Costs lawyers urged to review insurance cover in wake of Mitchell

Nash: unrivalled opportunity

The risk of costs lawyers being sued has increased since the Jackson reforms and they need to keep their level of insurance under active review, their regulator has said, with a formal change to the regulatory regime now approved by the Legal Services Board.

The move comes as the new chair of the Association of Costs Lawyers (ACL) said she expects her members to form an integral part of litigation teams in the next five years.

Costs lawyers need a minimum of £100,000 of professional indemnity insurance (PII) cover, and following the approval of the Legal Services Board, they are now required “on an ongoing basis, [to] assess all financial risk associated with work being undertaken by them and ensure that [PII] and loss of documents insurance is in place in excess of the minimum… at a level commensurate with that work”.

The application from the Costs Lawyer Standards Board (CLSB) said that in the wake of the Jackson reforms, it “formed the view that financial risk has increased”, with subsequent case law such as Mitchell demonstrating the courts’ “strict application of costs budgeting and costs management rules”.

A CLSB analysis showed that 22% of costs lawyers are practising with the minimum £100,000 cover, while in its response to a CLSB consultation, the Senior Court Costs Office raised the question of “whether the minimum cover requirements of £100,000 is sufficient given the size of bills passing through the SCCO”.

Further, a leading broker of costs lawyers’ PII, Kerry London, advised of “a larger influx of claims and/or notifications for costs lawyers since last year”.

The CLSB said it took this approach to reform because an ‘across the board’ increase in the minimum level of cover would be neither proportionate nor targeted.

New ACL chair Sue Nash – who increased her own firm’s PII substantially following April 2013 – said “the level of indemnity insurance taken by firms should rise in proportion to their risks, over and above the current limit of £100,000. The ACL will, together with CLSB, continue to seek the best protection for clients of all kinds”.

Ms Nash succeeded Murray Heining and will hold the post for up to three years. She said costs lawyers have the skills to adapt to the changed role brought about by the Jackson reforms.

“Costs lawyers have an unrivalled opportunity to capitalise upon their expertise in legal project and legal practice management, costs auditing, WIP valuation and costs ADR, amongst other things, to ensure their future,” she said.

“The profession has developed greatly in recent times and costs lawyers will, I believe, become an integral part of litigation teams in the near future as solicitors, barristers and costs lawyers work together to progress proceedings in an efficient and proportionate manner.”

A practitioner for over 25 years, Ms Nash runs her own full-service costs firm, Litigation Costs Services, alongside costs software business Omnia Software.

Other plans include the creation of a student council to mirror the ACL council, the expansion of the association’s education programme to include more online training and CPD, and setting up regional costs groups to better represent members across the UK, along with the launch of a new website.

“My tenure will be all about guaranteeing a strong future for the costs profession,” she said. “The opportunities are great if the profession responds now. Our role will be to ensure that costs lawyers and those entering the profession have the tools to thrive.”



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