Costs orders in favour of non-lawyers

Employment law solicitors who have spotted the judgment of the EAT in Ramsay & Ors v.Bowercross Construction Ltd & Anor ought to be cracking out the champagne. I have blogged before about the fact that solicitors are in severe competition with ‘consultancy’ outfits, such as RBS Mentor, Croner, Peninsula, First Assist, Qdos and the like, who do a huge amount of the tribunal litigation in this country. In practice, many of their litigators are “former solicitors” or “non-practicing barristers”. The reason for this is that those legal professionals have identified that, for them, working for these organisations can be an attractive career move away from a law firm or self-employment.

Current regulations forbid any practicing solicitors from providing legal services to the public through any medium other than an actual law firm regulated by the SRA. One rule for any such firm is that it is 100% solicitor owned; so all partners or shareholders must be solicitors themselves. This is of course no good for an organisation like RBS Mentor, owned by a bank, or First Assist and Qdos, privately-owned insurance services and consultancy providers. So these businesses set themselves up as litigators, but simply do not describe any of their litigators as solicitors or barristers, simply “representatives” or “consultants”. As there are no rules on rights of audience in the tribunals, these people may then do casework and appear in the tribunal to their heart’s content. They sometimes still farm the work out to solicitors, and sometimes book counsel to appear at hearings, simply as their work waxes and wanes. A solicitor employee will simply shelve his or her practicing certificate and then not hold out as a solicitor. There is still a question mark over the professional acceptability of this, although it is commonplace.

Of course this causes problems with the rest of the law and legal system, which is used to giving considerable favour to qualified lawyers that appear before it. A few weeks ago we found out that advice from these non-qualified representatives does not attract privilege (at least before litigation is contemplated). Now we find out that they are not allowed costs orders. The decision springs from the principle that appeared in Agassi v HM Inspector of Taxes [2005] EWCA Civ 1507, which considered the exact same position but with tax specialists rather than employment. Andre Agassi’s tax consultants had done an admirable job of conducting the case on his behalf, but they weren’t a law firm so no costs award for them.

This is a fairly severe impediment to insurers (the most common users of these companies) and those that are paying privately, as although costs orders in the tribunal are comparatively rare, they provide protection to those companies who are forced to litigate a misconceived or mischievous claim. Now a Claimant at risk of a costs order can proceed in the knowledge that if he is against a non-law firm his exposure will be greatly limited.

It should be noted however that the Respondent in this case was allowed its costs of counsel who appeared at the hearing, since he was a qualified lawyer.

Clearly change is needed, as these companies are accepted as a valid part of legal services provision. It is likely reform will come with Alternative Business Structures, due in the next few years.

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