By a claim form, issued on 22 March 2018, the claimant sought a detailed assessment of various bills delivered to him by the defendant, his former solicitor.
At a directions hearing on 30 April 2018 the defendant accepted that the claimant was entitled to assessment as of right of a bill dated 28 February 2018 in the sum of £480.
They contended however that by an agreement entered into on 21 March 2017 (‘the Agreement’) the sum payable for the work done up to 31 December 2016 was fixed in the liquidated sum of £86,000 plus VAT.
They relied on the Agreement as a bar to relief in respect of the bills covering that period.
By an agreement entered into on 21 March 2017 the parties agreed that:
Agreement regarding our costs
This letter is to confirm and record what we have agreed about the amount you will pay Richard Slade and Co plc for the services you have received from us up to and including 31 December 2016, and when and how you will pay it.
Amount you agree to pay
You have agreed to pay, and we have agreed to accept,£86,000 plus VAT for all legal services we have given you up to and including 31 December 2016.
The £5000 which you paid is when you first instructed us will be carried forward and set against charges incurred after 1 January 2017. For the record you agree that the figure of 86,000 plus VAT was reached after discussion and negotiation between us.
The letter also provided that if a recovery of money was made from the claimant’s opponent then the solicitors were entitled to that money as payment towards the sum owed, but in any event the sum of £86,000 plus VAT was to be paid by no later than 28 October 2017.
The Agreement also provided that the defendant would “continue with the retainer” until the arbitrator had issued his final procedural order in respect of the agreement that had been made on 2 March 2010.
At the date of proceedings, only £2,000 has been paid under the terms of the Agreement and the Claimant had not paid any of the monthly invoices that were subsequently delivered to him since the Agreement.
In his Defence to a claim for recovery of sums due, issued shortly before the directions hearing, the claimant contended that, on its proper construction, the Agreement was a “contentious business agreement” (‘CBA’) as defined in section 59 of the 1974 Act, and as such the Court was required to consider whether it was fair and reasonable and should be set aside (in accordance with Section 61 of the 1974 Act).
A preliminary hearing was listed to determine, inter alia, whether:
- the effect of the Agreement was to curb the Claimant’s rights to an assessment under the Solicitors Act 1974;
- whether a number of other bills served should be regarded as interim on account requests for payment or interim statute bills; and
- whether terms of the agreement between the parties were to be derived from what were said to be retainers dated 1 August 2014 or 13 March 2017.
Relevant background facts and issues
The defendant had acted for the claimant principally in respect of an arbitration dispute with a former business partner. A retainer was entered into in 2014, which provided for hourly billing at the following rates:
- Richard Slade – £250 per hour
- Junior solicitors – £150 per hour and
- Trainee solicitors and paralegals – £95 per hour.
Billing was to be on a monthly basis.
The Defendant asserted that by the end of 2016 there was about £118,000 plus VAT due in respect of fees and various bills had been delivered seeking payment.
Save for an interim on account payment of £5,000 (inclusive of VAT) and payments in respect of disbursements no further payments had been made against the bills delivered.
Because of a lack of readily available funds in 2014 Richard Slade had agreed that at that stage they would not bill on a monthly basis but take a charge against a property of the Claimant.
However, by the end of 2016, the litigation was proceeding to a conclusion, and the defendant contended that some substantial payment was now due.
Following a series of discussions in the course of which the claimant raised concern as to the level of the defendant’s charges an overall a reduction of some 25 to 30% of the sums set out in the initial bills was agreed.
At a final meeting on 7 March 2017 the claimant had proposed a figure of £80,000 plus VAT and the defendant had proposed a figure of £90,000 plus VAT. The figure then agreed upon at the meeting was £85,000 plus VAT, which was subsequently increased (to include another charge) taking the final agreed figure to the sum of £86,000 plus VAT, the basis of the Agreement.
The Court noted that the claimant had been encouraged to, and did, obtain independent legal advice in respect of the issues that had arisen with the defendant prior to entering into the Agreement.
Termination of retainer
By October 2017, as the defendant saw it, the claimant had a liability to it for some £155,164 having received nearly four years of what was said by Mr Slade to have been “fairly intensive legal services”.
By letter dated 24 November 2017 the claimant wrote to the defendant relying upon a clause of the Agreement in which the defendant stated that it agreed to continue with the retainer until the arbitrator had issued his final procedural order.
