Select Committee on Appeal First Report

Should the Committee give guidance?

  22. Whilst in no way challenging the right of the Clerk of the Parliaments to seek, or of this Committee to give, guidance in the discharge of his functions, Mr Kentridge for the Bar Council submitted that we should not do so in the circumstances of this case. He pointed out that taxation was a process whereby the Taxing Officer draws on his own knowledge and experience of the "going rate" for comparable work in reaching his view as to a reasonable fee, and that that is a matter on which the members of this committee have little, if any, relevant experience. He said that the system was working well, and that there was no need for our intervention.

  23. We cannot accept those submissions. So far as this House is concerned, the relevant officers have rightly sought guidance because of doubts as to the correct approach to the very large sums being claimed by counsel in legally aided matters. More generally, there is public concern about the cost of legal aid, and in particular about the rate at which counsel are being remunerated out of public funds. We accept that we lack the relevant experience to quantify counsel's fees in any given case. But there are certain matters of basic approach which can usefully be addressed.

Question 1 - The measure by reference to which counsel's fees payable out of public funds should be assessed

  24. Because the Costs Regulations do not directly apply to costs incurred in the House of Lords (see Regulation 18) there is no statutory provision laying down the basis on which the costs are to be taxed. However, all parties are agreed that the same principles are applicable as apply to fees in the Court of Appeal, namely to allow "such fee in respect of such work as [the appropriate authority] considers reasonable in such amount as appears to it to be reasonable remuneration for such work". This formula merely poses the real problem, viz. how does one approach the question of what remuneration is "reasonable" for the work of a barrister?

  25. It is manifest that widely differing views are entertained as to what is "reasonable". Thus counsel have consistently been claiming fees much in excess of what have been allowed. Presumably, this has been done because they consider they are entitled to the fees they are claiming. However, the evidence put before us by the Lord Chancellor's Department showed that in the year 1994/1995 fees allowed to counsel amounted to only 69 per cent of the fees claimed by them. In the years 1995/1996 and 1996/1997 the proportion of claimed fees allowed was 44 per cent and 55 per cent respectively. The Bar Council entertains doubts about the accuracy of the statistics. However, these figures are borne out by the amounts claimed and those allowed in the present cases. Annex 1 shows that at every stage - Crown Court, Court of Appeal and House of Lords - counsel claimed substantially larger fees than were allowed. In many cases the differences were very great. Thus in R v Powell and Daniels leading counsel for Powell had his brief fee at trial taxed down from £10,000 to £7,000, his brief fee in the Court of Appeal from £6,000 to £3,000 and in the House of Lords from £35,000 claimed to the £14,000 allowed. £35,000 and £14,000 cannot possibly both be reasonable remuneration for the work done.

  26. There are three possible reasons for such disparity between the amounts claimed and those allowed. The first is that counsel are putting forward claims based on false facts e.g. as to the number of hours worked. This is something against which taxing officers will naturally be on guard but no one suggests that has occurred in any of the cases presently under consideration. But there is no doubt that the system of claiming on the basis of hours worked is capable of being abused. Secondly, the disparity could be due to counsel's clerks deliberately pitching the amount claimed at a very high figure so as to ensure that, when it is taxed down, even the taxed down figure amounts to a good fee. Thirdly, the disparity so far as the costs in this House are concerned, could be due to there being no generally known going rate for counsel's fees because there are comparatively few criminal appeals to this House.

  27. As to the second of those reasons, the Bar Council, through counsel, accepted that it would be unprofessional conduct if counsel were knowingly to claim an excessive fee. There is a fine line between claiming a fee at the top end of the reasonable scale and claiming a fee which is obviously excessive. A number of the fees claimed in the present case would appear to be excessive. It may be that this can be explained by the final factor, namely that the rates payable in the House were not known to counsel's clerks. But in any event, in our view, the culture of making very high claims with a view to them routinely being taxed down by the Taxing Officer is not a good one. Unless the fees claimed appear to have been calculated on the same principles as those appropriate for taxation, they can be of no value to the Taxing Officer and he would be justified in ignoring them altogether.

  28. As to the third factor, counsel's clerks put in evidence that they had difficulty in finding out what was the going rate in the House of Lords because there were so few appeals in criminal matters and therefore there was no body of experience on which to draw. For the same reason, the Principal Clerk in taxing bills in criminal appeals has little experience on which to base his determination, beyond the experience of the great increase in the amounts claimed by counsel.

