Don't send bills too early

Mr & Mrs S decided to buy a flat in the south of England. They consulted solicitors who provided a costs quotation in the sum of £750 plus VAT together with any disbursements. Mr & Mrs S were quite happy and the transaction went ahead.


Within about three weeks, and with efficiency, the solicitors prepared a bill and completion statement incorporating the agreed costs at £750. However, shortly afterwards and before contracts were exchanged, various unexpected problems arose some of which related to the title and others to fixtures and fittings and a proposed completion date. The sellers had also experienced problems and a rather complicated chain developed.


Ultimately, the matter completed on time but the solicitors realised that they had carried out a great deal of extra work, necessitated by a situation not really within their control. They had overlooked telling the client about it and instead produced a second bill in the sum of £500, incorporated within an amended completion statement. On completion, they submitted the appropriate documents to the client and deducted their costs.


Mr & Mrs S were not happy. The solicitors endeavoured to explain that they had carried out a great deal of extra work, not initially anticipated. They acknowledged that their cost quotation of £750 was a 'quotation' and not an 'estimate'. They acknowledged that when sending client care and costs information to Mr & Mrs S they had confirmed that the firm's hourly rate system did not apply when fixed terms were agreed.


Mr & Mrs S recognised that additional work had been involved but remained dissatisfied and made a complaint. The adjudicator was satisfied that no additional costs information had been provided and no indication had been given that additional costs would be sought. Mr & Mrs S had clearly been upset to receive a further bill and indicated that they had believed all the firm's work was covered by the costs quotation provided in the first place.


The solicitors were directed to waive their second bill and to pay proportionate compensation to Mr & Mrs S for the inconvenience and anxiety caused to them as a result of what had occurred.


The lesson is simple. Never prepare a bill too quickly. If a fixed-price quotation has been provided and additional costs, originally unforeseen and unexpected, are incurred, it is absolutely essential to notify the clients and to reach agreement before any further billing.


It may well be convenient to conclude billing and administration at an early opportunity. However, it is important to remember that any additional costs that may be incurred will not usually be granted where a quotation has been provided, where there is no additional agreement between the parties and where the client seeks a remuneration certificate. If an inadequate professional service complaint is made, the circumstances would almost certainly result in a compensatory award in addition to any costs sanction which may be imposed.


This column is written by a Law Society adjudicator