It appeared, in context, that the claimant expected the defendant to continue to represent him to the end of the process whether his solicitors were to be paid or not.
The claimant indicated that was making efforts to arrange financing for his legal representation. However, Mr. Slade said that he suspected that what the claimant was really doing was seeking to “spin things out” until he was able to collect some money from his former partner.
On 12 February 2018 the defendant, not having received payment under the terms of the Agreement, terminated the retainer.
The parties’ respective positions
The defendant argued that:
- the Agreement was a compromise agreement and could not therefore be regarded as a CBA. In the words of Mustill J (as he then was) in Walton v Egan  1 QB 1231 “a compromise of existing rights” which stands “on its own feet” is outwith section 57 of the Solicitors Act 1974; he held that it would be “very inconvenient” if the parties could not enter into compromise agreements;
- whilst Walton was a case concerning a non-contentious business agreement, its reasoning applies to section 59(1) of the Solicitors Act 1974 (concerning contentious business agreements) and it supports the submissions that a compromise agreement is not an agreement “as to [the solicitor’s] remuneration” within section 59(1) but, instead, is a “compromise of existing rights”;
- it would be remarkable if it was be regarded as a CBA as it would mean that enforcement of all agreements between solicitors and clients which compromise a claim in respect of fees and disbursements would in effect be subject to Court approval. It was for this reason that he said that the matter was of some importance;
- the Agreement could not be a CBA because it was not sufficiently certain. As per the decision in Wilson v Spectre Partnership  6 Costs LR 802, the purpose of a CBA is “to fix the fees, or provide a fixing mechanism so that the parties (in particular the client) know where they stand”;
- even if the terms of the Agreement were sufficiently certain as to past fees, the terms of the Agreement went beyond that and imported an obligation to continue acting on the terms that had applied under the previous retainer of 2014 and the fees that were payable under this retainer were not sufficiently certain; and
- in any event, the Agreement was in all respects fair and reasonable and should not be set aside.
The claimant contended that:
- the Agreement should be regarded as an agreement to make an interim payment such that the sums payable remained subject to assessment; it was not an agreement to pay a liquidated sum in respect of the fees that that had been incurred;
- if the Agreement were not to be treated as a request for payment on account then it had to be a CBA; there was no distinction to be made between compromise agreements and CBA’s. Although there were elements of these provisions which appeared counter intuitive, there was a distinction to be made between an agreement which was made following delivery of a statute bill (which, he said, this was not) and one made following a request for a payment on account thereby seeking to distinguish the decision in Walton.
Meaning and effect of the Agreement
26. In my judgment the ordinary and natural meaning of the terms of the Agreement are clear. They provide for payment of a fixed sum for all legal services provided up to 31 December 2016 and they cannot be read as providing that the sum, which was said to be due, was subject to further adjustment by any assessment by the Court or otherwise.
27. Mr. Dunne submitted that it is relevant that prior to the Agreement the Defendant purported to deliver interim statute bills subject to assessment under the 1974 Act but which could not only properly be regarded as interim requests for payment. He referred to the terms of the retainer entered into [in] 2014 which provided that:
“Bills are rendered monthly in arrears. Our bills are detailed bills and are final in respect of the period to which they relate, save that disbursements (costs and expenses which we concur on your behalf) are normally billed separately later than the bill for our fees in respect of the same period.”
28. Reliance was placed by Mr. Dunne on the decision of Slade J in Boodia v Richard Slade Solicitors  1 WLR 2037, a case which concerned a retainer with the same wording as the retainer entered into in 2014 in this case. Slade J decided that bills purportedly served as statute bills were in fact interim bills. She held that in order to constitute an interim statute bill, the bill must include profit costs and disbursements in respect of agreed periods of time (see para. 56 at B) and that the clients needed to know the total costs incurred over a certain period to enable them to form an evidenced based view as to whether to exercise their right to assessment (para (para. 56 at C). In her judgment the retainer did not provide for delivery of interim statute bills (see para. 32 and para, 68D). The position of Mr. Dunne in this case was that the bills could only be considered as part a statute bill once the final bill had been delivered, in accordance with the principle of Chamberlain v Boodle & King  1 WLR 1443; Chamberlain provided that a series of interim on account bills may be deemed delivered as a statute bill at the time of delivery of the final bill. The bills delivered in this case could thus, Mr. Dunne argued, only be regarded as statute bills once the final bill delivered had been delivered.