  29. There is, therefore, a real need to seek to find some clearer and more objective test of what constitutes "reasonable remuneration". In the words of the written submission by The Law Society, what is needed is to "identify a benchmark, that is an objective and rational criterion, or a set of objective and rational criteria, according to which the actual rate payable can be determined". It is to this point that the second question is directed.

Question 2 - Should the "reasonableness" of fees in the public sector be fixed by reference to (a) fees obtainable by counsel in the private sector (b) a reasonable annual income or (c) remuneration paid out of public funds to e.g. doctors?

  30. All those represented before us were agreed that, since virtually all criminal work is publicly funded, fees obtainable by counsel in the private sector are not indicative of any general market rate and that their use would be misleading and unhelpful. As to fixing fees by reference to a reasonable annual income, quite apart from the difficulties of making the necessary adjustments, to ask what is a reasonable annual income merely forces the question one stage back: what is a reasonable income for a barrister? £20,000 per annum, £100,000 per annum, £500,000 per annum? As to using remuneration paid out of public funds to, for example, doctors, Mr Lawrence Collins QC for The Law Society submitted that target incomes for barristers could be set in much the same way as they are for medical and dental practitioners. But in our view it is not the function of a taxing officer to fix target incomes for barristers by reference to the earnings of other professions. He is concerned to allow the barrister a fee which is reasonable in relation to fees which are generally allowed to barristers for comparable work and the earnings of other professions are irrelevant to this calculation. They would be proper to be taken into account (although the practical difficulties of doing so are considerable) by someone charged with fixing levels of fees for the profession as a whole, such as the Lord Chancellor when he determines levels of graduated fees. But a taxing officer, in deciding what is a reasonable fee in a particular case, must take the general levels of fees as given and use them as the basis of his taxation.

Alternative guidance

  31. In the course of the hearing, various other ways of assisting in fixing "reasonable" remuneration were considered. In our opinion, some of these are of considerable importance.

Graduated fees

  32. The system of graduated fees was introduced by amendments to the 1989 Costs Regulations made in 1996 and 1997. Such regulations were made under section 34 (2) (e) and (9) of the 1988 Act which requires the Lord Chancellor to consult the Bar Council and The Law Society and to have regard, amongst other things, to "the general level of fee income arising from it" i.e. from the remuneration to be paid. We were informed that the Costs Regulations and the amendments were the product of long negotiations between the Bar, The Law Society and the Lord Chancellor. Although it is not said that there was agreement as to the rates to be included in graduated fees, it is obvious that there was a high degree of consensus in the approach. Everybody accepts that in making the Regulations the Lord Chancellor complied with the statutory duty of taking into account the general level of fee income which would be produced by the fees to be allowed.

  33. We therefore have, for the first time, a quantification of what constitutes reasonable remuneration for the purposes of legal aid in respect of the work which is covered by the graduated fees scheme.

  34. The graduated fees laid down by Regulation 9 and the Third Schedule cover ordinary trials lasting not more than ten days, which constitute some 80 per cent of Crown Court cases. Simply by applying the formula in Schedule 3 to the appropriate class of case, one can find the standard fee payable for any trial lasting up to ten days. Thus, leading counsel acting for two defendants in a murder trial (class A) lasting eight days with two hundred pages of prosecution evidence will receive a total remuneration (including refreshers) of £10,929.40. Leading counsel acting for two defendants in a ten day trial for possession of articles for terrorist purposes with four hundred and fifty pages of prosecution evidence and forty prosecution witnesses will receive a total (including refreshers) of £14,993.80. These figures for eight day and ten day trials give some guidance as to the type of fee to be considered "reasonable" in moderately heavy and responsible cases. If leading counsel had not been briefed to appear in the House of Lords' cases the taxation of the costs of which are being considered, this is the kind of work on which they would have been engaged and those are the fees that they would have recovered for it. Therefore, the graduated fees provide a general indication of the range of appropriate fees. As comparables, graduated fees have an advantage over the only other comparables which will in practice be available to the Taxing Officer, namely the fees which have been allowed on other taxations of comparable cases. This advantage is that they are immune to the ratchet effect whereby a high fee allowed in one case, perhaps on exceptional grounds, is then used as a precedent for another case. In the absence of normal market forces to bring such a process back to reality, the ratchet effect is likely to push fees higher than those which would be negotiated at arms' length. According to the Lord Chancellor's Department's statistics over the years between 1990/1991 and 1996/1997 (during which the Retail Price Index increased by 18.6 per cent) the average payment per bill for counsel's fees under Criminal Legal Aid in the Crown Court and Court of Appeal increased by 56.20 per cent.

