Disputing solicitors’ fees – A client’s guide

Fees are one of the most common causes of dispute between solicitors and their clients. In this guide for clients we examine the different options available to you for disputing solicitors’ fees and charges and the circumstances in which they might be best pursued.

Causes of fee disputes

There may be a number of different reasons, actual and perceived, which have caused you to be concerned about the fees being charged by a solicitor. Some of the most common causes of fee disputes occur when solicitors:

• Provide misleading information about the level of fees likely to be incurred
• Charge for disbursements without prior notice or permission
• Fail to provide updates as to the level of fees being incurred
• Charge fees in excess of the fee estimate(s) previously provided
• Charge fees in excess of a pre-agreed fee cap or fixed fee, without consent
• Charge fees improperly for work not actually undertaken
• Charge fees which are disproportionate to the outcome achieved
• Charge fees which are disproportionate to the amount of work undertaken
• Charge fees for work which was unnecessary or not authorised
• Charge fees for unreasonable duplication of work between solicitors
• Charge fees for additional work undertaken as a result of a mistake
• Charge fees for work that had to be aborted or proved valueless due to a mistake
• Make accounting errors when calculating fees and disbursements

Options for disputing solicitors’ fees

In the paragraphs that follow, we identify and explain the most common and task-specific options available to you for disputing solicitors’ fees. While these options tend not to be pursued concurrently, some of them may be pursued consecutively, if one or more of them fails to deliver a satisfactory outcome.

The nature of your concern about fees, the level of fees and/or disbursements in question and the circumstances surrounding your concern, can all have a bearing on what course of action is most appropriate for you.

1.      Complain to the firm

Instinctively, complaining to a firm of solicitors about their fees might seem highly unappealing. This is particularly so if you have lost trust and confidence in the firm, or if you perceive the firm to be motivated by its own best interests, rather than yours. However, there can be a number of potential advantages in doing so. These include:

• Securing the release of information or documents which support your complaint
• Achieving a settlement in a swift and cost-efficient way
• Averting costly and potentially unnecessary legal proceedings and/or an adverse court judgment
• Satisfying one of the qualification requirements for using the Legal Ombudsman

Under the SRA Code of Conduct, solicitors are required to inform their clients at the outset of a matter of their right to complain and how complaints can be made. Solicitors are also required to handle any complaints (including any cost complaints) promptly, fairly and free of charge.

However, a complaint to the relevant firm may not be an appropriate starting point in every case. For example, it might not be so where legal proceedings to recover an outstanding fee have already been commenced against you by the firm or where the fees in dispute are part of a range of financial losses that you have suffered as a result of a mistake made by a solicitor at the firm. In either case, a claim (or counterclaim) for professional negligence may be more appropriate.

2.      Complain to the Legal Ombudsman

As a result of its broad remit, the Legal Ombudsman can consider a wide range of concerns about solicitors’ fees, many of which are capable of being categorised as issues of poor service by solicitors. Indeed, costs is one of the biggest themes amongst the consumer complaints made to the Legal Ombudsman.

For an explanation of what the Legal Ombudsman is, how it works and what the advantages and disadvantages of using it can be, please see our guide: The Legal Ombudsman Complaints Service – An Independent Guide.

Some of the specific advantages of using the service for disputing solicitors’ fees are:

• It is free for complainants
• It is not necessary to appoint a legal representative in order to use the service
• There is no risk of having to pay the solicitors’ costs of responding to the complaint
• The complainant is free to accept or reject the Legal Ombudsman’s decision
• The £50,000 compensatory limit does not apply to any fee reductions

You should note, however, that there are certain restrictions on using the Legal Ombudsman, which are set out in our above guide.

3.      Initiate detailed assessment proceedings

If the level of fees charged by a solicitor appear excessive, you can apply to the court for a detailed assessment of those fees in accordance with section 70 of the Solicitors Act 1974.

There are certain time limits that apply to making such applications and these run from the date upon which a final fee note/invoice is delivered to you by a solicitor. These time limits can affect your entitlement to an assessment, as set out in the table below:

To commence the assessment process, a Part 8 Claim Form will need to be completed and filed with the court, together with the appropriate fee (being £55 at the time of writing). The Claim Form should then be issued by the court and a copy served on your solicitor.

Unless your solicitor consents to a detailed assessment, the court is likely to list a hearing at which a judge will listen to your reasons for requesting, and consider your entitlement to, a detailed assessment.

If the judge concludes that a detailed assessment is appropriate, a further hearing will be listed for this purpose. This will require a further court fee to be paid, which will vary (from £335 to £6,160 at the time of writing) according to the total amount of your solicitor’s fees in dispute. This will also require certain preparatory steps to be taken.

It is important to note that when assessing costs, the court will:

• Consider whether the work undertaken and the fees incurred are reasonable
• Presume the fees were reasonably incurred if they were incurred with your express or implied approval as the client
• Presume that the fees incurred are reasonable in amount unless proved otherwise
• Not consider whether the fees are proportionate to the outcome achieved
• Not usually determine whether the fees are a consequence of professional negligence and should not have been incurred at all

It is also important to note that unless:

• The solicitor’s fees are reduced by the court by 20% or more, or
• You originally offered to pay more than the final amount assessed by the court

you are likely to have to pay both your own costs and the solicitor’s costs of the detailed assessment process. Potentially, and collectively, such costs could well exceed the total amount of any reduction made by the court to the solicitor’s original fees. For these reasons, you should seek independent legal advice before pursuing this option.

