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Dispute Resolution
Thursday 5th May 2022 Sunil Patel 

Challenging your solicitors’ costs, be mindful of the 1/5 Rule

It has always been beyond good practice that solicitors should provide their client with clear costs advice which should be reviewed throughout the retainer. This duty has become more prominent since the introduction of budgets approved by Judges at hearings in cases that are dealt with under the multi-track process (generally those that are over £25,000 or more in value). A solicitor should provide their client with advice not just on the budget but also discussions with their opposing side(s) and advise on the version approved by the Court.

There will be instances where the client will be unhappy with the amount(s) the solicitor has invoiced. The Solicitors Act 1974 provides a mechanism by which a client can challenge the amount(s) invoiced by a solicitor. That process is called a ‘detailed assessment.’ This type of claim before the Court is a detailed assessment between solicitor and client. This should not be confused with the detailed assessment where the Court is considering the assessment of costs of a successful party in a court action being claimed against the losing party or parties which is beyond the scope of this article.

Clients may already be familiar with the County Court or High Court, but this process of a detailed assessment is considered by the ‘Senior Court Costs Office’ where specialist Judges consider the amount payable.

The process of assessment starts with the service of a Part 8 claim requesting the invoices to be assessed and the solicitor to provide a breakdown of costs in a prescribed form and the party paying the costs will respond with a document called ‘Points of Dispute.’ These should be served within 14 days on receipt of the breakdown. The receiving party then has the option to serve a Reply. The parties are open to make offers during this process to settle before a hearing where the Judge will determine the amount the client should have to pay. If the offer is not accepted, the rejecting party would have to beat that offer at the end of these proceedings or face the prospect of paying costs of the assessment, subject to the 1/5th rule.

Detailed assessment though possessing many features of litigation is essentially a numbers game. In reaching a decision, the Court will most likely examine the retainer and solicitors’ file including advice on costs. It is imperative the solicitor keeps a well ordered file along with contemporaneous attendance notes.

In carrying out negotiations of a detailed assessment or if taken to a final hearing, the former client of a firm and their advisors ought to be aware of the one fifth rule under section 70(9) of the Solicitors Act 1974 which provides if there is a reduction of 20% or more, the costs of these proceedings are paid by the solicitor. Such a rule should focus the minds of those carrying out negotiations between the parties and advice should be given to clients who challenge the costs of their former solicitors to manage the risk of such litigation. Often, the margin between success and failure can be very slight and has the consequence that one party will pay the costs of the detailed assessment which in itself can be substantial.

There are however, ‘special circumstances by which the Court can dis-apply the one fifth rule as set out in the case of Bentine v Bentine [2013] EWHC 3098 (Ch). One important circumstance is that a solicitor should not be able to include in the bill of costs that fall outside the professional retainer, as explained by Mrs Justice Proudman:

Thus the rule in s. 70 (9) of the 1974 Act does not allow a solicitor free rein with his bills. He is to be appropriately penalised in costs for claiming want of retainer costs which should not have been claimed in the assessment at all. He cannot benefit from including improper charges which fall outside the retainer. This is as one would expect; if it were not so a solicitor would have no disincentive against inserting charges in bills which should not be there. If they were simply disallowed for want of retainer the reductions would not count against him under the one-fifth calculation.

Such a judgment could be interpreted to mean that where a solicitor includes professional charges in his bill that fall outside the scope of his retainer, such costs should fall outside the claim for costs when the Court applies the calculation of the one fifth rule.

At JPC, our solicitors have experience in representing clients at detailed assessment proceedings against their former solicitors particularly in high value disputes. Our approach is to offer pragmatic advice, help clients manage the risks of litigation and strive to obtain the best financial outcome whether a detailed assessment is being contemplated, being commenced or already before the Court.

If you wish to discuss how JPC could assist you, please get in touch with Sunil Patel, by email on spatel@jpclaw.co.uk, by telephone on 020 7644 7278, or connect with him on LinkedIn.

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