CostsLegal ArticlesSolicitor Client Assessments – a warning

September 30, 20170

This is the text of an article published in the September 2017 PIC Costs Specialists Magazine

Recently, I have seen a number of commentators noting an increase in the number of solicitor/client assessments. This is to be expected in straitened economic conditions, and as consumers become more aware of their rights through the publicity given to such issues, such as by the Legal Ombudsman. In the past, it seemed to be taken for granted as an unavoidable fact of litigation that a successful client would not recover its costs in full from the opposing party, but now clients will be going to costs management hearings to see their solicitor’s budgeted costs being criticised and knocked down; in some cases the application of proportionality may lead to rather drastic reductions. I anticipate that this trend will continue if the proposals made by Jackson LJ in his July 2017 Supplemental Report of Fixed Recoverable Costs are implemented: in cases which fall into his new “intermediate track”, his matrix of fixed costs may be seen by clients as an authoritative guide as to what their case “should” cost.

One issue which frequently occurs in solicitor client assessments is where the solicitor’s costs have substantially exceeded the estimate(s) given to the client. Potentially this could give rise to a significant reduction in the bill, and is often therefore central to the client’s prospect of avoiding paying the costs of the assessment, given the operation of the one fifth rule. In the recent case of Eurasian Natural Resources Corp Ltd v Deschert LLP, Lawtel 22.2.17, where the solicitor was arguing that the client was out of time in seeking a detailed assessment of some bills, Master Rowley held that the extent to which the bills had exceeded the estimates was a “special circumstance” under section 70(3) of the Solicitors Act 1974, such that an assessment should be ordered.

In my experience, the difficulty is less often with the initial costs estimate, where it can be argued with some force that it was difficult at an early stage in the retainer to predict the shape that the litigation would take, and therefore to estimate with any precision the level of costs involved. The solicitor is usually quite careful at that stage to stress the difficulties inherent in giving an early estimate.

But the professional duty on a solicitor is not only to give an estimate at the outset, it is also to keep the client updated about costs as the case progresses. This is more often where the solicitor falls down: without the prompt of the client care letter to include an estimate, it is easy to forget to update the client. It is then the shock of getting the unexpectedly large bill at the end of the case which prompts the client to think about a solicitor client assessment. It is easy to state the need for keeping the client regularly updated, but of course this depends on  the costs being carefully monitored as they are incurred, and tracked against the expected progress of the case.

Costs estimates were also at issue in another decision of Master Rowley, in Breyer Group v Prospect Law Limited, 26 July 2017, unreported (but available on Gordon Exall’s Civil Litigation Brief). Of greater note, however, were the Judge’s findings in relation to charging for unusual items.

In relation to the solicitor’s practice of charging for time, including routine items, in 10 minute, rather than 6 minute, units, the Judge found that this was undoubtedly unusual in nature, and could properly be described as unusual in amount; it was not enough that the client had expressly agreed to it in the client care letter or had been warned in general terms that a reduction of about 30% on an inter parties assessment could be expected; in order to avoid the presumption in CPR 46.9(3) that the cost was unreasonable, the solicitor must specifically point to the unusual aspect and give specific advice on it. As a result, the routine items claimed at 10 minutes would be reduced to 6 minutes.

The solicitor also charged for reading incoming correspondence. The Judge considered that that was not in itself unusual; however it was unusual to charge for this work at the full rate rather than at half the rate, exacerbated here by the fact that the time was being charged in 10 minute rather than 6 minute units; that should have been notified to the client as being unusual. At the preliminary issues hearing, the Judge indicated that he wold be minded to allow incoming correspondence at half the rate claimed, subject to further submissions at the substantive hearing of the detailed assessment.

The trend for clients seeking to challenge their solicitors’ bills seems set to continue. Solicitors are well advised to factor in the need to give clients regular updates on the level of costs being incurred and on any changes to the initial costs estimate, as well as taking time to explain any unusual items which might not be recoverable inter parties.

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