4.      File a defence & request a common law assessment

In some cases, legal proceedings may be initiated by a solicitor seeking a judgment from the court for the payment of any outstanding fees. Such action may be taken notwithstanding that you have made a prior complaint, either to the solicitor’s firm or to the Legal Ombudsman, which has not been fully investigated or determined.

If proceedings are issued in the face of genuine concerns over the level of fees charged, you may be able to persuade the solicitor to agree to those proceedings being stayed, until such time as the firm or Legal Ombudsman has exhausted its own complaints handling process.

Alternatively, you could file a Defence to the claim with the court in which all or part of the fees are denied as being properly due.

If you accept in principle that your solicitor is entitled to payment of the outstanding fees claimed, but consider that the amount of those fees is unreasonable, you may also make a request to the solicitor and the court for the outstanding fees to be made subject to a common law assessment, by a specialist costs judge.

However, it is important to note that while this assessment process may be similar in a number of respects to the detailed assessment process described above, it will not be the same. Importantly, the additional legal costs incurred by your solicitor in issuing the claim and of assessment may well be recoverable from you, even if you succeed in achieving a reduction of 20% or more of the amount of the original fees claimed. For this reason, and again, you should seek independent legal advice before pursuing this option.

5.      Claim for professional negligence

It is not unusual for clients to incur unnecessary, additional or abortive fees as a result of a mistake made by a solicitor. Such fees might be incurred in isolation or in conjunction with other fees, losses or expenses. Examples of circumstances where this might occur include:

• A property purchase which, because of the solicitor’s failure to comply with an option agreement, could not be completed and had to be abandoned
• A commercial transaction which, because of a solicitor’s delay in undertaking certain legal enquiries, would have been abandoned at an earlier stage
• A compensation claim which, because it was issued late and against the wrong party, had to be discontinued
• A probate claim which, because of the uncertain terms of settlement agreed by the solicitor, required further costs to be incurred to enforce those terms
• An application for an injunction for non-molestation which, because of mistakes by the solicitor, proved wholly ineffective
• A compensation claim which, because of the solicitor’s failure to comply with a court order, was automatically struck out

In appropriate circumstances, you may be able to recover fees already paid to a solicitor as compensation for negligence or breach of contract. Alternatively, and where the fees remain outstanding, you may be able to obtain an order prohibiting the recovery of such fees.

In either event, legal complexities and cost liabilities can arise and, for these reasons, you should seek independent legal advice before pursuing this option. Where the value of any claim exceeds £10,000 and is successful, the cost of obtaining this advice and any associated representation should generally be recoverable from the negligent solicitor.

6.      Counterclaim for professional negligence – set off

If a claim for unpaid fees has been issued against you, and in addition to filing a defence disputing the amount of fees properly due, it may be appropriate to file a counterclaim for professional negligence.

In doing so, it may be possible to circumvent the procedures that must usually be followed by anyone pursuing a claim for professional negligence, as well as ‘set off’ the amount claimed by way of compensation under the counterclaim, against any amount found to be due in respect of the solicitor’s fees.

Again, given the legal complexities and cost liabilities involved you should seek independent legal advice before pursuing this option.

7.      Apply for a wasted costs order

Where the conduct of a solicitor (or other legal representative) in legal proceedings can be shown to have been improper, unreasonable or negligent, it may be appropriate for you to apply to the court for an order for wasted costs. Where granted, such an order can require the solicitor concerned to meet not only the costs that you have incurred as a consequence of the solicitor’s conduct, but also the costs that another party has incurred and for which you have, or may, become liable.

The power to award wasted costs derives from the common law and from statute (section 51(6) of the Senior Courts Act 1981). It is not exercised lightly by the courts and any order made against a solicitor is reportable to the Solicitors Regulation Authority.

Further information about the process of applying for a wasted costs order is contained within the Civil Procedure Rules – Part 46.8  and at paragraphs 5.1 – 5.9 of Practice Direction 46. While a full account of the process is beyond the scope of this article, it may be noted that it involves two stages:

• Firstly, an assessment by the court of whether on the evidence presented to it a wasted costs order is likely to be made; and
• Secondly, an assessment by the court of whether such an order should be made in all the circumstances and having regard to any submissions made by the solicitor.

Each stage can require its own court hearing.

It is important to note that the process is a summary one, generally regarded as being suitable only in relatively clear-cut cases. Again, given the legal complexities and potential cost liabilities involved, it is advisable to seek independent legal advice before pursuing this option.

Further legal assistance

If you are being asked to pay (or have paid) significant legal costs which you believe may have arisen as a result of a mistake made by your solicitor, the most appropriate course for you might be to pursue a claim (or counterclaim) for professional negligence.

As professional negligence solicitors we would be happy to discuss this option with you as part of an initial consultation, if those fees and/or any related losses exceed £100,000. If this would be helpful to you, please complete our Contact Form or email us at mail@pnclegal.com.

At PNC Legal there is much more than just the fact that we specialise exclusively in resolving claims for professional negligence that sets us apart from most other solicitors.