Conduct and service

Deduction of costs

An issue that repeatedly poses problems is when money can be taken from client account to pay costs that are due.

The present position is governed by rules 19 and 22 of the Solicitors Accounts Rules 1998, which replaced rule 7 of the 1991 rules, but with one important difference.

The old rule stated that a solicitor could not take costs out of client account without having sent the client 'a bill of costs or other written intimation of the amount of costs incurred.' That requirement is repeated in the new rule 19(2).

However, rule 19(3) adds a further stipulation.

This is that, once the requirements of rule 19(2) have been complied with - that is to say, the bill or other written intimation has been sent - the money becomes office money and, therefore, must be transferred to office account within the next 14 days.

In practical terms, this means that, in a conveyancing matter, if the solicitor posts the bill and completion statement to the client on the day that completion has taken place, it would be reasonable to assume that the client would receive them the next day.

That complies with rule 19(2).

Rule 19(3) would then take effect and the costs must be transferred out of client account within the next 14 days.

The question then arises as to whether, if there is a breach of the rule, this should be treated as a service or conduct issue, with the different consequences each would involve.

The issue arose in a complaint where the client, a lay co-executor with a solicitor/executor in a probate matter, alleged that the solicitor had taken costs without supplying a bill or notifying the co-executor of his intention to do so.

The Office for the Supervision of Solicitors treated the issue as one of inadequate service, but the complainant wanted the solicitor disciplined.

Because there was no evidence of dishonesty and it was actually to the benefit of the complainant, the appeal committee upheld the decision to treat the matter as an inadequacy of service.

However, that matter was decided on its own facts.

Practitioners who are subject to similar complaints in the future may find that they are not treated in the same way.

Every case before the adjudication panel is decided on its individual facts.

This case study is for illustration only and should not be treated as a precedent

Lawyerline

Facing a service complaint? Need advice on how to handle it? Contact Mike Frith at LAWYERLINE, the support service offered by the Office for the Supervision of Solicitors, tel: 0870 606 2588.