Article on Costs

The possibility of a detailed assessment of their costs under Section 70 of the Solicitors Act 1974 (the “Act”) is a possibility that all solicitors should be alive too. It is likely to be encountered in some sense during the course of a career and clients are becoming increasingly aware of the option. When a client changes firms it is also not uncommon for the new solicitors to advise on the prospect of a detailed assessment of the previous bills, especially if they seem high.

The first thing to note is that the time limits are reasonably tight under the Act, with a client only having an absolute right to an assessment for one month after the bill is delivered. If the bill is unpaid the Court can order an assessment up to 12 months after receipt of the bill. An unpaid bill will only be subject to assessment more then 12 months after delivery if a ‘special circumstances’ test can be met. Matters are even more limited if a client has paid a bill; the ‘special circumstances’ test must be met if the assessment is sought more than one month after payment and the court cannot assess a bill more then 12 months after payment.

Given the time limits the question of what constitutes a bill is one which can cause vexation and annoyance, especially if a solicitor has thought that they have been issuing interim bills during the course of a matter only to find out that the bills were in some way deficient and that all of their costs are, therefore, open to assessment.

Under Section 69 of the Solicitors Act 1974 a bill must be (1) signed and delivered in accordance with the act . A further requirement, not apparent on the face of the Act, is the requirement for a bill to be sufficiently detailed so that a client may, if they wish, take advice as to its detailed assessment. This principle was confirmed in Ralph Hume Garry v Gwillim [2003] 1WLR 510 with Ward LJ summarising that

‘I would accept the proper principle to be that there must be something in the written bill to indicate the ambit of the work but that inadequacies of description of the work done may be redressed by accompanying documents (as in Eversheds v Osman where it was doubtful whether the bill on the face of it would have been sufficient) or by other information already in the possession of the client. That, it seems to me, would serve the purpose of the Act to give the client the knowledge he reasonably needs in order to decide whether to insist on taxation. If the solicitor satisfies that then the bill is one bone fide complying with the Act.’

A further immediate complication depends on whether the solicitor chooses to send a single bill at the conclusion of the matter or to render interim bills during the course of a matter. The rendering of interim bills is a choice for each solicitor and has its pros and cons. On the one hand interim bills start the time running for detailed assessment at the earliest possible opportunity and (perhaps more practically) can be enforced in the Courts pursuant to Section 69 of the Act. On the other hand, an interim bill is (in principle) final and cannot, therefore, be adjusted later on. This can create difficulties in cases where funding arrangements might include CFA uplifts or matters include ongoing work which does not make it into the interim bill.

If a solicitor chooses to render interim bills, they must comply with the requirements above. It is notable, however, that they must also be provided for in the contractual arrangement between the solicitor and the client (whether embodied in the terms of business or the client care letter). There is no automatic right to render interim bills. It is this last requirement which often causes difficulties as upon a close study of the client care letter and terms of business there may not be specific provision for the delivery of interim bills. If there is no such provision any interim bills issued, even if paid, are treated as requests for payments on account. The only arguable exception is if the course of conduct between the solicitor and the client clearly shows that there was some contractual agreement for the delivery and payment of interim bills (a point noted in Abedi v Penningtons [2000] 2 Costs LR 205).

It should be noted finally, that when it comes to the question of a detailed assessment of costs the board is not level between solicitors and clients but is instead tipped in favour of the former. There is a presumption under CPR 46.9 that solicitors’ costs are presumed to have been reasonably incurred if incurred with the express or implied approval of the client and to be reasonable in amount if the amount was expressly or impliedly approved by the client. Under CPR 46.9 costs are unreasonably incurred only if (1) ‘they are of an unusual nature or amount’ and (2) the client was not told by the solicitor that as a result of that, the costs may not be recovered from the other side. The costs of the assessment also favour the solicitor in an assessment. The client will pay the costs of the assessment on the indemnity basis unless they achieve a reduction of more than 20% in the total costs subject to detailed assessment.

Becket Chambers costs team has a wide range of experience of issues arising under the Solicitors Act 1974 and costs disputes generally. Samuel Davis recently appeared before the SCCO in Genevieve Ugochi Iwuanyawu v Ratcliffes Solicitors which dealt with many of the issues above. Our team is always happy to offer general advice on costs and you should not hesitate to contact the clerks with any queries.

A further article will be published on the ‘special circumstances’ test shortly.

Pursuant to Section 69(2A) of the Solicitors Act a bill is signed if it is: ‘(a) signed by the solicitor or on his behalf by an employee of the solicitor authorised by him to sign, or (b) enclosed in, or accompanied by, a letter which is signed… and refers to the bill.’

Pursuant to Section 69(2C) of the Solicitors Act a bill is delivered if: ‘(a) it is delivered to the party to be charged with the bill personally, (b)it is delivered to that party by being sent to him by post to, or left for him at, his place of business, dwelling-house or last known place of abode, or (c)it is delivered to that party; (i) by means of an electronic communications network, or (ii) by other means but in a form that nevertheless requires the use of apparatus by the recipient to render it intelligible, and that party has indicated to the person making the delivery his willingness to accept delivery of a bill sent in the form and manner used.’