29. The decision of Slade J is the subject of a second appeal to the Court of Appeal, which I understand will be heard in November. I proceed on the basis that the Court of Appeal has accepted that the issues raised by the appeal are ones of important practice and/or principle but I am, of course, bound by the decision of Slade J (Mr. James reserving his position as to the correctness of the decision). Nevertheless even taking the decision of Slade J in the Boodia case at its highest I do not see that it assists Mr. Dunne in displacing the clear meaning of terms of Agreement. Those terms fix the amount that is payable whatever the status of the bills that preceded it.
It is, I might add, not unusual for solicitors and clients to dispute whether any particular bill is to regarded as a statute bill or an interim on account bill but that does not preclude parties agreeing or fixing the amount payable. Indeed, I would observe that in this case most of the relevant bills had been the subject of credit notes as at the time of the Agreement.
30. Further, it is clear in any event from the email correspondence which preceded the Agreement, including communications in respect of the document headed ‘Deed of Arrangement’ which was provided to the Claimant in draft form, that the Claimant was made aware of the effect of entry into the agreement proposed and that that was to end any argument about the amount that was payable. Indeed the Claimant stated in terms in an email of 14 February 2017 that the proposed deed “on the face of it limited my statutory rights”. Whilst the parties did not proceed with a deed the change in the form of the agreement did not alter any understanding of the parties as to its effect. Accordingly, if there were any ambiguities as to the meaning of the agreement, and in my judgment there were none, resort to extrinsic evidence would confirm my conclusion as to the meaning of the agreement.
31. In my judgment the Agreement cannot be regarded as simply a request for payment.
Under the 1974 Act absent any basis for setting aside the Agreement, the effect of the Agreement was that the Claimant waived his rights under the 1974 Act for an assessment and/or for the delivery of the further assessable bills in respect of the work done prior to 31 December 2016.
32. There was, I might add, no dispute between the parties that
a client can agree to waive his rights under the 1974 Act (see in any event Re Van Laun ex parte Pattullo  1 KB 155) or that the Agreement could, subject to it being setting aside, act as bar to the relief sought.
-Whether the Agreement was a CBA under section 59 of the 1974 Act; and if so whether should it set aside under section 61 of the 1974 Act on the grounds of that it was unfair and/or unreasonable.
33. So far as is material Section 59 of the 1974 Act provides:
(1) Subject to subsection (2), a solicitor may make an agreement in writing with his client as to his remuneration in respect of any contentious business done, or to be done, by him (in this Act referred to as a “contentious business agreement”) providing that he shall be remunerated by a gross sum or by reference to an hourly rate, or by a salary, or otherwise, and whether at a higher or lower rate than that at which he would otherwise have been entitled to be remunerated.
34. Section 61 provides that:
“No action shall be brought on any contentious business agreement, but on the application of any person who—
(a) is a party to the agreement or the representative of such a party; or
(b) is or is alleged to be liable to pay, or is or claims to be entitled to be paid, the costs due or alleged to be due in respect of the business to which the agreement relates,
the court may enforce or set aside the agreement and determine every question as to its validity or effect.
(2) On any application under subsection (1), the court—
(a) if it is of the opinion that the agreement is in all respects fair and reasonable, may enforce it;
(b) if it is of the opinion that the agreement is in any respect unfair or unreasonable, may set it aside and order the costs covered by it to be assessed as if it had never been made;
(c) in any case, may make such order as to the costs of the application as it thinks fit.
(3) If the business covered by a contentious business agreement (not being an agreement to which section 62 applies) is business done, or to be done, in any action, a client who is a party to the agreement may make application to a costs officer of the court for the agreement to be examined.
(4) A costs officer before whom an agreement is laid under subsection (3) shall examine it and may either allow it, or, if he is of the opinion that the agreement is unfair or unreasonable, require the opinion of the court to be taken on it, and the court may allow the agreement or reduce the amount payable under it, or set it aside and order the costs covered by it to be assessed as if it had never been made.
– is the Agreement or any part of it a CBA?
39. Business agreements (‘contentious’ and ‘non contentious’, see 57 of the 1974 Act) are different from other retainers in that if they are not set aside, they are enforceable without the client having a right to an assessment
(Friston Civil Costs: Law and Practice 2nd edition, para. 8.115).
