It is an inevitable consequence of the reduced bread-and-butter work for costs negotiators in personal injury cases that they will be looking for new areas of business. As reprehensible as it may be, I fear the next growth industry for costs disputes will be between solicitor and client.
There are already more than a few rather tasteless websites courting business from solicitors’ clients which encourage clients to dispute their bills. The incentive for the costs negotiator is that there are easy fees to be quickly earned. This is a largely untapped market. Costs lawyers frequently see files where clients might have grounds for disputing the fees charged to them. Sadly, all too often solicitors do themselves no favours with client care and in dealing with solicitor and client costs.
The changes to the law regarding recovery of success fees coupled with the reduced areas of legal aid are likely to fuel more disputes. Think back to the between-the-parties disputes concerning the enforceability of conditional fee agreements (CFAs) executed before November 2005 and substitute ‘solicitor and client disputes’. In this and my next article, I will address some of the areas where your costs may be challenged and give guidance on how to avoid those challenges being sustained.
The starting point to costs recovery is the retainer. In the absence of an enforceable retainer, there is no right to costs recovery. It is essential that the written agreement is watertight and is reviewed regularly to ensure it continues to reflect the entitlement to full costs recovery. Where there is a dispute as to the terms of the contract of retainer, the evidence of the client is given greater weight.
Sometimes too little regard is given to ascertain who the client is. Two common examples are solicitors acting for a litigation friend where the child attains majority, and where an undischarged bankrupt is provided with legal services without the sanction of the trustee.
Identifying and explaining the fee-earners who will work on the client’s case is important. First, it builds a relationship between the client and those fee-earners. Second, and most important, it removes the right to a challenge by the client in circumstances where he may have been given incorrect information as to the status of the fee-earner who was going to work on his case. In one case where a client asked for an appointment to see a solicitor about a family matter and was referred to a legal executive, it was held that the contract was one to provide legal services by a solicitor. The firm did not perform that contract at all and consequently they were not entitled to recover their charges. Third, it is important where there is to be the involvement of more than one fee-earner working on the case – this in most instances would be an unusual expense (see below).
Notwithstanding guidance from case law on costs estimates and reported sanctions imposed by the Legal Ombudsman arising from inadequate costs estimates, there are many firms who still fail to address this subject adequately. Costs estimating and costs reviewing is hugely important and cannot be delegated to inexperienced staff.
Dealing with CFAs has an added responsibility now given the fact that the client in most cases will pay the success fee. The reduced scope for between-the-parties technical challenges since November 2005 has encouraged a degree of slackness by solicitors. Much greater care is required now. A client is inevitably going to challenge costs recovery if means of alternative funding were inadequately investigated.
Murray Heining is chairman of the Association of Costs Lawyers