Assessment of solicitors’ costs – Essential case examples

This article is essential reading for any client considering an application for an assessment of solicitors’ costs. In it we provide a summarised account of the most important court decisions in this area, each of which offers its own insight and guidance on the assessment process.

Where an application for an assessment of solicitors’ costs is made by a client it is commonly referred to as an assessment of solicitor/client costs. This process is to be distinguished from an application for an assessment of costs by an opposing party in litigation, which is often referred to as an assessment of party/party costs (historically known as inter partes costs). Although similarities exist between the two, different rules and procedures apply.

The right to seek an assessment of solicitors’ costs

The entitlement that any client has to an assessment of solicitors’ costs is governed by the type of contract (also known as a retainer) that they have entered into with the solicitor.

Most commonly, solicitors are engaged by their clients under simple contractual or common law retainers. However, on other occasions solicitors may be engaged under either a non-contentious business agreement or a contentious business agreement. While these forms of agreements are specific to the type of business being transacted, simple retainers can be used for any types of business, including contentious and non-contentious business.

In this article, we concentrate on the rights available to clients who have entered into a simple retainer.

The legal provisions that govern an assessment of solicitors’ costs

Before considering case examples of solicitor/client assessments, it is important to have some knowledge of the law on which those cases have been decided and we set this out below. This should not only aid understanding, but also provide a convenient point of reference.

Before considering case examples of solicitor/client assessments, it is important to have some knowledge of the law on which those cases have been decided and we set this out below. This should not only aid understanding, but also provide a convenient point of reference.

The statutory provisions governing an assessment of solicitors’ costs in the present context can be found in Part III of the Solicitors Act 1974. The key provisions are those contained within sections 70 and 74.

Section 70 sets out various time limits within which a client may apply for an assessment and these are explained in our related article: Disputing Solicitors Fees: A Clients’ Guide

However, in essence, section 70 provides that:

‘(1) Where before the expiration of one month from the delivery of a solicitor’s bill an application is made by the party chargeable with the bill, the High Court shall, without requiring any sum to be paid into court, order that the bill be assessed and that no action be commenced on the bill until the assessment is complete.

(2)  Where no such application is made before the expiration of the period mentioned in subsection (1), then, on an application being made by the solicitor or, subject to subsections (3) and (4), by the party chargeable with the bill, the court may on such terms, if any, as it thinks fit…order: (a) that the bill be assessed; and (b) that no action be commenced on the bill, and that any action already commenced be stayed, until the assessment is completed.

……

(4)  The power to order taxation conferred by subsection (2) shall not be exercisable on an application made by the party chargeable with the bill after the expiration of 12 months from the payment of the bill.

In addition, section 74(3) provides that:

‘The amount which may be allowed on the assessment of any costs or bill of costs in respect of any item relating to proceedings in the county court shall not, except in so far as rules of court may otherwise provide, exceed the amount which could have been allowed in respect of that item as between party and party in those proceedings, having regard to the nature of the proceedings and the amount of the claim and of any counterclaim.’

Here the ‘rules of court’ referred to are the provisions contained within the Civil Procedure Rules (commonly abbreviated to ‘CPR’) and Part 46.9 in particular. This prescribes the basis of detailed assessment of solicitor and client costs and, in truncated form, states that:

(1) This rule applies to every assessment of a solicitor’s bill to a client except a bill which is to be paid out of the Community Legal Service Fund…or by the Lord Chancellor…

(2) Section 74(3) of the Solicitors Act 1974 applies unless the solicitor and client have entered into a written agreement which expressly permits payment to the solicitor of an amount of costs greater than that which the client could have recovered from another party to the proceedings.

(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.

(4) Where the court is considering a percentage increase on the application of the client, the court will have regard to all the relevant factors as they reasonably appeared to the solicitor or counsel when the conditional fee agreement was entered into or varied.

These provisions are supplemented by paragraph 6 of Practice Direction 46 of the CPR which, amongst other matters, provides that:

(6.1) A client and solicitor may agree whatever terms they consider appropriate about the payment of the solicitor’s charges. If, however, the costs are of an unusual nature, either in amount or the type of costs incurred, those costs will be presumed to have been unreasonably incurred unless the solicitor satisfies the court that the client was informed that they were unusual and that they might not be allowed on an assessment of costs between the parties. That information must have been given to the client before the costs were incurred.

