Complaint: LeO resolution binding
A law firm which reduced its fees in an informal resolution of a client’s complaint brokered by the Legal Ombudsman (LeO) could not subsequently submit a higher revised bill, a costs judge has ruled.
Riverbrooke Solicitors tried to reopen the matter after LeO then reported it to the Solicitors Regulation Authority (SRA), for which the firm blamed its former client.
However, LeO made the decision itself, with the client having no say in it, Costs Judge Leonard said.
He held that Riverbrooke was contractually bound by the informal resolution and was also estopped from raising a revised bill.
Sylvia Olukoya instructed the central London firm in May 2017 to act for her in an ultimately successful employment claim. The initial fee estimate was between £6,000 and £10,000, along with undertakings to send her an estimate of costs incurred every two months and to advise her if it looked like the estimate would be exceeded.
Ms Olukoya complained that it was only on the first day of the remedy hearing in June 2018 that she learned Riverbrooke’s claimed costs were around £85,000. She complained to the firm but there was no resolution and she referred the matter to LeO.
An investigator at LeO managed to secure an agreement that Ms Olukoya would pay costs of £10,000 plus VAT and disbursements, totalling £13,000.
The investigator had given Riverbrooke a clear indication of her conclusion that, had Ms Olukoya understood at the outset that the costs would exceed £10,000, she would not have instructed it.
Riverbrooke issued a final invoice and Ms Olukoya paid within two weeks, as required.
The ruling quoted partner Chi Chikwendu telling the investigator that “this matter was an exception but with grave consequences and lessons have been learned” about not providing written confirmation to a client following oral discussion about costs.
Nearly three years later, after learning about the SRA referral, Riverbrooke sent Ms Olukoya a ‘revised final invoice’ for £158,000, against which it credited the £13,000.
Ms Olukoya then sought a detailed assessment, after which the law firm revised its invoice to £106,000, less the £13,000.
The judge said Ms Chikwendu believed that she could only properly achieve “vindication” through a detailed assessment of the firm’s full claimed costs. She wrongly believed that Ms Olukoya was pursuing an “undisclosed claim” against the firm with the SRA through LeO.
Judge Leonard dealt with Riverbrooke’s ability to revise its invoice as a preliminary issue and found it “beyond doubt” that when Ms Olukoya and Riverbrooke “accepted and put into effect the informal resolution brokered by the Legal Ombudsman they entered into a legally binding contract”.
The terms of that contract were “clear and complete” and he rejected the contention that Ms Olukoya had not provided any consideration. The consideration included Ms Olukoya terminating her complaint and the possibility of a published finding against the firm and other sanctions.
The fact the resolution was labelled ‘informal’ did not mean it could not be binding, Judge Leonard said.
“It seems to me that terminology is entirely beside the point. One must look at the correspondence and the parties’ actions to determine whether or not the informal resolution was contractually binding…
“All that aside, it is simply not credible that a solicitor would deliver a bill marked ‘final’ and then wait for almost three years to deliver the real ‘final’ bill.
The judge added that, if he was wrong on this, the firm was debarred by promissory estoppel from relying upon the revised invoice.
Further, the firm needed the court’s permission to do raise a revised invoice, which it had not sought and would not have received as there needed to have been a genuine mistake in the original bill. This was not the case here.
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