Client Care: failure to provide an estimate should not render retainer 'unenforceable'

A failure to provide clients with estimates does not mean solicitors cannot recover their costs, the Court of Appeal ruled last week.


In a decision that also removes a threat to the new regime for conditional fee agreements (CFAs), Lady Justice Arden ruled that the Law Society's client-care rules are not in place 'to relieve paying parties of their obligations to pay costs which have been reasonably incurred'.


She said the fact the statutory framework for costs imposes a requirement to take some steps, such as providing an estimate, 'is not of itself sufficient to render the performance of a contract in disregard of that step unlawful and unenforceable'.


Garbutt v Edwards [2005] EWCA Civ 1206, a boundary dispute, was settled with costs to be paid by the defendant, who argued that the claimant's solicitors - north London firm Vanderpump & Sykes - failed to give costs estimates to its clients. Vanderpump denied this before the CA, but was not permitted to pursue on grounds of lateness.


It was argued that 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 from the client and, under the indemnity principle, the paying party.


The Law Society filed written submissions, which said it is not the effect of rule 15 that a breach should render fees irrecoverable.


Had the challenge been successful, it could have seriously undermined the new CFA regime, which came into force this week. The purpose of moving client care provisions from statutory instrument to the practice rules was to choke off defendants' technical challenges to render CFAs unenforceable.


Backing the use of estimates, however, Lady Justice Arden said it was a question for the discretion of judges whether to take into account a failure by the receiving party to provide one. It could also be a matter of disciplinary action for Chancery Lane.


Vanderpump partner Mark Heselton said he was 'very pleased' by the decision, adding that it would have thrown up a huge amount of litigation and confidentiality issues had the ruling led to a close examination.


The defendants' solicitor, Michael MacCallum of Harlow firm Whiskers, declined to comment.


However, Tony Guise, former president of the London Solicitors Litigation Association, described the ruling as a 'missed opportunity'. He explained: 'The court was reluctant to grapple with the statutory nature of the solicitors' information code and thought they would just leave it as a disciplinary matter.'


Mr Guise claimed there was now a green light to solicitors not to give estimates, as case law provided a penalty for an inadequate estimate, but not the absence of one.