The recent case of JMH v CFH and SAP revisits the issue of recovery of costs where a solicitor acts for themselves through their own firm. The question goes back as far as London Scottish Benefit Society v Chorley [1884] 13 QBD 872 in which solicitors acted for themselves. The Court of Appeal held that they were entitled to recover their costs because, if they had not represented themselves, they would have got another solicitor to act. The trade off was that the amount of the costs was reduced because they could not recover work involved in a personal attendance upon themselves! In other words you could not claim 2 hours for taking initial instructions from yourself.
This has become known as the Chorley principle. It has been approved and developed over the years. In Halborg v EMW Law [2017] EWCA Civ 793, the firm had issued proceedings to recover unpaid costs. Mr Halborg argued that they were not entitled to the costs of those proceedings as they were acting for themselves and should be treated as litigants in person. The Master of the Rolls, Terence Etherington confirmed the entitlement –
“a solicitor who acts for himself as a party to litigation can recover not only his out of pocket expenses but also his profit costs, but he cannot recover for anything which his acting in person has made unnecessary”
In these cases, the solicitor had instructed the firm but had then carried out the work themselves. The point was that there was the use of skills and time which could have been used for other clients. The firm had therefore incurred a loss.
The JMH v CFH and SAP situation was different. This was case about an Enduring Power of Attorney. SAP was a solicitor employed by KSN Solicitors. The Applicant wished to revoke an existing EPA and appoint SAP under a Lasting Power of Attorney. SAP acted for herself. It was not disputed that she had never in fact instructed the firm to act for her, even though she carried out work in their time, with their knowledge and approval. She was in fact a litigant in person. Her Honour Judge Evans-Gordon said –
“The fact that SAP asserts that she was a litigant in person, had not instructed KSN and was never under any obligation to pay them anything, together with KSN’s position that they were not acting for SAP is, in my view, fatal to the claim to assessment under the Chorley principle which applies only where the solicitor litigant has instructed, expressly or impliedly, a firm, including their own firm, to act for them. She simply believed, as did they, that her profit costs would be recoverable in the usual way. SAP did not carry out the work to relieve her solicitors from some of the work nor has she suffered any loss as she got paid throughout. It is only KSN who will suffer loss and they are neither the principal nor instructed solicitors.”
The argument that she was doing work that could have been carried out for other clients was rejected – “SAP was not carrying out any work for the applicant but for herself qua litigant in person”
This may seem a harsh decision but equally, it is not difficult to avoid the problem. Firms can carry out work on their own matters but the ‘Chorley’ principle will only entitle them to recovery of their costs if they actually retained to act.