Good practice

Conduct and service

Remuneration certificate waivers

The normal rules that apply to a client's right to require his solicitors to obtain a remuneration certificate are that the client has to pay half of the profit costs as shown in the bill, all the VAT and all the disbursements that the firm has paid on behalf of the client.

In addition, the request for a certificate must be made within one month of the client receiving from the solicitors notice of his rights to require a remuneration certificate or, if no notice is given, within three months of receiving the bill.

Normally, of course, most firms endorse the requisite notice on the bill itself.

However, there are circumstances in which an application for a waiver of those requirements will be considered.

These are exceptional but would include, for example, where the solicitors have given an estimate of costs that is then substantially exceeded, where the solicitor is the subject of disciplinary proceedings or intervention, where the solicitor already holds security for his costs or when no costs information has been given to the client.

The position is governed by article 11 of the Solicitors (Non-Contentious Business) Remuneration Order 1994.

The Law Society's remuneration certificates department received a request for a waiver from a client under circumstances in which the solicitors, engaged in a redundancy matter, had sent initial costs information setting out their hourly charging rate and charging practices.

About two weeks later they sent the client an estimate for costs of about 3,000.

Five months on the firm revised its estimate to 3,750.

The solicitors' final bill was for only 2,000, albeit that their instructions were terminated before the matter was to go before the tribunal.

The view of the remuneration certificates department was that the client had been kept fully informed about costs and there were no grounds for a waiver to be granted.

The client appealed.

However, his reasons for requiring a remuneration certificate appeared to be concerned with the expertise of the solicitor who had acted for him.

The suggestion made was that, because of the solicitor's lack of expertise, he was misadvised, unnecessary counsel's fees were incurred and the matter took much longer, and was therefore more costly than it should have been.

The adjudication panel upheld the original adjudicator's decision to the effect that the client had not been able to demonstrate any exceptional circumstances that would justify the grant of a waiver.

The result was that, if the client still wanted the solicitors to obtain a remuneration certificate, he had a month from notification of the refusal to comply with the requirements.

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

These case studies are for illustration only and should not be treated as precedents.

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.

Risk management

What constitutes an employee?

One area often overlooked when taking out professional indemnity cover is who within the firm is actually protected.

It is all very well to have all your full-time professionals and administrative staff covered, but what about temporary staff, locums and agency advocates? Are they classed as employees when they are in your pay, or does your insurer believe they should have their own cover?

This is still a grey area for both insurers and insured.

Locums are generally seen as employees and as such are covered by the practice's indemnity insurance, but agency advocates are often not.

The rationale being that an agency advocate is freelance, and therefore should have his own cover.

What constitutes an employee is one area which is particularly pertinent for sole practitioners.

How does a sole practitioner keep his practice running if he is on holiday or ill? Often, a sole practitioner will hire a locum or agency advocate to take over.

However, if the sole practitioner is then hit with a claim by a disaffected client, will the insurance company pay up if the sole practitioner was not actually handling the case at the time? Another scenario is that some sole practitioners have a buddy system for holidays and illnesses, for example, several sole practitioners cover for each other when one is off work.

Yet again, will one's professional indemnity insurance cover an occasional colleague who is temporarily working on a case? Is this occasional colleague now classed as an employee of the absent sole practitioner, even though the practice is for a sole practitioner?

Another factor is responsibility.

If an agency advocate or locum, when working for a practice, makes a mistake, and a client then makes a claim, who exactly is responsible for settling the claim? How easy is it to prove that the claim was made against the part-time employee, rather than being a mistake made by several members of the practice? Is the practice at fault for not having the proper checks in place? Is it right that responsibility simply falls on the shoulders of one person, or are the senior partners at fault for not double checking the work of their employees? Clients pay good money for a practice to look after their affairs, and the excuse that 'a freelancer made the mistake' will probably not hold much water.

After all, a client would expect better structures to be in place.

Discuss the matter in depth with an insurance broker, so that it is up to the broker to find the right cover for your firm.

Make sure that when agreeing your terms for professional indemnity cover, you know exactly what you are covered for and exactly who your insurer deems to be an employee.

This article was prepared by Alexander Forbes Professions' risk management team.

Question of ethics

Q My clients, who own a company, are negotiating with a prospective buyer for the company, the main assets of which are land.

They are also negotiating with another prospective buyer for the land owned by the company.

I am instructed to prepare all the documentation for both matters.

Does Law Society practice rule 6A (seller's solicitor dealing with more than one prospective buyer) apply?A No, practice rule 6A would only apply if you were instructed to deal with more than one prospective purchaser of the land.

Rule 6A does not apply to the sale of shares in a company.

Therefore, even though the two prospective sales are mutually exclusive, rule 6A would not apply in this case.

Q I want to work as a locum for several firms of solicitors.

What is the position if I find that two of the firms for whom I work are acting on different sides of a matter?A There should be no problem with this, provided that you yourself have no involvement in the matter in question at either firm and that you can be adequately isolated from it by both firms.

Please note

The Solicitors' Publicity Code 2001 replaced the Solicitors' Publicity Code 1990 on 16 November 2001.

It also repealed Law Society practice rule 11 (names used by a firm).

The new code requires all firms to put 'regulated by the Law Society' on their notepaper.

Practitioners can postpone this until 1 January 2003 but only if they continue to comply with the 1990 code and the old practice rule 11.

Question of ethics is compiled by the Law Society's professional ethics guidance team.

Send questions for publication to Austin O'Malley, the Law Society, Ipsley Court, Berrington Close, Redditch B98 0TD; DX 19114 Redditch; tel: 020 7242 1222.