Legal Aid Matters and Inter-Partes Costs Orders
What is Legal Aid?
Legal aid was introduced to provide free legal advice and to cover legal costs in many civil, family and care cases in England and Wales. It is used in all areas of law including criminal cases, civil disputes and family law to offer access to justice for those who are the most vulnerable in society. Not all cases are eligible for legal aid and it is not offered to everyone. Legal aid is usually offered, in the interests of justice, to people who cannot afford to pay for legal advice or legal services in certain circumstances. Common examples include if a client is at risk of harm, such as domestic violence, or if a client faces prison, or if they are being discriminated against. Legal aid is also available in certain circumstances for matters such as birthing clinical negligence, TOLATA, ancillary relief and housing disrepair claims.
Recovering Costs in Legal Aid Matters
In a legal aid case, costs are not usually recoverable from the Defendant and therefore, the Legal Aid Agency (LAA) will usually be responsible for paying the Claimant Solicitor’s costs at an hourly rate. The rate of costs paid by the Legal Aid Agency to the Claimant Solicitors is usually much lower than the costs they would receive had the Claimant not been entitled to Legal Aid in an inter-partes case. It is for this reason that Solicitors working under legal aid funding are limited, as it can be struggle for such practices to operate at a profit.
Funding an Inter-Partes Legal Aid Case
If a client has qualified for Legal Aid, the Claimant solicitors would then apply to the LAA to obtain permission to represent the said client. Funding this type of case is similar to having an insurance policy in place to cover the Claimant’s costs as a Legal Aid Certificate will be issued to the Claimant Solicitors with a financial threshold and scope of certificate attached; the Claimant Solicitor can then incur costs up to that threshold/within the scope of the certificate in representing their client.
Can Costs Ever be Recovered from the Defendant?
In some cases, it is possible to recover costs from the Defendant if an Order for this is obtained. In Judicial review cases, TOLATA, Ancillary Relief and Infant Birthing Claims, you may get an Order which states that “the Defendant do pay the Claimant’s costs, to be assessed failing agreement”. In these types of cases, the agreement with the LAA acts as the retainer in the case (in place of a CFA or private agreement for instance, and entitles the Claimant solicitors to claim their costs from the other side.
Inter-Partes Cost Orders in Legal Aid Cases
When a Claimant solicitor successfully obtains an inter-partes costs Order in a legal aid funded case, whether it is an Order for the Defendant to pay the full costs of the application or simply to pay the costs of a particular issue or a specific hearing, it is important that they know exactly what can then be claimed from the LAA and ensure that they claim the appropriate costs from the Defendants.
It is worth noting that when an inter-partes costs Order is made on legal aid funded matters, the indemnity principle does not apply in respect of hourly rates. This essentially means that the hourly rates claimed can be claimed at any rate as is considered reasonable on the case (rather than being fixed as per a CFA or private retainer). Guideline Court rates would usually be applied in this circumstance however, in any matters of complexity, there is scope to claim enhanced rates. The costs which can be claimed against the Defendant are not limited to the Claimant Solicitor’s certificate limitations however, they would be unable to claim anything that falls outside the scope limitation of their certificate.
Negotiation of Costs when an Inter-Partes Cost Order is Obtained
When an inter-partes cost Order has been made in the favour of the Claimant Solicitors in a case covered by a LAA certificate, the Claimant solicitors should make attempts to recover their costs. Not only does this allow the Claimant Solicitor’s to recoup more of a profit on their work, but it enables the LAA to recoup their fees, which are to be refunded on recovery of costs. A Bill of Costs should be prepared and negotiated with the Defendants as set out in PD47. This Bill should be in a 6 column format, and include three columns for work that is only being claimed from the LAA fund (at prescribed legal aid rates) and the other 3 columns set out costs being claimed from the Defendants (at inter-partes rates).
On commencing the detailed assessment procedure with service of the Bill with a Notice of Commencement, the Defendant should then serve their Points of Dispute in response to the bill within 21 days. Following receipt of the Points, the standard assessment procedures for inter-partes cases are then pursued and, if the issue proceeds to a detailed assessment hearing, any legal aid costs will be assessed by the Court at the same time.
In the event that the Defendant fails to serve their Points of Dispute and have not agreed to the Claimant Solicitors costs, the next step will be to obtain a default costs certificate which should then be served on the Defendant.
If the Claimant Solicitors are unable to recover their costs from the Defendants, they will need to be recovered from the LAA at legal aid rates.
In the event that costs claimable from the Defendant have been recovered, the remaining legal aid only costs can be claimed from the LAA. Costs are assessed by the LAA on a CLAIM2 form, however, if costs exceed £2,500, they will be assessed by the Court.
Recovering Costs in Fixed Fee Cases
If a case is subject to a fixed fee scheme, the process is different and the Claimant Solicitors can either:
- Not make a claim with the Legal Aid agency and keep the costs which have been recovered inter-partes.
- Pay the recovered costs into the fund and claim payment in full from the LAA.
The latter option is usually the best option in circumstances where a cost Order only covers part of the case. Unfortunately, this means that the Claimant is not benefiting from obtaining the costs order due to the fact that all their costs are being claimed from the LAA in the same way as if no order had been obtained.
It is the Claimant Solicitor’s duty to protect the fund and therefore it is still important to obtain a cost Order where possible as part of this duty.
How Can ARC Costs Assist?
The ARC Costs team are highly experienced in recovering inter-partes costs in legally aid funded cases. We are always happy to help with costs challenges and can provide information on dealing with inter-partes cost orders in legal aid matters.
We can be contacted via email at email@example.com, or by telephone on 01204 397302. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.
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