Kerry Underwood

SOLICITORS ACT ASSESSMENTS: INTERIM STATUTE BILLS: CFA’s

leave a comment »


A slightly different version of this post first appeared on the Practical Law Dispute Resolution Blog.

In Richard Slade and Company v Boodia and Boodia [2017] EWHC 2699 (QB)

the Queen’s Bench Division of the High Court, in an appeal from the Senior Courts Costs Office, upheld the Cost Master’s finding that interim statute bills must include disbursements.

As they had not done so here, they were not interim statute bills, and thus were not final bills for the period described, because not all of the costs were included in the bill.

Consequently the clients were not time-barred from seeking Solicitors Act Assessments for all 61 invoices involved.

The term “interim” statute bill is a little confusing as in fact the whole point of such a bill is that it is final and complete for the period it covers. That finality and completeness allows solicitors to sue on the bill pursuant to the provisions of Section 69 of the Solicitors Act 1974, but prevents the solicitor from charging any further fees for that period.

Thus finality and certainty is there for both parties and a client can decide whether or not to pay or dispute the bill.

The Shorter Oxford English Dictionary definition of “interim” is:

 

“A thing done in an interval; an interlude”

 

and thus the description is technically correct as, in the absence of contractual entitlement to the contrary, an interim statute bill can only be delivered when there is a natural break, or interlude, in the proceedings.

In fact most solicitor and client retainers create a contractual right to deliver an interim statute bill at any time.

However the other dictionary definition of “interim” is:

 

A temporary or provisional arrangement”

 

and that is where the potential confusion arises as in relation to that period, the whole point is that the bill is a final and permanent arrangement for that time.

The courts have long realised that the wording is somewhat unfortunate. In

Bari v Rosen (trading as RA Rosen & Co Solicitors) [2012] 5 Costs LR 851

the court said

“15. … a solicitor may contract with his client for the right to issue statute bills from time to time during the currency of the retainer. Such bills are known as “interim statute bills”. They are nevertheless final bills in respect of the work they cover, in that there can be no subsequent adjustment in the light of the outcome of the business. They are complete self-contained bills of costs to date.”

 

Here the High Court adopted that wording and reasoning.

It is important to note the wording that “there can be no subsequent adjustment in light of the outcome of the business.”

Thus if a bill is genuinely an interim statute bill charged at the discounted rate in a No Win Lower Fee Agreement, then there can be no subsequent further charge.

Here the court did briefly refer to the situation in a Conditional Fee Agreement case saying:

 

“The only potentially practical difficulty would be in a CFA case. Until the outcome of the case was known the client’s liability for costs could not be determined. However, where a decision was to be made between an interpretation that caused inconvenience to a solicitor and one which caused prejudice to a client, the client’s interest prevails.”

 

The point here is that generally a solicitor can deliver an interim statute bill, as they will know the work done to date and any disbursements incurred, and thus a final interim statute bill can be delivered and the client has to pay it and the solicitor can sue on the bill if it is not paid.

Obviously that cannot be done in a conditional fee case, as the final bill for that period will not be known until the case is concluded.

It is also most important that solicitors in conditional fee cases, whether No Win No Fee or No Win Lower Fee cases, make it clear when delivering a disbursements only bill, that it is not an interim statute bill. Otherwise it may be found that the solicitor can deliver no further charges for that period, and thus cannot charge profit costs.

Proper wording of the bill avoids that problem, but creates another problem, namely that the solicitor cannot sue on an interim on account bill as compared with an interim statute bill.

Thus it is essential to obtain payment on account of such costs, and then an interim on account bill can be delivered and the costs transferred from client account to office account to discharge that bill.

Generally, care needs to be taken when delivering an interim statute bill to ensure that all disbursements to date are included.

There is an obvious problem in relation to counsel’s fees in that counsel may be carrying on work generally and not have delivered a fee note for work done to date.

This is recognised in the judgment where the court says:

 

“54. Master James recognised in paragraph seven of her judgment the practical difficulties of obtaining and including disbursements such as fees for counsel and experts to coincide with the period in time to which a solicitor’s fees relate. The Master recognised that her answer that interim non-statute bill could be rendered carried the disadvantage by reason of Section 69 their payment cannot be enforced by taking proceedings.”

 

Depending upon the circumstances of the funding arrangement and the case, sometimes solicitors will want an interim bill to be a final statute bill for that period, and sometimes they will not.

The benefit of having a final interim statute bill is that the solicitor can sue on it and the client has strict time limits in which to challenge the bill under the Solicitors Act 1974.

The disadvantage from the solicitor’s point of view is that they cannot revisit the work done in that period, and thus it must be a carefully calculated and costed bill for work done during that period.

