There has been a spate of claims since 1 October 1991 against solicitors and counsel seeking to hold them personally responsible for the costs not only of specific items but of entire proceedings.

The Law Society and the Solicitors Indemnity Fund (SIF) supported six appeals to the Court of Appeal, with a view to obtaining guidelines on practice and principles.The relevant legislation is contained in s.4 of the Courts and Legal Services Act 1990 (CLSA) and s.51(6)(7) and (13) of the Supreme Court Act 1981 (SCA).Six cases were consolidated and heard by the Court of Appeal in December 1993.

The cases illustrated everyday scenarios and all raised the same question - in what circumstances should the court make a wasted costs order? - a question which the court considered to be 'of great and growing significance'.Four appeals arose out of orders against solicitors, one out of an order by the Court of Appeal to show cause why an order should not be made, and the sixth, supported by the Bar Mutual, involved counsel.

All the appeals were successful and there is, therefore, real hope that they will herald the return to a more controlled exercise of the costs jurisdiction.

That is certainly the tenor of the Court of Appeal judgment.Parliament's intervention with the CLSA which, for relevant purposes, came into effect on 1 October 1991, added teeth to the costs jurisdiction and significantly brought counsel into the firing line.

It does not, however, affect conduct before this date (see Fozal v Gofur CA (unreported, 21 June 1993)).The new legislation empowers the court to order the 'legal representatives' to meet wasted costs incurred by a party as a result of any improper, unreasonable or negligent act or omission on the part of any legal representative which the court considers it is unreasonable to expect that party to pay.The new ord 62, r.11(4) lays down the basic procedure to be followed.

Except in limited cases, such as failure to attend court, which are so obvious as to not merit a hearing, no order may be made unless the court has given the legal representative a reasonable opportunity to appear and show cause why an order should not be made.As a general rule, applications should not be made until the litigation has been concluded (see Filmlab International Systems Ltd v Pennington [1993] The Times, 2 July).

Nor is it proper for one party to threaten another with a wasted costs application in order to 'browbeat' the other party into abandoning a claim (see Orchard v SE Electricity Board (1987) QB 565).

The Court of Appeal approved both these points.

It is, however, permissible to alert your opponent to the fact that you consider his or her conduct to be unacceptable and likely to result in wasted costs.

No doubt the line between 'intimidation' and notification of concern will be a matter of much debate.The Court of Appeal also confirmed that the jurisdiction is intended to be 'as simple and summary as fairness permits'.

This implies that it is to be exercised in clear and obvious cases only.

Where the applicant seeks to recover all the costs of an action, it is difficult to see how the matter could be dealt with in summary fashion as doubtless the respondent will wish to present a full defence even if the applicant's case is pleaded tersely.The Court of Appeal reiterated that it is essential to the fair operation of the system that the lawyer knows:-- the conduct being complained of;-- the amount claimed against him or her; and-- the causal link between the two.The Court of Appeal stressed that the necessary causal link with the conduct relied on must be established by the applicant.

Did the 'negligence' cause the costs to be wasted? The inference is that failure to provide this information will result in no award being made.There remains a lacuna not fully addressed by the Court of Appeal which arises when the claim is initiated by the court because it is not obliged to serve a pleading thus making it more difficult for the lawyer to prepare his or her defence.

The Court of Appeal did, however, indicate that such claims should only be brought in straightforward cases - lateness, failure to appear, etc not least because, if unsuccessful, a respondent will have to bear the costs of a claim in any event.

The Court of Appeal strongly discouraged courts from making lawyers 'show cause' where the issue went to the merits.

That should be left to the parties.Unfortunately, with claims becoming more sophisticated, the rules fell short of providing adequate insight into either the mechanics or the criteria upon which the new jurisdiction is predicated.

What is certain is that a Pandora's box had been opened revealing a minefield of complex legal issues through which the unwary practitioner (whether qua applicant or respondent) had to tread carefully.In particular, the interpretation of the crucial words 'improper', 'unreasonable' and 'negligent' required clarification as to which the Court of Appeal has provided clear guidance.

'Improper' continues to bear its generally accepted meaning and will include 'conduct which would ordinarily be held to justify serious professional penalty...or be regarded as improper according to the consensus of professional opinion'.

'Unreasonable' also retains its traditional meaning - the acid test is whether the conduct permits of a reasonable explanation.The definition of 'negligent' in the history of wasted costs has proved the most controversial.

The Court of Appeal rejected the argument that conduct should not be regarded as negligent unless all the ingredients for the tort of negligence are made out.

Instead, it adopted the common sense 'reasonable competence' test expressed in Saif Ali v Sydney Mitchell (1980) AC 198.In practice, the Court of Appeal does not anticipate that this definition will lead to the inequitable result of compensation being awarded to the other side when the same acts cannot give rise to liability to a lawyer's own client, because the conduct resulting in wasted costs claims is likely also to result in a claim by the client.It is probably worth highlighting that a duty of care to the opponent is superfluous.

A lawyer does not owe a duty to a party for whom he or she is not acting and a wasted costs order is based upon the legal representative's duty to the court alone.Another conundrum, explored in the Antonelli v Wade Gery Farr [1994] The Times, 28 January was the interaction of the new costs jurisdiction and the immunity of counsel (and solicitor advocates) enshrined in Rondel v Worsley [1969] 1 AC 191.

It is plain that there has been an encroachment into the advocate's liability and if his or her conduct in court is improper, unreasonable or negligent he or she will be liable to a wasted costs order.

This is subject to the qualification that the court should not lose sight of the public policy considerations upon which the immunity is based.Accordingly, judges are urged to make allowances for the fact that the advocate has to make pressurised decisions 'in the fog of war' and mistakes will inevitably be made.