(6.2) Costs as between a solicitor and client are assessed on the indemnity basis. The presumptions in rule 46.9(3) are rebuttable.

The assessment in practice - case examples

In any given year the courts are required to process numerous applications for an assessment of solicitors’ costs. However, each of the case examples that we have summarised below arises from an application which has, in our view, given rise to a decision of both general and practical significance. As will be observed, in some of these cases the client was successful, in others the solicitors.

Turner & Co v O Palomo SA (1999)

In this case the court had to decide whether or not the client was prohibited from seeking any assessment of solicitors’ costs more than 12 months after paying the solicitors’ invoices and therefore, outside the statutory time limit stipulated by section 70(4) of the Solicitors Act 1974.

Background

The client, Palomo SA, was a commodity trader based in Madrid, who had instructed the solicitors to act for it in connection with a number of commercial arbitration disputes.

On 26 November 1998 the client issued an originating summons, seeking an assessment of six invoices previously raised by the solicitors. Of these invoices, five of them had been paid more than 12 months prior to the summons and so outside the 12-month time limit set by section 70(4) of the Solicitors Act 1974. On appeal, and on this basis, Mr Justice Buckley ordered that these five bills could not be assessed. Dissatisfied with this decision, the client appealed.

Meanwhile, the solicitors issued proceedings against the client seeking payment of approximately £67,000 in unpaid fees. Although the solicitors were initially successful before Master Rose in obtaining judgment against the client for £48,006.89, that judgment was subsequently overturned on appeal by Mr Justice Tugendhat QC. This was on the grounds that the court only had the power to grant judgment on liability (which was not disputed) and to order the amount of costs due to be assessed. Dissatisfied with this decision, the solicitors also appealed.

Considerations

In determining both appeals, and amongst other matters, the Court of Appeal observed that:

  • Section 70 of the Solicitors Act 1974 did not expressly state that the client forfeits his common law right to object to paying more than a reasonable sum for the solicitor’s services, if he does not avail himself of the statutory procedures;
  • There were a number of Court of Appeal authorities which supported the proposition that a client who is sued by his solicitor for the amount of his charges is entitled to challenge the reasonableness of the sum claimed, notwithstanding that the period during which he may apply for an order for assessment of solicitors’ costs under (what is now) section 70 of the Solicitors Act 1974 has expired;
  • The solicitor is not disadvantaged by the possibility that the client is entitled to have the reasonableness of the charges assessed by the court after the statutory periods for assessment have expired;
  • The solicitor’s claim is for a reasonable sum (whether by statute or at common law) and not for a liquidated sum and the burden of proving that the sum is reasonable rests upon him;
  • The assertion that a counterclaim is necessary, where an hourly rate is agreed, is contrary to the basic rule that the solicitor is entitled to claim no more than reasonable remuneration for the work that he was retained to do;
  • Although section 65(2) of the Solicitors Act 1974 entitled the solicitor who conducts contentious business to request a payment on account, that did not constitute a bill for the purposes of the assessment procedure under section 70 of the same Act;
  • The five bills in question each stated that they were ‘On account of charges and disbursements incurred or to be incurred’ and did not contain any VAT reference;
  • The five bills could be contrasted with other statutory bills, which stated that they were ‘To charges for professional services’ and were accompanied by a VAT reference.

Decision

Dismissing the solicitors’ appeal and allowing the client’s appeal, the court therefore concluded that the client was not precluded from challenging the reasonableness of the outstanding fees claimed by the solicitors and was not precluded from seeking an assessment of solicitors’ costs in respect of the five bills.

Breyer Group plc and others v Prospect Law Ltd (2017)

In this assessment of solicitors’ costs, the court had to determine a number of preliminary issues. These included whether the solicitors were entitled to charge for routine correspondence, how the solicitors’ costs should be valued for the purposes of determining who had won the assessment and whether the solicitors’ costs should be capped in line with the estimates they had given to the client.

Background

Fifteen clients, of which Breyer Group plc was one, had instructed the defendant firm of solicitors to pursue damages claims against the Department of Energy and Climate Change.

Ultimately the clients took issue with the nature and amount of the charges that had been made and raised eight preliminary issues for the court to decide.