In respect of costs which are subject to assessment under section 70, the source of the right to enforce is the service of a bill (see section 69 of the 1874 Act; also Walton v Egan  1 QB 1231 at pages 1237G – 1238 A); and an assessment, under section 70 of the 1974 Act, is an assessment of the reasonableness of costs applying the presumptions set out in CPR 46.9 (3).
A characteristic of a business agreement is that it deprives the client of the right to an assessment under section 70 of the Act and permits the solicitors to recover the sums due as an ordinary debt; the client is not without protection because the Court is empowered to set aside any agreement if found not to be fair and reasonable.
40. In Walton Mustill J was concerned with the allied provisions under section 57 of the 1974 Act (dealing with non-contentious agreements); he said this:
“Where there is a special agreement under section 57 the procedure is quite different. The solicitor’s right of action is founded on the agreement not the bill; indeed so far as section 57 is concerned there is no need for the solicitor to render a bill at all. Nor is there any room for taxation under section 70 , for this is concerned with bills, not agreements. It is true that section 57 (4) seems to contemplate that a taxation may occur, but this is in my view a procedure initiated by the court pursuant to its own inherent powers to supervise solicitors as officers of the court; it is not a procedure exercised as of right by the client. When an action on a special agreement comes before the court, the matter may be sent to the taxing master so that he can inquire into the facts and report back to the court.”
41. The observations concerning the split roles of the Judge and the Taxing Master would appear to relate to a time when the role of the Taxing Master was to report back to the Court, but that has changed in the light of the reforms which increased the jurisdiction so that Costs Judges and Masters may now determine disputes under Part III of the 1974 (see now CPR 67.3).
42. The 1974 Act is a consolidating statute (Ralph Hume Garry (a firm) v Gwillim  EWCA Civ 1993, judgment of Ward LJ paragraph 44). Insofar as it deals with special agreements which oust the jurisdiction of the Court to carry out an assessment, its provisions, although altered in form, appear to derive from the Attorney and Solicitors Act 1870. In Clare v [Joseph]  2 KB 369 the Court of Appeal was concerned with the terms of section 4 of the 1870 Act, which was the predecessor of the relevant statutory provisions in the 1974 Act, in the context of a dispute as to whether a verbal agreement, being an agreement to pay specific sum in respect of legal services between a solicitor and client, was enforceable. Fletcher-Moulton LJ held as follows:
“It is to be remarked in the first place that this is a purely enabling, and not a disabling, section, and the Court would not, unless forced to do so, construe such a section so as to take away or alter powers already in existence, except indeed by extending them. Let us now consider the state of the law on this subject at the date of the coming into operation of the Act of 1870. At that date agreements between a solicitor and his client as to the terms on which the solicitor’s business was to be done were not necessarily unenforceable. They were, however, viewed with great jealousy by the Courts, because they were agreements between a man and his legal adviser as to the terms of the latter’s remuneration, and there was so great an opportunity for the exercise of undue influence, that the Courts were very slow to enforce such agreements where they were favourable to the solicitor unless they were satisfied that they were made under circumstances that precluded any suspicion of an improper attempt on the solicitor’s part to benefit himself at his client’s expense. But when it appeared that the agreement was favourable to the client, the Courts often held the solicitor to his bargain, for there was no ground in equity why they should be suspicious of a bargain of that kind. Sect. 4, therefore, was not required for the purpose of enabling persons to enter into these agreements, nor was it required in order to strengthen the hands of the Courts in their examination of them. Before 1870 the Court had full power to investigate their propriety, and in my opinion the specific provisions of s. 4 did no more than provide and regulate a procedure for the control of such agreements; they did not in substance alter the law affecting them.
