24 October 2013Print This Post

Lord Chief Justice shines proportionality spotlight on unnecessary use of London lawyers

Thomas: huge differences in rates

The impact of the new rule on proportionality means that there should be a greater emphasis on only instructing London lawyers for non-London work when genuinely necessary, with the issue addressed during costs budgeting, the new Lord Chief Justice has said.

Giving his first speech in the role – the Birkenhead lecture – Sir John Thomas focused on improving the provision of justice outside of the capital, particularly because it “provides access to justice without the cost of parties coming to London”.

Sir John said the “serious impediment” to reducing the costs of litigation is the “trend towards the use of London lawyers and the courts in London to do work that can properly be carried out by lawyers based outside London in courts based outside London”.

The impetus for this, he suggested, may well be the higher rates that can be charged and recovered.

Noting the 1998 Court of Appeal ruling in Wraith v Sheffield Forgemasters – which said judges had to ask themselves whether it was objectively reasonable for London solicitors to be instructed – Sir John said only a few types of case “truly require” London firms, with all the overheads their location adds to the hourly rate charged.

“Of course a party is entitled to employ any firm it wishes in any city, but if the party does instruct a London firm for out of London work, it should do so in the knowledge that in the event of success, it will be necessary to explain to the court at the costs budgeting stage or on any assessment why it was reasonable to use a London firm for such a dispute. The differences in costs are now huge.”

He highlighted a Divisional Court case relating to Wales on which he sat last year in Cardiff, where the two interested parties instructed the Sheffield and London offices of the same national law firm respectively, at partner rates of £198 in Sheffield and £510 in London. It was held unreasonable for the Welsh party to have instructed the London office.

He continued: “But the advent of the national firm, the huge differences in rates and the increased emphasis on proportionality the Jackson reforms have introduced into the conduct of litigation are all matters that have arisen since the judgment of Kennedy LJ in [Wraith].

“It may be that this will necessitate a reconsideration of the factors that go into an assessment of whether it was reasonable to instruct London solicitors in cases where the dispute arises out of London.

“Kennedy LJ may have noted the duty to avoid higher costs. It will be interesting to see the view that the courts take of that duty now. Will it be seen as one that carries with it the requirement that instructing parties have to consider how best to ensure that costs are proportionate to the claim? Will this go beyond simply avoiding higher costs than would otherwise be incurred?

“If proportionality does have this effect, in addition to its wider effects on costs through budgeting and costs assessment, it may well serve to increase the impetus for clients in cases arising out of London to use expert local firms or, if a national firm is instructed, to ask the question of their solicitors why the work, or the bulk of it, was not done in an office out of London and charged accordingly.”

Sir John acknowledged that there has always been work that requires lawyers from a certain part of the country. “London remains one of the world’s financial and commercial centres. It is inevitable that those law firms specialising in such work will locate there. Nothing should disturb that or question the reasonableness of using them for such work.

“However there is a vast amount of litigation, including what has traditionally been seen as specialist, such as much traditional chancery work and administrative court work, that can and should properly be litigated outside London by local firms where that work arises out of London. The courts will do all they can to encourage that.”

While highlighting the need for a better court infrastructure, particularly IT, and the need to stamp out local directions, Sir John said the key to the “proper provision of justice” outside of London is structuring and motivating the legal profession to support it, including preserving local specialist advocacy.

Sir John continued: “London has no monopoly on skill or experience, as any of our law firms and chambers based out of London will tell you with both pride and justification. In the age of the internet, of tele-conferences, Skype and Facetime, there is no reason why a litigant should not or could not properly instruct a lawyer from outside London to work for them at a cost significantly less than in London but with equal quality experience in most fields… And of course such increased competition from a truly national market will affect London prices.”

This in turn means that “there is a real opportunity to reverse the recent historic trend that has seen London gain the largest concentration of the legal profession”, he added.

To read the full speech, click here.

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