My Solicitor Has Overcharged Me | What Can I Do?

A look at some of the questions you might want to ask yourself if looking to challenge your solicitors’ fees

SOLICITOR AND CLIENT COSTS – WHAT YOU NEED TO KNOW

SHOULD I CHALLENGE MY SOLICITORS’ FEES?

A decision to challenge your solicitors’ fees should not be taken lightly. A client at the end of a stressful piece of litigation can sometimes feel that they have been charged too much by their solicitor, especially if the case hasn’t gone their way. However, there are some important things to consider, not least the further cost involved. You have rights. But there are safeguards in place for the solicitors too.

The starting point Part 46.9 of the Civil Procedure Rules:

(3) Subject to paragraph (2), costs are to be assessed on the indemnity basis but are to be presumed –

(a) to have been reasonably incurred if they were incurred with the express or implied approval of the client;

(b) to be reasonable in amount if their amount was expressly or impliedly approved by the client;

(i) they are of an unusual nature or amount; and

(ii) the solicitor did not tell the client that as a result the costs might not be recovered from the other party.

This is the basis on which a court will approach an assessment of a solicitor’s fees.

But there are some things to consider first.

Here are some of the questions you might want to ask yourself, and some assistance in answering them.

Are my bills “statute” bills or merely requests for payments on account?

It is important to know the difference.

A statute bill:

Is a self contained bill for the period covered which cannot be altered at a later date
Can be challenged within certain strict time limits governed by the Solicitors Act 1974
Can be sued upon after one month in the event of non payment

A non statute bill:

Is merely a request for payment on account
Can be increased at a later date
Cannot be sued upon
Cannot be directly challenged

If you have been sent a single bill and the end of your case which covers the whole period of instruction from start to finish, this is likely to be a statute bill.

Alternatively, you may have had several “interim” bills sent you over the course of your case.

These might also be statute bills, but they might not be.

A solicitor can render an interim statute bill only (i) by contractual agreement or (ii) at a natural break in the proceedings. Any interim bills not meeting one of these criteria is likely to be treated as an interim bill on account ie a “non statute” bill pursuant to s65(2) of the Solicitors Act 1974.

The distinction between a statute bill and a s65(2) request can be subtle and confusing. Even if one of the above criteria is met, an otherwise compliant statute bill can still be rendered non-compliant and thus no more than a s65(2) request in a number of other ways.

There are ‘pros’ and ‘cons’ to both solicitor and client in the rendering of either interim statute bills or s65(2) requests.

It is important to know the difference before considering any challenge.

Was my solicitor entitled to send me statute bills?

The most common way in which statute bills are validly delivered to clients is pursuant to an agreement. In other words, the solicitor informed you at the outset in writing that interim statute bills would be delivered to you during the course of your case.

As with most aspects of solicitor and client costs, this might not be a clear cut as at first it seems. The issue of entitlement to render interim statute bills can be and often is the subject of fierce debate.

It was affirmed by the High Court in Bari v Rosen (t/a RA Rosen and Co Solicitors) [2012] EWHC 1782 (QB) that if there is no contractual entitlement to issue an interim statute bill, any interim bill issued can be no more than a request for payment on account.

In that case, the solicitors argued that their retainer letter entitled them to render interim statute bills to the client. The court disagreed and held the letter to be confusing and contradictory, in that whilst stating that “I shall send you a regular statutory final bill, which will not be altered subsequently” it went on to say “You have a right to have an assessment of my bills at any time in the High Court”. Spencer J found:

The Master was entitled to conclude that there was ambiguity arising from the plain conflict between the purported contractual right to have a bill assessed at any time and the complete inability of a true interim statute bill to meet that expectation. He was not only entitled but bound to resolve that conflict in the claimant’s favour… The Master was correct to find that the defendant had no contractual right to issue interim statute bills. There was no suggestion that the bills had been issued at natural breaks. Accordingly, they had to be regarded as mere requests for payment on account. [35]

More recently, in Vlamaki v Sookias & Sookias [2015] EWHC 3334 (QB), the court again found deficiencies in the solicitors’ retainer letter, holding that:

I do not underestimate the force of the argument that they must be statute bills because of what is said in the retainer as to payment being due and as to interest. That argument, however, assumes knowledge of the 1974 Act and procedures under it…. In the ordinary course a lay client cannot be assumed to have such knowledge. [23]

You may have agreed and understood with your solicitor that each invoice sent to you in the course of your case was to be treated as a self-contained bill in respect of which the right to challenge would be subject to various time limits. In which case, you will likely have taken an informed view along the way.