“I felt for some time a difficulty in understanding the language of s. 4 on the supposition that, as the law stood prior to the Act, verbal agreements were enforceable when they were favourable to the client and might even be enforced when favourable to the solicitor if the Court were satisfied that they were fairly made. I felt that s. 4 was intended to hold the balance equally between the solicitor and the client, and that an agreement by the solicitor to do the work for a less sum than the ordinary remuneration is as much within the words of the section as one that provides for his remuneration at a higher rate. If, therefore, writing is necessary in favour of the solicitor, why is it not necessary in favour of the client? But the difficulty arises solely from concentrating one’s attention too much on s. 4, which is only the introductory section of a whole group of sections forming Part I. of the Act. That group concludes with a section of great importance (s. 15), which provides that where an agreement has been made in accordance with s. 4, and has not been set aside, the ordinary provisions as to delivery and taxation of a duly signed bill of costs are no longer to have effect. This gives to a solicitor who comes under this group of sections an advantage not previously given to him. In my opinion s. 4 only prescribes the mode in which the solicitor can obtain for himself (and I think also in which the client can obtain for himself) the benefit of the group of sections from s. 4 to s. 15 . If either the solicitor or client wants the privileges which those sections give him, he must comply with the requirements of s. 4 and must have an agreement in writing, but if he does not want the benefit of those sections, s. 4 imposes no duty upon him.”
43. The Divisional Court in that case had found that the verbal agreement between the client and the solicitor was not enforceable on a claim by a client against solicitors for monies had and received. As appears above, the Court of Appeal reversed that decision on the basis that such agreements were unaffected by the passing of the 1870 Act. Such agreements would be the subject of the scrutiny of the Court under equitable principles by reason of the solicitor having been in a position of presumed undue influence; however by entering into a business agreement, in effect a special agreement, the solicitor obtained the privileges of a procedure set out in the provisions. It seems to me that this judgment might go some way to clarifying what might otherwise be regarded as counter intuitive or anomalous in the current provisions (including the provisions requiring business agreements to be in writing). Moreover the decision demonstrates that
there are types of agreement between solicitor and client in contentious business that are outside the scope of s. 59(1) so that it does not follow, as Mr. Dunne had argued, that if the agreement does not preserve the right to an assessment it must be a CBA.
44. I accept Mr. Dunne’s submission, which was not as I understood it disputed, that the fees for work already done, may be the subject of a CBA; that seems clear from the references in section 59 to “remuneration” for business “done” (No specific issue was taken as to whether or not some of the work might be regarded as “contentious” or not)
45. I understand the observation that it is perhaps difficult to see why an agreement forming a compromise of existing rights should not benefit from any additional protection that might be accorded to a CBA (if indeed such status were to confer any additional protection) or why the absence of a dispute, (which might in terms be little more than a query) should make any difference to the issue as to whether an agreement should be regarded as a CBA. Indeed, set against the practice of background as described in Clare v Joseph above, there might be good grounds for thinking that such an agreement should benefit from the “privileges” attached to it. Nevertheless I do not accept that the decision in Walton can be distinguished on the ground advanced by Mr. Dunne. It seems to me that although the outcome in that case might be justified by other findings made by Mustill J, the Agreement in this case was a compromise of existing rights, albeit that it was a matter of dispute as to what those rights may have been.
46. In my view the terms of the Agreement in respect of past fees are sufficiently certain: looked at on their own they are clearly intended to give a right to payment of a specific sum which was enforceable without an assessment. But I think Mr. James is right to say that the Agreement was multi-faceted: the Defendant had held back from serving a fresh retainer letter in March 2017 pending the discussion about costs and the terms of the on-going retainer (and as to the payment of fees for work to be done by the Defendant) derive from this Agreement. I note that after the Agreement the Defendant proceeded on the basis that the retainer applicable for work after the Agreement was one which gave the Claimant the right to an assessment and that would be subject to the need to serve assessable bills under section 70 of the Act; indeed it seems to me clear that, subject to the issues raised in the Boodia case (as to which see above), so did the Claimant. The Defendant’s right to enforcement in respect of its claim for future costs would thus appear to have been accepted as dependent on the delivery of an assessable bill and as regards future work the terms of the Agreement did not provide the certainty necessary to avoid the need for an assessment in respect of the bills delivered – it did not sufficiently set what he was “letting himself in for” (Lord Denning MR in Chamberlain at p191 c-e). Reading the Agreement as whole, as Mr. James argued, it could not be regarded as a CBA.
