Podcost with Andrew Gordon-Saker

Andrew’s retirement at the end of October will see Costs Judge Jason Rowley serving as the acting Senior Costs Judge until the position is permanently filled after the Judicial Appointments Commission’s recruitment process concludes early next year. 

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Much has changed since Andrew’s appointment as a Deputy Taxing Master 30 years ago. At that time his work largely involved commercial bills of costs, with a significant amount of personal injury and defamation work. He moved to full-time judicial duties as the level of commercial work began to decline. There was still a fair amount of personal injury work, and the costs wars emerged in the early 2000s at the same time as Legal Aid disappeared.

Since 2014 clinical negligence work has decreased significantly. The Costs Office now handles more commercial bills and more solicitor and own client bills which is partly due to the Jackson reforms. Andrew believes that Sir Rupert Jackson largely achieved his goals, particularly by ending recoverable success fees. This helped to streamline detailed assessments because with fewer arguments about success fees, disputes over costs were more likely to settle.

Andrew, Jeremy, and Andy also explore whether the indemnity principle should have been abolished – Jeremy supports this idea – and whether redefining the proportionality test worked as intended (Andrew’s view is that, generally, the right result can be achieved through using the test of reasonableness. When a bill of costs has been reduced significantly on a reasonableness basis, factors such as complexity and the value of the claim will also inevitably have been considered.)

When it comes to budgeting, Costs Judges do not get too involved with setting budgets, but the introduction of costs management has had a huge impact. It has helped control costs at an earlier stage and reduced disputes during detailed assessments. This is largely because the courts have been stringent in adopting the words of the Court of Appeal in Harrison – which cautions against departing easily from approved budgets. It is rare that a good reason to depart is found. In most cases, once the incurred costs have been dealt with, it is possible to ‘glide’ over the budgeted costs. This has probably halved the length of the average detailed assessment.

Jeremy suggests that Costs Judges might have a more active role in setting budgets. Andrew believes this could be beneficial, as Costs Judges are well-placed to assess the reasonableness of budgets. Andrew’s thoughts are that, whilst costs budgeting and directions setting effectively feed off each other, this cuts out the Costs Judge because they aren’t involved in making case management directions. Although it is possible for costs management and directions to be handled by different judges, Andrew notes that this is rare outside of group actions. Involving Costs Judges could reduce or remove the current waiting time for CCMCs.

The discussion shifts to the Senior Court Costs Office's smooth transition to online working during the pandemic – a process which was undoubtedly helped by the fact that the SCCO had recently moved to compulsory electronic filing. Very quickly the legal profession moved to fully digital working or at least to producing digital bundles although the proficiency of bundle preparation and the associated cost continue to vary significantly.

Andy then brings the electronic bill into the discussion. The flexibility and accuracy of Excel are positives for Practico because of the large-scale work Practico handles. Andrew agrees that electronic bills can be useful in assessments, especially if Points of Dispute are drafted in a way that plays to the strengths of the electronic bill. However, Points of Dispute which address every item in a bill individually can cause problems – which Andrew believes should be addressed with a rule change. He also notes that electronic bills are essential in costs-managed cases and are becoming more popular in non-budgeted ones.

The conversation turns to why large costs claims, like the £53M bill in the Deutsche Bank case, take so long to assess. It is not always the amount of costs which produces long detailed assessments (this one lasted nearly 100 days), but also the procedural complexities involved. In this case and other commercial work costs assessments, the receiving party’s poor time recording can extend the length of the hearing. In many large cases, the litigators’ time records are less than ideal, requiring what Andrew calls "forensic archaeology" to determine what fee earners were doing at specific times. Years later sometimes only emails remain, with no file notes or attendance records. Andrew believes that, in such situations, the receiving party must be given the opportunity to come up with a reasonable explanation for the time spent.

Andrew also asserts that the paying party has the right to know the total costs being claimed upfront. This is why, in the Deutsche Bank case, he rejected an application from the receiving party to serve their claim for costs in parts. Without knowing the full amount, neither party can make informed offers or settle the costs.

When costs are challenged – whether by the opponent or the firm’s own client – reconstructing time recording can be a difficult process. This leads to a broader discussion on the rise in solicitor-client challenges. Andrew believes the Solicitor’s Act 1974, rooted in the 18th century, needs reform. He hopes that recent comments from the Master of the Rolls and the Civil Justice Council Report of May 2023 on costs will prompt a much-needed review of the opaque system for charging clients. Andrew points out that in nearly half of solicitor-client assessments, the first issue is determining whether the invoices being assessed qualify as bills under the Act. The Act is complex, but Andrew finds it "bizarre" that solicitors themselves struggle with billing. Simplifying the technicalities around billing and making the process more transparent will be beneficial, but it is going to be a significant task.

The session ends with both Jeremy and Andy wishing Andrew a long and happy retirement. They commend him for his fairness, for understanding the practical challenges of running a law firm, for doing everything possible to make sure that the system works and for making wise decisions along the way.

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