If, however, you were not made aware that you were being sent complete self-contained interim bills, and of your rights to challenge those fees with the applicable time limits, it may be open to argue that the invoices rendered to you are in fact no more than s65(2) interim payment requests. In Adams v Al Malik [2014] 6 Costs LR 985, Fulford J observed this:

…the party must know what rights are being negotiated and dispensed with in the sense that the solicitor must make it plain to the client that the purpose of sending the bill at that time is that it is to be treated as a complete self-contained bill of costs to date [48]

Do I have sufficient information in my bill?

Solicitors are required to provide sufficient information in any statute bill that they send to their client in order for them to take advice on whether or not to challenge it. If they don’t then what was intended to be a statute bill may turn out not to be.

In Ralph Hume Garry (a firm) –v- Gwillim [2002] EWCA Civ 1500 Ward LJ found that…

I am left in little doubt that good practice required then, and still requires, an adequate description of the work done to justify the charge… This review of the legislation and the case law leads me to conclude that the burden on the client under section 69(2) to establish that a bill for a gross sum in contentious business will not be a bill “bona fide complying with the Act” is satisfied if the client shows:-

i) that there is no sufficient narrative in the bill to identify what it is he is being charged for, and

ii) that he does not have sufficient knowledge from other documents in his possession or from what he has been told reasonably to take advice whether or not to apply for that bill to be taxed.

However, it is not black and white.

In Re a Solicitor, an unreported decision of the High Court on 10th October 1994, Mr Christopher Clarke QC found the following narrative to be sufficiently descriptive to comply with the Solicitors Act 1974 …

“In connection with the renewal of licence of the above premises. To include correspondence concerning witnesses, attending consultation with counsel … attending final hearing … and preparation of service of notice of appeal and reporting, instructions to counsel on application to the Crown Court for continuance of licence pending appeal, correspondence and attendance arising.”

He went on to say…

In my judgment Parliament did not intend to oblige a solicitor submitting a gross sum bill for contentious business to include any more than, in the words of Lord Denning, “a summarised statement of the work done sufficient to tell the client what it is for which he is asked to pay.” … A bill which, to use Lord Denning’s example, simply said “To professional services” would not, of course, be sufficient since such a document would leave it wholly unclear what the client would be paying for, if he paid it, or in respect of what the solicitor might or might not, after payment, be able to make a further claim. If such a document is a bill at all it is certainly not a bill contemplated by the Act.

The narrative itself is not entirely determinative.

In Re Kingsley (1978) 122 Sol Jo 457, a bill merely stating that it was ‘for professional services’ was found to be inadequate.

However, in Eversheds v Osman [2000] 1 Costs LR 54, it was held that although the narrative description “General Matters” on each bill rendered to the client would in itself ordinarily be considered inadequate, the accompanying printouts which showed the time spent by each individual fee earner on the case was “satisfactory and adequate back-up material” to render the bills compliant.

Ward LJ finished his judgment in Ralph Hume Garry with this…

Surely in 2002 every second of time spent, certainly on contentious business, is recorded on the Account Department’s computer with a description of the fee-earner, the rate of charging and some description of the work done. A copy of the print-out, adjusted as may be necessary to remove items recorded for administrative purposes but not chargeable to the client, could so easily be rendered and all the problems that have arisen here would be avoided. In these days where there seems to be a need for transparency in all things, is a print-out not the least a client is entitled to expect?

It is also worthy of note that the former Senior Costs Judge, Chief Master Hurst, has himself commented that a bill…

must be complete in itself and contain sufficient information to enable the client to obtain advice as to its assessment and for the Costs Judge to assess it.

If your bill is deemed to be insufficiently detailed – and it is determined that you did not have sufficient knowledge from other documents in your possession or from what you have been told reasonably to take advice whether or not to challenge it

It will likely be held to be no more than a s65(2) payment request, whatever its intent.

Your solicitor cannot sue upon it, and neither can the fees be challenged until a final statute bill has been delivered.

Can I ask for further information?

Yes, but be aware.

Let’s assume that you are dealing with a statute bill.

This might be in the form of a “gross sum” bill, with little to no breakdown of the hours spent. This is not unusual.

Section 64(2) of the Solicitors Act 1974 does however provides that a client may, before he/she is issued with proceedings, and within three months of receipt, request a detailed bill in lieu of the less informative gross sum bill he may have received.

It is important to understand that the effect of this is to render the gross sum bill of no effect and the solicitor is no longer bound by it.

In other words, the charges might increase.

The bills I received did not always include all of the expenses my solicitor had paid out on my behalf

In Richard Slade And Company Solicitors v Boodia & Anor [2017] EWHC 2699 (QB) the High Court affirmed that in order to comply with the strict requirements of the Solicitors Act 1974 a statute bill must be a complete and self-contained bill for costs including all disbursements incurred during the period covered.