47. But that, as Mr. James accepted, gives rise to a yet further issue as to whether the Agreement was severable so that the obligation to pay past fees was to be severed from the obligation to pay future fees. The difficulty with this is that the promise to continue to act would appear to have been an important part of the consideration provided for the promise on the part of the Claimant to pay the outstanding fees, as was the promise to do so for payment on the rates applicable under the earlier retainer) and thus not susceptible to the severance in principle (see Chitty 32nd ed, 21-130; 16-28). Moreover, severance might be said to work an unfairness on the Defendant given the hourly rates which were agreed in the earlier retainer were discounted from the rates which the Defendant would normally charge and considerably below market rates for solicitors in Central London doing this type of work (the partnership dispute involving a significant and serious claim of substantial value).
48. In the circumstances and for the reasons set out above, I accept that the Agreement as a whole should not be regarded as CBA. This is particularly so if this issue is to be seen in the procedural context explained by Moulton-Fletcher LJ addressing the question whether the solicitors had complied with the necessary requirements in order to qualify for the “privileges” attached to a CBA. Nor do the provisions, in my judgment, appear to contemplate that part of an agreement, in this case as to work done, could be a CBA- when the remainder is not; to sever the agreement might work a real unfairness. However as the judgment in Clare v Joseph makes clear in the ordinary case the client would still be protected because he would still benefit from the equitable doctrines of breach of fiduciary duty, undue influence and economic duress or misrepresentation in an appropriate case. In this case, these equitable defences have been abandoned.
– Was the Agreement in all respects fair and reasonable?
49. If I were wrong about the above and the Agreement, or part of it, were a CBA, I would have to decide whether to enforce it (or part of it) in the sense of adjudicating upon it and giving effect to it (Wilson v Spectre Partnership at paragraph 14).
50. In my judgment the Agreement is fair and reasonable whether considered in severed form (the Agreement as to past costs only being treated as if it were a CBA itself) or in unsevered form.
51. In Re Stuart, ex parte Cathcart  2 QB 201 (CA) is a decision which turned on sections 8 and 9 of the Attorneys’ and Solicitors’ Act 1870 which gave the Court power to declare an agreement for remuneration void “if the terms of such agreement shall not be deemed by the Court or judge to be fair or reasonable”. Lord Esher M.R. said:
“By s.9 the Court may enforce an agreement if it appears that it is in all respects fair and reasonable. With regard to the fairness of such an agreement, it appears to me that this refers to the mode of obtaining the agreement, and that if a solicitor makes an agreement with a client who fully understands and appreciates that agreement that satisfies the requirement as to fairness. But the agreement must also be reasonable, and in determining whether it is so the matters covered by the expression “fair” cannot be re-introduced. As to this part of the requirements of the statute, I am of opinion that the meaning is that when an agreement is challenged the solicitor must not only satisfy the Court that the agreement was absolutely fair with regard to the way in which it was obtained, but must also satisfy the Court that the terms of that agreement are reasonable. If in the opinion of the Court they are not reasonable having regard to the kind of work the solicitor has to do under the agreement, the Court are bound to say that the solicitor, and an officer of the Court, has no right to an unreasonable payment for the work he has done and ought not to have made an agreement for remuneration in such a manner..”
52. Those dicta were cited with approval by Robin Spencer J in Bolt Burdon v Tariq  EWHC 81 which concerned with the fairness and reasonableness of a non-contentious business agreement under section 57 of 1974 Act. He said this:
“Fairness relates to principally to the manner in which the agreement came to be made. Reasonableness relates principally to the terms of the agreement”.
53. Mr. Dunne did not pursue many of the arguments in the Defence, having abandoned his case that the Agreement had been obtained by improper threats. The Claimant however asserted in a witness statement that the Defendant’s billing system was “labyrinthine”. He said he would receive documents described variously as “bills”, “draft bills”, “amended draft bills”, “discussion documents” and “pre-bill information” along with credit notes. He said he tried to weed out overcharging, non-chargeable items, charges for non-existent meetings and the like as he went through the Excel spreadsheets onto which the Defendant put the bills. This occurred he said, as a result of Mr. Emanuel encouraging him to do this on the basis that the bills were “discussion documents”. The task, he said, was substantial and he was left confused.
54. The Claimant also asserted in his witness statement that the bills were requests for payments on account. He stated:
“Any agreement would therefore be confined to arranging what was to be paid in respect of those payments on account and would not be an agreement to finalise what I owed.”
55. He said he had no intention of finalising his liability to the Defendant such that he lost his right to ask the Court to consider whether the charges are reasonable. He contended that the invoicing was chaotic, not easily understood, and no basis upon which to make a decision as to whether the amount offered was a reasonable sum. He said that he simply needed to continue with his claim.
