Preparing for your first solicitor and client detailed assessment – Part 1
Routes to challenging bills for contentious business
The route to assessment (where available) will depend firstly on the nature of the retainer agreement. A distinction must be made between ordinary non-statutory retainers – by far the more common, and ‘contentious business agreements’ (CBA) – which are statutory creations that our governed by the requirements of the Solicitors Act 1974, sections 59 to 66.
Contentious business agreements
A solicitor is not entitled to bring an action for unpaid fees on a CBA and bills delivered pursuant to a CBA cannot be subject to detailed assessment, except – to a limited degree - in cases where the CBA provides for the solicitor to be remunerated by reference to an hourly rate. Where there is a dispute, it is for a party to the CBA to apply to the court to have the agreement enforced, or set aside, as the case may be.
If the court takes the view that in all respects the CBA is fair and reasonable it will enforce it and the full amount will be payable. However, if the court is of the view that the agreement is in any respect unfair or unreasonable it may set it aside and order that the costs are subject to assessment as if the CBA had never existed.
The one exception is that in cases where the solicitors are remunerated by reference to an hourly rate it is open to the client to object to the costs without otherwise asserting that the agreement is unfair or unreasonable. In those cases, the court may carry out a limited form of assessment, enquiring into the number of hours worked by the solicitors and whether the number of hours worked was excessive.
The time limits – ordinary retainers
Firstly, it is worth noting the provisions of the Solicitors Act 1974, section 69. No action can be brought to recover unpaid costs until one month from delivery of the solicitor’s bill (save in some exceptional circumstances including the client’s imminent bankruptcy or flight from the jurisdiction – see section 69 (1)). A bill must be signed or enclosed in a signed letter (sections 2A and 2C), and it must be properly delivered to the party chargeable (sections 2C and 2D).
It is also worth noting that before any action can be brought to recover unpaid fees and indeed before any assessment can be ordered the 'bill' in issue must be a final ‘statutory’ bill and not merely a request for an interim payment on account. It is often difficult to distinguish between the two and many solicitor and client detailed assessment proceedings involve a preliminary hearing to determine the nature of the solicitor’s bill(s). It is not unusual to find that the solicitor has (unintentionally) failed to deliver proper ’statutory’ bills that are susceptible of enforcement or assessment.*
• The client is entitled to an assessment as of right and without the requirement to pay any sum into court, provided that the application for assessment is made within one month of delivery (section 70 (1)) of the statutory bill.
• If the application for assessment is made later than a month from delivery of the bill in issue, then the court may order an assessment, but on such terms as it thinks fit (other than in relation to the costs of the assessment proceedings) (section 70 (2)). In this scenario the client may be required to make a payment into court or on account.
• However, if the application is made after 12 months from delivery of the bill, or after the solicitor has obtained a judgement for the recovery of the costs covered by the bill, or after the bill has been paid but before a further 12 months has elapsed, then the court will only order an assessment if there are ‘special circumstances’ (section 70 (3)). In this scenario the court may require the client to provide security or make a payment into court, and it may also make an order in relation to the costs of the assessment itself.
The court has no power to order a statutory assessment if the application is made by the party chargeable and 12 months after payment (section 70 (4)).
Many applications for a solicitor and own client assessments are made in relation to bills that are more than one month old. Where the client does not have to show special circumstances leave to assess is normally given on terms that may include a payment on account or into court.
Where the client must demonstrate special circumstances, the threshold is relatively high (although the court has found that special means out of the ordinary rather than exceptional). There is no single test and the client does not need to get home on any one issue; but rather the judge will assess all relevant circumstances in aggregate.
Examples of special circumstances include obvious significant overcharging, a failure to keep within an estimate, personal difficulties that prevented the client from applying on-time, and a failure to advise the client of his right to request an assessment. The court has also taken into account the difficulties that a client faces when the solicitor delivers a series of interim statutory bills – and the fact that it is impractical for the client to seek an assessment of each bill as it is delivered.
When the court makes an order for assessment it will also make an order that no action should be commenced on the bill (or that any action in progress should be stayed) until the assessment proceedings have completed.
*In Part 2 of our guide to solicitor and client detailed assessment we examined the differences between interim on account bills and statutory bills.