Solicitor and own client assessments of a solicitor’s fees under section 70 of the Solicitors Act 1974 used to be rare beasts. It used to be possible for solicitors practising in family law to undertake their entire career, without suffering the indignity of a challenge to their fees by their own clients.
No more. Across a wide range of work including financial remedy disputes and disputes about children, solicitors are increasingly at risk of finding themselves in the Senior Courts Costs Office (SCCO) or a District Registry having to justify their fees because their (usually former) client will have made an application to court for an assessment of their charges.
Most disputes over fees arise at the simplest level, from a failure to exercise appropriate standards of client care including regular and informed communications with the client in language that they can understand and managing a client’s expectations: if these basic skills are applied in every case, then many disputes over fees which could potentially arise can be avoided.
Most dispute, but not all, as even when a solicitor deals sensitively with a client, who will be usually in a fraught condition due to family breakdown and the stress of a dispute with their partner, disputes over fees can arise, as a client may have unrealistic expectations which they cannot be disabused of.
And some disputes will arise because a client has not achieved what they wanted to achieve, either because it did not prove possible in the litigation, or because of poor quality advice and service.
In this short article, I will consider a number of the key issues which frequently arise on section 70 detailed assessments, the vehicle by which disputes over a solicitor’s fees will be litigated out between the solicitor and client.
Client care considerations
The starting point is to consider what are a solicitor’s professional obligations when advising a client about costs in relation to contemplated litigation and subsequent action. The current professional obligations are to be found in the SRA Standards and Regulations which came into effect on 25 November 2019, replacing the SRA Handbook. The key provisions which relate to costs matters have been substantially slimmed down from the predecessor provisions to the following obligations:
8.6 You give clients information in a way they can understand. You ensure they are in a position to make informed decisions about the services they need, how their matter will be handled and the options available to them.
8.7 You ensure that clients receive the best possible information about how their matter will be priced and, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of the matter and any costs incurred.
It will be noted that the use of the words “best possible” impose an onerous obligation upon a solicitor, and one which applies both at the time of initial instruction and one which must also be complied with throughout the case. The key points that must be addressed with the client are transparency and certainty, in the way that fees are calculated and charged, the likely disbursements and their amounts and the overall costs: the adequacy of costs estimates of the overall cost, from start to finish, is a matter that will be further addressed below. The advice that is given should be recorded in writing and will be reflected in the creation of the retainer: the contract for services that governs the relationship between solicitor and client.
All retainers should be written retainers, and in most family cases the retainer will be a privately paid retainer set out in a client care letter. The content of a client care letter should be carefully thought about. Such letters often perform a hybrid role of containing both advice and contractual obligations. It can be sensible, to separate out the detailed terms and conditions into a separate document for ease of reference.
This retainer documentation and/or client care letter should be written with an eye to the Law Society Practice Note June 2018 Law Society Guidance on retainers. This document notes without any irony
“There are relatively few outcomes that require you to provide information in writing. These relate to complaints.”.
But reading into the document that is not quite right. Clients must be made aware in writing of their right to make a complaint and details of how to do so. They must also be advised of their right to complain to the Legal Ombudsman. They must further be aware of their right to challenge or complain about a bill, including their rights to an assessment of costs under part III of the Solicitors Act 1974.
Moreover as the document unfolds, it makes it plain that clients must be informed the solicitors regulatory status, provided with cost information and fee arrangements, told about any separate businesses and there must be an agreement about service levels including for example the type and frequency of communications.
Although this information need not be provided in writing, it would be a bold or incautious solicitor, who does not record it in writing. Nor is this a new problem or one that goes unrecognised. Section 4.12 of the Guidance notes this:
Many clients comment about being given large documents containing lots of legal language in small print by their solicitors. Often these documents are not read or understood.
The advice given by the Law Society is to alter the style, which is used to write these documents, in an attempt to make them more user friendly.
You may wish to consider adopting the following style for your written client information to help clients understand the contents:
· ensure the key information is highlighted early on. If the document exceeds three pages, you may wish to move detailed information into annexes. This will help ensure important information is not overlooked
· use a clear font, in no smaller than 11 point
· make use of headings and bullet points to break up blocks of text and highlight points
· use plain language
· only include terms and conditions which actually apply to the specific retainer
· where a document is long, include a table of contents.
