Practice and Procedure


PUBLISHED February 25, 2003

Cost negotiators were not properly instructed as agents of solicitors acting for an insurance company and therefore would not be given rights of audience under s.27 Courts and Legal Services Act 1990 and the basis on which they charged their fees was champertous.Determination of preliminary issues arising on a detailed assessment of costs following admission of liability by the defendant ('P') for personal injury suffered by the claimant ('C') in a road traffic accident with P. P's insurance company ('AC') had an arrangement with cost negotiators ('NLG') to act on their behalf regarding costs. They were paid a commission by AC at a set rate provided they achieved a monthly average gross saving of a certain percentage on claimants costs annually on a set number of cases. C contended that NLG should not have been granted rights of audience in the detailed assessment proceedings because: (i) NLG were not instructed as agents of the solicitors; (ii) the manner in which NLG charged for their work was champertous as it was based on an illegal contingency fee agreement; and (iii) NLG were not members of a professional body. P submitted that: (a) pursuant to s.27(2)(e) Courts and Legal Services Act 1990 NLG were employed by a qualified litigator to assist in the conduct of litigation by appearing at the detailed assessment hearing on behalf of P, and this was evidenced by a letter from P's solicitors ('BW') requesting NLG to act as their agents; (b) the contingency fee arrangement was in accordance with public policy as it was in the public interest that costs were saved and it was therefore a beneficial agreement; and (c) the agreement was not champertous because NLG had a proper business interest as they were instructed to act for P.HELD: (1) Section 27(2)(e) of the Act did not give NLG rights of audience as it was clear NLG were employed by AC and not instructed by BW. (2) NLG were attempting to run a detailed assessment without reference to BW. (3) Savings achieved on behalf of a losing insurance company were a very significant element of litigation and NLG's remuneration was a share of that element. (4) The agreement between AC and NLG was not subject to the statutory safeguards in respect of contingency fee agreements and offended against public policy. (5) Arrangements of this type gave rise to concerns that the question of costs might be pursued over vigorously and therefore disproportionately and in breach of the overriding objective in the Civil Procedure Rules 1998 SI 1998/3132. This was a very real concern and one of the reasons why rights of audience were so rigorously controlled by s.27 of the Act.Order accordingly.