Malkinson v Trim and the sole practitioner

From time to time, solicitors pause from fighting like lions on behalf of their clients and need to go into battle on their own account, either pursuing a debt collection against their former clients who have had the ill grace not to pay their bills, or in some other context.

In such cases, an issue sometimes arises, as to what is the measure of costs, and in particular, the hourly rate that can be recovered when a solicitor is litigating his or her own case, as opposed to acting for someone else.

The starting point is that since 1884, and the seminal decision in London and Scottish Benefit Society v Chorley (1884) 13 QBD 872 a solicitor has been able to recover his full costs, in litigation rather than be regarded as a litigant in person, as a special concession due to the peculiar position of being a solicitor. That is a principle which was preserved in the old RSC.

The important question was whether it survived the introduction of the CPR on 26th April 1999. The Court of Appeal declared that it did in the important decision of Malkinson.v.Trim [2002] 1 WLR 463, where the then rule 48.6(6) and section 52.5 of the Costs Practice Direction were interepreted to mean that the common law rule in Chorley had survived the introduction of the Civil Procedure Rules 1998.

In the case of Zakirov.v Newmans [2012] SCCO Master Leonard an inventive attempt was made to argue that the decision in Malkinson, was per incuriam. This was rejected by Master Leonard.

That that principle survives the introduction of the CPR was expressly confirmed by the Court of Appeal’s decision in Malkinson v Trim. The point is simply one of interpretation, and the correct interpretation of the CPR 48.6, in the light of CPD 52.5, is summarised by Chadwick LJ (at paragraph 22):

‘As I have sought to point out earlier in this judgment, the basis of the principle that a solicitor who acts for himself in litigation is entitled to compensation, by way of costs, for his time and trouble is a recognition that he (in common with any other litigant) ought to be indemnified against the expense to which (on the hypothesis that he has been successful in the litigation) he has been unjustly put. The special position of a solicitor is that he does not need to employ others to provide professional skill and knowledge in the conduct of litigation. He can provide that skill and knowledge himself. Further, there is no difficulty in measuring what it costs him to do so; and there is a potential saving in costs if he is not discouraged from doing so. One effect of CPR r 48.6(6)(b), read in conjunction with section 52.5 of the Practice Direction, is that there is now more clearly recognised a distinction between the solicitor litigant who provides, in connection with his own litigation, professional skill and knowledge in the course of his practice as a solicitor-that is to say, who “is represented … by himself in his firm name”—and the solicitor litigant who provides skill and knowledge in what might be described as “his own time”—that is to say, outside the course of his practice as a solicitor and (typically) outside the office. The latter is treated as a litigant in person for the purposes of CPR r 48.6, and so is subject to the restrictions imposed by that rule, including the two-thirds restriction imposed by paragraph (2). The former is not. Nor is there any reason, consistent with the need to provide an indemnity, why he should be. Further, there is no reason, consistent with the need to provide an indemnity, why he should not recover the cost of providing professional skill and knowledge through employees of his practice’.

Mr William’s interpretation of CPR 48.6 (6)(b) as applying to all solicitors in all circumstances, says Mr Mallalieu, is one interpretation, but not the only one. The interpretation offered by Chadwick LJ is not per incuriam: it is the correct interpretation as well as the generally accepted interpretation and should be applied.

Master Leonard rejected the challenge in these words:

The distinction between a solicitor acting on his own behalf and a solicitor represented by his firm is not merely hypothetical, nor confined to procedural matters. For example a partnership of solicitors, if sued, will normally, by virtue of section 5A of Practice Direction 7A, be sued and defend in the name of the firm. However that name will represent the partners in the firm at the time the cause of action accrued. If the same firm of solicitors appears on the court record for the defendants, some of the partners in the firm as currently constituted may be defendants and some not.

It would seem to follow, on the Claimant’s interpretation of the rule, that the defendant partners would be litigants in person if no there have been no changes in the partnership since the cause of action accrued. If there have been changes, then any retired partners would not be litigants in person. Continuing partners would be litigants in person unless any new partners have joined, in which case (being represented by someone in addition to themselves) there is room for argument about whether they are or not. If they are then, unlike the former partners, their recoverable costs will be capped by CPR 48.6(2).

My conclusion is that the application of the rule is meant to be simpler, and more obviously fair, than that. A solicitor is a litigant in person, like any other litigant in person, if he is on the court record as acting for himself. If the record shows that he is represented by a firm of solicitors, he is not. That is the case whether or not he is a partner in or employee of the firm on the court record.

I respectfully agree with Chadwick LJ’s interpretation, which was not per incuriam. The Costs Practice Direction does no more than clarify the position by pointing out the significance of the words ‘acting for himself’ in CPR 48.6(6)(b).

Post April 2013, the rules have been amended yet again, so that apparently there is a surprising lacuna, in respect of sole practitioners due to the use of the word “partner” which might suggest that sole practitioners now can no longer claim their full hourly rate. The question then, is whether the rules have fundamentally changed, or changed so that they apply save where for example, a firm of solicitors with 2 partners represents one of them. The new rules provide:

(6) For the purposes of this rule, a litigant in person includes –

(a) a company or other corporation which is acting without a legal representative; and

(b) any of the following who acts in person (except where any such person is represented by a firm in which that person is a partner) –

(i) a barrister;

(ii) a solicitor;

(iii) a solicitor’s employee;

(iv) a manager of a body recognised under section 9 of the Administration of Justice Act 19851; or

(v) a person who, for the purposes of the 2007 Act, is an authorised person in relation to an activity which constitutes the conduct of litigation (within the meaning of that Act).

There is no suggestion in any material I have seen, such as the Explanatory Notes to the amending statutory instrument, or a consultation, or guidance from the SRA that there was any intention to change the existing law.

