The Civil Justice Council has issued an interim report and a consultation regarding reforms to Part III of the Solicitors Act 1974, which deals with costs paid by clients for their own solicitors and how clients can challenge them before costs judges.
A working party of the CJC suggested that Part III could be replaced by a statutory code alongside revised rules overseen by the Solicitors Regulation Authority (SRA) in its findings and consultation, published last week, which is due to close on 16 July 2026.
In its findings, former HSF Kramer partner and now High Court judge Mr Justice Adam Johnson, the working group’s chair, said the existing regime was “complex, formalistic and outmoded” and provided “perverse incentives” for satellite litigation.
Noting Part III was “seriously out of date”, Johnson said the regime as a whole “reflects the concerns of a time when there was no developed system of regulation for solicitors”.
He added: “The resultant inefficiencies are wasteful of court time and resources and damaging to consumers and businesses alike.”
The time had come, he said, to introduce a new and simplified system that reflected modern practices, recognising that law firms now often billed clients periodically, rather than only doing so at the end of a matter, while the courts themselves have emphasised early settlement of claims before proceedings are issued.
Fee-related disputes over small bills could be resolved via the Legal Ombudsman, on the basis that charges must be “fair and reasonable”.
Supported by clearer regulatory guidance on definitions, such disputes could replace the need for clients to provide informed consent to such bills, the interim report said. It also recommended the removal of distinctions between contentious and non-contentious legal work, which it said had “no modern relevance”.
More significant disputes, such as claims worth more than £50,000, would limit the right to legal challenge by insisting on mandatory alternative dispute resolution (ADR), before litigation could proceed.
Law Society of England and Wales vice president, Brett Dixon, said: “Rules around solicitors’ costs are unnecessarily complicated and it is positive that the Civil Justice Council are considering reform.”
“The consultation will impact solicitors as it examines the way they bill their clients, as well as how disputes relating to costs are dealt with in future,” he added, urging members to respond.
David Bailey-Vella, chair of the Association of Costs Lawyers (ACL), agreed with Dixon, saying the recommendations would “sweep away many of the outdated formalities surrounding bills that serve only to prolong disputes unnecessarily”.
While shifting responsibility for smaller bills to the Legal Ombudsman might resolve smaller disputes faster, Bailey-Vella noted that the Ombudsman had concerns about higher caseloads, which “raised questions about how practical this is, at least for the foreseeable future”.
Bailey-Vella added: “Similarly, while many of the failures we see in costs cases are matters of professional conduct – such as not providing clients with adequate costs information – the SRA is also reporting increasing complaints and is going through a turnaround process of its own.”
The ACL supported using ADR, but added the consultation “points to the need for a culture change as much as a rule change if we are to deliver a regime that works in the interests of all”.
Email your news and story ideas to: [email protected]