In other words, if your bill does not contain all disbursements (expenses) incurred by your solicitor on your behalf during the specific period which it covers, it will be deemed to be non compliant with the Solicitors Act 1974 and thus non statute in nature.

I’ve only received payment requests, but I’m concerned at the amount I have been asked to pay. What’s my next step?

Assuming you have no further business with your solicitor, you can ask him to provide you with a final bill. This is unlikely to be refused. However, if it is, or is unreasonably delayed, you can seek an order for delivery up of a final bill under s68 of the Solicitors Act 1974.

My solicitors fees have exceeded the estimate I was given. Is that relevant?

It might be.

The topic of estimates has been the subject of High Court scrutiny on several occasions.

The following principles have developed:

Mastercigars Direct Ltd v Withers LLP [2009] EWHC 651 (Ch)

Where a client satisfies the court that an inaccurate estimate deprived her of an opportunity of acting differently, that is a relevant matter which can be assessed by the court when determining the regard which should be had to the estimate when assessing costs [47]

Where a client contends that its reliance on an estimate should be taken into account in determining the figure which it is reasonable to pay the court should i) determine whether the client did rely on the estimate ii) determine how the client relied on the estimate iii) determine the above without conducting an elaborate and detailed investigation iv) decide whether the costs claimed should be reduced by reason of its findings as to reliance and, if so, in what way and by how much [54]

Mastercigars Direct Ltd v Withers LLP [2007] EWHC 2733 (Ch)

The estimate is a useful yardstick by which the reasonableness of the costs may be measured. If there is a modest difference between the estimate and the final bill, because an estimate is not a fixed price for the work, one may be very little surprised by the modest difference. The greater the difference the more it calls for an explanation. If there is a satisfactory explanation for the difference then the estimate may cease to be useful as a yardstick with which to measure reasonableness. Conversely, if there is no satisfactory explanation the estimate may remain a very useful yardstick with which to measure reasonableness [99]

Even if the solicitor has spent a reasonable time on reasonable items of work and the charging rate is reasonable, the resulting figure may exceed what it is reasonable in all the circumstances to expect the client to pay and, to the extent that the figure does exceed what is reasonable to expect the client to pay, the excess is not recoverable [102]

A modest excess does not call for much explanation and a substantial excess calls for a great deal of explanation [104]

In Reynolds Stone Brewer (a firm) [2008] 4 Costs LR 545 Mr Justice Tugendhat held:

In my judgment the Costs Judge was fully entitled to come to the view that, if the estimates given at the start of the case had been such as are required by the applicable rules, then the claimant would not have acted as she did. She would clearly not have been able to afford to do so, and I think it unlikely she would have embarked on the course she did embark on. I bear in mind, as Mr Bacon submits, that, when confronted in 2006 with estimates nearer the reality, the claimant pressed on. But that is not a guide as to what she would have done if she had been faced with the reality in December 2004, at the time when she should have been. [70]

These by now established principles were applied more recently in the case of Harrison v Eversheds Llp [2017] EWHC 2594 (QB).

It is important to take heed of what was said, at para 63:

An estimate is to be distinguished from a quotation of fees: an offer which is accepted. An estimate is what it says. It gives an idea, which from a professional firm can be taken as reasonably and carefully made taking into account all relevant considerations, of what the future costs of work on a case is likely to be. A solicitor cannot be held to be restricted to recovering the exact sum set out in an estimate. However a client is entitled to place some reliance on the estimate. The nature, degree and reasonableness of that reliance will no doubt be one factor in the view taken on an assessment under Section 70 of the Solicitors Act 1974 of how much more than the estimate it is reasonable for the client to pay.

In conclusion:

If your solicitor gave you an estimate of likely fees;
You relied on that estimate when deciding to instruct or continue to instruct; and
The fees you have been asked to pay significantly exceed that estimate

You can ask the court to take it into account.

However, an estimate is not a quote. Your solicitor will not be held to it merely because it has been exceeded.

Are there time limits I should be aware of?

Yes.

Having determined that you are dealing with a statute bill, it is important to consider whether you are within time to challenge it.

The following time limits apply:

Unpaid bills

Section 70(1) of the Solicitors Act 1974 gives you the right, within one month of delivery of the bill, to apply for the bill to be assessed, without requiring any sum to be paid into court. If no such application is made, that absolute right to assessment is lost.
If you apply for assessment of the bill within twelve months from delivery, and it remains unpaid, the combined effect of s 70(2) and (3) of the Solicitors Act 1974 is that the court may allow assessment on such terms as the court thinks fit.
If the bill remains unpaid and twelve months have expired from delivery of the bill, the court may only order an assessment if special circumstances are shown.

