Kerry Underwood

INTERIM STATUTE BILLS

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This piece, in slightly different form, first appeared on the Practical Law Dispute Resolution Blog.

The matters dealt with in this piece are examined in great detail in my three volume, 1,300 page book Personal Injury Small Claims, Portals and Fixed Costs – price £50 and available from Underwoods Solicitors here.

Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

 

Normally a solicitor – client retainer is an entire contract – see

Vlamaki v Sookias & Sookias [2015] EWHC 3334 (QB) :

“A solicitor’s retainer is an example of what, although known as an “entire contract”, is perhaps better described as involving an “entire obligation”: a solicitor can generally only claim remuneration when all work has been completed, or when there is a natural break. That, however, is subject to any agreement to the contrary”.

So, ordinarily a statute bill will be delivered at the end of the retainer, that is a final statute bill, but solicitors and clients can agree that interim statute bills may be delivered during the retainer, and which are final statute bills for the period covered.

The advantage for the solicitor is that time then runs and there is little prospect of the fees being challenged at the end of the case, but they are final bills and cannot ordinarily be amended.

 

In

Harrods v Harrods (Buenos Aires)

the court said:

“That causes difficulty when you have litigation which is ongoing. The client is called upon by those provisions to challenge an interim bill within one month if he wants to do it as of right, and if he does not challenge it within 12 months then he has to show “special circumstances” to challenge his solicitor’s bill. That puts him in an impossible position. Either he challenges the solicitor’s bill – the very solicitor who is now acting for him – and continues to use that solicitor at the same time, or he has to change solicitor, all in the middle of litigation when he is facing another enemy”.

Problems sometimes arise because the retainer is ambiguous.

 

In

Adams v Al Malik [2014] 6 Costs LR 985

the court said:

“… the party must know what rights are being negotiated and dispensed with in the sense that the solicitor must make it plain to the client that the purpose of sending the bill at that time is that it is to be treated as a complete self-contained bill of costs to date”.

The retainer must make it clear that interim statute bills are to be delivered and what the consequences are in terms of the time limits on challenging fees, with any doubt being resolved in favour of the client, see Vlamaki:

“…if there were an ambiguity on a fundamental aspect of the terms and conditions that cannot otherwise be resolved, then the ambiguity is to be determined against the solicitors”.

The court there commented that a lay client cannot be expected to understand the Solicitors Act 1974.

However in Abedi v Penningtons [2000] 2 Costs LR 205 where there was no express terms as to the rendering of interim bills, the court held that the solicitors were entitled to rely on the fact that they had rendered bills, which had been paid, to enable them to assert that there was an agreement by conduct that they could deliver interim statute bills.

 

In

Ashfakul Bari v Arnold Rosen (t/a Ra Rosen And Co Solicitors) [2012] EWHC 1782 (QB)

the court found that the following wording did not provide for interim statute bills to be delivered:

“I shall send you a regular statutory final bill, which will not be altered subsequently…  I require payment of the bill by return and will argue about any aspect of the charges subsequently. You have a right to have an assessment of any bills at any time in the High Court. Ask for details from me at any time… Apart from that, all bills are self-contained. You and I will agree that each such subsequent bill is fair and reasonable when billed. The bills are for acceptance; but I do reserve my rights to charge as and when appropriate”.

 

In Vlamaki v Sookias & Sookias the retainer said:

“To help you budget, we will send you a bill for our charges and expenses at the end of each month while the work is in progress. We will send you a final bill after completion of the work.”

The court said:

“Absent from those clauses in particular and the retainer in general is any express statement that each interim bill would be a final bill for the period that it covered”.

Thus, there must be a contractual right to deliver an interim statute bill, but that bill must comply with all the statutory and common law rules that apply to a final statute bill.

“Even if there was a contractual right to issue interim statute bills, it will be a question of fact whether any individual bill issued to the client was a statute bill. If there was no contractual entitlement to issue an interim statute bill, any interim bill issued could be no more than a request for payment on account”.

Solicitors can send separate disbursement and profit costs interim statute bills following the Court of Appeal decision in

Slade (t/a Richard Slade And Company) v Boodia & Anor [2018] EWCA Civ 2667

that interim statute bills need only be final for the period they cover under the element of the costs covered.

 

A statute bill must:

1. contain a sufficient narrative, whether in the bill or from information known to the client;

2. be a reasonably complete account of fees rendered;

3. give the client sufficient information to decide whether to have the fees assessed;

4. allow the client to assess the bill;

5. be a demand or request for payment.

If any of these requirements are not met, then the bill will be only a request for a payment on account and will not trigger the time limits on challenging it.

 

Termination

The unlawful termination of an entire retainer by a solicitor will lead to no costs being chargeable, even for work already done – see

Wild v Simpson [1919] 2 KB 544 (CA) 566

 

Chamberlain Bills

A Chamberlain Bill must meet the requirements of a statute bill as to narrative – see

Rahimian & Anor v Allan Janes LLP [2016] EWHC B18 (Costs)

and is a statute bill comprising a series of bills with a deemed delivery date of the final invoice.

This may arise when the individual bills do not satisfy the rules, due to lack of agreement or natural break or meeting the statutory requirements.

 

Conditional Fee Agreements and Interim Statute Bills

Discounted conditional fee agreements and interim statute bills

In

Sprey v Rawlison Butler LLP [2018] EWHC 354 (QB)

the court considered whether monthly bills delivered by a solicitor to his client under a discounted conditional fee agreement were “statute bills”, and therefore capable of detailed assessment under section 70 of the Solicitors Act 1974.

A solicitor’s retainer is an entire contract and usually the solicitor is entitled to be paid by the client only at the end of the retainer, such as at the conclusion of the litigation.

There are two exceptions to this:

  • where the solicitor and client have agreed that the solicitor may render interim bills;
  • at a natural break in lengthy litigation (Re Romer & Haslam [1893] 2 QB 286).

Agreement may be inferred from conduct, such as where the solicitor renders interim bills which the client accepts and pays (Abedi v Penningtons [2000] 2 Costs LR 205).

Here, the court said that the construction of the Conditional Fee Agreement did not permit or anticipate the rendering of interim statute bills.

Clause 11.1 under the section “Right to apply for an assessment” gave a clear indication that the invoices were not statute bills, as it said that the client had the right to challenge the bills under Section 70 of the Solicitors Act 1974, which was described as the “right to assessment by the court of the amount of the fees, Success Fee and/or Disbursements which are payable by the client under this agreement”.

The court said that unless those three items, that is fees, success fee and disbursements, were read separately, that is disjunctively, then the right to challenge them arose only at the end of the case.

Thus the interim bills were not statute bills, but rather requests for payment on account, or, in the circumstances, Chamberlain bills.

It is unclear from the judgment as to whether a bill delivered during a no win lower fee case can ever be a statute bill.

Although the court said that here the wording of the Conditional Fee Agreement was inconsistent with the ability to deliver interim statute bills – a highly questionable conclusion which disagreed with the decision of the Costs Master – it is open to question whether a different wording would have made any difference.

This is due to the line of authorities that says that a client does not need to decide whether to challenge the bill until she/he knows the full amount, which in a conditional fee case will not be until the end.

That makes no sense.

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.

Written by kerryunderwood

November 11, 2019 at 8:06 am

Posted in Uncategorized

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