under the Legal Services Act 2007 found in sections 14-17 of the Act.

Section Number Offence 14 Carrying on of a reserved legal activity: employers and employees etc 15 Offence to carry on a reserved legal activity if not entitled 16 Offence to carry on reserved legal activity through person not entitled 17 Offence to pretend to be entitled

Section 14(1) of the Legal Services Act 2007 makes it is an offence for a person to carry on a reserved legal activity unless they are entitled to do so under the LSA. That means a person may be liable unless they are either authorised or exempt to undertake the activity. Section 14(2) of the Legal Services Act 2007 does provide a defence if the accused can show that they did not know, and could not reasonably have been expected to know, that the offence was being committed. The offence is punishable by imprisonment and/or a fine (section 14(3) of the Legal Services Act 2007) and if a person who is guilty of an offence because they have conducted litigation or undertaken advocacy they will also be guilty of contempt of court and punished accordingly (section 14(4) of the Legal Services Act 2007).

Section 17(1)(a) of the Legal Services Act 2007 makes it an offence for a person to wilfully pretend to be entitled to carry on a reserved legal activity and section 17(1)(b) of the Legal Services Act 2007 makes it an offence to use a name, title or description with the intention of implying falsely that the person is entitled to carry on a reserved legal activity. The offences are also punishable by imprisonment and/or a fine (section 17(2) of the Legal Services Act 2007).

1. Introduction

When taking instructions and dealing with a client’s matter you must have regard to your regulatory obligations. It is a requirement under principle 3 that you must inform clients, in writing at the outset of their matter, of their right to make a complaint and details of how to do this. You must also inform them, in writing at the outset and on the conclusion of your complaints procedure, of their right to complain to the Legal Ombudsman, the time frame for doing so and full details of how to contact the Legal Ombudsman.

Under principles 1 and 2 you must not do anything which is illegal or dishonest, even at the instructions of a client. You must at all times act within the law and act honestly, professionally and with integrity, honour your duty to the court. Consider your duty to your client of confidentiality and also a duty to the court to disclose information if required. If you do receive instructions from a client which you feel may not be the best way forward, discuss this with your client and if required, do your best for the client under the circumstances. You must however give serious consideration to issues such as your duty to the court. For example, could you justify your position to the court if asked to by the judge?

Under principle 3 it is a requirement to advise clients appropriately at the beginning and during a retainer about costs. Clients must be given the best possible information about the cost implications in their matter.

At the first meeting with a client, funding of the case should be discussed. At this stage you should explain any fee sharing arrangement and explain any arrangements that are relevant to your client's instructions so that clients are able to make informed choices. The information you provide during the meeting should be clear and followed up in writing. You should also agree, at this stage, how often you will inform the client about costs accrual and payment of interim bills.

It is considered best practice to agree a service level with your client. This could include for example, the type and frequency of communications. It may also include both the client and your responsibilities. Some examples of this are: we will review your matter weekly and inform you of any changes in the law; the client will provide clear and timely instructions: We will bill you every month and bills should be paid within 14 days.

2. Rights of Audience

Rights of audience were previously governed by Section 27 of the Courts and Legal Services Act 1990 which, so far as relevant, read:

“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 before a court in relation to any proceedings only in the following cases: … (e) where –

© Association of Costs Lawyers Training 2020 70 (i) he is employed (whether wholly or in part) or is otherwise engaged to assist in the conduct of litigation and is doing so under instructions given (either generally or in relation to the proceedings) by a qualified litigator; and (ii) the proceedings are being heard in Chambers in the High Court or a County Court and are not reserved family proceedings.”

The Courts and Legal Services Act 1990 historically regulated advocacy in detailed assessments by costs lawyers. This was replaced by the Legal Services Act 2007 on 1 January 2010. Under schedule 2 of the Legal Services Act 2007 a “right of audience” means the right to appear before and address a court, including the right to call and examine witnesses.

Advocacy, as you know, is now a “reserved legal activity” and costs lawyers are authorised persons permitted to undertake this reserved activity. The Legal Services Act 2007 also allows “an exempt person” to perform certain reserved activities including advocacy. An exempt person is defined in paragraph 1 of schedule 3 to the Legal Services Act 2007. This provision in the Legal Services Act 2007 recognises, as did the Courts and Legal Services Act 1990, that in certain circumstances, a person not authorised by statute to exercise rights of audience may nevertheless do so.

Despite the Legal Services Act 2007, costs lawyers are often challenged on their rights of audience and to conduct costs litigation along with their position when working with unregulated costs professionals. The ACL has thus obtained counsel’s advice on this issue. The advice given by 4 New Square’s specialist cost counsel Roger Mallalieu is unambiguous and confirms that costs lawyers have an absolute right granted to them by the Legal Services Act 2007 to conduct all costs proceedings within the scope of the statute whether they are retained or employed. The advice further states that costs lawyers are able to use unregulated persons to assist with tasks such as secretarial services, drafting and general assistance as long as such person do not engage in reserved activities.

As we know, the Costs Lawyers Code of Conduct sets out the principles that costs lawyers must follow. The principles within a code of conduct embody the key ethical requirements on individuals. Costs lawyers and trainees should always have regard to the principles and use them as your starting point when faced with an ethical dilemma.

The Costs Lawyers Code of Conduct is silent as to the general stance where two or more principles come in to conflict. However, the SRA Handbook stated that the principle that should take precedence is the one that best serves the public interest in the particular circumstances, especially the public interest in the proper administration of justice. The Costs Lawyers Code of Conduct within principle 3 gives some guidance when costs lawyers are required to act at all times to ensure the client’s interest is paramount, except where this conflicts with their duties to the court or where otherwise permitted by law. So, in a case of conflict at court, a costs lawyer’s overriding duty is to the court. This is also the position at common law. Moreover, in accordance with Arthur Hall v Simons (2000) 3 WLR 543, the advocate's proper discharge of his duty to his client should not cause him to be accused of being in breach of his duty to the court.

The advocate doesn’t however owe a duty to his client's opponent. Inevitably, the proper discharge by the advocate of his duty to his own client will more often than not be disadvantageous to the interests of his client's opponent as illustrated in Orchard v S E

© Association of Costs Lawyers Training 2020 71 Electricity Board (1987) QB 565, 571. The advocate is under a duty to draw the judge's attention to authorities that are in point, even if they are adverse to that advocate's case as in Copeland v Smith (2002) 1 WLR 1371 so the costs lawyer may try to negotiate before entering the court room where he is aware there is adverse authority undermining his client’s case. Buxton v Mills-Owens (2010) 1 WLR confirms that costs lawyers, as with solicitors, have a duty not to plead matters that are meritless.

Finally, as a duly authorised representative of a solicitor, as confirmed in Waterson Hicks v Eliopoulos (1997) Costs L.R, a costs draftsman has the same authority as the solicitor would have to consent to orders.

3. The conduct of litigation

Under schedule 2 of the Legal Services Act 2007 “conduct of litigation” means:

þ the issuing of proceedings before any court in England and Wales; þ the commencement, prosecution and defence of such proceedings; and þ the performance of any ancillary functions in relation to such proceedings (such as entering appearances to actions).

The Courts and legal Services Act 1990 narrowly defined ‘litigation services’:

“as any services which it would be reasonable to expect a person who is exercising, or contemplating exercising, a right to conduct litigation in relation to any proceedings, or contemplated proceedings, to provide.“

In Agassi v Robinson (2005) EWCA Civ 1507 the definition of ‘ancillary functions related to proceedings’ was construed narrowly and is limited to the formal steps required in the conduct of litigation. Further in O'Connor v Bar Standards Board (2012) All ER (D) 108, the scope of the meaning of conduct of litigation was explored and established that signing a declaration of truth did not amount to conducting litigation. This decision further underlined that litigation is narrowly defined.

Proceedings are usually issued in the solicitor client’s name, and it is the solicitor client that is responsible for the contents of the bill drafted by a costs lawyer as can be seen in Bailey v IBC Vehicles Ltd (1998) 3 All ER 570. To date, it would be unusual for a costs lawyer to have ever filed a Notice of Acting or been on court record but the current changes to the legal services market have resulted in a different market. Part 42 of the CPR has recently been amended to allow any person who is an authorised person, in relation to an activity which constitutes the conduct of litigation (within the meaning of the Legal Services Act 2007), to be entered on the court record. It is predicted that costs lawyers will see an influx of work from lay clients and in time, the situation may arise when this becomes more common and they need to be on record as acting.

