The entitlement of a Solicitor to receive payment for work done is reliant upon the existence of a valid retainer.
Disputes can often arise as to the entitlement and amount of costs that a Solicitor charges to a client and there is a process of assessment to deal with any such dispute.
When is a Solicitor entitled to be paid?
If there is no agreement between the Solicitor and the client that interim invoices will be paid, then the Solicitor is entitled to be paid at the conclusion of the matter or where “natural break” in the proceedings occurs. A natural break is only likely to occur in protracted litigation.
If there has been an agreement between the Solicitor and client that interim invoices will be paid then the Solicitor will be entitled to charge the client at regular intervals (monthly, quarterly etc). The Solicitor will submit an interim invoice at the stages agreed with the client and that invoice could form a request for payment on account or it could be way of an interim statute invoice.
What types of bill can be submitted?
Interim invoices for payment on account
These invoices are not compliant with Section III of the Solicitors Act 1974. They are simply requests for payment on account of costs and the Solicitor is not entitled to sue on them. The client is also not able to request an assessment of the costs to which it relates and the relevant timescales do not apply.
If an interim invoice is rendered for payment on account, that is simply a note of the minimum charges of the Solicitor for that period and is not a final quantification of the costs in that period.
Interim Statute Invoices
These invoices comply with all the requirements of Section III of the Solicitors Act 1974 and the Solicitor is entitled to sue on them. They must specify the work to which they relate and the invoice is a final quantification of the costs incurred in that period. If the invoices are limited to a lower amount than the costs to which it relates, then the Solicitor cannot amend that at a later date.
The client can also request an assessment of the costs to which the invoice relates. The timescales that apply to a Solicitor and client assessment will begin to run from the date of service of the invoice. That is taken as the first working day after the invoice was sent unless it can be proven that service occurred later than that date.
These invoices are submitted at the conclusion of a case and relate to the entirety of the costs that are outstanding at that time. If interim invoices on account have been paid, then the final invoice must be for the full amount of the costs but it must give credit for any payments on account that the client has made during the course of the matter.
If the final invoice follows an interim statute invoice, then the final invoice must be for the costs that have been incurred following the period of the last interim statute invoice.
When can a solicitor or a client request an assessment of costs?
A Solicitor or a client can request an assessment of costs under section 70 of the Solicitors Act 1974 upon service of an interim statute invoice or a final invoice. Time limits apply as follows:
· If the application is made within one calendar month of receipt of the invoice, the Costs Judge must order a detailed assessment.
· If the application is made more than one calendar month but less than a year from receipt of the invoice, the Costs Judge has discretion to impose conditions such as ordering the client to make a payment on account.
· If more than 12 months has elapsed from service of the invoice, judgment has been obtained for the recovery of costs covered by the invoice or the invoice has been paid less than 12 months before the date on which the application was issued, then no order will be made for detailed assessment save for in special circumstances.
· If the invoice has been paid more than 12 months before the date the application was issued then the judge has no power to order an assessment.
A Solicitor is unlikely to request an assessment of costs because it is more cost effective to pursue the client via debt proceedings.
How do you make an application for an assessment of costs?
If debt proceedings are issued by the Solicitor, then the client must acknowledge service of the proceedings and either oppose the making of an order for costs (if the client does not believe that they owe the Solicitor any money) or seek an assessment of the costs under Section 70 of The Solicitors Act.
Once the claim form has been issued, it is usual for a short hearing (usually via telephone) to occur and the Court will make an order for directions. The directions will often order that the Solicitor serve a detailed bill of costs on the client, the client will then have 14 days from deemed service of the bill to serve points of dispute, the Solicitor 14 days from deemed service of the points of dispute to serve replies and the Court will often give a date by which a request for a hearing date must be submitted.
What happens next?
The Court will set the matter down for a hearing, where the judge will consider the points made against the bill of costs, the replies and make a decision on the various points. An order will then be made for the client to pay the amount of costs as assessed.
What about the costs of dealing with the assessment process?
The costs of the process are called the “costs of the assessment”. Those costs are subject to the one fifth rule. That means that, if the client is successful in reducing the bill of costs by one fifth or more, then the Solicitor will be ordered to pay the costs of the assessment. If the bill is reduced by less than that one fifth, then the client will be ordered to pay the costs of the assessment.
It is worth remembering that the judge on assessment can also take into account any special circumstances and has discretion to make any order that is deemed appropriate.
If you have any questions on Solicitor and Client costs then please get in touch with us to discuss. We will be happy to help.
Sextons Legal Costs Limited is a company registered in England and Wales under company number 9997481. Registered Address: Towngate House, 2-8 Parkstone Road, Poole, BH15 2PW.