Nevertheless, if the advocate's conduct is unjustifiable an order will be made.

Counsel's immunity from the client's suit is expressly preserved by s.62 of the CLSA.Even if a court is satisfied that a negligent act or omission has occurred and that this resulted in costs being wasted, the role of discretion must not be underestimated.

The avalanche of applications for wasted cost orders over the past two years provides the strongest possible indication that this discretion has been exercised too readily.The Court of Appeal emphasised that judges should approach their task with caution and where possible consider the applicability of other sanctions of a disciplinary nature.

No doubt this is a recognition of the fact that costs orders not only impose a heavy burden on respondents (not to mention the wider insurance implications) but they also undermine the reputation of lawyers, particularly in local legal communities.The court must therefore walk a tightrope between the conflicting interests of the protection of the public from unacceptable standards of care and the protection of the profession from unmeritorious claims.It was difficult to furnish the Court of Appeal with accurate data illustrating the incidence of applications for wasted costs.

Experience has shown that many solicitors have hitherto opted to pay up rather than become embroiled in protracted proceedings which often prove more expensive than the amount at stake.

No doubt this decision will in many cases be motivated by commercial considerations - loss of fee-earning hours and potential repercussions on their name - particularly where the claim is court led because there does not appear to be any mechanism whereby the lawyer can recover his or her costs if the proceedings are successfully defended.It is thus only those residual claims reported to the professional bodies which can form the basis of any meaningful statistical analysis.

Even so, the sheer volume of these and the substantial costs which have been allocated to them over the past two years caused SIF to take notice of what appeared to be an alarming trend for the new costs jurisdiction to be invoked in a manner which is potentially detrimen tal to the profession as a whole.One of the most worrying features of the jurisdiction was considered to be the fact that two main catalysts for an application have been either insolvency or bankruptcy of the plaintiff or legal aid.

In both categories the successful defendant would be unlikely to recoup its costs against the losing party.Unless checked, it was believed that the threatening of these applications would have the undesirable effect of curbing the willingness of lawyers to accept legally aided cases.This danger was recognised by Dillon LJ in Orchard.

The Court of Appeal has now made it clear that it 'deplores' the use of wasted costs orders as a 'back door' means of recovering costs not otherwise recoverable against a legally aided or impoverished litigant and the message to judges is that they should think carefully before making an order against lawyers whose clients' financial position has made them especially vulnerable to these claims.On the other side of the coin, there was also a fear that legal representatives may be at risk if they act for rich plaintiffs who insist on commencing proceedings-- when the odds are stacked against them and-- even though the costs are likely to be out of proportion to any recoverable damages.Such clients are entitled to commence litigation and the Court of Appeal has confirmed that provided the lawyer has not knowingly misled the court or been a party to an abuse of process he or she should not fall foul of the jurisdiction.It is equally clear that the rules do not cover the plethora of complex issues concerning the substance and procedure of claims which must be confronted in each and every case.

The Court of Appeal has, to a certain extent, remedied this omission although there are still a number of important questions which remain unanswered.-- Do the normal rules as to discovery apply? Addressing this issue for the first time the Court of Appeal has indicated that formal discovery is inappropriate.

This suggests that an order for discovery of the applicant's documents cannot be obtained.

However, the Court of Appeal usefully adds that if the applicant's privileged communications are germane to an issue and he or she declines to waive privilege adverse inferences can be drawn against him or her.-- Can oral evidence be given? The Court of Appeal did not lay down any firm guidelines on this point.

Each case will be considered on its own merits.

The Court of Appeal does not 'imagine any circumstances in which the applicant should be permitted to interrogate the respondent lawyer'.

There remains the more general question as to whether there ought to be a strict procedural timetable in these claims which in all other respects have taken on the characteristics of a 'trial within a trial'.It is unlikely that a formal structure will emerge, particularly as the Court of Appeal indicated that these applications should occupy hours rather than days.

Lengthy enquiries were strongly discouraged.-- How does privilege interact with the wasted costs jurisdiction? By far the most awkward issue in wasted costs claims concerns privilege, a right which belongs to the client and not his or her lawyer.

In a straightforward negligence action brought by a former client, privilege is automatically waived.

However, where a claim is brought by the opposing party it remains intact.In Orchard it was made clear that adverse inferences should not be drawn where privilege is not waived.

The Court of Appeal has gone further directing judges to 'make full allowances for the respondent's ina bility to tell the whole story'.

Where there is room for doubt the lawyer is entitled to the benefit of it.

Nevertheless, one can still envisage circumstances in which lawyers, deprived of the most useful ammunition (communications with the client, etc) are being required to fight with both hands tied behind their backs.The legal representative has to decide what information he or she is entitled to reveal if privilege is not waived and whether to ask the client to waive privilege.

Practitioners must take care not to waive privilege without consent.

It is easy to envisage a situation in which the lawyer would be torn between the interests of the client(s) and his or her personal position.

The Court of Appeal was anxious to prevent such situations occurring.The new statutory jurisdiction brought into sharper focus the role of the advocate and the extent to which the solicitor is entitled to look to counsel for an indemnity.As a general rule, a solicitor is entitled to rely upon the advice of counsel properly instructed (see Locke v Camberwell Health Authority (1991) 2 Med LR) although he or she must not do so blindly and must exercise his or her own independent judgment.

In general practice to rely upon specialist counsel is to make a 'normal and proper use of the Bar'.

Both these propositions have been endorsed by the Court of Appeal.The Court of Appeal has addressed many of the important issues raised by this controversial jurisdiction and it is hoped that the Master of the Rolls' cautionary advice that 'judges must be astute to control what threatens to become a new and costly form of satellite litigation' will also be heeded by all practitioners before they consider embarking upon wasted costs claims.