Paid bills

The position after a statute bill has been paid is different.

You still have the absolute right to an assessment before the expiry of one month from delivery of the bill.
After that, if you apply for assessment within 12 months of payment, special circumstances need to be shown.
However note, Section 70(4) of the Solicitors Act creates an absolute bar to assessment after the expiration of twelve months from payment. After this time, the court has no statutory power to order an assessment.

I am being sued for unpaid fees. What can I do?

A solicitor is entitled to bring proceedings for recovery of unpaid fees after one month of delivery of a statute bill. If this happens, and you have a genuine issue with the amount of fees being claimed, you have common law entitlement to have them assessed.

This applies notwithstanding the expiry of time limits under s70 of the Solicitors Act 1974, as affirmed by the Court of Appeal in Turner & Co. v. O Palomo SA [2000] 1 WLR 37:

…a client who is sued by his solicitor for the amount of his charges is entitled to challenge the reasonableness of the sum claimed, notwithstanding that the period during which he may apply for an order for taxation under what is now s. 70 of the 1974 Act has expired.

Will it cost me to challenge my solicitors’ fees?

Who ultimately pays the costs of your challenge will depend on the outcome and the type of assessment, ie whether under the Solicitors Act 1974 or at common law. Different considerations apply.

Solicitors Act Assessment

The costs of an assessment (ie the entire process from raising a challenge, seeking to negotiate a resolution and, if necessary, an assessment of those fees by the court) under the Solicitors Act 1974 is dealt with under s 70(9), which says:

the costs of an assessment shall be paid according to the event of the assessment, that is to say, if the amount of the bill is reduced by one fifth, the solicitor shall pay the costs, but otherwise the party chargeable shall pay the costs.

In other words, if you manage to reduce your solicitors’ charges by more than 20% you will (absent special circumstances) be entitled to recover your costs of bringing the challenge. This is known as the “one fifth rule”.

It is important to understand from the outset that if you fail to reduce your solicitors’ fees by more than 20%, then you will probably have to pay not only your own costs but also those of your solicitor. This can often cancel out any saving you might have achieved.

There is one other consideration to bear in mind. Even if you manage to reduce the costs by more than 20%, if your solicitor has in the course of negotiation offered to accept an even lower sum, the court may take that into account.

If you don’t manage to reduce the fees below the level of an offer made to you, you may still end up paying the costs.

Common Law Assessment

The situation in a common law assessment is different. It was held in Ahmud and Co v Macpherson [2015] EWHC 2240(QB) that:

It seems to me first that an assessment under the Solicitors Act and an assessment at common law are very different regimes; and, secondly, considering the position under this non-statutory assessment, that it is clear that the solicitors were the successful party. They succeeded in achieving an order in their favour for the recovery of costs which was greater than anything which had been offered by the client either openly or in any without prejudice save as to costs order. [21]

It seems to me that there is force in that point in that the one fifth rule is part of a package of provisions in the Solicitors Act…. I can see the force of a submission that it would not be right to take one part of that package in isolation, namely the one fifth rule, and apply it to an assessment to which other parts of the package do not apply. [28]

In effect of this case (in which TMC acted) was to establish that the one-fifth rule can play no part at all in the consideration of who has “won” in a common law detailed assessment of solicitors’ fees.

Instead, the court will look exclusively at what in the course of any negotiations the client offered to pay.

In essence, Ahmud & Co. takes the incentive to make offers away from the solicitor completely and puts it firmly on the client.

If your offer is ultimately greater than the amount the costs are assessed at, you are likely to be awarded your costs from that point onwards.

If it is less, the you are likely to end up paying all of your solicitors costs, from the outset.

It is important to take a realistic approach to any challenge, whether under the Solicitors Act or common law.

However, in respect of the latter an early sensible offer is absolutely essential.

In conclusion

We have looked at just some of the basic questions you might want to ask yourself when considering whether or not to challenge your solicitors’ fees, or when faced with a claim for payment of unpaid fees.

They are not exhaustive.

Solicitor and client disputes are filled with legal technicalities and can become some of the most acrimonious and costly in the courts. Proceed with caution. Seek to resolve your dispute with your solicitor in the first instance. Formal challenges should be taken only as a last resort. If all else fails, and you decide – or are left with no other option but – to proceed down the formal route, keep this in mind: whether proceeding under the Solicitors Act 1974 or at common law, it is of paramount importance that a sensible and realistic approach is adopted from the outset. This sometimes means leaving any personal feelings to one side. Whilst you might be disappointed at the level of costs you have been asked to pay, the “costs of the costs” in the event of failing to “win” can and often will significantly outweigh any savings made.

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