56. These assertions, as to the alleged difficulties in understanding the Defendant’s bills, seem to me to contrast with the underlying contemporaneous correspondence from which it appears that the Claimant was able to scrutinise bills or draft bills and to mark those entries or charges which he contested. Moreover the bills and the accompanying ledgers, in my judgment, readily identify the work done, the fee earner who is said to have done the work and the hourly rates applicable to the work done. As indicated in the ledgers there was significant attendance on the Claimant so he was likely to have known what work his solicitors had done; and in any event he was able to go through the bills and identify the relevant charges to which he objected such that he was able to consider the reasonableness of the charges. I reject his case that the billing system was confusing or, to the extent that it is necessary for me so to find, that he was confused by it.
57. The Claimant was an experienced businessman and a sophisticated client, as is apparent from the proposals that he put to the Defendant in the course of discussions prior to the entry into the Agreement. Further, as I have found above,
the terms of the Agreement were clear. It was, in my judgment, clear to the Claimant that he was indeed agreeing to compromise on terms that precluded any subsequent attempt to have the relevant fees assessed.
It is difficult to see how there could be any genuine misapprehension as to the nature of the agreement- the assertions he makes in his witness statement appear to have been prepared with hindsight. Even if the witness statement of the Claimant could be relied upon as indicating that at the time of entering into the Agreement he did not understand the nature of the agreement (which I do not accept), it is clear that in determining the fairness of the making of the Agreement I am concerned with the steps taken to ensure that the client understood the effect of the agreement. If those steps had been taken, as they have in this case, it does not seem to me that the agreement could properly be said to be unfair because of the Claimant’s subjective state of mind, particularly if any such state of mind was unreasonably formed.
58. Mr. Dunne also argued that the Agreement could not have been fair because the Claimant, he said, had been misadvised as to the status of the bills; that the solicitors had proceeded on the basis that they were statute bills whereas, on the basis of the decision in Boodia, they were not and that, accordingly, the Agreement was unfair. I do not accept that argument. Quite apart from the fact that there was no evidence that Claimant was given any further advice by the Defendant as to the bills beyond that which is stated on the bills, he had the benefit of legal advice at the stage when the terms of the Agreement were made and if it were right to query any claim for payment of fees he could have done so with the benefit of such assistance. Moreover, even if the bills were requests for on account payments, section 65 of the 1974 Act entitles a solicitor to seek a reasonable interim on account payment for contentious business and if not paid, the solicitor can terminate the retainer. As Mr. Dunne appeared to accept it could not realistically be said that the Defendant was required to continue to act for the Claimant without him making any such payment. In any event it is clear that it is open to the parties to come to an agreement as to the fees payable even where there is a dispute as to the status of the bills and I do not consider that any misunderstanding as to the status of the bills (which, it was accepted, was innocent) would make the Agreement unfair.
59. As I have recorded above the Defendant encouraged the Claimant to get independent legal advice, which he obtained. He was made aware of the meaning and effect of the terms of the Agreement and I am satisfied, applying the guidance set out in paragraphs 50 and 51 above, that the mode or manner of obtaining the Agreement was fair.
60. It seems to be clear, and was in any event accepted by Mr. Dunne, that
in considering whether the Agreement was reasonable the Court could not be required to carry out what is in effect an assessment. As Mr. Dunne put it, that would be an assessment ‘by the back door’; it would obviously defeat the purpose of entering into an agreement as to fees (which I would assume to be commonplace).
61. Mustill J commented that “from a practical point of view the agreement of the client is strongest evidence that the fee is reasonable” (see Walton). As recorded above the extent of the dispute between the Defendant and the Claimant as to the fees due was modest at the time of the final discussions.
It seems to me clear from the correspondence that the Claimant had been able, on the substantial amount of documentation that had been provided to him, to ascertain the reasonableness of the charges in order to propose a discount in respect of those items which he had highlighted on the spreadsheets. He was, at the time of the discussions, well aware of the nature of the work undertaken by the solicitors.
