What is a bill? Costs lawyers urge regime reform

Ridgway: We need a framework in line with modern legal practice

Two significant High Court rulings in which law firms’ billing arrangements did not achieve what they had intended, emphasise the need for reform of the legal framework around them, the Association of Costs Lawyers (ACL) has argued.

The body for regulated costs professionals said the law needs to be updated to avoid preliminary arguments over whether a bill is actually a bill – or a request for payment on account – before any debate could be had on its contents.

The regime is contained in the Solicitors Act 1974, which has not been updated for 50 years; the Senior Costs Judge, Andrew Gordon-Saker, and the Law Society are among those who also back a review, the ACL said.

As we reported last week, Costs Judge Nagalingam rejected national law firm Weightmans’ argument that its retainer gave it an express right to raise interim statute bills – a complete and final invoice for a specific period of work, rather than a payment on account.

As a result, a string of 47 bills worth £3m now face detailed assessment, a line-by-line examination of the charges.

Had they been interim statute bills, this would not have been the case, as a client has only 28 days of delivery of each bill to seek an assessment.

In the other, Costs Judge Whalan came to a similar conclusion in relation to 34 bills worth £226,000 raised by London firm Hodge Jones & Allen.

The judge said this type of dispute “should rarely if ever come before the court”.

He went on: “A solicitor/client retainer requires – or at least should invoke – the application of straightforward legal drafting. Any relevant uncertainties, twists or pitfalls have been considered exhaustively in the contemporary jurisprudence. There is no real excuse for imprecision, uncertainty or ambiguity.

“If a solicitor wants to provide for the demand and payment of interim statute bills, then the retainer should express an unequivocal provision to this effect. The profession’s consistent failure to do so is, frankly, baffling.”

ACL chair Jack Ridgway said: “These latest decisions are far from the first where law firms have fallen foul of this out-of-date Act but the figures involved indicate the jeopardy and risk they run.

“We need a fresh framework in line with modern legal practice and one that is easily explicable to clients – they cannot be expected to have a grasp of technical costs law when receiving a bill.

“Equally, Judge Whalan is right to be surprised that such mistakes are still being made. There is no excuse for that after all this time and I would urge law firms to have an expert review their retainers and terms and conditions to ensure that they are not the next solicitors on the receiving end of an adverse ruling in the Senior Courts Costs Office.”

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