The time will come when the costs lawyers name may be required on statements of case, after all documents drafted by a legal representative have to be signed and, if they are drafted by a legal representative as a member or employee of a firm, they should be signed in the name of the firm in accordance with CPR PD 5A, 2.1. If a costs lawyer exercises his right to conduct litigation, he must remain alert to the fact that every

© Association of Costs Lawyers Training 2020 72 document prepared by a party for filing, unless impracticable, should be on A4 paper of durable quality having a margin, not less than 3.5 centimetres wide (CPR PD 5A, 2.2).

Costs lawyers must comply with orders and in doing so they must ensure that their clients understand their obligations in this regard. Moreover, it is not beyond the scope of the future role of a costs lawyer that they will need to file bills signed by them in time. Under CPR 47, 5.7, a bill of costs may consist of some of the following sections as may be appropriate:

þ title page; þ background information; þ items of costs claimed under headings ; þ a summary showing the total costs claimed on each page of the bill; þ schedules of time spent on non-routine attendances; and þ the certificates contained in precedent F including a certificate as to accuracy.

Under CPR 47, 5.8 where it is necessary or convenient to do so, a bill of costs may be divided into two or more parts. Bills of costs must be accurate, they must contain no costs that are knowingly claimed in breach of the indemnity principle and they must be reasonable. In short, the indemnity principle prescribes that costs orders between the parties are given by the law as an indemnity to the person entitled to them and not to impose a punishment on the party who pays them which is illustrated in Harold v. Smith (1860) 5 H&N 381. A bill of costs must exclude costs which are not recoverable under the terms of the order in question.

Costs lawyers, like solicitors, have a duty not to plead matters that are meritless, although there is no objection to pleading matters where the issue is arguable, even if the lawyer subsequently loses the argument or believes that he is likely to lose it. This point of law can be seen in Buxton v Mills-Owens (2010) 1 WLR 1997.

Bailey v IBC Vehicles Ltd (1998) 3 All ER 570 stipulated that the signature to a bill of costs is that of an officer of the court, and the mis-certification of a bill is a serious disciplinary offence. The penalties for a carelessly drawn bill may include:

þ the striking out of a claim; and þ an adverse costs order against the lawyer.

For a dishonestly drawn bill, the consequences are more serious and may include:

þ the striking out of the proceedings with an adverse costs order; þ disciplinary action by the CLSB; and þ in the worst case, criminal proceedings.

Other documents which are signed in costs proceedings and to which these provisions apply include points of dispute, replies, Part 18 responses, any witness statements and applications. Disciplinary proceedings will be brought against a costs lawyer if he signs a document that he knew was false.

Legal professional privilege is a rule of litigation that protects, in general terms, confidential communications between lawyers and their clients. It may also cover some communications between a lawyer and third parties for the purpose of preparing litigation. Under the litigation rule, if material is subject to legal professional privilege, a party generally does not have to disclose it during the course of legal proceedings. Whether information is subject to legal professional privilege is a question of law.

Where a legal representative is precluded by legal professional privilege from giving a full answer to any criticism, a court should not make such criticism unless, proceeding with extreme care, it is satisfied that there was nothing that the representative could say, if permitted, to answer the criticism and it was in all of the circumstances fair to make such criticism (Medcalf v Mardell (2003) 1 AC 120 HL) . The need of a lawyer to be able to ask a court to look at privileged material when a lawyer's conduct is in question may not be so intractable. Parry-Jones v The Law Society (1969) 1 Ch 1 confirms that the material in question may be confidential rather than absolutely privileged. In such circumstances, as can be seen in R v Commissioners of Inland Revenue ex parte Taylor (No.2) 62 TC 578 at p.588, it may be possible to restrict the use which can be made of the disclosed material so as to reduce or remove the infringement of the client's privilege. If you consider Campbell v UK (13590/88) 15 EHRR 137 and Foxley v UK (33274/96) 31 EHRR 25 it may be that, as in the context of Articles 6 and 8 of the European Convention on Human Rights, the privilege may not always be absolute and a balancing exercise may sometimes be necessary.

4. The administration of oaths

The right afforded to costs lawyers to administer oaths was defined under the Costs Lawyers Statement of Rights, as approved by the Lord Chancellor in July 2007, as being “the right to administer oaths and take affidavits under section 113 of the Courts and Legal Services Act 1990”. This provision was repealed on 1 January 2010 and is now section 183 of the Legal Services Act 2007. Commissioners for Oaths can provide the following services:

þ witnessing the signing of documents; þ verifying oaths, affidavits and statutory declarations; and þ certifying copies of documents.

4.1 Commissioners for Oaths

A Commissioner for Oaths is a person who is authorised to verify affidavits, which are statements in writing and on oath, and other legal documents. Every costs lawyer holding a current practising certificate is entitled to administer oaths and to use the title "Commissioner for Oaths". A Commissioner for Oaths may continue to act as a Commissioner for Oaths for as long as he/she remains a regulated costs lawyer.

The essential functions of a Commissioner for Oaths are:

þ to make sure that the evidence in question is in written form (the draft affidavit); þ to establish that the person before him/her has read the draft affidavit and fully understands the contents;

© Association of Costs Lawyers Training 2020 74 þ to require the person to swear that the affidavit is true by raising the appropriate Testament in the right hand and repeating the words of the oath; þ to verify that the affidavit was properly sworn by completing a "jurat" on the affidavit; þ to charge a fee for his/her services.

4.1.1 Affidavits

An affidavit is a written statement of evidence which is sworn before a person authorised to administer affidavits, such as a costs lawyer. Affidavits take a similar form to witness statements but they include a jurat instead of a statement of truth. Before the introduction of the Civil Procedure Rules, affidavits were the principal means by which evidence was put before the court in interim applications. However, witness statements have generally taken their place now, except in some limited circumstances where affidavits must still be used, such as:

þ In an application for a search order, a freezing order or an order requiring an occupier to permit another to enter his land. þ If required by the court, the CPR or a practice direction or by legislation (for example, section 3(5)(a) of the Protection from Harrassment Act 1997 or in certain insolvency proceedings under the Insolvency Rules 1986).

4.1.2 Statutory Declaration

A statutory declaration is a formal statement made in a prescribed way affirming that something is true to the best knowledge of the Declarant, being the person making the declaration. The statutory declaration will need to be signed in the presence of a solicitor, commissioner for oaths or notary public. The statutory declaration would effectively satisfy some legal requirement, or regulation where perhaps no other such evidence is available.

4. 2 Oaths and Affirmations

The oath to be taken by persons before the Commissioner for Oaths is as follows:

"I swear by Almighty God that this is my name and handwriting, and that the contents of this my affidavit are true".

Depending on the faith of the person making the oath they will be required to swear the oath by raising the New Testament or if Jewish they may swear the oath by raising the Old Testament. Variations of this wording may be preferred by followers of religions other than Christianity or Judaism.

A person who objects to being sworn on the grounds that taking an oath is against his/her religious belief or that he/she has no religious belief is permitted to make a solemn affirmation, which is phrased as follows:

"I, XXXXX, do solemnly and sincerely affirm that this is my name and handwriting, and that the contents of this my affidavit are true".

Any sworn affidavit should begin: © Association of Costs Lawyers Training 2020 75 “I, [Full names and occupation of deponent]. of [Address] make oath and say as follows:-“

A person making a statutory declaration should say:

“I (name) do solemnly and sincerely declare, that/as follows...... and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act 1835.”

By virtue of CPR PD 32, 16 the deponent should commence an affidavit:

‘I (name) of (address) do solemnly and sincerely affirm ……’,

4.2.1 Administering an oath/affirmation

When administering oaths and affirmations or taking declarations, a Commissioner for Oaths is under a duty to ascertain:

(a) that the deponent is in the presence of the Commissioner by enquiring whether the signature to the document before the Commissioner is the name and in the handwriting of the deponent; (b) that the deponent is apparently competent to depose to the affidavit or declaration; (c) that the deponent knows he or she is about to be sworn or declared by the Commissioner to the truth of the statement; and (d) that the exhibits, if any, are the documents referred to.

Responsibility for the contents of the affidavit or declaration rests with the deponent and the person who prepared it. There is a duty on the Commissioner administering the oath to be satisfied that the oath is in a proper form and, upon the face of it, an oath which the Commissioner is authorised to administer. If it comes to the Commissioner’s notice that the affidavit or declaration is incomplete, for example because it contains blanks, the Commissioner must refuse to administer it.

Although a Commissioner is under no duty to read through the oath or declaration, if a Commissioner has good reason to believe that the oath or declaration is false (even if that was unknown to the deponent), the Commissioner must refuse to administer it.

