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

Costs and benefits of litigation

Most solicitors recognise the importance of giving their clients a realistic assessment of their own firm's likely costs.

However, they do not always alert their clients that they may become liable for the other side's costs should they abandon or lose the litigation, or indicate what those are likely to be.

While it is often difficult to estimate the other side's costs, it is not impossible to produce a rough indication.

Clients whose bills come as a shock are quite prepared to complain.

Such complaints are sometimes justified, as the two examples from this month's casebook show.

A work of fiction?

P instructed D to bring negligence proceedings against her former legal team.

D's retainer lasted six-and-a-half years, and cost P more than 60,000.

Her case was unsuccessful, and she was ordered to pay the other side's costs, which were almost 40,000.

She described D's bill as a 'fabrication', claiming that he had dishonestly charged for work that he had not done.

She also said that if D had handled the matter more competently, the other side's costs would not have been as high as they were.

The Office for the Supervision of Solicitors (OSS) said it could not pursue the matter, because the other side's costs had already been assessed by the court and it was open to her to apply to the court to have D's bill assessed.

D was not satisfied with this outcome.

She said D had failed to advise her about assessment.

This meant that not only had she failed to realise that she could challenge the other side's costs, but also her time limit for applying to the court for assessment of D's bill had expired.

There was nothing that the OSS, or the ombudsman could do about P's missed opportunities to apply for and challenge assessment.

Nonetheless, the OSS could have investigated P's allegation that D had fabricated parts of his bill (since this, if proved, would amount to misconduct).

The OSS could also have considered whether P had been given adequate costs/benefits information as her case progressed, and whether D had advised her of her right to challenge the other side's costs, and to apply to the court to have his own bill assessed.

Therefore, the ombudsman recommended that the OSS reconsider the complaint.

No-win, but not free

H instructed F to act for her in a potential personal injury claim against her former employer.

She was adamant from the outset that she did not want to incur any costs.

F told her that he would act on a no-win, no-fee basis, and that he would obtain on her behalf legal costs insurance to cover the other side's costs in the event that her claim was unsuccessful.

Unfortunately, F was unable to find a company prepared to provide the insurance.

In the meantime, the other side successfully applied to have H's case struck out.

H ended up having to pay the other side's costs, which were almost 2,000.

She also had to pay around 1,000 in disbursements.

The ombudsman noted that F had been very forthcoming about the potential benefits of H's case, but less so about the potential costs.

She recommended that the OSS reconsider the matter, and evaluate whether F had been realistic when he told his client that, because he would act on a no-win, no-fee basis, she would not incur any costs.