Challenging lawyers’ fees: solicitors and their clients take note

A client who is unhappy with the level of their solicitor’s charges has a right to have those charges assessed by the Court, subject to the time limits set out in Section 70 of the Solicitors Act 1974 (“the Act”).

If an application for an assessment is made within one month of delivery of the solicitor’s invoice(s) then the Court will order an assessment as of right. If an application is made after one month, but within 12 months, then an order for an assessment will be made at the Court’s discretion.

However, obtaining an assessment of a solicitor’s invoices in other circumstances is more problematic.

Section 70(3) of the Act provides:

"Where an application under subsection (2) is made by the party chargeable with the bill –

    (a) after the expiration of 12 months from the delivery of the bill, or

    (b) after a judgment has been obtained for the recovery of costs covered by the bill, or

    (c) after the bill has been paid, but before the expiration of 12 months from the payment of the bill

no order shall be made except in special circumstances and, if an order is made, it may contain such terms as regards to the costs of the assessment as the Court may think fit”.

Hence when Section 70(3) applies, a client will need to persuade the court that there exist “special circumstances” such that justify an assessment.

What are “special circumstances”?

Lewison J (as he was then) in the 2010 case of Falmouth House Freehold Co. Limited v. Morgan Walker LLP provided this guidance:

“Whether special circumstances exist is essentially a value Judgment. It depends on comparing the particular case with the run of the mill case in order to decide whether a detailed assessment in the particular case is justified, and despite the restrictions contained in Section 70(3)”

In the recent case of Raydens Ltd v. Ms. Julie Cole, Costs Judge Leonard put it another way:

“In many ways, a helpful test is to consider whether there is something in the fees claimed by the invoices, or the circumstances in which they were charged, which “calls for an explanation”. If they do call for an explanation, or further scrutiny, that is a strong indication that there should be an assessment”.

In the Raydens case the Defendant raised issues regarding cost estimates provided by the solicitor and the irregularity of invoices, but it was the increases in the solicitor’s hourly rates which engaged Master Leonard’s attention. In the four year period of the Defendant’s instructions to the Claimant, the Partner’s hourly rate increased by 30%, whilst his assistant’s rate rose by some 65%. Master Leonard had this to say:

“These increases, in my view, do call for explanation, and there has to be an issue about informed (or any) approval by the Defendant of the hourly rates imposed by the Claimant… It seems to me that a finding of special circumstances is justified in this case by exceptionally large increases in the Claimant’s hourly rates, charged to a client who was already struggling to fund her matrimonial litigation, against a background of quite exceptionally high overall litigation costs”.

Among the other issues which the courts have determined amount to special circumstances over time include:

• when a solicitor gave misleading information about a client’s right to assessment
• where there was an agreement that there would be a detailed assessment and the solicitor would not take any points regarding time limits
• unreasonably high costs.

Relying on special circumstances to obtain an assessment of a solicitor’s charges carries with it a degree of risk and uncertainty which can be avoided if advice is taken by a client at an early stage.