4.2.2 The Jurat of Attestation Clause

CPR PD 32, 5.1 sets out that a jurat of an affidavit is a statement set out at the end of the document which authenticates the affidavit. By virtue of CPR PD 32, 5.2 a jurat must:

þ be signed by all deponents; þ be completed and signed by the person before whom the affidavit was sworn whose name and qualification must be printed beneath his signature; þ contain the full address of the person before whom the affidavit was sworn; and þ follow immediately on from the text and not be put on a separate page.

The jurat or attestation clause should be completed by the commissioner to show the date on which, and place where, the oath or declaration was taken. The commissioner should © Association of Costs Lawyers Training 2020 76 add his or her signature below the jurat or attestation clause (adding his or her name in block capitals if the signature is unclear), and indicate the capacity in which he or she is acting, i.e. Commissioner for Oaths. Where a document is being sworn the following jurat should be used:

Sworn at [Address] in the

County of this [County] this [date] day of [Month][Year ]

By virtue of CPR PD 32, 16 in the jurat the word ‘sworn’ is replaced by the word ‘affirmed’.

Any amendments in the text of the affidavit or declaration should be initialled in the margin by the commissioner, who must also sign the certificates identifying any exhibits.

The wording of the jurat will need to be varied for special circumstances, for example if the deponent is blind, illiterate or does not speak English. Precedents can be found in the usual practitioner texts.

4.2.3 Certificate to be used where a deponent to an affidavit is unable to read or sign it

The following is the certificate to be used where a deponent to an affidavit is unable to read or sign it:

Sworn at . this . day of . Before me, I having first read over the contents of this affidavit to the deponent [if there are exhibits, add ‘and explained the nature and effect of the exhibits referred to in it’] who appeared to understand it and approved its content as accurate, and made his/her* mark on the affidavit in my presence. Or, (after ‘Before me’) the witness to the mark of the deponent having been first sworn that the witness had read over etc. (as above) and that the witness saw the deponent make his/her* mark on the affidavit. (Witness must sign.)

4.2.4 Certificate to be used where a deponent to an affirmation is unable to read or sign it

The following is the certificate to be used where a deponent to an affirmation is unable to read or sign it:

Affirmed at …… this …...day of …... Before me, I having first read over the contents of this affirmation to the deponent [if there are exhibits, add ‘and explained the nature and effect of the exhibits referred to in it’] who appeared to understand it and approved its content as accurate, and made his/her* mark on the affirmation in my presence. Or, (after ‘Before me’) the witness to the mark of the deponent having been first sworn that the witness had read over etc. (as above) and that the witness saw the deponent make his/her* mark on the affirmation. (Witness must sign.)

4.3 Fees

The following fees are prescribed by the Commissioners for Oaths (Fees) Order 1993/2297.

© Association of Costs Lawyers Training 2020 77 For taking an affidavit, declaration or affirmation, for each £5.00* person making the same And in addition, for each exhibit therein referred to and £2.00* required to be marked or for each schedule required to be marked.

*The fees are inclusive of value added tax where payable.

It is improper for a Commissioner to share any part of the fee received for administering the oath with any person, since the administration of oaths is a discharge of a public office. However, fees received in the course of employment can properly be taken by the employer.

4.4 CLSB Guidance

Please note that the following is the guidance issued by the CLSB for costs lawyers. Commentary has been added by ACLT in red for training and guidance purposes only.

GUIDANCE NOTES: EXECUTING LEGAL DOCUMENTS &

RIGHT TO ADMINISTER OATHS

Regulator: Costs Lawyer Standards Board

Effective date: 4 July 2012

These notes have been based on legal advice and seek to offer a greater understanding of Costs Lawyers' rights to execute legal documents.

Where does the right to execute certain legal documents come from?

Costs Lawyers can carry out certain Reserved Legal Activities (“RLA”) if they are entitled to do so under the Legal Services Act 2007 ("the Act") or are exempt. The Costs Lawyer Standards Board (the “CLSB”) is an Approved Regulator under delegated authority of the Association of Costs Lawyers. Costs Lawyers who hold a current practising certificate issued by the CLSB are permitted under Schedule 4 Part 1 of the Act to carry out the following RLA’s:

• The exercise of a right of audience • The conduct of litigation • The administration of oaths

The right afforded Costs Lawyers to administer oaths was further defined under the Costs Lawyers Statement of Rights as approved by the Lord Chancellor in July 2007 as being “the right to administer oaths and take affidavits under section 113 of the Courts and Legal Services Act 1990. This provision was repealed on 1 January 2010 and is now section 183 of the Act.

© Association of Costs Lawyers Training 2020 78 Note: the administration of oaths is one of the reserved legal activities listed in section 12 of the Legal Services Act 2007, you must be an authorised person to undertake this activity. Authorised persons are defined under section 18 of the Legal Services Act 2007 as:

a person who is authorised to carry on the relevant activity by a relevant approved regulator in relation to the relevant activity or a licensable body which, by virtue of such a licence, is authorised to carry on the relevant activity by a licensing authority in relation to the reserved legal activity.

Do Reserved Legal Activities include the execution of documents? Schedule 2 of the Act provides further details about what RLA’s are. This guidance note focuses specifically on the RLA under which Costs Lawyers are most likely to execute legal documents – the conduct of litigation and the administration of oaths.

What documents can a Costs Lawyer execute?

The conduct of litigation Costs Lawyers can execute any legal documents connected with the conduct of costs litigation, this includes issuing proceedings and performing ancillary functions relating to those costs proceedings.

The administration of oaths Costs Lawyers are regarded as 'commissioners of oaths' under section 183 of the Act as they are 'relevant authorised persons'. In practice, Costs Lawyers are also able to take affidavits.

Note: Section 183 of the Legal Services Act 2007 sets out what is meant by a commissioner of oaths. A relevant authorised person has the right to use the title “Commissioner for Oaths” (section 183(2) of the Legal Services Act 2007). Under this section a relevant authorised person may not carry on the administration of oaths in any proceedings in which that person represents any of the parties or is interested”(section 183(3) of the Legal Services Act 2007). The Lord Chancellor may by order prescribe the fees to be charged by relevant authorised persons in respect of the administration of an oath or the taking of an affidavit ” (section 183(6) of the Legal Services Act 2007).

What are oaths and affidavits? The Commissioners for Oaths Act 1889 sets out the following definitions for oaths and affidavits:

• "Oath" includes affirmation and declaration. • "Affidavit" includes affirmation, statutory or other declaration, acknowledgement, examination, and attestation or protestation of honour.

The Commissioners for Oaths Act 1889 (section 1) states that as long as the individual does not have a personal interest in the proceedings, commissioners of oaths may "in England or elsewhere administer any oath or take any affidavit for the purposes of any court or matter in England ..… and take any bail or recognisance in or for the purpose of any civil proceeding in the Senior Courts".

What processes and procedures must I follow in the event I administer an oath as a Costs Lawyer?

© Association of Costs Lawyers Training 2020 79 The rules surrounding the correct processes and procedures are set out in section 183 of the Act. You should not administer an oath in any proceedings in which you, your partner, fellow director or your employer represent one of the parties or have an interest in.

You are first required to ascertain:

• if the person before you wishes to swear on oath or affirm; and • explain the affirmation or oath.

You are under a duty to ascertain that:

• the person before you is in fact the deponent; and • the deponent is competent to depose to the affidavit, affirmation or declaration; and • the deponent is fully aware that the document they are about to be sworn to or declared, is the truth; and • the exhibits, if any, are the documents referred to in the deposition.

The process to follow is that you:

• must state in the jurat or attestation the place and date on which the oath or affidavit is taken or made; and

Note: Under section 183(4) of the Legal Services Act 2007, a relevant authorised person before whom an oath or affidavit is taken or made must state in the jurat or attestation at which place and on what date the oath or affidavit is taken or made.

• must insert your signature below the jurat (if your signature is unclear you should write your full name in block capitals); and • underneath your name you should record your status as “Commissioner for Oaths.”

Note: Under section 183 (5) of the Legal Services Act 2007, a document containing such a statement and purporting to be sealed or signed by a relevant authorised person must be admitted in evidence without proof of the seal or signature, and without proof that that person is a relevant authorised person.

• any amendments to the affidavit must be initialled by you in the margin alongside the amendment; and • any exhibits to the affidavit must be signed by you.

What documents can I not execute as a Costs Lawyer?

