Lawyers ordered to disclose costs

Litigation lawyers face having to disclose details of their costs evaluations to the losing party after a recent landmark ruling

In his judgment in Dickinson v Rushmer, Mr Justice Rimmer stated: “I can see no good reason why the client care letter and the payment calculation could not have been disclosed to the defendant, as I have not been persuaded they were privileged.”
Costs experts say that at the most extreme, this may lead to discrepancies being exposed due to disclosure between costs shown to clients and the bill of costs lodged at court. They also envisage that those liable for costs will request disclosure before court or when considering a settlement that may influence how they proceed with the case.
Costs payers may have grounds for refusing to pay costs if the other side has not done sufficient due diligence to ensure that costs for hiring counsel and expert witnesses are reasonable.
Legal costs consultant Jim Diamond said: “One third of all costs in litigation go to barristers and expert fees. If [a party] can get the letter of retainer we can find out if those fees are reasonable. This shows the way a party carried out due diligence for clients.”
Diamond, a costs consultant for some 20 years, believes not disclosing means that those facing financial liability for costs may be at risk of being denied the right to a fair trial under Article 6 of the Human Rights Act.
All this is a sea change for cost negotiators and consultants who remember back to a decade ago, when some firms, particularly in the City, were reluctant to provide a proper breakdown of their costs, even to their own client.
Diamond said: “If you're a big City firm doing special rates for clients, the last thing you want to do is give that information to another law firm. Ten years ago, City firms would not even make out their own rates to their own clients. Now you could order a print-out to see if your lawyer's estimates match with the bill of costs.”