However, the Guidance also goes on to heap yet more written requirements on the solicitors head, promising that on the one hand there is no regulatory requirement to set out terms of business, whilst on the other noting ominously that it is good business practice to do so. These terms of business are stated to include the following matters.
Terms of business will normally set out details of:
· standards of service clients can expect
· information on professional indemnity insurance (also see requirements under Provision of Services Regulations 2009)
· verifying bank account details in order to protect against fraud
· data protection issues
· storage of documents and any related costs
· confidentiality and disclosure
· outsourcing of work
· auditing and vetting of files
· any clauses limiting liability
· processes for terminating the retainer
· client due diligence you will undertake financial arrangements with clients.
Thought should also be given in the client care letter or terms of business, to inserting contractual terms which deal with common circumstances, such as when a solicitor wishes to cease work for a client, or when a client does not pay interim bills, which should bring clarity to these situations, in order to avoid litigation of the kind which occurred in Cawdery Kaye Fireman & Taylor v Minkin  EWCA Civ 546
1. Every solicitor will encounter, in one way or another, the kind of problem which gives rise to this appeal. The solicitor is instructed to conduct certain litigation on the client's behalf. He gives his best estimate of the cost of doing so. He asks for a payment on account. The litigation becomes more complicated than had been envisaged. The estimate is exceeded. More money is requested on account. The client is by now dissatisfied with the service he has been receiving and believes that the costs are excessive and that the solicitor is achieving nothing. The fractious relationship is terminated and the solicitor's bill is assessed. Then – and this may be the unexpected turn of events, at least from the solicitor's perspective – the costs judge conducting the assessment concludes that it was the solicitor who wrongfully terminated the retainer and did so before the litigation had come to its end. Not having performed an entire contract, the solicitor is entitled to no further fees: indeed, he must repay the fees he has already received on account.
It will be noted that a key obligation is to give an initial estimate of costs and to update that estimate as the matter proceeds. A failure to give an adequate estimate of costs, particularly where a client has relied upon the estimate can justify a swinging deduction from a bill of costs at an assessment. In Harrison v Eversheds LLP  EWHC 2594 Slade J stated:
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.
Clients often lose documents that they are given, or do not retain them. They may also have an imperfect impression of what work has been done on their case. When they terminate the relationship with their former solicitor and instruct a fresh legal team to challenge the fees of the former solicitors, it is key to obtain the former solicitors file.
The first point that often arises is to determine whether there are any grounds for an assessment, which may not be easy to judge when a disappointed client may lack access to the file or have lost copy documents she was provided with.
Solicitors may not be obliged to supply a client with multiple copies of documents she has already had. Solicitors should bear in mind the Law Society Practice Note Who Owns the File on what documents they must furnish to their clients. In Hanley v JC & A Solicitors: Green v SGI Legal LLP  EWHC 2592 (QB) Soole J ruled the court had no jurisdiction to make orders under the inherent jurisdiction and/or s.68 in respect of documents which were the property of the solicitor. Nevertheless, it did not follow that solicitors should in all circumstances press their legal rights to the limit, nor that they could necessarily do so with impunity.
A client’s right to seek a detailed assessment under section 70 of the Solicitors Act 1974, is circumscribed by time limits. Section 70 itself provides as follows:
(1)Where before the expiration of one month from the delivery of a solicitor's bill an application is made by the party chargeable with the bill, the High Court shall, without requiring any sum to be paid into court, order that the bill be taxed and that no action be commenced on the bill until the taxation is completed.
(2)Where no such application is made before the expiration of the period mentioned in subsection (1), then, on an application being made by the solicitor or, subject to subsections (3) and (4), by the party chargeable with the bill, the court may on such terms, if any, as it thinks fit (not being terms as to the costs of the taxation), order—
(a)that the bill be taxed ; and
(b)that no action be commenced on the bill, and that any action already commenced be stayed, until the taxation is completed.
(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 taxation as the court may think fit.
(4)The power to order taxation conferred by subsection (2) shall not be exercisable on an application made by the party chargeable with the bill after the expiration of 12 months from the payment of the bill.
It can be seen from the statute, that a client only has an absolute right to an assessment if the application is made within one month of receiving the bill of costs. Thereafter if the bill is unpaid, the court will, for a period of up to 12 months after receipt of the bill make an order for assessment on such terms as it thinks fit and after 12 months, only when there are special circumstances.
