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The interplay between the client care letter, the Solicitors Act and the Civil Procedure Rules

View profile for Claire Holloway
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In the case of Breyer Group Plc & Ors v Prospect Law Limited Master Rowley considers some key, important factors in deciding what the Claimants in this action should pay the Defendants (their former solicitors) in respect of legal fees. It raises some interesting points relating to the differences between a Solicitor/Own client Assessment and a ‘between the parties’ Assessment. They key questions which came before Master Rowley on 21-22 June 2017 were:

  1. Whether any of the work claimed under various headings should not be recoverable in principle
  2. How the costs provisions in section 70(9) of the Solicitors Act should be applied in principle in this case?
  3. Should the amount payable by the Claimants to the Defendants be capped to any extent as a result of the estimates given by the Defendant during the course of its instruction?

Background

The underlying litigation concerned the Defendant (as one of several firms) who successfully brought judicial review proceedings on behalf of their clients against the Secretary of State for the Department of Energy and Climate Change (DECC). Five Claimant companies were identified at the outset with a further thirteen later becoming involved. Each Claimant contracted their solicitor by way of a client care letter which set out various terms of business to include detail as to their fees and expenses. This hearing was to deal with a number of issues the Claimants raised in relation to the fees and charges the solicitors were seeking to be paid under the contractual terms.

The Judgment is lengthy at 31 pages but offers careful analysis of the issues raised and Master Rowley’s distinction between solicitor/own client costs and between the parties costs. Some interesting points are raised and the Judgment is worth a read but I have summarised those I considered to be of greatest note.

Unusual work – 10 minute units

The Claimants alleged that there was work claimed which could be considered ‘unusual’ and, with reference to CPR 46.9 and PD 46 (6.1), the Claimants averred that in the event that any of the work charged to them was considered to be unreasonable by virtue of being unusual, they may not be liable to pay those charges. CPD 46 6.1 states that any unusual costs may not be charged to the Claimant unless the solicitor can demonstrate that the Claimant was informed as to their unusual nature and the possibility that they may not be recovered between the parties. The Claimants’ primary submission related to the solicitor’s decision to charge routine items at 10 minute units, contrary to Practice Direction 5.22 which details the usual 6 minute unit charge.

The Claimants submitted that the unusual nature of these charges, not commonly accepted practice and unlikely to be recovered between the parties, is a clear example of where a warning ought to have been given as to the unusual nature of the charges and the unlikelihood of recovery between the parties. The Defendant’s position was that this term had been contractually agreed and the solicitor need not be bound by what a paying party may be liable to pay. In addition they averred that the concept of charging a proportion on an hour (i.e one sixth, as opposed to one tenth) was not unusual and that their low hourly rate resulted in the ultimate charge being in line with what would be expected of a firm with higher rates.

Master Rowley took the view that whilst 10 minute units was not unheard of, it was extremely uncommon in contentious matters and highly unlikely to be awarded between the parties and therefore was with the Claimant in their submission that this constitutes unusual charges to be drawn to the Claimants' attention. Master Rowley applied 6 minute units to all routine items with reference to CPR 46.9(3)(c). Master Rowley did however give clear warnings that this would not always be the case and commented that solicitors do of course have the ability to charge their clients more than might be recoverable between the parties and to suggest otherwise would undermine the indemnity basis assessment of a solicitor/own client Assessment.

Incoming correspondence

This more robust approach was applied to the solicitor’s charges for incoming correspondence. Whilst Master Rowley accepted that the Practiced Direction deals with incoming letters when looking at an inter parties Assessment, he commented that charging for incoming post is a practice of long-standing, albeit traditionally charged at half of the outgoing rate. Master Rowley noted that this is an ongoing practice in Legal Aid cases and not an uncommon nor unusual practice. He concluded that he could not see why a solicitor should not be remunerated for working on his client's behalf in considering incoming correspondence. He allowed incoming correspondence at one twentieth (3 mins) of the hourly rate.

Potential Claimants

The Claimants sought to argue that the work undertaken in approaching and attempting to ‘bring on board’ other Claimants to the action was akin to ‘business development' and not a charge payable by the original Claimants. The Defendants’ submission was that they sought out additional Claimants on the Claimants’ instruction because of the underlying costs sharing arrangement (meaning more Claimants reduced the amount of common costs as they were equally shared). Master Rowley was entirely with the Defendants on this point, intimating that where there is a direct costs benefit for the Claimants and where additional Claimants are garnered on the Claimants’ instruction, it cannot be said they do not form costs of the action, payable by the Claimants.

Reliance on Costs Estimates

Master Rowley then went on the examine the costs estimates provided during the course of the litigation in the context of the submission that the estimates provided were exceeded and thus the Defendant should be bound by the estimates. Long and complex submissions were made as to the estimates provided for different aspects of the case with the Claimants' case being that the billed fees bore no resemblance to the estimated costs set out throughout the case. The Claimants averred that, had they known the costs would equate to as much as they were eventually billed, they may not have pursued the litigation. By contrast the Defendants’ position was that, whilst the costs estimates may have changed at different stages, the Claimants were kept abreast of costs throughout and did not query the figures at those junctures; they submit that whilst the figures may not tally it did not justify them being bound by an early estimate which was revised.

After lengthy submission and witness statements from both sides, Master Rowley ultimately referenced the Mastercigars Direct Ltd v Withers LLP [2007] EWHC 2733 (Ch) case and concluded that there was not compelling evidence to suggested that the Claimants relied on the estimates provided and thus the objection fell at the first hurdle.

The Hearing concluded with those preliminary points addressed and a full Detailed Assessment Hearing to follow.

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