Costs Lawyers are not automatically authorised to carry out the following RLA’s which may involve the execution of documents. However, there are exceptions in some circumstances – if you think these may apply, see section 19 and Schedule 3 of the Act for further details. © Association of Costs Lawyers Training 2020 80

(i) Reserved instrument activities These include: Preparing any instrument of transfer or charge for the purposes of the Land Registration Act 2003, making an application or lodging a document for registration under that Act, or preparing any instrument relating to real or personal estate for the purposes of the law of England and Wales, or an instrument relating to court proceedings in England and Wales, or preparing a contract for the sale or other disposition of land (except a contract to grant a short lease).

These do not normally include: Preparing an instrument relating to any particular court proceedings (unless a restriction has been placed on the individual), a will or other testamentary instrument, an agreement not intended to be executed as a deed, a letter or power of attorney, or a transfer of stock containing no trust or limitation on the transfer.

Exemptions: An individual is exempt if he carries on the reserved instrument activity: a) in the course of his duty as a public officer; or b) under the supervision of an authorised person, and they are connected through their employment; or c) if the individual is accredited or authorised, or d) if the instrument creates a farm business tenancy or relates to an existing tenancy.

(ii) Probate activities These include: Preparing any probate papers (including a grant of probate or a grant of letters of administration) for the purposes of the law of England or Wales, or in relation to any proceedings in England or Wales.

Exemptions: An individual is exempt if he carries on the probate activity a)under the supervision of an authorised person, and they are connected through their employment, or b) does not receive, or expect to receive any fee, gain or reward for doing so.

Can a trainee Costs Lawyer exercise these rights?

No, only a qualified Costs Lawyer holding a current practising certificate may exercise these rights.

Note: You cannot exercise the rights without a current practising certificate.

Important note

Under section 14 of the Act, it is an offence to carry on a RLA unless the person is entitled to do so.

Note: If you do exercise the rights without a current practising certificate you will be liable of an offence.

© Association of Costs Lawyers Training 2020 81 Chapter 4 Learning outcomes After studying this chapter you should understand the following main points: þ liability of costs lawyers; and þ first and second tier complaints

4.1 Costs Lawyers and Complaints

1. Introduction

A complaint means an oral or written expression of dissatisfaction which alleges that the complainant has suffered (or may suffer) financial loss, distress, inconvenience or other detriment.

Competence is an ethical duty for a lawyer; what lawyers do has value only if they practice competently. Not long ago, clients were not able take lawyers to court for negligence or incompetence for some activities they undertook (Rondel v Worsley (1969) 1 AC 191) but an advocate’s immunity has since been abolished (Hall v Simon (2000) 3 ALL ER 673). Invariably, as in the delivery or any services, there may be complaints made about costs lawyers.

If a client achieves an unsatisfactory result that may give rise to a valid complaint this may be settled by a reduction in fees but the costs lawyer should be alert to the fact the dissatisfaction may lead to a conduct complaint or a claim in negligence.

You should remain alert to the fact that the signature to a bill of costs is that of an officer of the court and the mis-certification of a bill is a serious (disciplinary) offence as demonstrated in the case Bailey v IBC Vehicles Ltd (1998) 3 All ER 570. Solicitor clients will also be asked to sign a statement of truth on a budget, the importance of such can be seen in cases such as The Bank of Ireland & Anor v Philip Pank Partnership [2014] EWHC 284 (TCC) (12 February 2014). Therefore, when you return a file to a solicitor or a litigant in person who is on court record you must ensure you set out clearly the parts of any bill or budget that may need detailed consideration by the client. You must include details of any estimated times and highlight the costs that are at risk or points that may cast doubt on the chances of success in recovering those costs.

Complaints that are made directly to a provider of legal services are often referred to as “first-tier complaints”, while complaints that are escalated to the CLSB or Legal Ombudsman are known as “second-tier complaints”.

2. An internal procedure

Pursuant to Section 112(1) of the Legal Services Act 2007 it is a requirement that a Costs Lawyer has effective procedures in place for the resolution of complaints. The CLSB’s primary requirements in relation to first-tier complaints procedures and complaint handling are contained in the Costs Lawyer Code of Conduct under Principle 3 (Costs Lawyers must act in the best interests of their client). Pursuant to the Code of Conduct, Costs Lawyers must provide for an effective first-tier complaints procedure which is:

þ simple and transparent; þ ensures that a complaint can be made by any reasonable means: and þ takes into account the individual needs of clients (in particular the needs of vulnerable clients).

For a firm of Costs Your employer should have a first-tier complaints procedure Lawyers in place for your use. You will need to produce your own first-tier complaints As a sole practitioner procedure. Your firm should have a first-tier complaints procedure in place that complies with the requirements of the Solicitors For a firm of solicitors Regulation Authority, which the CLSB will accept as being adequate so long as it is provided to your clients in all cases. But only insofar as you provide costs law services externally In-house to clients other than your employer.

Since 2012, all Costs Lawyers have been required to file their complaints procedure with their annual application for a practising certificate. This allows the CLSB to supervise compliance with the obligation to maintain an appropriate complaints procedure.

2.1 When it should be supplied

The Competition and Markets Authority, in its 2016 legal services market study, recommended that all providers of legal services publish their complaints procedure on their website, where they have one.

Research conducted by YouGov and the Legal Ombudsman suggests that many clients do not recall being provided with details of complaints procedures in the relevant client care letter. It is therefore important to ensure that a client care letter is easy to understand and not overly long, and that the complaints procedure is clearly identifiable. It is also important to remind the client of the complaints procedure as their matter progresses.

In particular, a complaints procedure should be provided to a client on each of the following occasions:

1 When the client first contracts with you. If an existing client, upon a new instruction at 2 the first appropriate opportunity 3 In the event of a change of contractual terms. In the event of a change to your complaints 4 procedure. 5 Once a complaint has been made. 6 At the conclusion of a complaint. 7 When asked for, at any time.

2.2 Contents

A complaints procedure should be in writing and state the date it became effective or was last updated. It should be clear and simple with as few steps as possible and identify the person to whom the complaint should be made.

A complaints procedure should be reasonable, fair, proportionate and responsive. It should state clearly the timeframe for a complaint to be raised – this should be within one year of the complaint arising (i.e. when the issue first occurred or when the complainant should

© Association of Costs Lawyers Training 2020 84 reasonably have become aware of the issue). It should also state clearly the timeframe for a complaint to be resolved – this should be within eight weeks of receipt of the complaint.

It should advise that if the complainant is not satisfied with the outcome of the complaint under the complaints procedure, or the complaint has not been resolved within eight weeks, then the complainant has the right to refer a service complaint to the Legal Ombudsman, or refer a conduct complaint to the CLSB, and provide the timeframes for referral. It should also include contact details for the Legal Ombudsman and CLSB.

Finally, it should advise the complainant of an approved alternative dispute resolution (ADR) body and state whether a firm agrees to use that body’s services.

2.3 Approach

If a complaint is notified to a costs lawyer he should, in the first instance, comply with his own complaints-handling procedure. Where appropriate, the complaint should also be reported to his professional indemnity insurer, even if in the end the complaint is not upheld.

A good technique for dealing with complaints is to be positive and open-minded and be friendly, showing the client that their complaint is being taken seriously. Costs lawyers should also consider taking advice at an early stage from an impartial observer. Even if the complaint is unjustified, consider why the client saw fit to make a complaint and deal with those issues.

It is rarely wise to be defensive, aggressive or to appear to be exasperated; likewise, it would almost never be appropriate to reject the complaint out of hand, to give the impression of omnipotence or to criticize the client in any way for having made the complaint. Above all, never charge a client for dealing with a complaint as this would result in serious professional misconduct.

Research highlights how the type of language used in the complaints process can affect clients’ decisions, particularly whether to escalate a complaint. In 2017, the Legal Ombudsman suggested the following tips for handling complaints:

Avoid jargon, pretentious language and using legal or technical terms. They may seem commonplace to you but they can be Keep it simple confusing and intimidating to the client. If you need to use legal or technical terms, you need to explain what they are. Ensure that it is clear that you are taking the complaint seriously. Overly informal language or poor grammar / processes can suggest Take it seriously that no formal investigation is underway; avoid phrases such as “I’ve had a word with (X)”. For many, the decision to make a complaint is not taken lightly. Acknowledge Complaining is seen as negative activity, the client may lack stress or confidence in the process and fear jeopardising their relationship inconvenience with you. It is therefore important to empathise with the situation caused they are in and reassure them that you understand their position. Start with a proper apology and avoid burying it at the end of Don’t be afraid to lengthy letters. If you’ve made a mistake say ‘sorry’ without caveats apologise and conditions. Justifying what has happened can play to client fears that the complaint handling stage will be subject to the same

© Association of Costs Lawyers Training 2020 85 negativity as the original transaction. Avoid subjective sentences such as “I’m sorry you feel this way” or “I’m sorry you have felt the need to complain”. Demonstrate to the client that you appreciate their feedback and the opportunity to improve your service. There can be positive Appreciate aspects of complaining, this can also reassure the client that their feedback complaint is being taken seriously. For example, “We assure you that client satisfaction is a key priority for us and we want the service you receive to reflect that principle”. When responding, detail the client’s concerns one by one. Use bold headings to structure the response around the details of the complaint. It is also important to give an explanation of what evidence you have looked at and what your conclusions are. Be clear Ensure that, when you signpost a client to the CLSB (conduct complaints) or Legal Ombudsman (service complaints), the information is clear and easy to find. This will reassure complainants and give them a sense of security that there are other avenues.