  35. But we emphasise that in no way do the graduated fees provide the full answer. Graduated fees have deliberately not been adopted as applicable to appeals to either the Court of Appeal or the House of Lords, and for very good reason. The preparatory work involved in an appeal to this House will often be very considerable, and its product will not always be apparent at the hearing of the appeal. For example the House of Lords to a greater extent than lower courts requires counsel to research not only the law of the United Kingdom but very often the law of other Commonwealth countries. Such research may throw up no relevant law on the point. In that case the only sign of what may be considerable research to prove the negative is nothing more tangible than a statement to the House that there is no relevant authority.

  36. However, providing that the Taxing Officer is alert to the demand for legal research on appeals and the time that such research can consume, the graduated fee does provide helpful guidance as to what, in the context of Legal Aid, is reasonable remuneration for counsel. Certainly it shows that a claim for a £35,000 brief fee plus refreshers at £1,000 per day, for a three day appeal to the House of Lords, is wholly out of line. Even the £14,000 allowed for the brief fee is, in our view, generous.

Prosecution fees

  37. In the past it has apparently been difficult to introduce as a relevant factor the fees paid to the other side. We do not understand why this is so. At least in fixing the fees payable on appeal to the Court of Appeal or to this House we can see no merit in excluding such information. On the contrary the fees paid to the prosecution ought to provide guidance as to the proper fee for defence counsel. Although there may be exceptions, we can see no reason why in general the fees paid to both sides in the same appeal and both out of public funds should be very different. Both sides have to do the same research and must be prepared to argue all the points which the other side raises. The amount charged by prosecuting counsel will have been the product of some negotiation between him and the Crown Prosecution Service. In our view this provides a limited but helpful cross check against market forces. As the Annex to this report demonstrates, for the most part defence counsel have been paid more in these cases than prosecuting counsel. It is hard to see any justification for this.

Fees in the court below

  38. The fees set out in the Annex (both claimed and allowed) show a sharp increase as between the lower courts on the one hand and the House of Lords on the other. This may reflect special additional work required to be done at the final appeal. But in our view the mere fact that the case is being heard in the House of Lords does not justify such an increase. In some cases (for instance where this House is being invited to overrule a line of cases binding on the Court of Appeal) the argument in the House of Lords will be quite different to that in the Court of Appeal, and therefore more research will have been required. On the other hand, the issues in the House of Lords may be narrower than those in the Court of Appeal. If so, the brief fee should reflect such diminution in work. Again counsel may have been instructed for the first time in the House of Lords, in which case he is entitled to be remunerated for "getting up" the brief for the first time unlike counsel who have been with the case throughout.

Consultation with Court of Appeal Taxing Master

  39. Because of the relatively small number of criminal appeals to the House of Lords, the Principal Clerk has limited experience in taxing the bills for such appeals. The question was raised during the hearing whether the Principal Clerk could properly consult those who tax bills in the Court of Appeal so as to take advantage of their greater experience and expertise. All those represented before us considered that such consultation would be proper, and we agree.

Hours worked multiplied by hourly rate

  40. It is clear from the evidence put in on behalf of the individual counsel that their clerks attributed great weight to the number of hours worked in preparing the brief and then multiplied those hours by an hourly rate to produce the brief fee claimed. The hourly rate did not appear to be a rate always charged by that counsel for all his work but a rate adopted by the clerk for the purposes of fixing the brief fee on that appeal. This despite Direction 9 (d) "the hours spent by counsel in preparation are not generally of assistance to the Taxing Officer . . .".

  41. The use of hours worked multiplied by an hourly rate will seldom be helpful in taxing counsel's fees. Regulation 4 (2) (a) requires the appropriate authority to have regard to "the time involved" and TONG 1.11 (e) repeats this requirement. But the time expended by counsel is not necessarily the time to be remunerated. Only the time reasonably expended is to be remunerated: otherwise the inefficient, slow worker, gets better pay for the same work than the efficient worker. Add to this the risk (not a feature of these present cases) of counsel consciously or unconsciously exaggerating the time expended and the limitation on the hours worked approach becomes even more apparent. When the hours worked out of court are then multiplied by an hourly rate substantially higher than that payable as refreshers for hours spent in court, the dangers of the system are very obvious.