Considerations

In determining seven of the preliminary issues, and amongst other matters, Master Rowley sitting in the Senior Court Costs Office commented that:

  • The solicitors’ practice of charging for routine communications at one sixth of an hour, rather than at one tenth of an hour, was extremely unusual in contentious business;
  • The general warning given by the solicitors about the recoverability of party/party costs in litigation did not sufficiently warn the clients that such a charge was unlikely to be recoverable from the opposing party and, therefore, fell foul of CPR Part 46.9(3)(c);
  • It was unrealistic, however, for a client to be given a specific warning before every instruction that an item of work may not be recoverable from the opposing party in litigation and CPR Part 46.9(3)(c) was not a method of importing all of the expectations of a standard basis party/party assessment into a solicitor/client assessment;
  • While the practice of charging for perusing routine incoming correspondence was not unusual and so did not necessitate a warning to the client before being incurred, the rate of one sixth of an hour applied by the solicitors was unusual and should be reduced to one twentieth an hour;
  • The costs incurred by the solicitors in gathering new clients to join the action as Claimants were authorised and were not unusual in nature or amount;
  • The costs incurred by the solicitors in preparing and providing client care letters were also not unusual in nature or amount;
  • While invoicing and credit control were generally administrative matters that should be covered by the solicitors’ overheads, where payment is delayed and the solicitor with conduct of the matter had to get involved, this cost may be recoverable from the client;
  • For the purposes of section 70(9) of the Solicitors Act 1974, and determining whether the client had been successful in reducing the solicitors’ costs by one fifth, the court would take as its starting point the discounted sum claimed in costs by the solicitors and not the higher aggregate sum of the costs the solicitors had incurred;
  • In determining whether or not the costs payable by the clients to the solicitors should be capped to any extent as a result of the cost estimates given by the solicitors, the court should firstly determine whether the clients did rely on the estimates and secondly, in what way and by how much the costs should be reduced by reason of its findings as to reliance.

Decision

Accordingly, the court held that while the clients had failed to establish not only that they had relied on the cost estimates provided by the solicitors, but also that the costs claimed were unreasonable having regard to those estimates, certain elements of the costs claimed were unreasonable and would be reduced on assessment.

Mr H TV Ltd v Archerfield Partners LLP (2019)

In this case the court had to determine whether the solicitors were entitled to rely on the presumption within CPR Part 46.9(3) that their costs were reasonable, in circumstances where the client alleged that it did not give informed consent or approval to the amount of the costs the solicitors had incurred.

Background

The client had entered into a settlement agreement with ITV2 as part of its underlying claim. This was on terms that ITV2 pay to it the settlement sum of £8.6 million inclusive of costs. The client subsequently issued Part 8 proceedings, seeking an assessment of solicitors’ costs of £3.6 million.

Considerations

In determining the preliminary issues, Master McCloud, sitting as a Deputy Costs Judge in the Senior Courts Costs Office, observed that:

  • This case turned less on the terms of the retainer and more on what occurred in terms of the client’s informed – or not informed – consent in relation to the agreement with ITV2, what it was that it consented to, and what the implications of that consent may be for the application of the presumptions in CPR Part 46.9;
  • The degree to which a client’s consent must be informed – i.e. the nature of the information to be provided to the client – must be fact sensitive;
  • This case represented a commonplace situation where negotiations take place which lead to a settlement in which a fixed sum of costs will also be paid to the client to discharge the defendant’s liability for costs;
  • Where the settlement sum fully discharges the client’s liability for own solicitors’ costs, the client must be informed of the proposed terms of settlement accurately and must understand and consent;
  • If he is so informed and consents, then the solicitors are entitled to proceed on that basis, and the client is consenting to the solicitors having in fact incurred those costs;
  • CPR Part 46.9(3) provides presumptions as to reasonableness which operate within a detailed assessment, but does not mean that a client is unable to seek an assessment of solicitors’ costs;
  • The ‘global’ settlement of £8.6 million had been clearly broken down and the client was well aware that £3.6 million had been allocated to costs, which meant that it would experience no shortfall in the recovery of its costs;
  • The fact that the settlement agreement did not itself provide a breakdown of the settlement sum did not prevent the court assessing what the parties understood it to reflect.

Decision

On this basis, the court concluded that the client had in fact given informed consent and that the presumptions in CPR Part 46.9(3) in favour of the solicitors did apply.

Frank Warren v Hill Dickinson LLP (2019)

In this case the court had to decide whether the solicitors were entitled to an interim payment of costs from the client, before an assessment of solicitors’ costs had actually taken place.

In this case the court had to decide whether the solicitors were entitled to an interim payment of costs from the client, before an assessment of solicitors’ costs had actually taken place.

