A Case Where a Client Challenges a Solicitors Bill of Costs
Where a client challenges a solicitors bill under the Solicitors Act 1974 (SA 1974) the statutory one-fifth rule under section 70(9) trumps a Part 36 offer to settle so says the case of Zuhri v Vardags Ltd which clarifies that Part 36 offers and their consequences do not apply to the assessment process outlined in the SA 1974. The ruling emphasises that the statutory one-fifth rule which governs the liability for the costs of assessment, remains paramount and cannot be overridden by Part 36 offers.
This decision is significant as it provides clear guidance that the SA 1974 like a Part 36 offer has its own self-contained code for the assessment of solicitors’ bills that cannot be bypassed or modified through the strategic use of Part 36 offers.
While Part 36 offers may influence the outcome in related Part 7 proceedings that have been stayed for a SA 1974 assessment, they do not directly affect the assessment’s cost consequences under SA 1974.
Client’s Challenge to a Solicitor’s Bill of Costs
The claimant (the Client of the solicitor) sought an order under Section 70 of the Solicitors Act 1974 via CPR 8 to review her defendant solicitors’ bills of costs. The solicitors had paused their CPR 7 fee recovery action pending this review. Intending to resolve through alternative dispute resolution, the defendant solicitor later made a Part 36 offer covering both legal actions, implying cost consequences for the client, the claimant, if not accepted and the defendant’s offer was surpassed.
The claimant did not engage with the assessment process, and in her absence, the bill was nearly fully upheld. The solicitor argued that by exceeding their Part 36 offer, they were entitled to both the assessment costs and the additional benefits of a successful Part 36 offer. The solicitor however could not take advantage of the benefiting rules of CPR Part 36 due to the statutory provision under the one-fifth rule.
The court’s decision confirmed that a SA 1974 assessment is distinct from a ‘detailed assessment’ under CPR 44.1, and that the specific rules and procedures outlined in Part 36 of the CPR are not applicable to such assessments. The judgment also addressed the practical challenge of applying Part 36’s claimant-defendant paradigm to the context of SA 1974 assessments, further supporting the conclusion that Part 36 offers do not apply.
However, the court acknowledged that, under different circumstances, a Part 36 offer might constitute ‘special circumstances’ that could potentially influence the application of the one-fifth rule or be relevant in resumed CPR 7 proceedings.
Establishing the One-Fifth Rule When a Bill of Costs is Challenged
In the case of Bentine v Bentine [2013] EWHC 3098 (Ch), it was established that there are special circumstances by which the court can dis-apply the one-fifth rule under the Solicitors Act 1974. One important circumstance is that a solicitor should not be able to include in the bill of costs that fall outside the professional retainer.
Mrs Justice Proudman explained that the rule in section 70(9) of the 1974 Act does not allow a solicitor free rein with their bills. A solicitor cannot benefit from including improper charges that fall outside the retainer that should not have been claimed in the first place. The court will most likely examine the retainer and solicitor’s file, including advice on costs, when reaching a decision. It is imperative that the solicitor keeps a well-ordered file along with contemporaneous attendance notes.
Thus in the Bentine case, despite reversing a prior ruling in Re a Solicitor, the appeal failed, the solicitor cannot benefit from including improper charges in the bill to defeat the one-fifth rule.
Note that CPR 47.20 is a rule from the Civil Procedure Rules (CPR) that applies to detailed assessments between parties to litigation, as conducted under CPR 47. This rule was introduced as part of the 2013 reforms and extends the provisions of Part 36 offers to detailed assessments between parties to litigation. However, CPR 47.20 does not apply to Solicitors Act assessments between solicitors and their clients, as conducted under CPR 46.9 and 46.10, because it is not possible to reconcile the provisions of CPR 36 with subsections 70(9) and 70(10) of the Solicitors Act 1974
Procedure for Challenging a Solicitor’s Bill of Costs
The Court of Appeal’s recent ruling in Belsner v CAM Legal brings to light the pressing issues surrounding court challenges to solicitors’ deductions from damages and the need for an overhaul in bill assessment practices. Sir Geoffrey Vos, the Master of the Rolls, highlighted the problematic nature of the current system, noting the inefficiency of allowing cases of this kind to initiate costly High Court actions for the examination of relatively small solicitors’ bills. He suggested that the Legal Ombudsman scheme would offer a more cost-effective and efficient alternative for disputing solicitors’ fees. Sir Geoffrey also emphasised the urgent need for a comprehensive review and significant reforms in the court’s approach to assessing solicitors’ bills, critiquing the illogical separation between contentious and non-contentious matters.
On the basis that the challenge to the Solicitors Bill of costs are more than a small sum a client may challenge their solicitors bill under Section 70 of the Solicitors Act 1974 via CPR Part 8.
Former Client Lost £267,750 When Challenging Deductions of £321
Such claims should not be taken lightly however as in the case of Belsner the challenging client who wanted to recover the £321 deducted from her compensation for her solicitor’s success fee lost and had to pay a substantial sum of £267,750 in adverse costs. But Belsner was run on highly technical grounds which most clients would no longer run bearing in mind the amounts involved.
But providing there are reasonable grounds despite Belsner to challenge a solicitor’s bill of costs the following steps are note.
Under Section 70 of the Solicitors Act 1974, a client has the right to apply to the court for an assessment of the solicitor’s bill (a detailed assessment) if the client considers the bill to be excessive.
Time Periods to Challenge the Solicitor Bill
A client must challenge the bill:
• Within One Month: You can challenge the bill without needing to show cause.
• After One Month to 12 Months: You need to show “special circumstances” why you didn’t challenge the bill.
• After 12 Months: It’s generally not possible to challenge the bill unless it has not been paid yet.
But what are the special circumstances to challenge a solicitors bill of costs?
If a client wants to challenge a solicitors bill after one month from delivery there appears to be no express provision in the Solicitor Act 1974 that must be taken into account, but the following may be of use:
1. Lack of Information or Understanding
2. Misleading Conduct
3. Illness or Incapacity
4. Complexity of the Bill
5. Dispute Over the Quality of Services
6. Ongoing Negotiations
7. Delay in Receiving the Bill
8. Exceptional Circumstances
It’s important for clients to note that simply disagreeing with the amount charged or facing financial difficulty in paying the bill are not considered “special circumstances.” The onus is on the client to provide evidence supporting their claim of special circumstances, and the court will assess this evidence to determine whether it is just and reasonable to allow a late challenge to the solicitor’s bill.
