Client to pay costs after failing to cut lawyer's bill by 20%

A former client will have to cough up for the majority of the costs of an assessment despite achieving a reduction of £28,000. 

Clare Griffin was granted an assessment order to go through bills totalling £182,000 that she had received from London firm Kleyman and Co for its work on her divorce case. The costs were assessed at £154,000, meaning Griffin had secured a reduction of around 15%.

Under the Solicitors Act 1974, responsibility for the costs of an assessment is dictated by the proportion of any reduction achieved. The solicitor pays when the reduction is one fifth or more; if it is less, the client pays.

But in Griffin v Kleyman & Co Solicitors Ltd, the claimant tried to argue there were special circumstances because she had made a Part 36 offer to settle before the assessment was carried out. The court heard that Griffin’s new lawyers said she would accept a £28,000 reduction in full and final settlement of the costs claim. This turned out to be almost exactly the reduction ordered by the court.

Kleyman replied asking why Griffin was offering to accept less than the 20% reduction she would need to achieve to obtain a costs order.

Its response added: ‘We draw the obvious inference to this offer in that your client is accepting that she is highly unlikely to achieve a reduction of at least 20% as otherwise her initial offer would have been over that threshold to put us at risk on costs. This offer somewhat undermines your client’s position.’

The firm offered to settle on a drop hands basis and write off the £10,452 that Griffin still owed, but this was not accepted.

Costs Judge Leonard said the offer to accept a £28,000 reduction was a ‘misconceived attempt’ to reverse the effect of the one-fifth rule. The judge found it 'unsurprising' that the firm was unwilling to accept it. ‘I do not accept that the defendant should be deprived of its right under the one-fifth rule to recover its costs by virtue of an offer that sought, unsuccessfully, to defeat that right through CPR Part 36,’ he said.

Leonard awarded the firm 80% of its assessment costs rather than the full 100% after a finding that it had overbilled by around £4,300. He said the overbilling had arisen from negligence in managing its financial records. ‘The poor management of the defendant’s accounting and billing records has in my view impeded the clarification and resolution of the issues on this assessment,’ he added.

‘Nor should it ever have been necessary for the claimant to engage in a detailed assessment process to find out that she had been overbilled.’

The amount the claimant must now pay was not specified in the ruling.