YouGov and Legal Ombudsman research has shown that clients would like someone independent to look into their complaint. Where reasonably possible, the complaint investigator should be someone not involved in the matter leading to the complaint who has the appropriate seniority, training and understanding to provide a good complaint handling process. A sole practitioner may have to deal with a complaint themselves.

The Legal Services Board has issued guidance on section 112 of the Legal Services Act 2007 stating that complaint resolution should be free of charge. The CLSB would not expect a Costs Lawyer to charge for complaint resolution in relation to the Costs Lawyer’s own service provision.

3. Second-tier complaints

Second tier complaints are those that are escalated to the CLSB or Legal Ombudsman.

3.1 Service complaints

A costs lawyer should make a decision based on the evidence, impartially and without any discrimination or prejudice. A complaint must be resolved within 8 weeks of that complaint being made to the costs lawyer. In the event a complaint is not resolved in that time period or the complaint is not resolved to the satisfaction of the complainant, the complainant may refer the matter to the LeO.

3.2 The Office of Legal Complaints

Section 114(1) of the Legal Services Act 2007 created The Office of Legal Complaints (the OLC) and it is described in Schedule 15. This changed the complaint procedures radically but not the disciplinary procedures. Baroness Butler-Sloss in the debate in the House of Lords regarding the Legal Services Act 2007 said:

© Association of Costs Lawyers Training 2020 86 “I am very concerned about the hybrid nature of the complaints that will come to the OLC. Some will be on discipline; some will be seeking redress. It is extremely difficult to differentiate between them. Indeed, I am told that about 70 per cent of the complaints have been hybrid. We have the great problem that there will be the same facts, possibly two bites at the same cherry with two different organisations—the approved regulator and the OLC—dealing with the same case. There is always the possibility of different conclusions.”

Section 4 of Schedule 15 of the Legal Services Act 2007 gave clear instructions to the Board that in appointing members of the OLC, they should make sure that they have knowledge or experience in:

þ the handling of complaints; þ the provision of legal services; þ legal education and legal training; þ consumer affairs; þ civil or criminal proceedings; and þ the working of the courts and so on.

In other words, people working there should be very professional and able to maintain the proper standard of work for legal professionals.

3.3 The Legal Ombudsman

The Legal Ombudsman was established by the Office for Legal Complaints (OLC), under the Legal Services Act 2007 and began accepting complaints on 6 October 2010. The Legal Ombudsman investigates and adjudicates complaints against those providing legal services. It is an independent body that deals with all those who provide legal services. Its mission is to:

‘run an independent ombudsman scheme that resolves complaints about lawyers in a fair and effective way, where we are shrewd and decisive when tackling complex issues and that is open so we can give focused feedback to help drive importance to legal services.’

The Legal Ombudsman deals with service complaints about Costs Lawyers in an independent and objective way. The Legal Ombudsman can award a variety of remedies, including financial compensation. A complainant can accept the Legal Ombudsman’s determination, in which case it is binding on the Costs Lawyer. However, the complainant does not have to accept the determination and can pursue redress via other means (including the courts).

Before the Legal Ombudsman will consider a service complaint, the Costs Lawyer must first have tried to resolve the complaint themselves under their first-tier complaints procedure. Should a service complaint be referred to the Legal Ombudsman, they will look not only at the substance of the complaint but also the way in which the complaint was initially dealt with by the Costs Lawyer.

The complaint must come from a complaint with whom the Legal Ombudsman is authorised to deal, which includes individuals and small businesses, charities, clubs, societies, associations, trustees and personal representatives and personal representatives © Association of Costs Lawyers Training 2020 87 and beneficiaries of an estate. The Legal Ombudsman will not consider complaints that were considered by previous complaints handing organisations, such as the Legal Complaints Services, unless new evidence has come to light that might affect the outcome.

The Legal Ombudsman has stated that it wishes to resolve complaints at the earliest stage possible. The first stage in the process will normally be an attempt to resolve the complaint informally. If this is not possible, the Legal Ombudsman will investigate the complaint ensuring that both parties have a chance to make representations. The Legal Ombudsman will then provide parties with their provisional assessment and both parties will have a chance to respond within a fixed deadline. If neither party indicates disagreement with the decision then the Legal Ombudsman can treat the complaint as resolved.

The complainant will be asked to accept the determinations and, if the complainant does so, it will become final and binding on all parties. Neither party may then start or continue legal proceedings in respect of the complaint. If the complainant rejects the determination (or it is treated as such due to non-response) then the legal rights of both parties are unaffected.

An ombudsman has the power to require information from either party that he considers necessary to make a determination. The ombudsman can consider a wide range of evidence including evidence from approved regulators, third parties and evidence given in confidence, where it is reasonable and necessary to do so. The Legal Ombudsman has indicated that its investigators will normally consider a solicitor’s file on the complaint, for example, the record that has been kept about how the complaint has been handled. It is therefore important that solicitors ensure that they keep accurate and thorough files on each complaint they receive.

If a legal services provider does not co-operate with the Legal Ombudsman, then an ombudsman may inform the CLSB or other regulator of this. Where either party fails to comply with a deadline then the ombudsman may:

þ proceed with the investigation, consideration or determination; þ draw inferences from the failure; þ if the failure is on the part of the complainant, dismiss the complaint; or þ if the failure is on the part of the authorised person, include compensation for any inconvenience caused to the complainant in any award made.

Where the Legal Ombudsman finds in favour of the complainant, the ombudsman may require a lawyer to do any of the following:

þ apologise; þ pay compensation of a specified amount for loss suffered; þ pay interest on that compensation from a specified time; þ pay compensation of a specified amount for inconvenience/distress caused; þ ensure (and pay for) putting right any specified error, omission or other deficiency; þ take (any pay for) any specified action in the interests of the complainant; þ pay a specified amount for costs the complainant incurred in pursing the complaint; and/or þ limit fees to a specified amount. © Association of Costs Lawyers Training 2020 88 There is a limit of £50,000 on the total value that can be awarded in respect of:

þ compensation; þ the cost of putting right any errors; and þ the cost of any specified action carried out in the interests of a complainant.

However, this limit does not apply to awards relating to interest on compensation, costs incurred by the complainant in pursuing the complaint, the limitation of fees and the interest on fees to be refunded. Thus the cost could be higher than £30,000. However, it should be noted that complainants will not normally require assistance to pursue a complaint with the Legal Ombudsman and therefore awards of costs are likely to be rare.

The Legal Ombudsman may also report any suspected misconduct on the part of a costs lawyer to the CLSB.

3.4 Conduct Complaints and the CLSB

If the conduct of a costs lawyer falls below the required levels and is sufficiently poor, he may be guilty of professional misconduct. A few examples of what may be considered professional misconduct are listed below, but this is by no means an exhaustive list:

þ accepting instructions to carry out work (i.e. preparation of the bill) and then failing to undertake that work; þ failure to attend a hearing when instructed to do so; þ deliberately and unjustifiably inflating a claim for costs for the solicitor; þ practicing without any or any adequate insurance in place; and þ being intoxicated in court.

Where there has been a breach of the Rules or Codes or where a costs lawyer becomes aware that his conduct has not met the required standard, he should advise his clients that they are no longer able to act and he must comply with passing over the file of papers to another firm. Where a complaint is made, regardless of the costs lawyer’s opinion of the veracity of the complaint, the file should be passed on to another firm. Where appropriate, both the CLSB and professional indemnity insurer should be informed of the complaint.

The CLSB publishes Disciplinary Rules which sets out the procedure for complaints referred to the CLSB. Once a complaint is made, the CLSB will consider the matter and produce a report, which will conclude with one of three outcomes:

þ no case to answer; þ minor disciplinary finding; or þ referral to Conduct Committee for consideration.

