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Lawyer and Client Costs Booklet V1.0

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Lawyer and Client Costs Booklet V1.0 Lawyer and Client Costs CONTENTS PAGES CHAPTER 1 OUTCOMES 2 THE REGULATORY FRAMEWORK OF THE LEGAL SERVICES MARKET 3-10 TYPES OF WORK 11-14 LAWYER CLIENT RETAINERS 15-24 FUNDING METHODS 25-29 CHAPTER 2 OUTCOMES 30 REMUNERATION OF LAWYERS 31-41 ENTERING A RETAINER (COSTS INFORMATION AND ESTIMATES) 42-49 TERMINATION OF THE RETAINER 50-55 CHAPTER 3 OUTCOMES 56 LEGAL ACCOUNTS AND COSTS 57-60 TYPES OF BILL 61-69 COMPLAINTS ABOUT A LAWYERS BILL 70-76 CHAPTER 4 OUTCOMES 77 SOLICITOR AND OWN CLIENT ASSESSMENTS 78-82 LAWYER’S RIGHTS TO RECOVER COSTS 83-93 1 Chapter 1 Learning outcomes After studying this chapter you should understand the following main points: þ the development of the legal services market; þ how work of lawyers may be classified; þ what retainers are, the law that governs retainers and the relevant professional conduct rules; and þ the way matters may be funded. 1.1 The Regulatory Framework of the Legal Services Market 1. Introduction The regulation of legal services has grown as the legal profession developed and expanded over hundreds of years, historically regulations were created by both the profession itself and by governments through legislation. It was the Solicitors Act 1974 that authorised the Council of the Law Society to make rules regulating the professional practice, conduct and discipline of solicitors, and rules relating to the keeping of accounts. Whilst this is still the case in some instances in others, in recent times, the law has changed dramatically. Whilst the Solicitors Act 1974 used to govern the vast majority of persons who conducted litigation, as a result of changes made by the Courts and Legal Services Act 1990, then the Access to Justice Act 1999, and finally the Legal Services Act 2007 the ambit of persons who are able to provide this and other types of legal service has widened considerably to all “authorised persons”. The main aim behind the Legal Services Act 2007 was to refocus regulation on consumer interests, as opposed to professional interests, ensuring independent regulation and removing unnecessary barriers to competition. 2. The Regulators Concern about self-regulation by some categories of lawyers was one reason why the Legal Services Act 2007 was introduced. The Legal Services Act 2007 triggered 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 by overseeing the regulation of lawyers across England and Wales through authorised regulating bodies. The LSB has 8 regulatory objectives, namely: þ protecting and promoting the public interest; þ supporting the constitutional principles of the rule of law; þ improving access to justice; þ protecting and promoting the interest of consumers; þ promoting competition in the provision of services; þ encouraging an independent, strong, diverse and effective legal profession; þ increasing public understanding of the citizen’s legal rights and duties; and þ promoting and maintaining adherence (by authorised persons) to the professional principles. In achieving the above 8 objectives the LSB is an overarching regulator. 2.1 The Approved Regulators The approved regulators of the legal service market are listed in paragraph 1 of Schedule 4 to the Legal Services Act 2007 or they have been designated as an approved regulator by © Association of Costs Lawyers Training 2020 3 an order under paragraph 17 of that Schedule. ACL remains the approved regulator of Costs Lawyers although the function has now been delegated to the Costs Lawyer Standards Board. 2.2 The Internal Governance Rules Section 30 of the Legal Services Act 2007 places a duty on the LSB to make internal governance rules (IGR), which set out requirements to be met by approved regulators for the purposes of ensuring that: þ the exercise of their regulatory functions is not prejudiced by any representative functions; and þ so far as reasonably practicable, decisions relating to the exercise of regulatory functions are taken independently from decisions relating to the exercise of representative functions. Putting IGR in place in 2009 was one of the LSB’s first priorities. The IGR were then amended in 2014 to update the rules on Board appointments and reappointments. The LSB published their vision for legislative reform in September 2016. This document explained why the current lack of full independence between approved regulators and their frontline regulatory bodies was unlikely to be sustainable. The Competition and Markets Authority undertook a legal services market study and a final report was published in December 2016. This report identified a number of issues arising from the current regulatory structure. It considered that full regulatory independence from providers and government is a fundamental principle for the regulatory framework and consequently that