Indeed, the retention of the “firm” exception above, would point the other way. I think that the true construction which would apply in this situation, is that sole practitioner would not be acting as a litigant in person at all, per Chadwick’s formulation and Master Leonard’s explanation and rule 46.6 simply does not apply, with its limiting case of the requirement that there be representation by a firm, of which the solicitor is a partner.

Otherwise I think that as this is technical legislation, using words of art, known to and understood by the solicitors profession, that references to “a firm” and “a partner” when properly construed, are words which embrace this situation, of a sole practice and a sole principal.

I am strengthened in this view by the definitions under the Glossary in the Solicitors Handbook, which of course are made under rule 23 of the Solicitors Code of Conduct, itself made under the Solicitors Act 1974.

The glossary provides the following definition of what a “firm” is:

(i) save as provided in paragraphs (ii) and (iii) below, an authorised body or a body or person which should be authorised by the SRA as a recognised body or whose practice should be authorised as a recognised sole practice (but which could not be authorised by another approved regulator); and for the purposes of the SRA Code of Conduct and the SRA Accounts Rules can also include in-house practice;

(ii) in the SRA Indemnity Insurance Rules:

(A) any recognised body (as constituted from time to time); or

(B) any solicitor or REL who is a sole practitioner, unless that sole practitioner is a non-SRA firm; or

(C) any partnership (as constituted from time to time) which is eligible to become a recognised body and which meets the requirements applicable to recognised bodies set out in the SRA Practice Framework Rules and the SRA Authorisation Rules, unless that partnership is a non-SRA firm or an Exempt European Practice;or

(D) any licensed body in respect of its regulated activities;

whether before or during any relevant indemnity period;

(iii)in the SRA European Cross-border Practice Rules, means any business through which a solicitor or REL carries on practice other than in-house practice.

Thus it can be seen that for the purposes of the law established by the Solicitors Act 1974, a “firm” does not have to be a partnership, but can be a sole practice. In such a firm there can never be a partner, but there is of course a principal.

Later in the glossary a definition of a principal is:

(i) subject to paragraphs (ii) to (iv) means:

(A) a sole practitioner;

(B) a partner in a partnership;

(C) in the case of a recognised body which is an LLP or company, the recognised body itself;

(D) in the case of a licensed body which is an LLP or company, the licensed body itself;

(E) the principal solicitor or REL (or any one of them) employed by a non-solicitor employer (for example, in a law centre or in commerce and industry); or

(F) in relation to any other body, a member of its governing body;

(ii) in the SRA Authorisation Rules, SRA Practice Framework Rules and SRA Practising Regulations, means a sole practitioner or a partner in a partnership;

(iii) in the SRA Indemnity Insurance Rules means:

(A) where the firm is or was:

(I)a sole practitioner – that practitioner;

(II)a partnership – each partner;

(III)a company with a share capital – each director of that company and any person who:

(01)is held out as a director; or

(02)beneficially owns the whole or any part of a share in the company; or

(03)is the ultimate beneficial owner of the whole or any part of a share in the company;

(IV)a company without a share capital – each director of that company and any person who:

(01)is held out as a director; or

(02)is a member of the company; or

(03)is the ultimate owner of the whole or any part of a body corporate or other legal person which is a member of the company;

(V)an LLP – each member of that LLP, and any person who is the ultimate owner of the whole or any part of a body corporate or other legal person which is a member of the LLP;

(B)where a body corporate or other legal person is a partner in the firm, any person who is within paragraph (A)(III) of this definition (including sub-paragraphs (01) and (03) thereof), paragraph (A)(IV) of this definition (including sub-paragraphs (01) and (03) thereof), or paragraph (A)(V) of this definition;

(iv)in the SRA Indemnity Rules, means:

(A)a solicitor who is a partner or a sole solicitor within the meaning of section 87 of the SA, or an REL who is a partner, or who is a sole practitioner, or an RFL or non-registered European lawyer who is a partner, and includes any solicitor, REL, RFL or non-registered European lawyer held out as a principal; and

(B)additionally in relation to a practice carried on by a recognised body or a licensed body alone, or a practice in which a recognised body or a licensed body is or is held out to be a partner:

(I)a solicitor, REL, RFL or non-registered European lawyer (and in the case of a licensed body any other person) who:

(01)beneficially owns the whole or any part of a share in such recognised body or licensed body (in each case, where it is a company with a share capital); or

(02) is a member of such recognised body or licensed body (in each case, where it is a company without a share capital or an LLP or a partnership with legal personality); or

(II)a solicitor, REL, RFL or non-registered European lawyer (and in the case of a licensed body any other person) who is:

(01)the ultimate beneficial owner of the whole or any part of a share in such recognised body or licensed body (in each case, where the recognised body or licensed body is a company with a share capital); or

(02)the ultimate owner of a member or any part of a member of such recognised body or licensed body (in each case, where the recognised body or licensed body is a company without a share capital or an LLP or a partnership with legal personality).

And it can be seen, therefore that for the purposes of the Code of Conduct, the position of a sole practitioner and a partner, are equated as the principals of their various firms. It follows that there are reasonable grounds for suggesting that despite the slipshod wording in the CPR, the law has not changed after all.

 

One thought on “Malkinson v Trim and the sole practitioner

  1. On a related note, EMW Law LLP v Halborg “raises a novel point concerning the assessment of solicitors’ costs of considerable significance and importance”. Paragraphs 26 to 40 of the judgement at this link http://www.bailii.org/ew/cases/EWHC/Ch/2015/2005.html are the relevant ones. The outcome is that, although the solicitors limited liability partnership was a “corporation”, it was not a “person” limited to the Litigant in Person rate of £19 per hour.

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