Solicitor/Own Client Assessments are on the rise so it is more important than ever for Solicitors to know and understand the rules which govern them.
Disputes between Solicitors and former clients can rapidly become expensive and acrimonious. Even the most client-focussed and attentive firms will inevitably be faced with the occasional dispute over fees, whether raised by the client or the firm themselves for non-payment of fees. Fee earners can become embroiled in disputes rather than concentrating on remunerative work. The best way to save money is by knowing the assessment process in advance of any potential disputes.
The Solicitors Act 1974 was introduced to regulate and govern the practices of Solicitors and their firms. Most commonly it is clients who bring about Solicitors Act assessments on the basis of allegedly excessive fees or lack of information provided about fees. The rules afford a certain amount of protection to Solicitors in that clients (in most cases) need to secure a 20% reduction in the fees or else they must pay the costs of the assessment, this is referred to as “the 1/5th rule.” – see Section 70(9) of Solicitors Act 1974.
Just Costs were recently instructed in a dispute which did not fall into the above common category.
Just Costs were instructed by a client against whom proceedings had been brought by former Solicitors for unpaid fees. Over a number of years the firm had acted for the client, raising numerous invoices over the period of conduct. The client sought an assessment of the invoices raised to her.
Section 70(3) of the Solicitors Act 1974 provides that:
(3)Where an application under subsection (2) is made by the party chargeable with the bill—
- (a) after the expiration of 12 months from the delivery of the bill, or
- (b) after a judgment has been obtained for the recovery of the costs covered by the bill, or
- (c) after the bill has been paid, but before the expiration of 12 months from the payment of the bill.
No order shall be made except in special circumstances and, if an order is made, it may contain such terms as regards the costs of the assessment the court may think fit.
The rules essentially provide that a paying party cannot have invoices over 12 months old assessed.
A Consent Order was agreed between the parties for all invoices to be assessed, dating back to 2012. The receiving party then served a breakdown of only a selection of the more recent invoices raised.
The client served Points of Dispute again requesting all invoices be disclosed for assessment.
The Solicitors only realised the mistake they had made in the run up to the detailed assessment when Counsel had been instructed. The Solicitors then applied 7 months out of time for permission to appeal the terms of the Order and only have the invoices up to 12 months old assessed.
The Solicitors had failed to pick up on the issue despite it being raised in the client’s Points of Dispute and again in the Joint Statement.
Upon hearing the Solicitor’s Application the Court found that a Consent Order is akin to an Application and the fact that both sides consented to it meant that it was not just the paying party seeking this assessment. The Solicitors Act only provides a limitation in circumstances where the paying party is seeking the assessment NOT the receiving party, therefore all invoices were allowed to be assessed. The Solicitor was ordered to disclose all invoices and the client was awarded the costs of the hearing.
The Court commented that the Application by the Solicitors was essentially a relief from sanctions application. It was found that it was clear from the terms of the Consent Order what was being assessed; the Solicitors had the protection of the 1/5th rule and the client had the chance to attack and reduce all of the invoices.
In addition, there was a significant delay in making the application, despite the numerous opportunities the Solicitors had to rectify this at a much earlier stage.
In a final damning blow, the Judge commented that even if the application had been allowed, the appeal would have been refused in any event.
The key lesson here is for Solicitors to carefully review and understand the rules in respect of Solicitor and own client assessments prior to embarking on the process.
With success fees now payable out of client’s damages awarded in most conditional fee agreement funded cases, the Solicitors Act 1974 is more important than ever as Solicitor’s fees come under ever more scrutiny from disgruntled clients.
Accordingly, firms will need to swot up on the rules if they are to successfully resist such challenges and scrutiny (and of course to instruct costs specialists if they are unsure!).
Written by Dominic Patching - Associate and Costs Draftsman
The purpose of this blog is to provide information and discussion. Nothing on this blog should be relied upon as a substitute for advice from a qualified Solicitor regarding any actual legal issue or dispute. Nothing on this website should be construed as legal advice or perceived as creating a solicitor – client relationship. Just Costs Limited can accept no liability in contract or tort to any person, firm or company that relies on or makes use of the above, or any part thereof.