The recent decision by the Court of Appeal in Crane v Canons Leisure Centre [2007] could have a significant impact on those firms of solicitors who are on the ball. The Court of Appeal was asked to decide whether the work undertaken by a cost draftsman should be treated as a disbursement or as part of the solicitor's profit costs when charged to their client.

It is a well established principle that a solicitor is able to outsource work [for example to another solicitor doing agency work attending court etc.] and for the instructed solicitor to charge the agent's time as their own including perhaps, an uplift on their costs [see Smith Graham v Lord Chancellor's Department]. The question concerning costs draftsman's fees is therefore a significant one. The Court of Appeal held that, as the solicitor could be held to account by their client for the work done [contrast an expert witness], then the costs draftsman's fees could be charged as part of their own costs and could therefore include an uplift and even attract a success fee.

This decision means that a solicitor can quite validly turn a profit on costs draftsman's fees although to do so, they would need to ensure that the draftsman's fees are paid for from their nominal account and not added to the client's ledger as a disbursement. Instead, the client should be charged for the time taken [which obviously needs to be recorded by the costs draftsman] at the appropriate hourly rate - normally grade C or D. It might also be prudent for the solicitor's client care letter to include a statement that they may outsource certain tasks from time to time but that the client would be charged for the work at the solicitor's hourly rate as though the work had been undertaken by the solicitor themselves.

Click here to read the Court of Appeal decision in full.