Background

The client had secured an award of damages and costs in multi-million-pound claims against two defendants, who were unable to meet those awards and who subsequently became bankrupt. After receiving invoices from his solicitors totalling £922,890.33, the client then applied for an assessment of solicitors’ costs under section 70(1) of the Solicitors Act 1974.

In addition to ordering an assessment the court was required to determine a number of preliminary issues. In doing so, and amongst other matters, it found that:

  • The client had not, as he claimed, agreed with the solicitors that he would not have to pay for their work unless either it resulted in a “net gain” to him or he recovered costs from his opponents;
  • There was no substance in the client’s assertion that he was inadequately advised as to the content and effect of the Conditional Fee Arrangements (CFAs) that he had entered into with the solicitors;
  • The client’s motive in pursuing his underlying claims was not primarily the recovery of money;
  • The client gave full and informed consent to the transfer of the CFAs to his current solicitors.

Having filed a request for an assessment hearing, the solicitors also applied under CPR Part 47.16 for an interim costs certificate, requiring the client to pay to them the sum of £636,583.83 pending the outcome of the assessment. The client objected.

Considerations

In determining the solicitors’ application, the court observed that:

  • Section 70(1) of the Solicitors Act 1974 did not prohibit the issue of an interim costs certificate as part of an assessment of solicitor/client costs;
  • Parts I, V and VII of CPR Part 47 (and the corresponding parts of Practice Direction 47) apply to solicitor/client assessments except in so far as they are inconsistent with CPR Part 46 or Practice Direction 46 (or for that matter CPR Part 67 and Practice Direction 67) or with the primary statutory provisions governing solicitor/client assessments;
  • Paragraph 6.18 of Practice Direction 46 offers guidance as to the appropriate exercise of the court’s power under CPR Part 47.16, to make an interim award of costs to a receiving party, where it is evident that the receiving party is the client rather than (as would more usually be the case) the solicitor. Paragraph 6.8 of Practice Direction 46 also makes it clear that, as the heading to section III of CPR Part 47 indicates, the default provisions of that section are intended only to apply to assessments between opposing parties;
  • The client’s objection to the application having been made before the solicitors filed an application for a detailed assessment hearing did not raise any obstacle, as CPR Part 47.16 empowered the court to issue an interim costs certificate at any time after the receiving party’s request for a detailed assessment is made;
  • In addition to determining whether it was empowered by CPR Part 47.16 to issue an interim costs certificate, the court had to decide (i) whether it would be right for the client to make an interim payment; and (ii) if it would be right, what the amount should be.

Decision

In the circumstances of this case, and on the limited information available, the court concluded that it was entitled to order, and should order, the issue of an interim costs certificate in the sum of £350,000, which seemed much less than the amount that would be payable by the client to the solicitors on assessment.

Herbert v HH Law Ltd (2019)

In this case the court had to determine whether a success fee of 100%, which was capped at 25% of the damages awarded to the client, satisfied the requirements of CPR Part 46.9(3) or should be reduced.

Background

The client, Nicky Herbert, had been injured in a road traffic accident, when a bus struck the car that she was travelling in from behind. Proceedings were subsequently issued by her solicitors seeking damages for a whiplash injury and related loss.

In due course a settlement was reached, whereby the client received £3,400 plus costs to be assessed if not agreed. From these damages, and having incurred fees of £4,795.40, the solicitors deducted £691 plus VAT, totalling £829.20, in respect of their success fee.

The client subsequently issued proceeding pursuant to section 70 of the Solicitors Act 1974, seeking an assessment of solicitors’ costs. In response, the court ordered that this be limited to an assessment of the success fee charged.

At first instance, District Judge Bellamy held that the success fee should be reduced from 100% to 15%. His decision was then upheld by Mr Justice Soole on appeal. The solicitors further appealed.

