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26 October 2018

Fitting the bill

This article was first published by New Law Journal

For the princely sum of £55 it is possible to issue a claim in the Senior Courts Costs Office seeking a detailed assessment of a solicitor’s bill. At this point the parties will be entering into an arcane process last codified by the Solicitors Act 1974. Presumably Parliament knew what it meant when it defined a bill of costs for contentious business as a document that ‘may at the option of the solicitor be either a bill containing detailed items or a gross sum bill’ – but such language is incomprehensible in this day and age without the assistance of a text book or even a specialist costs lawyer.

It is not just because of the language that the statute needs modernising. The legal profession – indeed society in general – has transformed over the past 40 years. Long gone is the traditional relationship of deference between client and professional, to be replaced by a modern business (or consumer) relationship in which the client is both more price savvy and far more willing and able to change lawyers and challenge fees.

Thus it should be no surprise that a new industry is emerging in the field of finding ways to challenge solicitors’ fees, most starkly illustrated by the fact that the trading name of the firm of costs lawyers representing the clients in one of the recently reported cases ( Allen v Brethertons LLP [2018] EWHC B15 (Costs)) is checkmylegalfees.com. Legal challenges to solicitors’ bills are it seems only going to increase.

Technical minefield

Solicitors need to tread carefully through what is a technical minefield in which it is easy to come a cropper. In the case of Richard Slade and Company v Boodia and Boodia [2017] EWHC 2699 (QB), [2018] 1 WLR 2037 the High Court found that 61 interim bills delivered (of which 57 had been paid) were not statute bills (ie compliant with the 1974 Act). This meant that the solicitor was not able to sue for payment on the unpaid bills and the client could demand a statute bill covering all the interim bills and have a detailed assessment of all the costs, including those bills long since paid. The reason the interim bills were defective was because profit costs and disbursements had been billed separately and so the bills for profit costs did not include all the disbursements incurred during the period covered by the profit costs in the bill.

Such a result may well be a correct application of the 1974 Act but it creates a real practical difficulty for modern solicitors given the lack of control over when invoices for disbursements (most obviously counsel’s fees) will be delivered. More to the point, it will often go against what both solicitor and client would prefer if the solicitor is somehow prevented from invoicing the profit costs while waiting for all the disbursements to come in.

The Boodia case goes to the Court of Appeal in November and perhaps the court will find a way of synthesising an antiquated statute with modern practice.

Proportionate

Finding a proportionate and effective way of ensuring the solicitor is fairly paid in accordance with agreed terms, while protecting the client from poor practice, also came to the fore recently in Hanley v J C & A Solicitors [2018] EWCA 2095 (Civ), [2018] EWHC 2592 (QB). This case involved conjoined appeals arising from disputes over the deduction of fees from claimants’ damages and, in particular, whether the solicitors could be required to hand over their files to facilitate the search for evidence that fees had been wrongfully deducted. Mr Justice Soole ruled that the files belonged to the solicitors and the inherent jurisdiction of the court could not be invoked to circumvent that proprietary right.

This was a pragmatic decision which may ameliorate the disproportionate cost that would otherwise be incurred by a wave of satellite litigation reviewing fee deductions which in each individual case are likely to be of relatively small sums. However, it does hamper the ability of clients who have been the victims of poor billing practices to obtain an effective remedy. (The client in Allen v Brethertons LLP was apparently vindicated in challenging certain deductions and it is noteworthy that the judge in that case added a postscript to his judgment criticising the solicitors for not showing due respect to the costs lawyers mounting the challenge on their former client’s behalf.) It was seemingly with this unease in mind that Soole J added his own warning in Hanley that solicitors should not ‘press their legal rights to the limit’ nor could they ‘do so with impunity’.

Comment

Even if an updating of the 1974 Act may be a remote prospect, we can expect our regulators to become ever more interventionist in the area of solicitors’ charges. In a little yet noticed decision, the SRA has announced that, with effect from 1 December 2018, the SRA Transparency Rules will require firms to publish on their websites a whole raft of information about costs and likely timescales across a range of different legal services which are offered to individuals or businesses. The required information will include:

  • the total cost of the service or, where this is not practicable, the average cost or range of costs;
  • the basis for the charges, including any hourly rates or fixed fees;
  • the experience and qualifications of anyone carrying out the work and their supervisors;
  • a description of, and the cost of, any likely disbursements or the average cost or range of costs;
  • whether any fees or disbursements attract VAT; and
  • details of the services that are included in the price and likely timescales for key stages.

The services to which these new rules will apply include contentious matters such as debt recovery of up to £100,000 for businesses. The SRA’s rationale is that all the services in question can be commoditised. Yet any litigator will know that one £100,000 debt dispute can be far removed from the next one in terms of what it might cost to resolve and how long it will take.

If the SRA feels there is a need to intervene in this way to protect litigation clients at the pricing stage, we can surely expect it to turn its attentions to the billing stage in due course—whether that is by supplementing the 1974 Act or prevailing on the Government to find parliamentary time to legislate.

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