© Association of Costs Lawyers Training 2020 89 There are a number of issues that will be taken into account when coming to the conclusion. In the event that there is no case to answer, no costs order will be made where there is a minor disciplinary finding, a fixed costs order of £250 will be made and the costs lawyer will be served with a warning letter that requires the cause of the complaint to be remedied within a set period of time.

Should a further complaint be made of a similar nature within two years, the CLSB will consider, as evidence, the first complaint when considering the further complaint.

In the event that the costs lawyer does not agree a minor disciplinary finding or in the event that a referral is considered appropriate, the Conduct Committee will be convened to consider the complaint. The Committee has three levels (levels one and two are the Conduct Committee and level three is the Conduct Appeal Committee). If the finding of the Committee is that the complaint is upheld, sanctions and penalties may be imposed. A fixed costs order will also be made, depending on the level the case reached (i.e. level one, two or three); there will be no costs order if it is the finding of the Committee that there is no case to answer.

The CLSB can publish the findings of the Committee (with certain exceptions) and this will be recorded against the costs lawyer’s name on the register. In the case of a warning letter or undertaking, it will be recorded against the name until the undertaking or action required in the warning letter has been completed; in the case of a sanction, it will remain against the costs lawyer’s name for the period of time covered by the sanction.

4. Data and information about complaints

Analysis of the number of complaints, the nature of complaints and their outcomes will assist costs lawyers in improving the effectiveness of the service they offer to their clients. Costs Lawyers should consider taking further steps to better understand their clients’ expectations, such as collecting feedback throughout a matter and at its conclusion.

The CLSB collates information about the volume and type of complaints dealt with by individual Costs Lawyers, along with Costs Lawyers’ complaints procedures, data sourced from the Legal Ombudsman and data about complaints to the CLSB. The complaints data loop below shows how this information informs the risk assessment process, enabling the CLSB to target its regulatory interventions in areas where consumer outcomes can most effectively be improved.

1. Introduction

It makes good business sense and it is fundamental in providing a good service that you manage client care effectively. This inevitably starts before your first meeting with the client. Having proper procedures in place to ensure that all the elements of good client care are accommodated for.

Clients tend to complain because they have received poor service or a firm’s charges have exceeded the clients’ expectations. In simple terms, clients will complain if they are asked to pay more than originally quoted for the service they have received or if the quality of service they receive does not meet their expectations.

Before you consider the potential liability of a costs lawyer you must consider who the costs lawyer’s client is. There are a number of parties that can potentially instruct costs lawyers, although some situations have historically been less common:

þ Litigant in person; þ Solicitors on behalf of their clients; þ Solicitors; and þ Insurers.

Some consideration should also be given to the position that a costs lawyer holds at his place of work e.g. is he an employee or an employer? The following is produced as an overview only.

2. Contract

As we know, the relationship between a costs lawyer and their client is largely governed by contract law. There are no specific rules, to date, that govern the form of contract between a costs lawyer and his client but effectively the relationship is a contract for service.

The requirements as to client care with regards a client agreement can be found in the Costs Lawyers Code of Conduct 2014 at rule 3.4 which states that costs lawyers must advise new clients in writing when instructions are first received of:

þ an estimate of fees / details of charging structure and where that estimate subsequently becomes inaccurate or that charging structure changes provide an updated estimate / notice of revised charges; þ the right to complain; þ how to complain i.e. first-tier complaints handling procedure; þ the period within which you will deal with complaints under first-tier complaints handling procedure; þ the clients right to refer their complaint to the Legal Ombudsman in the event the matter is not resolved to the satisfaction of the client or the matter has not been resolved within 8 weeks of the complaint being made; þ applicable time limits for referring the complaint to the Legal Ombudsman; and

There is an implied term in contracts for service by virtue of section 13 of the Supply of Goods and Services Act 1982 that a service should be carried out with reasonable care and skill. Inadequate service would be a breach of contract and therefore you may be liable for any loss suffered as a result.

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the regulations) come into force on 13 June 2014. They regulate most contracts made between a "trader" and a "consumer". The regulations are likely to apply to a wide range of contracts made between solicitors (as traders) and their clients (as consumers). Whether they apply will depend on the nature of the client and the circumstances in which the contract was made. If contracts were entered into prior to 13 June 2014 these will be covered by the Distance Selling Regulations which cover the period before 13 June 2014.

3. Negligence

Negligence can be defined, in this context, as the failure to provide legal services to the standard provided by a reasonably competent lawyer. These complaints may have serious repercussions if they are not dealt with to the client’s satisfaction. They may result in court action and may affect indemnity insurance.

3.1 Elements of a Claim

The basis for any claim in the tort of ‘negligence’ is that the tortfeasor owed the ‘victim’ a duty of care which was broken resulting in damage. The tort consists of three elements, identified in Donoghue v Stevenson [1932] AC 562 (see below):

þ the existence of a duty of care; þ a breach of that duty; and þ loss or damage caused by that breach of duty.

Part of the criteria for the existence of a duty of care depends on the relationship of the parties, such as doctor-patient. This can be described as a duty being owed by the nature an individual is a ‘members of a class’. in Heaven v Pender (1883) 1 QBD 503 a general duty test for a duty of care was mooted which relied on situations where there was a contractual relationship, this could cover costs lawyers and their clients. There was no generally accepted test for liability in negligence created until the landmark case of Donoghue v Stevenson in 1932. Donoghue v Stevenson [1932] AC 562 is now the basis for all negligence actions in England & Wales and the neighbourhood test which requires that there is a degree of proximity between the parties.

Following cases such as Blyth v Birmingham Waterworks [1856] 156 ER 1047 it is clear that when considering if there has been a breach of duty the questions the court will be concerned with are:

þ that the defendant failed to reach the appropriate legal standard required – so what was the extent of the claimant’s duty of care? þ as a matter of fact, the defendant’s actions fell below the required standard.

© Association of Costs Lawyers Training 2020 92 As in the case of costs lawyers, where a defendant holds him/herself out as possessing a particular skill, s/he will need to reach the standard of care of the reasonable practitioner of the skill s/he is claiming to have. For example, in Phillips v Whiteley [1938] KBD D, a jeweller pierced the claimant’s ears, which later developed an infection. The court held that a jeweller is not a surgeon, and so is not bound to take the same precautions as a surgeon. On the facts, the defendant had taken all reasonable precautions that a competent jeweller would take and had not breached his duty of care.

3.2 Responsibility to the Lay Client

The case of Ahmed v Powell (2003) EWHC 9011 is authority that solicitors are responsible for the conduct of the detailed assessment proceedings and cannot avoid that responsibility merely by instructing a costs draftsman. Costs draftsmen can appear on behalf of the party only as a duly authorised representative of the solicitor who has instructed him to be there.

It appears that when instructed by a solicitor, the conduct of a costs lawyer is the responsibility of the solicitor. The case of Ahmed v Powell (2003) EWHC 9011 is authority that solicitors are responsible for the conduct of the detailed assessment proceedings and cannot avoid that responsibility merely by instructing a costs draftsman. Costs draftsmen can appear on behalf of the party only as a duly authorised representative of the solicitor who has instructed him to be there. Which is appropriate given the decision in Crane v Canons Leisure Centre (2007) EWCA Civ 1352 means that work undertaken by independent costs draftsmen could be treated as part of the instructing solicitor’s profit costs such as to attract a success fee. However there is currently no authority on the extent of the costs lawyer’s liability if a lay client instructs them. However, the decision in Ahmed v Powell (2003) EWHC 9011 predates the enactment of the Legal Services Act 2007.

3.3 Negligent Advocates

Following the changes to a costs lawyers practice rights the costs lawyer needs to be alert to the position with regards a negligent advocate. Again, much of the authority on negligent advocates pre dates the Legal Services Act 2007 and there is no binding authority in respect of costs lawyers. The Costs Lawyers Code of Conduct clearly sets out the duty owed by a costs lawyer to the court in the administration of justice. Under principle 2 of the CLSB’s Code of Conduct, to comply with their duty to the court in the administration of justice a costs lawyer must:

þ at all times act within the law (principle 2.1); þ must not knowingly or recklessly either mislead the court or allow the court to be misled (principle 2.2); þ must comply with any court order which places an obligation on them and must not be in contempt of court (principle 2.3); and þ must advise clients to comply with court orders made against them (principle 2.4).