Where the bill of costs has actually been paid, the approach taken by the statute is stricter: only one month after paying the bill special circumstances have to be shown for an assessment to proceed and after 12 months the court has no jurisdiction to order an assessment.
However, just because something purporting to be a “bill” is sent to the client does not mean that time for an assessment starts to run. Instead it should be carefully considered whether the “bill” is adequate to start the clock running. A bill that does not accord with certain legal formalities will not be a bill for the purposes of section 69 of the Solicitors Act 1974 and either is not capable of assessment, or cannot be sued upon.
Consideration should also be given as to whether a solicitor is entitled to send a client interim statute bills according to the contract of retainer: the case of Vlamaki v Sookias and Sookias  EWHC 3334 (QB) is an interesting case, where the court found that the solicitors were not contractually entitled to render statute bills, so the bills which were sent were to be treated as requests for payment on account, which meant that the time limits for commencing an assessment had not started to run. Conversely, in the case of Abedi.v.Penningtons  2 Costs LR 205 where there were no express terms as to the rendering of interim bills, the solicitors were able to assert that the act of rendering bills and their payment enabled them to assert that there was an agreement by conduct that they could do so.
Assuming that the client has missed the initial period for challenging a bill of costs and special circumstances must be proved, the question arises as to what that elliptic term actually means. The leading authority on what constitutes special circumstances is that of Bentine v Bentine  EWCA Civ 1168 which endorsed the formulation of Lewison J (as he then was) in the case of Falmouth House Freehold Co Ltd v Morgan Walker LLP  2 Costs LR 292 where he stated:
Whether special circumstances exist is essentially a value judgment. It depends on comparing the particular case with the run of the mill case, in order to decide whether a detailed assessment in the particular case is justified, despite the restrictions contained in section 70(3).
Notwithstanding the open textured nature of the test, one searches for cases to provide illustrations of where special circumstances have been found to apply.
In the case of Eurasian Natural Resources Corporation Limited v Dechert LLP (SCCO Master Rowley 27th January 2017) it was contended that there were seven separate factors which gave rise to special circumstances: (1) The defendant’s failure to give an initial costs estimate and its subsequent failure to give adequate costs estimates. (2) The size of the bills. (3) The fact that there is to be a detailed assessment of a substantial part of the defendant’s charges in any event. (4) The impossibility of the claimant challenging the defendants bills during the currency of the retainer. (5) The defendant’s approach to billing queries during its retainer. (6) Specific billing irregularities. (7) The Defendant’s attempts to avoid scrutiny of its charges. The application in the Eurasian case succeeded, the Master finding that only (3) was not a specific circumstance: one could not piggyback on bills where the time limit had not expired.
The playing field on a section 70 assessment is not level. The assessment takes place on the indemnity basis, not the standard basis. The principle of proportionality is simply not in play. Both parties are likely to refer to the presumptions in rule 46.9 CPR which can remove large elements of costs from argument over their reasonableness:
(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;
(c) to have been unreasonably incurred if – (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.
It can be of crucial importance, to determine what a client knew and approved, and whether items sought from a client fall into that category of costs, called “unusual costs”.
In terms of what type of challenge at a detailed assessment, many of the points which can be deployed against a receiving party on a detailed assessment by way of general points of principle, can suitably tailored, be deployed on a section 70 assessment.
Two examples will suffice: the first is to note a challenge to the entirety of costs claimed can be made where there is a strong allegation that a client was given the wrong advice on funding options, as illustrated by the case of McDaniel and Co v Clarke  EWHC 3826 (QB) and so no costs have been reasonably incurred.
Secondly, in addition to general points, points of detail can be advanced, again suitably tailored, much as they would against a receiving party in an inter partes assessment: that there has been overmanning with multiple solicitors deployed to undertake work for no proper reason, duplication of work being undertaken as distinct from appropriate delegation to a cheaper fee earner, the booking of block time and simply too much time spent on particular elements of the case.
Finally, it should be noted that the client must obtain a discount of 20% from the costs sought to be assessed, otherwise the starting point is that the client will be paying the costs of the assessment. Thus, it can be very important to limit the costs which are to be assessed to particular parts of the Bill, such as the profits costs and not the disbursements, as permitted under section 70(6) of the Solicitors Act 1974.
My blog costs and litigation funding matters can be found at www.costsbarrister.co.uk