Costs News

27 January 2021
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Dozens of bills over eight years were not interim statute bills

Dozens of bills totalling £930,000 over nearly eight years were not interim statute bills and were open for assessment, a costs judge has ruled.

Master Rowley (pictured) said that, to make it plain to a client that he is receiving an interim statute bill, the information given at the outset needs to be clear that there are time limits and provide some indication of what those time limits are.

“The idea that several months, or, in this case, years after the engagement letter and terms and conditions were provided, the client ought to be alive to the fact that he has an entitlement under the Solicitors Act if he challenges bills promptly, seems to me to be far-fetched. There is no mention of the Solicitors Act on the invoices even to prompt such a recollection.”

In Masters v Charles Fussell & Co LLP [2021] EWHC B1 (Costs), the claimant instructed the defendant firm in respect of three litigation matters. There were three distinct periods during the retainer – the first, from February 2012 to December 2012 when he was paying privately; the second, from January 2013 to March 2018, under a discounted conditional fee agreement (CFA); and the third, from January 2018 until the defendant was disinstructed in late 2019, which was back to privately paying.

With the client wishing to challenge the bills, Master Rowley was asked to rule as a preliminary issue on whether they were interim statute bills, on-account bills forming a Chamberlain bill, or neither.

Looking at the first retainer, he had “no doubt” that the law firm intended them to be interim statute bills so that it could, if necessary, sue for non-payment.

“The terms of the invoices themselves seem to me to be clearly an attempt to produce a self-contained bill for the period involved and there is a detailed list of the activities carried out during that period and the overall time taken. I accept [the defendant’s] submission that the bills would be assessable under the Solicitors Act.

“However, I consider that the defendant's argument runs aground when contemplating the practical difficulty of the client bringing a challenge whilst litigation is continuing…

“The difficulty in a client suing his solicitor while still instructing him is immediately apparent and does not really require High Court authority. It is often prayed in aid as a special circumstance when the challenge is outside the initial month.

“It seems to me to be self-evident that most clients would expect any issues with costs of this sort to be dealt with either by communicating with the solicitor to resolve perceived problems or at the end of the case when the inevitable conflict between solicitor and client would be less problematic.”

This was why the law firm needed to be clear about the status of the bills and the time limit for seeking assessment.

“Consequently, in my view, although the solicitors intended the bills to be interim statute bills, they cannot be treated as such so as to preclude the client from an opportunity to challenge those costs. Consequently, they are akin to requests for payments on account albeit that I appreciate entirely that this is not the intended nature of the invoices that have been rendered for the payments made to date.”

On the second retainer, the judge found nothing in the terms of the CFA which might give the solicitors any entitlement to render interim statute bills. While the original retainer had not in some way subsisted so as to re-emerge after the CFA ended, the judge held, there was nothing in the agreement for the third retainer to allow for interim statute bills.

Master Rowley found “no reason in principle why the Chamberlain approach” should not apply in these circumstances, however. “The last invoice was dated 31 October 2019 and these proceedings were commenced on 29 November 2019. On the basis that proceedings were commenced within a month of the last invoice then, in line with Chamberlain, the client is entitled to have the solicitors' invoices assessed.”

He said there was no need for an order for delivery up of a final statute bill because the 31 October invoice “will serve perfectly adequately for that purpose”.

This meant the claimant did not have to show any special circumstances to challenge the bills, but the master added that, if he were wrong on this, then he would have exercised his discretion to extend time in any event.

While the size of the bills rendered may not amount to a special circumstance in itself, he said, it was a relevant factor.

Master Rowley said: “The admitted lack of estimates seems to me to be magnified by the prism of the size of the overall invoices rendered in this case. The scope for the sum that it is reasonable for the client to pay to be at variance to the invoices rendered is increased by that size.

“Furthermore, the obvious difficulty in clients bringing proceedings on a monthly basis against their solicitors in order to protect their Solicitors Act rights regarding assessment is always a powerful argument in respect of special circumstances. That is particularly so where the overall sums claimed are large. It is these factors which, to my mind, demonstrate that special circumstances exist to have invoices which are caught by section 70(3) assessed.”

Robin Dunne (instructed by Clear Legal) for the claimant. Anthony Jones (instructed by Charles Fussell & Co) for the defendant.

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