The starting point when considering negligence claims and advocacy is the decision in Rondel v Worsley (1967) 3 WLR 1666 where it was held that a claimant's civil action for negligence could not be sustained and a barrister's immunity was justified by public policy. In this case, the appellant was tried on a convicted of having caused grievous bodily harm. He had been represented by the respondent, a barrister who had appeared on a "dock brief." Later the appellant issued a writ and statement of claim against the respondent © Association of Costs Lawyers Training 2020 93 claiming damages for professional negligence in the respondent's dealing with the evidence. The House of Lords held, dismissing the appeal, that a barrister's conduct and management of litigation (whether in court or at an earlier stage) could not give rise to a claim for professional negligence; this position was a result of public policy in that:

þ a barrister ought to be able to carry out his duty to the court fearlessly and independently; þ actions for negligence against barristers would inevitably amount to retrials and thus prolong litigation, contrary to the public interest; and þ a barrister was obliged to accept any client if a proper fee was paid and could not refuse a client on any other ground.

The later case of Saif Ali v Sydney Mitchell (1978) 3 All ER 1033 held that this immunity extended to pre-trial work if only if it is so intimately connected with the conduct of the case in court as to amount to a preliminary decision about it.

However, more recent authority on advocates liability for negligence states clearly that you are under a duty to your client. The case Arthur J S Hall & Co v Simons Lord Hoffman (2002) 1 AC 615 overturned the earlier decision and the court held that the public policy arguments for immunity established by Rondel v Worsley [1969] 1 A.C. 191 were no longer appropriate, particularly as the court had powers under the Civil Procedure Rules 1998 to prevent an abuse of process arising from inappropriate litigation. The standard of workmanship of an advocate is as described in Arthur J S Hall & Co v Simons (2002) 1 AC 615, by Lord Hoffman at page 691:

“The fact is that the advocate, like other professional men, undertaking a duty to his client to conduct his case, subject to the rules and ethics of his profession, with proper skill and care.”

Costs lawyers should remain alert to the fact that the rules on the liability of advocates are still developing as was said in Moy v Pettmann Smith (A Firm) & Anor (2005) 1 WLR 581 by Lady Hale, the courts:

"have not yet developed a clear set of principles governing the terms in which an advocate's advice should be given".

For now, what we do know is that the decision in Buxton v Mills-Owens (2010) 1 WLR 1997 means that if a point is not properly arguable, it should not be argued. Additionally, consideration should be given to Copeland v Smith (2002) 1 WLR 1371 which illustrates the advocate is under a duty to draw the judge's attention to authorities that are in point, even if they are adverse to that advocate's case. Finally, the case of Waterson Hicks v Eliopoulos (1997) Costs L.R. illustrates that as a duly authorised representative of a solicitor, a costs draftsman has the same authority as the solicitor would have to consent to orders.

4. Misconduct

Professional misconduct is unlike conventional law subjects in that in very few cases do the rules contain an absolute prohibition on an action or course of conduct. In most cases the rules and principles are drafted with a certain amount of flexibility in their wording, allowing discretion in their application. In some ways, flexibility in the law is more difficult to live with © Association of Costs Lawyers Training 2020 94 than an absolute rule since it becomes a matter of judgment as to whether a particular action will or will not amount to misconduct. The issue is even more complex when you consider the same action may be taken by a costs lawyer in two similar cases but the action may have quite different results for each client.

Owing to both the grey nature of the conduct rules and to the expectation of high standards of behavior, it is perhaps unwise to attempt to define conduct which would amount to professional misconduct, unbefitting conduct or a breach of duty. Nevertheless, the following broad brush definitions are offered for your consideration:

This is generally taken to mean breaches of the Professional conduct rules and principles committed in the Misconduct course of practicing as a costs lawyer. This may generally be defined as conduct by a Unbefitting lawyer which ought to render him as unfit to Conduct be an officer of the court (Re Southerton (1805) 6 East 126). This is something that gives rise to an action in Breach of duty law, for example in contract or tort.

There is an overlap between the above categories. Failure to advise a client on their potential costs liabilities is both unbefitting conduct and could give rise to an action in negligence. Whether practicing or not, situations in private life or activities outside of legal practice may give rise to disciplinary action, particularly in situations that bring the profession into disrepute.

Costs lawyers should not attempt to act beyond their competence. Where a costs lawyer considers it appropriate to do so, advice should be sought from an expert. This should be with the prior approval of the client. In the alternative, a costs lawyer must decline any work for which he does not have the skill, knowledge or experience to undertake. A costs lawyer should keep the client updated as to the progress of his matter. He should keep accurate records of the work undertaken on any file so that clients can make informed decisions based on the work being undertaken and the costs of that work.

Costs lawyers must work in a timely manner with due regard for the level of service provided. Although there is currently no particular evidence in respect of excessive delay being professional misconduct in light of the changes made in April 2013 with the Jackson reforms, and the adherence to stricter deadlines (especially in respect of costs budgets); costs lawyers should be aware that although this may (or may not) amount to outright misconduct, a failure to observe deadlines is likely to have a significant influence on their professional indemnity premiums.

A breach of the CLSB Code of Conduct or the SRA Codes of Conduct may result in a firm being investigated. The SRA Standards and Regulations require that a lawyer should report serious misconduct to the SRA. Principle 5 of the CLSB Code of Conduct requires that costs lawyers deal with the regulators & Legal Ombudsman in an open and co-operative way. Moreover, under Rule 8 of the Costs Lawyers Practising Rules, you would be required to disclose the consequence of any investigation upon application for a practising certificate. An adverse finding can have a serious impact on your professional standing.

On rare occasions, allegations of unlawful conduct may be made. These may warrant the involvement of the police. As you are aware, when entering into contracts since January 2014, you need to be alert to the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (SI 2013/3134), which replaced the Consumer Protection (Distance Selling) Regulations 2000 (SI 2000/2334) (as amended) and the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008 (SI 2008/1816). These regulations open fee earners up to a number of potential criminal actions. Regulation 19 makes it an offence to fail to inform consumers of their right to cancel off-premises contracts. The offence is punishable on summary conviction by a fine. Regulation 20 provides a due diligence defence if it can be shown that the offence occurred due to one of the following:

þ the act or default of another; or þ reliance on information given by another.

You must also be able to show that you have taken all reasonable precautions and exercised all due diligence to prevent the commission of the offence. If an officer of a corporate body has committed the offence, the officer is also guilty of the offence and liable to prosecution and punishment, if one of the following is true:

þ they consented to or connived in committing the offence; or þ the offence is attributable to any neglect on their part.

Regulation 25 makes it an offence to intentionally obstruct an investigation by authorised officers into breaches of the regulations, or to knowingly make a false statement to an authorised officer. However, the regulations do not authorise officers to inspect or take possession of privileged material. If you are asked to produce any such material by an authorised officer, you are not required by the regulations to produce it (Regulation 24).

Solicitors have strict rules to follow in how they handle money, especially client money. They are bound by a set of rules called the Solicitors Accounts Rules which form part of the Code of Conduct. The rules govern solicitors’ handling of client money, bills, disbursements, office money, wages, and indemnity insurance. The fundamental outcomes that the SRA wish to achieve with the Solicitors Accounts Rules are to protect client money and assets, ensure solicitors act with integrity, comply with regulations and operate the business in accordance with proper governance. Whilst costs lawyers are specifically precluded from holding client monies, they should remain alert to their potential liability in relation to the same.

Money laundering is a process by which money gained from illegal means is given the appearance of having originated from a legitimate source. It allows criminals to introduce their money into the financial system with the appearance that it is from a legitimate source. There are three acknowledged phases to money laundering: placement; layering and integration. Placement is when money generated from crime is placed into the financial system. Solicitors’ firms can be targets for this because they commonly deal with client money. Layering is when such money is moved through a number of transactions to conceal its origins. Possibly through a property transaction or a trust or a limited company. Integration is when this money reappears as a legitimate fund or asset. They will often buy © Association of Costs Lawyers Training 2020 96 shares, buy property, set up a trust or even settle litigation. There are criminal sanctions if a lawyer fails to report suspected money laundering.

Under section 327 of the Proceeds of Crime Act 2002, a person will be liable if he conceals, disguise, converts, transfers or removes criminal property. Concealing or disguising criminal property includes concealing or disguising its nature, source, location, disposition, movement or ownership or any rights with respect to it. Section 328 of the Proceeds of Crime Act 2002 states that a person commits an offence if he enters into, or becomes concerned in, an arrangement which he knows or suspects facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person. Finally, under section 329 of the Proceeds of Crime Act 2002, if a person acquires, uses or possesses property for which he has not given adequate consideration, he may be liable of an offence.