the government should undertake a review of the independence of regulators. The Ministry of Justice undertook Tailored Reviews of the Legal Services Board and Office for Legal Complaints and published its findings in July 2017. This review recommended that to ensure continued public and international confidence in the regulation of the legal sector, the LSB should use all of its powers to provide robust assurance on the separation of the frontline regulators from the representative functions of the Approved Regulators, including the use of its investigative powers where appropriate. Any changes, including those as a result of the review of internal governance rules, should be made within the existing legislative framework. A review of the IGR was undertaken by the LSB between November 2017 and July 2019, following which new rules and accompanying statutory guidance were published in July 2019. The approved regulators are under a duty to implement arrangements for securing independence in line with the IGR, and to update these arrangements in accordance with amendments made by the LSB. With the publication of the new internal governance rules and accompanying statutory guidance, a 12 month transition period commenced. By 24 July 2020, the approved regulators must demonstrate their compliance with these rules. © Association of Costs Lawyers Training 2020 4 3. The Practitioners Only an authorised person is entitled to undertake reserved legal activities because they are regulated by an approved regulator that has been designated to regulate that activity under the provisions of the Legal Services Act 2007. For completeness, you should also remain aware that an exempt person can carry out a reserved legal activity (section 14 of the Legal Services Act 2007). 3.1 Authorised Persons Section 18 Legal Services Act 2007 defines and “authorised person” as: þ a person who is authorised to carry on the relevant activity by a relevant approved regulator in relation to the relevant activity (other than by virtue of a licence under Part 5); or þ 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 (see sections 83-85 of the Legal Services Act 2007). It should be noted that an authorised person may include an entity, or in other words a business with a licence to undertake reserved legal activities. In light of entity regulation (i.e. of firms not just individuals), all staff (qualified or not) in a regulated entity have to be aware of the requirements of their regulator (such as the SRA) to the extent necessary to do their job. This can be seen if you consider Chapter 7 of the SRA Code of Conduct. The approved regulators are responsible for setting appropriate regulatory arrangements which provide the conditions on which a person is authorised and must abide by when carrying out the reserved activities, see for example the SRA Authorisation Rules 2007. Through the regulatory arrangements, it is the approved regulators that determine the nature of regulation for activities carried out by individuals or the entities they regulate. The requirements include such provisions as: þ qualification and entry requirements; þ practice rules; þ conduct rules; þ disciplinary arrangements; and þ indemnification arrangements and compensation arrangements. In some instances these are framed partly by statutory requirements of existing legislation that were maintained within the Legal Services Act 2007 such as the Solicitors Act 1974, the Administration of Justice Act 1985 and the Courts and Legal Services Act 1990. 3.2 The Duties of Regulated Persons Part 8 of the Legal Services Act 2007 contains miscellaneous provisions about lawyers, including the duties of regulated persons. Section 176(1) of the Legal Services Act 2007 states that a person who is regulated by an approved regulator has a duty to comply with the regulatory arrangements of the approved regulator as they apply to that person. © Association of Costs Lawyers Training 2020 5 4. Duty of the Lawyer to their Client in respect of Costs At the current time the only regulation by the Courts of costs is in respect of solicitors’ costs. Although barristers, chartered legal executives and costs lawyers are all regulated legal professionals, and have their own regulatory bodies to which complaints can be made and can be investigated by the Legal Ombudsman, there is no provision for the courts to assess the costs of any lawyer other than a solicitor. This is clearly an area which needs reform given that legal executives and direct access barristers can now set up alone and can conduct litigation. Costs lawyers can also conduct costs litigation, and a client may want to challenge the bill of any of these legal professionals through the courts. It is possible a court might be prepared to assess the bill of a legal professional other than a solicitor, there is no statutory right for the client in respect of the same.
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