Preparing for your first solicitor and client detailed assessment (contentious business) – Part 2

In Part 2 of our guide to solicitor and client detailed assessment we examine the differences between interim on account bills and interim statutory bills, as well as procedure, and the special presumptions that apply on an assessment under the Solicitors Act 1974.

Unless a solicitor can show that he was entitled to, and has, properly delivered a signed, complete, self-contained ‘statutory’ bill setting out a final figure for the period covered by that bill, he cannot sue for his fees in the event of non-payment. For it to be enforceable the solicitor’s bill for contentious business must be delivered in accordance with SA section 69, having been prepared in accordance with the requirements of SA section 64. Bills that meet these requirements trigger the client’s statutory entitlement to seek an assessment under SA section 70 (bills of this type are often referred to as ‘statute’ or ‘statutory’ bills, and although they are final and self-contained, bills sent periodically are often referred to as ‘interim statute’ or ‘interim statutory’ bills). Solicitors Act (‘SA’) assessments very often begin with a dispute about the nature of the ‘bills’ delivered; the solicitor asserting a right to enforce on unpaid bills (and often asserting that the client is out of time for putting in a challenge), and the client arguing that the solicitor has not yet delivered any final statutory bills capable of enforcement or (even) assessment. It is not unusual for solicitors to institute enforcement proceedings only to find (often at great cost) that (a) they were not entitled to deliver interim statutory bills at all, or (and more commonly) (b) the putative interim statutory bills are defective.

The right to deliver an interim statutory bill

It is trite to say that before a solicitor can deliver a statutory bill (interim or otherwise), he must be entitled to do so; but it is important to note that at common law the solicitor’s retainer is a complete, indivisible contract – historically there was no entitlement to payment until the contract had been completed or terminated. The position now however, is that a solicitor may deliver a statutory bill in four different situations, namely:(a) once all the work covered by the contract of retainer has been completed, or(b) on termination of the retainer, or(c) at a ‘natural break’ in protracted litigation (where each bill covers a separate and distinct part of the case), or(d) where there is an express agreement with the client to deliver interim statutory bills as the matter progresses.Thus, there are only two situations in which a solicitor can deliver an interim statutory bill – either by agreement or where there is a natural break (this was confirmed recently by the court in Bari v Rosen [2012] Costs LR 851). Delivery of an interim statutory bill at a ‘natural break’ in proceedings is relatively rare. In the event of non-payment, the solicitor is unlikely to be able to sue on unpaid interim bills unless he can to rely on the terms of the retainer under which the interim bills were delivered. The principles that inform the enquiry as to whether bills delivered by a solicitor are statutory bills were summarised by Spencer J in Bari v Rosen:‘15…a solicitor may contract with his client for the right to issue statute bills from time to time during the currency of the retainer. Such bills are known as “interim statute bills”. There are nevertheless final bills in respect of the work they cover, in that there can be no subsequent adjustment in the light of the outcome of the business. They are complete self-contained bills of costs to date.’‘17. Even if there was a contractual right to issue interim statute bills, it would be a question of fact whether any individual bill issued to the client was a statute bill. If there was no contractual entitlement to issue an interim statute bill, any interim bill issued could be no more than a request for a payment on account.

Form

Whether a solicitor’s invoice can be properly regarded as an interim (or final) statutory bill is a question of construction. The SA 1974 is silent as to the form of a bill for non-contentious work. Section 64 provides that the bill can either be a bill containing detailed items or a gross sum bill. However, the authorities make it clear that the bill must be sufficiently detailed to enable the client to judge the reasonableness of the charges. The Court of Appeal addressed the test for determining whether a bill qualifies as a statutory bill in Ralph Hume Garry (a firm) v Gwillim [2002] EWCA Civ 1500. In order to discharge the burden of proving that a bill does not so qualify the client needs to show (a) that there is insufficient narrative in the bill to enable him to identify what he has been charged for, and (b) that he does not have sufficient knowledge from other documents in his possession or from what he has been told, reasonably to take advice as to whether or not to apply for assessment.In addition, the bill must be a complete self-contained account of all costs incurred in the period covered by it. Thus, bills delivered pursuant to a retainer that provided for monthly final fee bills, but with separate later bills for disbursements (a very common billing practice), do not amount to interim statute bills – Richard Slade and Company Solicitors v Mr and Mrs Boodia [2017] EWHC 2699 (QB).

Basis of assessment and presumptions

Solicitors Act assessments are carried out on the indemnity basis. However, it is important to note the modifications made by CPR 46.9 (3):‘(3) Subject to paragraph (2), costs are to be assessed on the indemnity basis but are to be presumed –(a) to have been reasonably incurred if they were incurred with the express or implied approval of the client;(b) to be reasonable in amount if their amount was expressly or impliedly approved by the client;(c) to have been unreasonably incurred if –(i) they are of an unusual nature or amount; and(ii) the solicitor did not tell the client that as a result the costs might not be recovered from the other party.’It is extremely important that solicitors should keep CPR 46.9 (3) (c) in mind. Unusual expenditure that might not be recovered on an inter partes detailed assessment must always be discussed with the client in advance. Examples of unusual charges falling within the ambit of this provision include non-standard charge out units (10 minutes or more as opposed to the usual 6), as well as charges for administrative work, such as the preparation of solicitor – client bills, normally considered to be non-chargeable – Breyer Group Plc & Ors v Prospect Law (SCCO 26 July 2017).

Procedure

The procedure for obtaining assessment is set out in CPR Part 67. An application for assessment of costs relating to contentious business carried out in the County Court and falling within the financial limits of the County Court, can be made in the County Court. In all other cases the application is made in the High Court and by way of a Part 8 claim form; unless the claim is made in existing proceedings, in which case the claim can be made by way of a Part 23 application notice.As many applications for assessment are made out of time, or involve a dispute as to whether or not the solicitor has delivered a statutory bill(s), the assessment proceedings tend to divide into two stages – a shorter hearing to determine the applicant’s entitlement to an order for assessment (and sometimes to deal with the client’s application requiring delivery up of a statutory bill), followed by the main assessment proceedings. If the court is satisfied that an order for assessment should be made under the SA, that determination will normally be followed by standard directions (set out in CPR Part 46.10). The solicitor is normally required to serve a breakdown of the bill(s) within 28 days. The client will normally be required to serve points of dispute within 14 days, with the replies to points of dispute (which are obligatory) to be served within 14 days of receipt of the objections. Either party can then file a request for the assessment hearing and that should happen within three months of the date of the order for the costs to be assessed.

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Michael Heslin

Director & Senior Legal Costs Consultant

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