How could Costs Lawyers reduce the costs of legal services?
About the project
The CLSB has completed its project funded from the Regulators’ Pioneer Fund: “How could Costs Lawyers reduce the costs of legal services?”.
We carried out research based on the types of services that advisers (regulated or unregulated) specialising in costs are, or might be, involved in. We then went on to consider whether any regulatory or legislative change might remove barriers to innovation or encourage innovation.
The main questions we explored were:
- How might advisors specialising in costs drive services in a way that exerts a downward pressure on the costs of legal services?
- Would any regulatory or legislative change relevant to Costs Lawyers remove barriers to capturing this benefit or capture greater benefits?
Read the final report here.
Key findings from the project
Clients do not feel that legal costs are under control
As our consultants carried out this research on our behalf, they repeatedly heard the message that clients want legal costs for resolving disputes to be better controlled.
All of the Costs Lawyers we interviewed believed that they had an impact on costs rather than just moving costs between parties. This view was supported in the wider market survey carried out, in which 88% of those responding said that they believed that it was part of their role to impact overall legal costs and not just to redistribute costs away from their clients.
The people we spoke to were also clear that they do not believe that further civil litigation reform is the answer (or at least the whole answer) and there is more that all legal regulators could to do to support better control of costs earlier in the process, even before the stage of costs budgeting.
Next steps: The CLSB will plan in a programme of work aimed at harnessing the unique insights that Costs Lawyers can bring to stimulating discussion across all the legal regulators about how legal costs can be better controlled.
Awareness of the benefits of using Costs Lawyers
Our research reveals a great deal of evidence to support the proposition that the Costs Lawyer profession has the potential to have a much bigger impact than it does today. One key reason is that awareness of Costs Lawyers and the benefits of using their services appears to be low.
At present, because of the dependence of the Costs Lawyer profession on instructions from solicitors, there is a limit on the demand for any innovative services. If Costs Lawyers were better known beyond the niche costs law market, their contribution to the development of innovation in the sector could be increased.
Next steps: While it is not within the CLSB’s remit to undertake promotion activities for the sector it regulates, it is within our remit to encourage competition in the market for legal services and promote the interests of service users. We will therefore look at: how the CLSB’s branding is used by the sector; how our competency frameworks can ensure the profession provides the best value to end users; and how our overall framework of regulation could best support the positive role that Costs Lawyers can play.
Entity regulation for firms of Costs Lawyers could bring benefits
Strengthening the position of Costs Lawyers as independent actors in the sector, outside of employment in solicitors’ firms, has the potential to harness numerous benefits, including better access to work for Costs Lawyers directly from large clients which would benefit those clients. One way that this could be done might be by regulating entities rather than individual Costs Lawyers.
Entity regulation could also play a role in encouraging innovation. We saw encouraging signs of innovation most often in larger organisations, and a regulatory framework that supported flourishing firms of Costs Lawyers may be beneficial to innovation.
Next steps: In our next business plan, we will allocate resources to further investigation of the costs and benefits of entity regulation, including whether there is a cost effective version of entity regulation that may be practical to implement.
Costs Lawyers acting in the best interests of the end user
The reference by a number of interviewees to their use of Costs Lawyers as ‘independent’ advisors – acting almost as barristers might – raises the possibility that a stronger distinction between the interests of instructing solicitors (or others) and the ultimate client could be reflected in the regulatory principles set by the CLSB for Costs Lawyers.
Next steps: We will schedule in work to examine this recommendation in more detail, and consult Costs Lawyers on the benefits and costs of making such a change.
Heather Clayton, Director of Policy, is responsible for this project. You can contact Heather via our website.
This project has been made possible by a grant from the £3.7 million Regulators’ Pioneer Fund launched by the Department for Business, Energy and Industrial Strategy (BEIS). The fund enables UK regulators and local authorities to help create a UK regulatory environment that unleashes innovation and makes the UK the best place to start and grow a business.