Considerations

In giving the leading judgment in the Court of Appeal, Sir Terence Etherton MR observed that:

  • It was common ground that CPR Part 46.9(3) and (4) must be read together;
  • There was no longer any dispute between the parties regarding the application of CPR Part 46.9(3)(c), it being accepted that as the retainer made it clear that the success fee could not be recovered from the opposing party in the underlying claim, the condition in CPR Part 46.9(3)(c)(ii) was not satisfied;
  • It was accepted by the parties that the requirement of ‘approval’ from the client in CPR Part 46.9(3)(a) and (b) meant informed consent in the sense that the approval was given following a full and fair explanation to the client;
  • Where the client brings proceedings under section 70(1) of the Solicitors Act 1974, it is for the client to state the point of dispute and the grounds for it. If the solicitor wishes to rebut the challenge by relying on the presumptions in CPR Part 46.9(3)(a) or (b), the burden lies on the solicitor to show that the precondition of the presumptions, informed approval, is satisfied. Once the solicitor has adduced evidence to show that the client gave informed consent, the evidential burden will move to the client to show why, as a result of having been given insufficiently clear or accurate or comprehensive information by the solicitor or for some other reason, there was no consent or it was not informed consent. The overall burden of showing that informed consent was given remains on the solicitor;
  • In this country the fixing of a success fee in a conditional fee agreement had traditionally relied upon an assessment of the risk of the proceedings being lost and the wording of CPR Part 46.9(4) confirmed that a success fee was expected to be dependent upon risk;
  • The solicitors’ justification for charging a 100% success fee, capped at 25% of damages, relied not on any assessment of risk but on (i) the solicitors’ alleged need to cover overheads and maintain a reasonable level of profit; (ii) the fact that the same charging model had been adopted by many other personal injury solicitors; and (iii) the fact that it reflected the market rate;
  • While the imposition of a 25% cap was not unusual, and its practical effect may have been to reduce the success fee to an amount that was not in all the circumstances exorbitant, it was nevertheless the case that the starting point of a 100% uplift, irrespective of litigation risk, was unusual.

Decision

Accordingly, the Court of Appeal held that the presumptions contained within CPR Part 46.9(3)(a) and (b) did not apply and that the decision of the District Judge to reduce the success fee to 15% would stand.

Adam Newman v Gordon Dadds LLP (2020)

In this assessment of solicitors’ costs, the court had to determine as a preliminary issue whether the solicitors’ recoverable costs should be limited in amount to the fee estimate that they had given to the client at the outset of their retainer.

Background

The client, a director and shareholder in a family company, instructed the solicitors initially to advise and represent him with a view to resolving certain commercial operational issues through mediation. Within their retainer letter, the solicitors estimated that their charges would be £10,000 plus VAT and disbursements and stated that this was based on a number of assumptions.

Regrettably, a resolution through mediation was not possible and the disputes escalated, with the client becoming embroiled in a web of interconnected litigation. Thereafter, substantial costs were incurred by the solicitors, which resulted in six invoices totalling £84,919.90 being rendered by the Defendant between 31 January and 31 May 2018. By this point, the client had already paid £75,855 in costs to the solicitors.

Having paid £22,057.60 towards the six invoices outstanding, the client then applied for an assessment of solicitors’ costs under section 70 of the Solicitors Act 1974. The implications for assessment of the solicitors’ cost estimates was then heard as a preliminary issue.

Considerations

Sitting in the Senior Courts Costs Office, Master Leonard observed that:

  • Although not matters raised for the purposes of the assessment, the client took issue with much more than the solicitors’ failure to provide any further costs estimate beyond that provided at the outset of its retainer;
  • The solicitors relied to an extent on the fact that it did send invoices to the client on at least a monthly basis throughout the period of the retainer, thereby keeping him apprised of the accruing costs;
  • When assessing solicitor/client costs the test was whether costs have been reasonably incurred and are reasonable in amount. To this a number of rebuttable presumptions applied, including (i) that costs have been reasonably incurred if they were incurred with the express or implied approval of the client; and (ii) that they are reasonable in amount if their amount was expressly or impliedly approved by the client;
  • The Court of Appeal held in Garbutt v Edwards (2005) that failure by a solicitor to give an estimate did not in itself render a contract of retainer between a solicitor and a client unenforceable;
  • If, on an assessment of solicitors’ costs, it is found that (a) the solicitor has never provided the client with an estimate of the costs and (b) if a proper estimate had been given, the client would have paid less than the solicitor was claiming, it may be appropriate to limit the amount payable by the client to an amount that it was reasonable, in all the circumstances, to expect the client to pay;
  • In order to demonstrate that it was right to limit the solicitors’ recoverable costs in that way, it may be sufficient to prove that the failure to provide adequate advice deprived the client of an opportunity of acting differently;
  • Simply to hold a solicitor to an estimate as if it were a binding quotation, might produce a windfall for a client who may not have relied upon it or who may have taken the same approach regardless;
  • The failure in this case to give any further estimate of costs constituted a breach of the solicitors’ professional and contractual obligations to the client;
  • By the time the first of the invoices subject to assessment was raised, it would have been clear to all concerned that the initial estimate was no longer relevant and could not reasonably be relied upon by the client;
  • Holding the solicitors to the initial estimate would take no account of the costs that the client would still have incurred with other solicitors;
  • While there might well be a case for limiting the costs recoverable by the solicitors to the likely costs that the client would have incurred if he had instructed another solicitor to represent him, the evidence that the client had produced was inadequate to permit any firm calculations to be made.