Thus if a solicitor, in a long ongoing matter, simply wishes to bill say £2,000.00 a month and then adjust the total each year, or at a natural interlude, or at the end of the case, then the solicitor must ensure that it is not an interim statute bill.

Perhaps the most significant area where solicitors must ensure that the bill is not an interim statute bill is where they are acting on No Win Lower Fee basis and thus charging the client the discounted fee as the matter proceeds, but with the right to charge the full primary fee, plus a success fee if appropriate, in the event of a successful outcome.

Let us assume the solicitor is charging £400.00 an hour, discounted to £200.00 an hour in the absence of access, and with a 100% success fee.

10 hours’ work is done and the matter is continuing.

The correct level of the bill is £2,000.00, reflecting the discounted rate, payable even in the event of defeat.

However, the solicitor will potentially be charging a further £600.00 an hour for that work, being the primary rate of £400.00 an hour plus a 100% success fee of £400.00 an hour, bringing the total up to £800.00 an hour, of which £200.00 per hour has been paid.

In those circumstances, which will become increasingly common in general civil and commercial work once fixed costs are extended, it is crucial that the bill delivered is not a statute bill.

Such bills are in fact “on account” bills and this should be made clear in the text of the bill.

Furthermore the bills should not refer to Solicitors Act assessments as that indicates that they are statute bills. That was the case here but the court held that it “would be reluctant to make a finding of a fatal flaw in the retainer” for that reason.

Where there is a series of interim, and not statute, bills delivered as part of a running account in respect of one piece of work, then the time for requesting assessment, and the time from when the solicitor can sue on the bills, runs from the date of delivery of the final, statute, bill.

Such a bill is known as a Chamberlain Bill, following the case of

Chamberlain v Boodle and King [1982] 3 All ER 188.

 

Here the court examined the authorities and stated that in order for a bill to be a statute bill, whether interim or final, it “must be complete, self-contained and final in relation to costs to date.”

A solicitor may render a bill and a client may pay that bill without it constituting a statute bill – see paragraph 22.

That is what is happening when a bill for the discounted element of the fee in a No Win Lower Fee Agreement is delivered and paid.

The assumption, as here, is that a solicitor will want any interim invoice to be an interim statute bill so that it can be sued upon and so that the client’s time for applying for an assessment starts to run.

However with conditional fee cases exactly the opposite is true.

 

In practice

Do not have the wording about the right to a Solicitors Act 1974 assessment on an “on account” bill.

Although it is not strictly necessary to include all disbursements for the relevant period in an “on account” bill, it is good practice.  It also avoids a client saying something to the effect of “I knew there would be more legal costs payable if I won, but I thought that all the disbursements were already dealt with as I was paying those as we went along, win or lose.”

Include in an on account bill  wording along the following lines:

This is an interim on account bill. It is not a final bill for the work done during the period covered by this bill.

We reserve the right to deliver an additional, final, bill at the end of the matter.

Your time for challenging our costs and for applying for an assessment under Sections 70,71 and 72 of the Solicitors Act 1974 does not start until that final bill has been delivered.

We will advise you of your rights when we deliver that final bill.”

The following wording could be used for a Conditional Fee Agreement case, suitably adapted to effect the terms of the Conditional Fee Agreement:

This Interim on account bill represents the fees payable in any event, whether you win or lose your case and full details of the work done [are contained in this on account bill][are available on request][are contained in the attached schedule] and please ask us if you want any more information about that work.

These fees are calculated at the discounted rate in the Conditional Fee Agreement. If the case is won then you pay the full primary rate, together with a success fee”

[As the discounted rate is 50% of the full primary rate, then if you win the case you will pay the same sum again, being the difference between the primary rate and the discounted rate.

In addition, you will pay a success fee of []% on that full primary rate giving a further fee of [insert amount].

So, if you win, you will pay a further [Insert amount] in fees over and above the amount contained in this bill.

[However, the total charged to you, including this bill, is capped at []% of [damages][damages recovered].

This bill [does][does not] include all disbursements to date.

 

Theoretically, I think it possible to deliver a final interim statute bill for the discounted fee in a Conditional Fee Agreement, which would finalise the client’s liability in the event of defeat and enable the solicitor to sue on that element of the bill.

An additional bill could then be delivered on the basis that that is a free standing contractual entitlement to the balance of the full primary fee, plus the success fee.

However, given the fact that the Solicitors Act did not envisage Conditional Fee Agreements, and there is no authority on the point, I advise against such a course of action.

In any event if a solicitor is suing a client for the discounted fee part way through the case, it is hard to see how the solicitor client relationship could be one allowing the solicitor to continue to act until the end of the case.

Advertisements

Written by kerryunderwood

November 24, 2017 at 8:34 am

Posted in Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: