Clients and costs

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30 May 2012

Posted by Sue Nash of Litigation Costs Services

A recent report by the Legal Ombudsman (LeO) found that by far the largest volume of complaints it received concern legal costs. Despite the requirements to advise clients of costs at the outset and to keep them informed of their costs liability throughout their matter, many solicitors are failing to do this – or at least to do it adequately and/or in a way that can be understood by the lay client.

This issue is as important to solicitors as it is to their clients – if clients are unhappy at the lack of information received and the level of the costs that they face, they will not only not come back to those solicitors or recommend them to anyone else, but they are also more likely than ever to refuse to pay and/or to make a formal complaint.

At best this will delay payment of solicitors’ costs, thus affecting cashflow; at worst it could leave you facing a solicitor/own-client assessment of costs or even a referral to the Solicitors Disciplinary Tribunal.

In a recent case heard by the Court of Appeal – Cawdery Kaye Fireman & Taylor v Gary Minkin [2012] EWCA Civ 546 – the court considered whether a solicitor acted correctly in terminating/severing the retainer with Mr Minkin on the basis that he refused (and/or was unable) to pay a requested payment on account which exceeded the amount of the solicitor’s original estimate.

In this particular case, the opposing party had changed the course of the litigation, meaning that the original estimate was no longer valid. Whilst the Court of Appeal overturned the costs judge’s decision that the solicitors had wrongly terminated the retainer before the litigation had reached its conclusion, and ruled that the solicitors had acted properly, the case still highlights the necessity of ensuring that solicitors’ terms of business provide for these sort of circumstances.

In our experience, other common causes of complaint relate to insufficient information being given about the fee-earners working on the case (many retainers only contain information concerning the solicitor handling the case and fail to provide for other fee-earners – including costs draftsmen – who may be involved) and failure to keep the clients regularly updated as to the costs in the case.

It is in solicitors’ interests to do both of these as it assists proper recovery of costs inter partes as well as against the client and also ensures that you regularly review the hourly rates that are being charged to your clients.

The system of hourly billing itself is now being questioned by various luminaries including Master of the Rolls, Lord Neuberger and Professor Richard Susskind – but that is a subject for another day.



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