Law firms that fail to provide clients with estimates should be unable to recover their costs, the Court of Appeal will be told next month.

In a case being heard on 13 July, solicitor-advocate Michael MacCallum of Harlow firm Whiskers, will argue that failure to adhere to Law Society rules in not providing an estimate means solicitors cannot recover costs from their clients.


By virtue of the indemnity principle, there would then be nothing for the defendant to indemnify, meaning no costs are payable between the parties.


The case, Edwards v Garbutt, concerns a long-running boundary dispute which was settled with costs to be paid by the defendant. Mr MacCallum's defendant client argues that the claimant's solicitors - north London firm Vanderpump & Sykes - failed to give costs estimates to their clients, although Vanderpump says it did and interim bills were paid.


On the broader issue, Mr MacCallum said current case law contains an anomaly that if a solicitor provides an estimate but exceeds it without informing the client, he is entitled to the estimated costs plus 15% - but if there is no estimate at all, there is no penalty.


As the solicitors' practice rules are deemed to have statutory force, a breach is, in effect, a breach of statute and therefore unlawful, meaning costs could not be recovered, he argued - this mirrors the appeal court's ruling in The Accident Group (TAG) test cases in relation to the then-illegal referral fees that were found to have been paid.


'If the court rules against me, they will effectively be saying there's no requirement to give estimates,' he said.


Vanderpump partner Mark Heselton maintained that while an inaccurate estimate was misleading, 'if you give no costs estimate, you're not representing anything one way or another' - a distinction he said the district and circuit judges accepted.



His side has submitted that no provision expressly provides that a solicitor should be disqualified from recovering his fees in the event of a breach of rule 15. Mr Heselton pointed out that his side had won at every stage and that costs should follow the event.


Costs expert Tony Girling, a former Law Society President, said what makes the case unusual is that the client has not complained. 'The question is: what prejudice is done to the paying party? None - it's a windfall.' He said the court would want to avoid this if it could get over the TAG ruling.


Tony Guise, former president of the London Solicitors Litigation Association, predicted: 'The current climate is that estimates have to be given and stuck to, and the Court of Appeal will use the opportunity to ring that bell very loudly.'