A former client of a City firm who claimed not to have been told that fees had increased by more than £1m will get the chance to challenge the invoices.

Costs Judge Nagalingam ruled that City firm Howard Kennedy LLP should have been clearer as to the true status of bills being raised. In Blue Manchester v Howard Kennedy  he ruled that it seemed ‘inexplicable and arguably inexcusable’ that the firm would so drastically alter its estimate and not formally confirm this in writing.

Such a significant ramping up of fees required an explanation, the judge said, adding that he was minded to order an assessment of disputed 15 bills.

The claimant, the owner of a building in Manchester, had instructed Howard Kennedy in a dispute with hotel operator Hilton Group. Following an arbitration but before seeing the Hilton evidence, the firm had provided a costs estimate in 2020 of around £909,000, with a detailed document breaking down all the constituent parts.

Four months later, the client was told in that fees were around £750,000, but with costs escalating a conditional fee agreement was drawn up and signed. The claimant submitted to the court that the further fees of £1.1m were never formally communicated in writing and said they were ‘far in excess’ of any costs estimate.

The judge said that each bill was signed, included the words ‘this invoice is due for immediate payment’ and bore all the hallmarks of a valid statute bill.

The former client said it was a ‘nonsense’ that the solicitors included in the small print that each bill was ‘not necessarily a final bill’ and they could issue proceedings in the event of non-payment.

It was submitted that the firm was ‘trying to have their cake and eat it, because they want the enforcement rights of the Solicitors Act as and when each invoice was raised, but also want to reserve the right to add charges to those very same bills’.

The judge backed this submission, adding: ‘When one reads such a term, one can’t help but agree that it seems the defendant wanted the option to enforce payment one month after the request for payment, whilst openly expressing a right to raise further charges covering the same period and/or for the same work.’

The firm said costs had necessarily increased, and pointed out this had prompted the client to approach its lawyers for a discount. The trial bundle increased from 3,000 to 20,000 pages and the client’s own instructions had caused the expected work to escalate. It was not known, the firm submitted, whether the client would have acted any differently had more accurate estimates been provided in the first place or sooner.

The judge said the terms of business and subsequent CFA combined to create a right to raise interim statute bills. But he added: ‘That is not a clear right and in my view it falls to the defendant, in these circumstances, to be have been clear as to the true status of the bills being raised.’

 

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