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Last October the High Court’s decision in Mazur v Charles Russell Speechlys sent shockwaves through the entire legal system. Whilst the fundamentals of authorisation and regulation were unchanged, the High Court had proceeded to interpret the contents of the Legal Services Act 2007 far more restrictively than had beencommonly accepted in practice.
The High Court’s decision had been to consider the wording contained within the Legal Services Act within Schedule 3 and consider what the term ‘conduct of litigation’ meant. The conclusion reached was to interpret the term ‘conduct of litigation’ in a restrictive fashion and the Court held that the ‘mere employment by a person who is authorised to conduct litigation is not sufficient for the employee to conduct litigation themselves, even under supervision (emphasis added)’. This was subsequently interpreted as requiring all forms of work considered as ‘conducting litigation’ to be carried out by an authorised person and could not be delegated to an unauthorised person.
It was also clarified that there was a clear difference within the Legal Services Act between an authorised person and a regulated person, the latter potentially including unauthorised persons employed by an SRA regulated firm.
This had a significant impact on the profession, particular those within the profession who were unauthorised. This included paralegals and non-qualified costs draftsmen but also impacted Lega lExecutives who had not obtained their additional practicing rights certificates. This is because Legal Executives are only afforded the right to administer oaths under the Legal Services Act and require additional certification before they are awarded the right to conduct litigation or rights of audience.
An important consequence of the High Court’s original decision was the impact on costs recovery where an unauthorised person had conducted litigation. This was addressed in theoriginal High Court’s decision in Mazur and also in a subsequent decision by DJ Lumb. In both cases the costs incurred by the unauthorised person were disallowed and instead the Court had proceeded to allow fixed costs only.
Furthermore, the Legal Services Act contains provisions which make it a criminal offence for an unauthorised person to carry out reserved legal activities and there was concern that many individuals may have committed such an offence whilst acting upon advice from their legal regulator suggesting that they could act in such a way.
As such, it was unsurprising that CILEX proceeded with an appeal against the High Court judgment and that the Court of Appeal were able to hear the Appeal less than 6 months after the handing down of the judgment.
When the Court of Appeal’s decision was handed down there was a collective sigh of relief across the legal community coupled with a sense of frustration as to the up heaval caused by the High Court’s original decision and the subsequent reaction by regulators and employers alike.
The Court of Appeal proceeded to allow the appeal and found that the High Court had interpreted the Legal Services Act to restrictively. The Court of Appeal stated that there had been widespread and well-regulated use of delegation by authorised persons to unqualified individuals prior to the Legal Services Act and the introduction of the Act was not intended to change that foundation. As such, an unauthorised person could lawfully perform any tasks which are within the scope of the conduct of litigation for and on behalf of an authorised person. However, it is important to note that the authorised person retains the responsibility for the tasks delegated to the unauthorised individual and therefore retains overall responsibility for the conduct of the litigation. Such delegation requires proper management, supervision and control to ensure that obligations to the respective regulators are met.
The Court of Appeal was also invited to provide additional guidance on specific tasks which could be delegated with proper supervision and what tasks could not be delegated to an unauthorised person. Unfortunately, the Court of Appeal only provided limited comments in this respect and left it for the Regulators to formulate guidance.
As such, the costs of unauthorised persons are now unlikely to be subject to significant challenge and the decisions of the original High Court and DJ Lumb are unlikely to be upheld leading to unauthorised persons being limited to fixed costs at best. However, the Court of Appeals comments regarding requirement for an authorised person to retain control and responsibility of the conduct of litigation does poseadditional questions in respect of the recovery of costs of supervision of anauthorised person given that this is the only method by which delegation couldbe effectively and legally achieved.
Kris Kilsby is a Costs Lawyer at Peak Costs. If you have any questions regarding the recovery of legal costs then please feel free to get in touch at kris.kilsby@peakcosts.com.