Decision

In the circumstances, the court held that it would be wrong to limit the costs recoverable by the solicitors from the client to the amount of their initial estimate.

Darya Belsner v Cam Legal Services Ltd (2020)

In this assessment of solicitors’ costs, the court had to decide whether the costs that the solicitors were entitled to recover from their client should be limited to the same amount that the client was able to recover from the defendant in her underlying personal injury claim.

Background

The client, Darya Belsner, appealed an assessment of her solicitors’ bill of costs under section 70 of the Solicitors Act 1974, which itself related to work done by the solicitors for the client in a claim for damages for personal injury arising from a road traffic accident.

Amongst other matters, the client alleged that the District Judge had been wrong to assess the solicitors’ bill in the sum of £3,104.15 because:

  • Pursuant to section 74(3) of the Solicitors Act 1974, the amount allowed on assessment should not, except where rules of court permit, exceed the amount which could have been allowed as between party and party in the proceedings;
  • The District Judge had mistakenly held that the rules of court did permit the allowance of a greater amount, because CPR Part 46.9(2) applied;
  • While there was a written fee agreement (in the form of a Conditional Fee Agreement (‘CFA’)) which entitled the solicitors to charge the client a greater amount than that which the client could have recovered from the other party in the underlying claim, the client had not given her informed consent to it, even though she had signed it. That was because the solicitors had failed to give the client ‘a full and fair’ exposition of the factors relevant to the agreement.

Considerations

In determining the appeal, and amongst other matters, the court noted that:

  • The CFA provided for a success fee of 100% of the basic charge, subject to a cap of 25% of the total amount of any damages, but did not provide for an overall cap on the amount recoverable by the solicitors from the client;
  • The client recovered damages of £1,916.98 and costs of £1,783.19, making a total recovery of £3,700.17;
  • The solicitors had been prepared to limit their fees to £2,168.69, representing the costs of £1,783.19 recovered by the client and a success fee of £385.50;
  • The solicitors’ bill of costs which was relied upon at assessment (inclusive of the basic fee, success fee, disbursements and VAT) totalled £4,306.07;
  • Although this was a test case, the parties had collectively incurred costs of £87,715.53 in relation to the appeal, which itself concerned a sum of only £385.50, being the difference between the costs the client had recovered and the fees that the solicitors had charged;
  • The relationship between solicitor and client is a fiduciary one and a solicitor may not receive a profit from his client without his client’s fully informed consent;
  • A solicitor who wishes to rely on CPR Part 46.9(2) must not only point to a written agreement which meets the requirements of the rule, but must also show that his client gave informed consent;
  • To establish informed consent, the solicitor must show that he made sufficient disclosure to the client;
  • If it had been pointed out to the client here that, while the solicitors’ estimate of costs in the underlying claim was £2,500 plus VAT, she might recover only £500 or £550 plus VAT in costs, then that may have affected her consent to the CFA;
  • The general terms used by the solicitors to describe to the client the potential disparity between the solicitors’ fees and the costs the client might recover, were not such as to bring home that disparity to the client;
  • It was a very striking feature of the CFA that the solicitors’ estimated basic charges were five times the amount which the client might be entitled to recover by way of costs;
  • The solicitors should have warned of this disparity and, having failed to do so, the client could not be said to have given her informed consent to the CFA.

Decision

As a result, the court held that the solicitors could not rely on CPR Part 46.9(2) and that the fees payable by the client to her solicitors would be limited to those costs that she recovered from the opposing party in her underlying claim.

Further legal assistance

As will be apparent from the case examples set out above, an assessment of solicitors’ costs can raise complicated and technical issues of law. While we have endeavoured to simplify and summarise matters for ease of understanding, this article should not be regarded by clients as a substitute for specialist legal advice.

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