  42. In our view the policy that hours spent by counsel in preparation are not generally of assistance is a sound one and should be re-affirmed.

Question 3 - Can and should the Lord Chancellor be represented on taxations?

  43. There can be no doubt that the Lord Chancellor is entitled to be represented before the Principal Clerk on taxation of criminal legal aid costs and on any appeal from his decision. Such taxed costs are payable out of the Lord Chancellor's vote: it would require some statutory provision to exclude a paying party from being heard on the taxation.

  44. It appears that, at least in the past, the remarks of Lord Denning M R in Storer v Wright [1981] 1 QB 336 at page 347 have been treated as establishing that on a Legal Aid taxation no one is entitled to be heard in opposition to the claim put in. Lord Denning talked of legal aid taxation being different "in that there is no one to oppose it"; he asked "who is to challenge his bill? There is no one to contest the amount at all". In our judgment those words, insofar as they suggest that no one is entitled to appear to oppose a legal aid taxation, are not the law. In the absence of words excluding him, the Lord Chancellor would be entitled to be heard on a taxation in this House. As to taxations in the courts below, it may be that the structure we have set out, giving the Lord Chancellor express rights to appear on appeals from the determining officer and the Taxing Master, implicitly excludes any right to be heard at the first instance taxation hearing before the determining officer. But of course the Lord Chancellor can change this position by making the necessary regulation, to allow him to be heard.

  45. Hitherto the Lord Chancellor has never been represented (despite requests from the Principal Clerk) in any taxation or appeal from legal aid taxation in this House. In the courts below he has on occasion been represented on appeals on points of principle. From the point of view of the Taxing Officer it would obviously be helpful if he were represented so as to point out the possible objections to the claims: it is extremely difficult for someone in a judicial capacity to hold the balance fairly between two parties when he only hears the argument in favour of one of them. We would have expected it to be in the public interest, as the taxed costs of both counsel and solicitors play such a large part in the overall cost of legal aid, to seek to hold down to reasonable figures the costs allowed on taxation. It is for the Lord Chancellor, not for us, to administer the system and there may be administrative reasons why such representation is not expedient, e.g. the costs of such representation exceeding the amount saved to public funds. But from the point of view of the administration of justice, it would be much better for criticisms of the amount of counsel's fees to be made to the Taxing Officer at taxation and, if they are sound, to be reflected in the reduced sum awarded to counsel rather than to be the subject of adverse comment in Parliament or the media.

  46. Finally, under Direction 10 an appeal only lies against the Principal Clerk's determination on taxation in this House on a matter of principle and not on quantum. In the course of argument it appeared that it was a widely held view that a question of quantum could never be a matter of principle, such view being based on A T and T Istel Limited v Tully (No. 2) (above). That was an appeal against two decisions of the Principal Clerk. One concerned civil legal aid, where he taxed down leading counsel's brief fee from £25,000 to £9,000; the other concerned criminal legal aid, in which he had taxed down leading counsel's brief fee from £52,000 to £18,000. In argument counsel had submitted that the fees allowed fell so far short of what was appropriate as to be Wednesbury unreasonable. The appeals were dismissed on the short ground that there was no point of principle involved. In our judgment it is clear that the only decision in that case was that the sums to which the brief fees had been reduced were not Wednesbury unreasonable: it was not a decision that a question of quantum could never be a point of principle. Therefore, if the Principal Clerk were to award an unreasonably high fee, the Lord Chancellor could in an exceptional case challenge that fee as a matter of principle on the ground that it was so high as to be irrational.

Question 4 - Were the fees charged by counsel proper and, if not, at what figure should each be fixed?

  47. For the reasons previously given, we decline to answer this question.

  48. We have drawn attention to the undesirability of a culture of bargaining between counsels' clerks and the Taxing Officer, although we have acknowledged that this may be an appearance which is explained by lack of experience of the principles upon which costs in the House of Lords are taxed. But the ultimate responsibility for the fees allowed to counsel under legal aid rests, at the general level, with the Lord Chancellor and at the particular level, with the taxing officers. The fees are not fixed by counsel themselves. We have offered some guidance which may go some way to alleviate concern about the payment of fees which appear out of line with the norm, but general levels of barristers' fees are not within our control any more than that of the counsel in an individual case.

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