John Berry is director of ADR Legal Costs Assessors.
TAXATION of costs has always been a slow process, but on the 15 January 1997 it also became expensive. Court taxing fees were increased to 7.5 per cent on total costs taxed, but, more importantly, when an inter partes bill is lodged, a fee of 3.75 per cent on the total claim is immediately payable and non-refundable.
To tax a bill may add between 15 and 20 per cent to the total legal costs in an action. Previously, the taxing fee was just 5 per cent, and the new lodgment fee, coupled with a fee increase to 7.5 per cent, has sent a shockwave through the legal community, which will also be felt by the general public – the people who ultimately pay what one observer termed "indirect taxation".
But taxing can be avoided. Alternative Dispute Resolution Legal Costs Assessors have handled numerous matters to the satisfaction of clients and could be used as an alternative to taxation of costs.
With the parties' consent, the ADR procedure is completed within 28 days and at a cost that equates to one-fifth of the fees that might be incurred through taxation. It is carried out by three adjudicators who are approved by the clients, and who are selected from a list drawn from barristers, former taxing officers, arbitrators and costs draftsmen.
ADR involves a process of referring the claim, and any supporting documentation, to the adjudicator with the service on the respondent. The respondent's reply is then delivered to the adjudicator with the service on the claimant. Then the adjudicator notifies the parties of the date of the hearing and issues directions.
Prior to commencement, the parties may agree that the adjudicator's decision will be binding and irrevocable, or the agreement may be signed at the end of the procedure, at the hearing on day 28. If one of the clients cannot sign the document it may be returned to ADR House within 72 hours and the procedure is completed there.
There is no taxation and no further dispute over costs. Fees for the ADR service amount to three per cent and they are shared equally by the parties.
Also, the final submissions hearing can take place at the solicitors' office, so saving, in some cases, hours of travel.
It has been calculated that ADR procedure is more than 10 times faster than taxation. It allows clients to avoid the trauma of a further court hearing and cuts their legal costs.