High Court puts costs negotiators in jeopardy

leading personal injury (PI) lawyers are claiming that a new ruling by the High Court threatens the future of the costs negotiating industry.

Senior costs judge Master Hurst ruled in Ahmed v Powell last week that an agreement between a cost negotiator and the defendant insurer was illegal.

He went on to say that the increasing prominence of negotiators gave rise to "concerns that the question of costs may be being pursued overvigorously, and therefore disproportionately".

Andrew Twambley, a partner at Manchester firm Amelans, which represented the claimant in the challenge said: "This judgment completely decimates the entire 'cost muppet' industry. The court has ruled that all agreements between insurers and costs negotiators are champertous and consequently illegal; but also that they have no rights of audience before a court."

The firm has for a long time had a policy of not dealing with such companies.

Master Hurst ruled that such an agreement with costs negotiators were champertous because they took a share of the proceeds of litigation.

It was argued by the defendant that they did not enjoy a share of the proceeds but were paid by results by the paying party, who benefits from the costs savings they achieved.

It was not a view that Master Hurst accepted. "It is necessary to take into account not only amounts received, but also amounts preserved," he said. "It seems to me that savings achieved on behalf of a losing insurance company - to the tune of £20m per year - is in fact a very significant element of the proceeds of litigation."