Costs lawyers occupy a specialist corner of the English and Welsh legal services market. They are authorised persons under the Legal Services Act 2007, with the Costs Lawyer Standards Board (CLSB) acting as the approved regulator and the Association of Costs Lawyers (ACL) as the professional body. Their day-to-day work — drafting bills of costs, preparing points of dispute and points of reply, arguing detailed assessment hearings under CPR Part 47, running costs budgeting under Precedent H, and advising on inter-partes recovery — sits close to the money in litigation. That proximity to the sums in dispute is what makes robust professional indemnity (PI) cover a practical necessity as well as a regulatory one.
Since the Legal Services Act 2007 brought costs lawyers into the reserved legal activities framework, only individuals authorised by the CLSB can call themselves a Costs Lawyer and exercise the rights of audience and litigation conduct that the title carries. The ACL is the representative body; the CLSB is the statutory regulator that admits, disciplines and — if necessary — removes practitioners. The regulatory reach extends to sole practitioners, partners in costs consultancies, in-house costs lawyers employed by solicitors' firms, and those working under alternative business structures.
The Solicitors Act 1974 continues to shape the landscape in which costs lawyers work — its provisions on solicitor–client bills, statutory demands and assessment procedures underpin much of the retainer-side work. Familiarity with the 1974 Act, the CPR and the practice directions is assumed by clients and by the courts.
The CLSB Code of Conduct at rule 3.1 requires every practising costs lawyer to hold adequate professional indemnity insurance. The word adequate is deliberately calibrated to the size and nature of the practice: the CLSB does not fix a single monetary floor, but expects the practitioner to be able to justify the limit and terms chosen if asked. In practice the market settles at limits between £100,000 for a modest sole practitioner handling smaller inter-partes matters and £1,000,000 or more for costs lawyers advising on high-value commercial litigation, group actions or clinical negligence assessments where the sums at stake can exceed seven figures.
Adequacy is a moving target. A costs lawyer who takes on a larger commercial book, or who becomes involved in Precedent H work on multi-million-pound claims, may need to revisit the limit at renewal rather than default to last year's figure.
Three patterns dominate the notifications insurers see:
Alongside these, insurers also see claims arising from mis-cited authorities, arithmetic errors in the bill of costs, and failure to advise on the impact of Part 36 offers on recoverable costs.
Because costs disputes can surface years after the substantive litigation has ended, run-off cover matters. The CLSB expects a costs lawyer who ceases practice to maintain PI on a run-off basis, and the market convention is a six-year tail. The premium is typically front-loaded — a lump sum representing several years of run-off — and needs to be planned for at the point of retirement, sale or exit.
Illustrative scenario — not a specific client matter. A sole practitioner costs lawyer specialising in commercial litigation costs work reviews their PI at renewal. The CLSB requires adequate cover under rule 3.1. Following a review of their case-load — which includes several claims with bills in excess of £500,000 — the limit is placed at £500,000 any one claim with a legal-market insurer familiar with the costs-lawyer sector. Six months into the year, a court makes an order restricting the client's recoverable costs to the court's default assumption after a case-management conference is missed and the Precedent H hearing goes unattended. The client's shortfall against the recoverable figure crystallises as a loss. The costs lawyer notifies the insurer as a circumstance under the policy; the insurer accepts the notification, appoints panel solicitors, and — following investigation — indemnifies the client's loss within the £500,000 limit, subject to the excess.
For a costs lawyer, three practical points follow. First, the limit should reflect the size of the bills you work on, not the size of your fee. Second, insurers who understand the costs-lawyer market are a small group; a broker with visibility across that panel can help you compare cover meaningfully. Third, run-off should be budgeted for well before it is needed.
Apex Insurance Brokers arranges PI for legal-services professionals authorised under the Legal Services Act 2007, including costs lawyers, solicitors and legal executives. Related profession pillars: solicitors PI, barristers PI and CILEX legal-executives PI.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.