A question of costs

In a continuing series, Richard Miller provides answers to some of the common questions raised by legal aid practitioners

Q Why have I had such a large sum of costs disallowed in the contract compliance audit?A This is probably the question I have been asked most often this year.

Many firms have had large sums disallowed, and there have been significant disagreements between firms and auditors over the assessments. The problem has arisen primarily because recently there has been little assessment of legal help claims, so there has developed a considerable divergence of practice between the Legal Services Commission (LSC) and the profession. The audits applied the auditors' interpretation of rules and guidance to files.

This was exacerbated by factual mistakes made by auditors.

For most firms, a true assessment is much closer to what practitioners are claiming; but there are still lessons for the profession to learn.

Some of the cuts have been justified.

Q What mistakes are firms making?A The biggest impact on the audit results comes from failures to complete the legal help form properly.

Failing to complete capital details properly, not dating the form, or forgetting to tick the box confirming that the client has not had advice from another firm in the last six months result in a nil assessment.

Where the client does not provide evidence of means, the claim for costs will be limited to the first two hours.

This does not mean that you can do up to two hours' work without seeking evidence of means.

If you do not try to confirm eligibility, your costs may be disallowed. Attendance notes are sometimes inadequate.

What is adequate will always involve a degree of judgement.

A one-line attendance note will rarely be sufficient to justify a one-hour attendance, but where the results of that attendance are, for example, the initial letter or a witness statement, those documents may provide sufficient evidence.

Cross-referencing will reduce the length of attendance notes.

Similarly, where characteristics of the client or the case that mean that all attendances take longer than average are clear on the file, they should not need to be recorded in every attendance note.

The two key questions are, does the file explain the length of the attendance, and if that is longer than the guidelines normally allow, are the reasons for exceeding them plain? If the answer to both questions is yes, all time actually and reasonably spent on the matter should be allowed.

Q What mistakes are the auditors making?A There have been instances of auditors claiming that evidence is not on the file when it is; that legal help forms have not been properly completed when there is no apparent error; and cases where attendances the firm had not claimed for were used to reduce costs.

These issues, annoying though they are, are generally fairly easy to correct. There have also been some areas where the interpretation of guidance by the auditors is at odds with accepted practice in the profession.

For example, time taken to draft attendance notes may be claimed.

Where two letters are sent on one day, the guidance in Focus 27 provides that the second letter should be disallowed only where matters 'could reasonably, conveniently and appropriately have been dealt with in a single letter'.

If the second letter is the result of developments during the course of the day, or if a protocol requires two letters, or if the matters are so complex that sending a single letter is not appropriate (such as with the client care and initial letters), the guidance allows you to claim for both letters. Auditors have also disallowed work done by a secretary.

The guidance is clear that work that is administrative only is not claimable; and that work that advances the case is claimable.

The status of the person carrying, out the work is not conclusive as some auditors appear to have believed.

Q What other issues have arisen?A A number of issues have arisen on which there is no clear answer, and additional guidance is required.

For example, when is a letter to a client arranging an appointment merely administrative, and when is it substantive? Does the claim for costs have to appear on the legal help form itself, or can it be held elsewhere on the file? In these days of software-produced forms, is it necessary for clients to write the date on the legal help form themselves? In what circumstances is it permissible for an auditor to disallow time spent on the grounds that it exceeded a reasonable time for the attendance? These are all issues that need to be addressed.

Q How do I appeal against an unfavourable audit result?A The appeals mechanism under the contract, set out at paragraph 2.16 of the contract specification, provides that you have 21 days to make submissions by way of appeal to the costs committee; and thereafter, where there is a point of principle of general importance, you can appeal to the costs appeals committee. In practice this year, the LSC has been willing to discuss representations with firms and then proceed to the appeals mechanism where necessary.

Q Where is the guidance set out?A One of the most common requests has been, can the guidance be consolidated into a single place? Guidance is spread through issues of Focus, the funding code guidance, and the LSC manual.

It is sometimes difficult to find it or to know whether it has been superseded by costs appeals decisions or subsequent guidance.

There is no comprehensive index of all the sources of guidance.

Q Where do we go from here?A The LSC has responded constructively to representations made in the light of the problems arising on audits, as a result of which, revised and consolidated guidance is expected soon.

It is proposed that in next year's audits, disputes should be put through the appeals process sooner than happened this year, which in turn means more information should be given to firms earlier.

These changes may not address all the issues in the way practitioners would wish, but it should clarify matters substantially and ensure that next year's audits go a lot more smoothly than this year's, and that it will take a lot less time to resolve any issues arising from the assessments.l Questions for this column should be sent to Richard Miller at: 93 Turnmill Street, London EC1M 5TQ, DX 53339 Clerkenwell or e-mail: richard@lapg.co.ukRichard Miller is the director of the Legal Aid Practitioners Group and a Law Society Council member.

He was previously the franchise liaison officer for a small firm of solicitors that had franchises in crime, family, welfare benefits and personal injury.

Mr Miller cannot answer questions other than through this column, unless they are from members of the Legal Aid Practitioners Group