62. I do not accept Mr. Dunne’s argument that the Agreement simply followed an error in the bills in respect of the hourly rate of Mr. Emanuel and that the agreed sum of £86,000 plus VAT simply reflected a moderation of the hourly rate in respect of this fee earner. It is clear that the Defendant were indeed willing to reduce their charges to discount the appropriate rate to £200 per hour. But it is also clear that the extent of the discount achieved by the Claimant went beyond that (the error in hourly rate was in respect of Mr. Emanuel only and would account for 20% of the fees charged in respect of his work); and the overall discount agreed would have included the Defendant writing off a substantial amount of the sums claimed in the bills (which may well already have been discounted, at least in part).
63. If I were required to consider the reasonableness of the terms of the Agreement in respect of the CBA in unsevered form it would be necessary for me to consider also all the terms which include a term that that they would continue to act under the terms of the previously agreed retainer. As I have already indicated the hourly rates he had negotiated were substantially below the ordinary commercial rates for this type of work, particular for solicitors in Central London; and it seems to me that the terms which he had negotiated as to the continued involvement of the Defendant were favourable to him.
64. The Agreement also set the date for payment of the sum due. There is some indication that in the course of early 2017 the Claimant was seeking to release sums from the equity of a property, with a value put at some £1.5 million and £1.7 million. The Agreement put off the day when he was required to make any substantial payment.
65. I accept that this was an Agreement made in the course of litigation and thus there were pressures on the Claimant but he could not expect the solicitors to continue to act for him without receiving any significant payment.
66. I see nothing unreasonable about the term of the Agreement to the effect that the interim on account payment of £5,000 not be set against the debt for past fees. It could reasonably be set against future charges which the Claimant would incur arising out of the continued representation and advice that he would receive.
67. Nor do I accept that there is any complaint to be made about the extent of the charge on the Claimant’s property. The fact that it was limited, and not increased, worked to the detriment of the Defendant whose fees and charge would not therefore be secured.
68. Even if it were appropriate to sever the obligations in the Agreement and have regard to the terms of the Agreement as to past fees only, I do not consider there are any proper grounds for saying that its terms were unreasonable, applying the guidance set out above. This Agreement bought the Claimant certainty and limited his liability in respect of past fees, which was a considerable benefit to him. Moreover no real or proper basis was put to me for reducing the fees payable whether substantially or at all; indeed nor was any real basis put to me for the making of any further enquiry. This is notwithstanding the availability of detailed ledgers setting out the work done.
-Should the agreement be set aside?
69. I am satisfied that the Agreement, in both severed and unsevered form, was favourable to the Claimant. Even if I had been satisfied that a matter had been raised (or arose from a consideration of the papers), which gave me some basis for thinking there was some prospect of reducing the amount agreed in respect of past fees on an assessment, I do not think that it follows that the Agreement should be set aside. Section 61 of the 1974 Act contemplates that there might be a reduction of the sums due under a CBA in the event of a finding that the Agreement was unfair and unreasonable in any material respect – a remedy not sought by the Claimant. I would add that that the setting aside of the Agreement would seem to work an unfairness on the Defendant who had encouraged the Claimant to take independent legal advice; it could delay the date when payment is due and lead to the incurring of costs which may well be substantially more than the amount in dispute.
70. I therefore conclude that the Agreement is a bar to the relief that the Claimant seeks against the Defendant in respect of the bills caught by it. It is not necessary therefore for me to deal with other potential issues as to whether the bills in the relevant period were statute or interim bills; or indeed whether the Claimant would in any event be entitled to the relief he seeks against the Defendant.
71. Whilst it is not the basis of my determination,
the observation may sensibly be made that the Court should be slow to set aside an agreement as to fees under these provisions where a party had the benefit of legal representation (noting Chitty 8-097) or indeed where it can be demonstrated that a sophisticated client had an understanding of the nature and effect of the transaction (see Bolt Burdon paragraph 108).
If it were otherwise it would make it make difficult for solicitors and their clients to achieve finality over fees. The judgment of Fletcher-Moulton LJ in Clare v Joseph suggests that
the underlying rationale for the jurisdiction is the Court’s concern that agreements between clients and solicitors which preclude assessment may be procured by undue influence- and the allegation that the Agreement was procured by undue influence was abandoned in this case, albeit at the last moment.
If an assessment of the fairness and reasonableness of solicitors’ charges were merely a means of ascertaining whether there were any basis for considering a CBA unfavourable to the extent that it should be set aside by reason of any such concern, that might have suggested a more direct route to the result I have reached on this issue.