Kerry Underwood

SOLICITOR AND OWN CLIENT ASSESSMENTS: TWO NEW CASES

with 2 comments


You can now book onto my Fixed Costs Autumn Tour – here

This subject is dealt with in great detail in my book – Personal Injury Small Claims, Portals and Fixed Costs, running to three volumes and 1,300 pages and costing £80.00 and available from me here or Amazon here

In Breyer Group Plc and Others v Prospect Law Limited, Unreported, Senior Courts Costs Office, 26 July 2017

Master Rowley considered various matters in relation to solicitor and own client costs, which are governed by the Solicitors Act 1974 and CPR 46.9.

Here the solicitors charged each unit as 10 minutes, and thus charged one sixth of the hourly rate, as compared with the almost universal practice of charging a unit as six minutes, that is one tenth of the hourly rate as per Practice Direction 47, paragraph 5.22.

The court held that this was an unusual charge and therefore not recoverable from the client and all ten minute units were reduced to six minutes.

Incoming communications should be charged at half of that rate, which is one twentieth of an hour each.

Invoicing and credit control are administrative matters to be included within a solicitor’s overheads, are not subject to a separate charge.

Where there is an unusual charge, the solicitor must specifically point to the unusual aspect and give specific advice upon it.

A general warning does not protect the solicitor.

Subject to these points, generally solicitor and client are free to agree whatever they want.

In a Solicitors Act 1974 assessment, a client generally has to achieve a saving of 20% or more on the solicitor’s bill for it to count as a win for costs purposes.

In other words, if the reduction is less than 20%, the client pays both sides’ costs, and if it is 20% or more, then the solicitor pays the costs.

What if a solicitor delivers a bill for “£100,000.00, but say £70,000.00”?

Does the client have to get a 20% reduction off of the £70,000.00, or off of the £100,000.00?

In other words, in that scenario, does a reduction to, say, £60,000.00 amount to a 40% reduction from the £100,000.00 figure, or a 14.29% reduction from the £70,000.00 figure?

Here, the court held that the lower figure is the relevant one as solicitors should not be discouraged from discounting bills in the hope of avoiding a Solicitors Act Assessment.

In Herbert v HH Law Ltd, Sheffield District Registry, 28 April 2017, Claim Number C905E097,

District Judge Bellamy held that a 100% success fee in a road traffic accident portal matter “could easily be said to be unusual both in nature and amount given the circumstances of the claim that were known to the solicitors at the time.”

The decision is all over the place, with the district judge holding that such an arrangement was “unusual” but “almost common practice.”

Well it cannot be both can it?

He also notes, with approval, the comments of District Judge Lumb in

A and Another v Royal Mail Group [2015] EW Misc B24

in spite of the wholesale rejection of those very remarks by the Court of Appeal in

Broadhurst v Tan and Taylor v Smith [2016] EWCA Civ 94.

It is a curious judgment to put it mildly.

However, a key points was that there had apparently been no face to face meeting with the client and little contact and it was a referred matter, which allowed the judge to find that there was no clear evidence that the claimant had approved either expressly or impliedly, the costs to be incurred, and the fact that those costs would not be recoverable.

This is similar to the line taken by the Senior Courts Costs Office in

Vilvarajah v West London Law Ltd, 19 May 2017, Case Number AGS/1603489, Unreported,

which I deal with in my post – Hourly Rates in Retainers.

In that case the judge was also critical of the lack of explanation given to the client in relation to the Conditional Fee Agreement and was critical of the fact that the Conditional Fee Agreement was only discussed with the claimant in a 30 minute appointment, without a detailed attendance note of what was said and without correspondence, before or after.

There the judge said that he would have expected a letter to be sent to the claimant in advance of the meeting, with a draft copy of the Conditional Fee Agreement explaining its terms, and a follow-up letter after the agreement was signed, enclosing a copy of the signed Conditional Fee Agreement and explaining the key points.

Comment

Clear wording and clear explanation and seeing the client is now essential to avoid a Solicitors Act 1974 challenge in an matter conducted under a Conditional Fee Agreement, and arguably in any matter at all.

The key rule here is CPR 46.9 (2) to (4) which reads:

“(2) Section 74(3) of the Solicitors Act 19746 applies unless the solicitor and client have entered into a written agreement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings.

(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 –

  • they are of an unusual nature or amount; and
  • the solicitor did not tell the client that as a result the costs might not be recovered from the other party.

(4) Where the court is considering a percentage increase on the application of the client, the court will have regard to all the relevant factors as they reasonably appeared to the solicitor or counsel when the conditional fee agreement was entered into or varied.”

The Practice Direction – PD46,

6.1 reads:

“6.1 A client and solicitor may agree whatever terms they consider appropriate about the payment of the solicitor’s charges. If however, the costs are of an unusual nature, either in amount or the type of costs incurred, those costs will be presumed to have been unreasonably incurred unless the solicitor satisfies the courts that the client was informed that they were unusual and that they might not be allowed on an assessment of costs between the parties. That information must have been given to the client before the costs were incurred.”

I provide details advice, and model wording for agreements of all client, not just personal injury, in my book Personal Injury Small Claims, Portals and Fixed Costs, running to 1300 pages in three volumes and available from me here or Amazon here for £80.00 including P&P.

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Written by kerryunderwood

August 15, 2017 at 10:56 am

Posted in Uncategorized

2 Responses

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  1. Do you have a copy of the Herbert judgment Kerry?

    Jon Heath

    August 15, 2017 at 12:55 pm


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