The legal sector’s complaints handler says it expects solicitors to give a costs estimate up front before they take on a case. The requirement appears in the Legal Ombudsman’s latest guidance on what firms should be doing to be clear about costs and manage clients' expectations.
The service says 13% of the cases it accepted in 2018/19 included a complaint about costs, with clients reporting problems with the information provided, the charging structure and management of changing costs.
The new guidance includes case studies and makes clear that complaint investigators will probe firms on what figures they provided up front.
‘We believe it is important to manage consumers’ expectations about the possible costs range,’ the ombudsman states. ‘We will ask whether an estimate, however cautious, was given. We would expect that estimate to give the customer the best information.’
Clients should be told what factors affected the estimate, the guidance states, and receive an explanation when the estimate has been reached during the course of the case. An estimate being exceeded would not automatically constitute poor service, but the ombudsman ‘would normally expect to see reasons for this and look for evidence that the customer had been warned beforehand'.
Estimates should include VAT, the guidance suggests. If this is not made clear, it is likely investigators would find fault and possibly hold the firm to the lower figure quoted.
Similarly for disbursements, the ombudsman requires a ‘reasonable breakdown’ of extra costs incurred, with some costs such as photocopying forming part of the usual service cost.
Funding arrangements should be fully discussed before the service begins, and the ombudsman wants to see evidence that different options have been discussed, such an insurance, unions and legal aid (even if the lawyer is not registered to provide legal aid services and may potentially lose business).
If a bill remains unpaid at the end of a case, firms should give ‘reasonable notice’ that they intend to seek enforcement.
This is the second edition of costs guidance from the ombudsman, and the first since 2014. Since December last year, the Solicitors Regulation Authority has required firms to publish costs for certain types or work and explain the credentials of those handling matters.