Solicitors and other professionals are going to be further exposed to criminal liability. Clause 44 of the Serious Crime Bill 2014 introduces the offence of participating in an organised crime group into English law. It has the potential to seriously widen the scope of criminal liability for lawyers and other professionals working in the non-regulated sector.

Sections 14-17 of the Legal Services Act 2007 created offences associated with carrying out reserved legal activities with no entitlement. Section 197 of the Legal Services Act 2007 creates similar offences for entities. Similar provisions existed before the Act. However, these related to the individual branches of the profession and it is hoped that the consolidation of these provisions will improve transparency and compliance. Please note the decision in the case of Hudgell, Yeates and Co v Watson (1978) QB 451. In this case, one of the partners in a firm of solicitors forgot to renew his certificate, rendering him unqualified and meant that it was illegal for him to practise. A partnership between a solicitor and an unqualified person at that time was prohibited by statute. It was held that the failure to renew his certificate brought the partnership to an end, the partnership became illegal and was automatically dissolved but the court held that the remaining partners could lawfully carry on the business of the partnership. The outcome of this case today would be different due to the Legal Services Act 2007. However, the principle behind the decision continues in that it is illegal for persons to conduct work that they are not authorised to perform.

The Legal Services Act 2007 created two new criminal offences that are punishable by up to two years in prison under section 44B. These offences are called Information Offences and relate to the falsification or destruction of information that forms part of an investigation into the conduct of an authorised person. It is also worth noting that under the Legal Services Act 2007, preparing a report on a firm’s financial position is now required to disclose any suspicions of negligence or fraud on the part of a firm. This does raise the questions as to whether or not this duty may extend to costs lawyers in the future; after all, you are experts on the financial transactions that take place within proceedings.

6. Personal liability for costs

The two main principles when it comes to deciding which party should pay the costs of an application or of the whole proceedings are contained in the following authority:

þ section 51 of the Senior Courts Act 1981 and Civil Procedure Rules (CPR) 44.2; and © Association of Costs Lawyers Training 2020 97 þ CPR 44.2(2).

Section 51 of the Senior Courts Act 1981 and CPR 44.2(1) provide that the court has an absolute discretion when making an order for costs. CPR 44.2(2)(a) expands that by stating that if the court decides to make an order about costs, the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but CPR 44.2(2)(b) enables the court to make a different order. By virtue of CPR 44.4 when deciding what order the court shall make the factors that shall be considered are:

þ the conduct of all the parties; þ whether a party has succeeded on part of its case, even if that party has not been wholly successful; and þ any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.

Under section 51(6) of the Senior Courts Act 1981 the court may disallow, or order the legal or other representative concerned to pay the wasted costs. CPR 46.8 sets out the procedure for the court to make an order that a legal representative is personally liable for costs, when the court makes a wasted costs order. This may be particularly relevant to those instructed by litigants in person or in a solicitor/client dispute where the costs lawyer may put himself on court record as acting. Part 42 of the CPR has recently been amended to allow any person who is an authorised person in relation to an activity which constitutes the conduct of litigation (within the meaning of that Legal Services Act 2007), to be entered on the court record. It should be noted that if a costs lawyer is on the court record as acting, he may be required to sign a bill of costs and, as previously stated, the mis- certification of a bill is a serious (disciplinary) offence as per Bailey v IBC Vehicles Ltd (1998) 3 All ER 570.

The court must be satisfied that there has been an improper, unreasonable or negligent act or omission and that, as a result, costs have been incurred by a party. A mere mistake is not sufficient to justify an order, there must be a more serious error as can be seen by considering the leading authority Ridehalgh v Horsefield (1994) Ch 205 CA. This case established that for such an order to be made there must be Improper, unreasonable or negligent conduct. Consideration of Harley v McDonald (2001) 2 AC 678 tells us that wasted costs orders are discretionary and should be reserved for those cases where the unjustifiable conduct can be demonstrated without recourse to disproportionate procedures. Such orders should not be used as a threat to intimidate the lawyers on the other side as can be seen from the case Orchard v S E Electricity Board (1987) QB 565. Finally, the case Symphony v Hodgson (1994) QB 179 stipulates that an application for a wasted costs order should not be motivated simply by resentment at an inability to obtain an effective order for costs against an assisted or impecunious litigant.

For criminal proceedings, see the Practice Direction (Costs in Criminal Proceedings) : Costs (2010) 1 WLR 2351.

6.1 Wasted costs orders and legal aid

In Ridehalgh v Horsefield (1994) Ch 205 CA Bingham MR goes on knowingly to make two potentially contradictory points. One is that in legal aid cases it is unlikely that a costs © Association of Costs Lawyers Training 2020 98 award will be made against a legally aided party, therefore the risk of litigation to the client is lower, and a representative must be careful not to take advantage of that fact. However, he also points out that because costs cannot usually be recovered against the client, there is more incentive for a victorious opposing party and representative to pursue wasted costs against the lawyer rather than normal costs against their client.

Given that costs will not normally be awarded anyway and legal aid is now so rarely available in immigration appeals, these legal aid issues perhaps only touch on a small number of cases, if any. However, it might be thought that the same caution should be exercised by legal representatives given that it will rarely be possible to enforce costs orders against unsuccessful immigration law clients.

6.2 Wasted costs, privilege and client confidentiality

Ridehalgh v Horsefield (1994) Ch 205 CA recognises the difficulty which lawyers may face caused by the rules of client confidentiality and professional privilege. The privilege is that of the client and is not that of the lawyer, so it is not for the lawyer to waive it without permission from the client. The client may well refuse permission in this context, because to do so might expose the client to a costs order rather than the lawyer. This is something that judges contemplating a wasted cost application should very carefully consider:

Judges who are invited to make or contemplate making a wasted costs order must make full allowance for the inability of respondent lawyers to tell the whole story. Where there is room for doubt, the respondent lawyers are entitled to the benefit of it. It is again only when, with all allowances made, a lawyer’s conduct of proceedings is quite plainly unjustifiable that it can be appropriate to make a wasted costs order.

The issue arose again in the case of Medcalf v Weatherill & Anor [2002] UKHL 27. Counsel for a defendant party alleged fraud by the claimant and his solicitors in the conduct of the action before the judge. An action for wasted costs for the preparation of a defence to this allegation was brought on the grounds that there was no basis for the allegation in evidence and it was therefore improperly made according to the Bar’s Code of Conduct. Counsel pleaded in their defence that they were precluded from giving a full answer to a wasted costs application because of legal professional privilege.

With Lord Bingham giving the leading judgment, the House of Lords held a wasted costs order in these circumstances should be exceptional and went on:

Where a wasted costs order is sought against a practitioner precluded by legal professional privilege from giving his full answer to the application, the court should not make an order unless, proceeding with extreme care, it is (a) satisfied that there is nothing the practitioner could say, if unconstrained, to resist the order and (b) that it is in all the circumstances fair to make the order.

7. Professional indemnity insurance

Professional indemnity insurance (PII) is insurance that covers civil liability claims arising from your work in private legal practice. These claims most commonly involve professional negligence. This type of insurance ensures that clients do not suffer loss, which might

Under rule 1.1(d) of the CLSB Practising Rules 2014, no person shall be entitled to practice as a Costs Lawyer unless they have professional indemnity insurance in accordance with Rule 10. Under rule 10.1 of the CLSB Practising Rules 2014, Costs Lawyers shall ensure that they:

þ practice with the benefit of professional indemnity insurance of a minimum £100,000 (any one claim) to include loss of documents; and þ on an ongoing basis, assess all financial risk associated with work being undertaken by them and ensure that professional indemnity insurance and loss of documents insurance is in place in excess of the minimum set at a level commensurate with that work.

The CLSB ensure compliance with the rules of insurance by requiring costs lawyers to demonstrate they have complied with rule 1.1(d) of the CLSB Practising Rules when they apply for practising certificates. Should the costs lawyer fail to demonstrate they have the requisite insurance, and systems to monitor work, in place then the CLSB may refuse to grant them their practising certificate.

Rule 3.8 of the Costs Lawyers Code of Conduct requires all costs lawyers maintain professional indemnity insurance which complies with the requirements of the CLSB prevailing at the time and promptly provide evidence of that insurance cover if requested by a client, CLSB, ACL or Legal Ombudsman.

ACL Training Herringbone House Lion Road Palgrave, Diss, Norfolk, IP22 1AL Tel: 0203 1740 967 Email: [email protected] Web: www.associationofcostslawyers.co.uk.co.uk ALCD (Training) Limited trading as ACL Training. Registered in England and Wales. Registered Office: 16 Broad Street, Eye, Suffolk IP23 7AF. Company Number 04158593.