A recent decision by the Solicitors Disciplinary Tribunal (SDT) to clear two solicitors of litigation misconduct highlights important lessons about legal costs, litigation conduct, and the accountability of regulatory bodies.

This case has implications for legal professionals navigating complex disputes, as it demonstrates the importance of fairness and substantiated evidence in legal and regulatory processes.

The case and the allegations

The case involves the Solicitors Regulation Authority (SRA) prosecuting two solicitors over their involvement in volume litigation practices, an area of concern in recent years, alleging litigation misconduct. The solicitors were accused of improperly managing claims related to a group litigation model, where clients were pooled for efficiency. The SRA argued this arrangement led to conflicts of interest, lack of transparency, and potential client harm.

The Solicitors Disciplinary Tribunal (SDT), the independent body responsible for determining the facts of any case made by the SRA, cleared the solicitors of litigation misconduct. It found that the solicitors had adequately informed their clients of risks, acted within the agreed scope of work, and ensured professional standards. The SDT noted the absence of sufficient evidence from the SRA, criticising its reliance on speculative arguments and limited substantiation of claims.

The SDT went on to say that while bulk litigation models can be complex, the solicitors had not breached ethical obligations or acted negligently in managing client expectations and risks. This ruling reflects broader challenges in regulating innovative legal service delivery models while balancing client protection and efficiency​.

A notable aspect of the case was the tribunal’s decision to court order the SRA to pay the solicitors’ costs incurred during the proceedings, at £30,000. This outcome highlighted the significant financial burden of defending against regulatory action and underscored the role of cost orders in maintaining fairness in legal disputes.  It is not uncommon for the SRA’s own costs in such investigative disciplinary proceedings to reach close to or in excess of £100,000 in large cases, and an adverse finding against a Solicitor can bring significant financial consequences for an individual.  The SRA have challenged the SDT’s discretion in recent years to award costs against them in cases where the SDT had already approved the merits of taking the case to a tribunal hearing, and this case is a limited example of when a costs order will be made against the SRA (as often no order as to costs is made when the SDT make no findings against a Solicitor).

Legal costs in litigation

Legal costs are a cornerstone of fairness in disputes, ensuring that financial accountability and financial remedy are tied to conduct. Costs orders, as seen in this case, provide relief to parties subjected to unwarranted claims, aligning with the principle that it would be inequitable to disregard the financial impact of weak or speculative actions.  Though the principles of legal costs in Tribunals is often different to Courts, with the standard order being in many Tribunal cases “no order as to costs” rather than the unsuccessful party having to pay the successful party’s costs.

The SDT’s decision reflects an evolving approach to Tribunal conduct, emphasising that parties, whether individuals or regulatory bodies, must act reasonably and proportionately.

Litigation conduct

At the heart of this case was how the SRA handled the legal proceedings. The tribunal concluded that the SRA didn’t build a strong enough case, relying too much on hypothetical situations and unproven risks.

This decision sends a clear message that regulators must act responsibly, especially when their actions can seriously harm individuals and businesses. By ordering the SRA to pay costs, the SDT emphasised the importance of evidence based and fair litigation conduct.

What does this ruling mean moving forward?

The SDT’s ruling to clear solicitors of litigation misconduct and award costs against the SRA sends a strong message about the importance of fairness, evidence, and accountability in regulatory actions.

Moving forward, regulators must ensure their claims are substantiated, avoiding speculative or poorly supported cases that could result in adverse cost orders.

For solicitors, the decision underscores the need to maintain transparency and rigorous compliance with professional standards, particularly in innovative or complex practices like volume litigation.

How can ARC Costs Assist in Costs Disputes?

ARC Costs are an experienced and independent team of specialised Costs Draftsmen and Costs Lawyers. We assist both paying and receiving parties in resolving cost disputes and are adept at preparing Costs, Budgets and Bill of Costs for receiving parties, as well as providing legal costs negotiations services and preparing Points of Reply.

For paying parties, we are adept at preparing Points of Dispute, and ensuring that a proportionate level of costs is recovered. Proportionality is a subjective issue, and it is therefore important you have the right legal costs representative on your side during the detailed assessment to ensure you make the most persuasive submissions on the issue.  

Typically in Tribunal proceedings, if an order for assessment of costs is to be made, the applying party will need to provide a Schedule of their costs, and if such costs cannot be summarily assessed (i.e. determined on the day of the hearing), a Tribunal will order a costs assessment to take place pursuant to CPR 47.

Should you require any assistance or free initial advice concerning applying for a costs order, or recovering/challenging costs, please contact us on 01204 397302, or email one of our costs experts direct on info@arccosts.co.uk.

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