Don't bill too early

Mr & Mrs S decided to buy a flat.

They consulted solicitors who provided a quotation in the sum of 750 plus VAT, together with any disbursements.

Mr & Mrs S were happy and the transaction went ahead.

Within about three weeks, and with efficiency, the solicitors prepared a bill and a completion statement, incorporating the agreed costs at 750.

However, shortly afterwards and before contracts were exchanged, various unexpected problems arose, some of which related to the title and others to fixtures and fittings and a proposed completion date.

The sellers had experienced problems with their own sale - and a chain developed.

Ultimately, the matter completed on time but the solicitors realised that they had carried out a great deal of extra work, necessitated by a situation not really within their control.

They had overlooked telling the client about it and instead produced a second bill in the sum of 500, incorporated within an amended completion statement.

On completion, they submitted the appropriate documents to the client and deducted their costs.

Mr & Mrs S were not happy.

The solicitors endeavoured to explain that they had carried out a great deal of extra work, which had not initially been anticipated.

They acknowledged that the quotation of 750 was a quotation and not an estimate.

They acknowledged that when sending client-care and costs information to Mr & Mrs S, they had specifically confirmed that the firm's hourly rate system did not apply when fixed terms were agreed.

Mr & Mrs S recognised that additional work had been involved but remained dissatisfied and made a complaint.

The adjudicator was satisfied that no additional costs information had been provided and no indication had been given to Mr & Mrs S that any additional costs would be sought.

The solicitors were directed to waive their second bill and to pay proportionate compensation to Mr & Mrs S for the inconvenience and anxiety caused to them.

If a fixed price quotation has been provided and additional costs, originally unforeseen and unexpected, are incurred, it is absolutely essential to notify the clients and to reach agreement before any further billing.

It may well be convenient to conclude billing and administration at an early opportunity.

However, it is important to remember that any additional costs that may be incurred as a result of unforeseen circumstances will not usually be granted where a quotation has been provided, where there is no additional agreement between the parties and where the client seeks a remuneration certificate.

If an inadequate professional service complaint is made, the circumstances would almost certainly result in a compensatory award in addition to any costs sanction that may be imposed.

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