Wednesday, 9 May 2012

Would you rather your solicitor suspended you or terminated you?

Of all the tawdry squabbles I deal with, few are more bitterly disputed than attacks on a solicitors entitlement to be paid.  So of course, I love them! Now the concept of your solicitor as Arnie, the Terminator, may not spring to your mind, nor as a sort of latter day Pierrepoint (Albert Pierrepoint).  However, the distinction between being suspended or terminated, it's now clear, could be worth a lot of money!

The law recognises that solicitors are in a particularly good position to be able to overcharge their clients and it has given clients the right to have costs reviewed in detail either by an external assessor (via a remuneration certificate) or by a costs judge.  The rules which apply to these applications are fairly complicated and in some respects favour the solicitor, who knows (or should know) what they are.  However, there was a very sobering judgment some time ago in a case called Buxton v. Mills-Owen.  This ultimately resolved in the solicitor's favour, but only after it reached the Court of Appeal.   However, what the court accepted was that if a solicitor doesn't have a valid reason to terminate a retainer, he/she can't charge for any of their work at all!  In other words, if a solicitor doesn't see a case through to the end and doesn't have a good reason for baling out, he/she has to refund all the fees charged up until that point.

And that's what occupied the Court of Appeal in a recent case reported here:

Cawdery Kaye Fireman & Taylor v. Gary Minkin

The court, to cut a rather long story very short, had to decide whether a client was entitled to a refund of all the fees he had paid.  It was a case in which the client had fallen out with his solicitor during an application for a non molestation injunction and ouster order - a pretty commonplace family law situation.  The firm gave a costs estimate of £3,000 plus VAT and then very shortly afterwards increased it to £3,500 plus VAT - a little over £4,000 at the time.  However, barely a fortnight later, the client received a bill for just short of £5,500 in total - over a third more than the estimate.

What occupied the court then was deciding exactly what had happened next.  According to the client, the solicitor terminated the retainer because he didn't pay the whole of the bill.  Where it all gets rather bizarre is that the shortfall on what he had paid was just over £2,700 out of a total of just over £5,700.  And this went to the Court of Appeal, remember!  The client asked the court to assess his solicitor's costs.  The assessing judge did two things - first of all he said that the retainer had been wrongly terminated, so the solicitor should reimburse all his costs.  Secondly he said that if he was wrong about that, he would assess the bills.  He reduced them to the figure of just over £5,700 - a reduction of just over 20%.  £7 more than 20% actually.  Once the court has reduced them by over 20%, it's the solicitor who has to pay all the costs and in this case the client's costs amounted to £17,650!

The solicitors appealed.  The Court of Appeal agreed with them that what they had actually done was suspend the retainer pending payment of their bill, not terminate it.  It was the client who had terminated it because they wouldn't take any further steps until they were paid.  As a result, the client remained liable to pay them the £5,700.  However, the solicitors were still lumbered with the costs of detailed assessment, which amounted to more than three times the amount they recovered.  Now I daresay that the client would have had to pay the costs of the appeal, amount unknown.  So who were the losers?  Clearly both of them!  Sadly, not unusual in litigation.

Blog Disclaimer: Nothing in www.austinkempfamilylaw.blogspot.com blog should be construed as legal advice. If you require legal advice upon any family law related matter then you should instruct a solicitor. Any links to other blogs or web sites are provided for convenience only and Austin Kemp Solicitors cannot accept any responsibility for the contents of such linked blogs/sites.

2 comments:

  1. In fact, the client was ordered to pay the costs of the detailed assessment and both appeals, the Solicitor having made an offer to settle prior to the assessment being commenced, which he comfortably beat.

    ReplyDelete
  2. Now that's interesting. Just shows the value of carefully assessing the risk and offering accordingly.

    ReplyDelete