Ombudsman's casebook

A monthly column of examples from the files of the Legal Services Ombudsman

Counting the cost

Rule 15 of the Solicitors' Practice Rules 1990 and the solicitors' costs information and client care code place a duty on all solicitors to ensure that their clients receive clear information about costs.

The duty applies both at the outset of the matter, as well as at appropriate stages throughout.

One of the objectives of the rules is to ensure that a client is able to appreciate fully the basis on which costs will be charged and that, as the matter progresses, they are kept in touch with developments on the costs front, to avoid any nasty surprises later on.

Well, that's the theory.

But, as the following recent cases show, solicitors are still getting this fundamental element of client care wrong.

Calculated to confuse

In July 1997, Mr K instructed solicitors to recover a debt for him.

The solicitors agreed to issue proceedings and requested a court fee of 80.

The debtor apparently went into hiding and an enquiry agent was called - resulting in a charge of 66.98 - which Mr K was asked to pay in February 1998.

Mr K heard nothing further from the solicitors until January 1999 when another fee earner at the firm wrote to say that he had taken over the case.

He enclosed a copy of the firm's charging rates.

Mr K said that he couldn't afford to continue with his claim and he instructed the solicitors to withdraw the proceedings, which they did.

The next month, the solicitors got in touch with Mr K again, this time to request 126.98, as the firm was 'currently out of pocket'.

Mr K paid half of this but was shocked to receive, in August 1999, a solicitors' bill for 1,537.53.

Mr K complained to the Office for the Supervision of Solicitors (OSS) that, while he owed about 60 to the solicitors, they were still trying to recover the full balance of their bill and had threatened to sue him.

Following an investigation by the OSS, the complaint was considered by an adjudicator.

He decided that the solicitors had provided Mr K with an inadequate professional service because they had not given him any costs information for two years; had failed to advise Mr K that he wouldn't be able to recover his own legal costs because the proceedings were subject to the small claims procedure; and that the solicitors had failed to carry out any risk analysis.

The adjudicator directed the solicitors to pay compensation of 150, for Mr K's distress on receiving the bill; and that the solicitors' bill be reduced to 500 plus VAT and disbursements (in line with the solicitors' proposals for settlement).

Following an unsuccessful appeal, Mr K complained to the ombudsman.

The ombudsman shared Mr K's confusion about whether he still owed money to the solicitors.

She said that it was clear that the solicitors failed to provide costs information at any stage of the retainer and did not deliver a final account until well after the retainer had ended.

While the ombudsman was satisfied that the award of 150 compensation was reasonable, she found that, in spite of the OSS's investigation, there was considerable doubt as to how much money was still owed to the solicitors.

The only disbursements notified to Mr K were the court and enquiry agents' fees - which the ombudsman calculated as being 146.98.

Yet the solicitors said that these fees totalled 126.98.

Then, in the one and only bill of costs dated July 1999, these disbursements had grown to 240 and by May 2000 to 278.11.

The ombudsman recommended that the OSS reconsider the complaint in order to establish the precise basis of the solicitors' charges.

Only when this was done could a proper assessment be made as to whether the solicitors' settlement proposals were reasonable.

Losing interest

Mr C instructed solicitors to apply for residence orders in respect of his two children.

The application was unsuccessful.

Mr C complained to the OSS that the solicitors' bill exceeded their estimate by 1,105 or 43%.

He also complained about the way the solicitors had conducted the litigation.

After a lengthy investigation, the OSS referred the complaint to an adjudicator.

He found that the solicitors' service had been inadequate, in that they had failed to provide Mr C with adequate costs information, that they had exceeded their original costs estimate and that, in consequence, the solicitors were in breach of rule 15.

The adjudicator directed compensation to Mr C of 300.

Subsequently, the solicitors wrote to Mr C to say that they would deduct the compensation from their unpaid bill.

The ombudsman shared some of Mr C's concerns about the OSS investigation.

In particular, she decided that the OSS should have done more to establish the extent of Mr C's alleged monetary loss which he continued to claim was a direct result of the solicitors' poor service.

She was also distinctly unimpressed by the solicitors' demands for continuing interest on their bill - the calculation of which included the 21 months delay by the OSS.

The ombudsman recommended that the OSS reconsider.