Costs experts have sought to play down fears that yesterday's Supreme Court judgment in Menzies will open the floodgates to client challenge of law firms' bills. Justices found yesterday that ‘payment’ for the purposes of the Solicitors Act requires an agreement from the client to pay the sum specified in the bill. The client therefore had longer to challenge the invoices and the costs challenge claim was not time barred.

The Leeds firm at the centre of the case had warned the court of the serious repercussions of requiring clients to be informed of their bill before payments could be taken. JG Solicitors, the firm bringing the costs challenge, described it as a victory for consumer rights and said the judgment provided vital clarity.

Read more

But commentators have dampened suggestions that the ruling will bring on a wave of challenges. Jack Ridgway, chair of the Association of Costs Lawyers, agreed that clarity on the level of consent needed before a solicitor can deduct their shortfall costs was welcome. ‘Many law firms will now need to revise their retainers to ensure they still receive prompt payment while complying with the ruling. I’m sure they will quickly adapt,’ he added.

Nick McDonnell, director and costs lawyer with national firm Kain Knight, said obstacles to bringing a costs claim will remain even with the Menzies ruling.

He pointed in particular to the Court of Appeal’s comments in Karatysz v SGI Legal which made clear that claims in the High Court over small bills of costs were to be discouraged. Instead, disgruntled former clients were signposted to use the Legal Ombudsman scheme.

McDonnell added: ‘Whilst Menzies may have opened the door to potential solicitors’ fee challenges under the act, the hurdles a client faces thereafter will often slam that door in their face pretty sharpish. The Court of Appeal’s not so subtle invitation to clients to use the LeO’s complaint procedure together with the LeO’s relaxing of their own guidance as to the timings of when a complaint can be brought, seem to suggest that Menzies is unlikely to open the floodgates as has been suggested.’

In Menzies Lord Hamblen had ruled it was open to solicitors to agree terms with their client that would assist in establishing acceptance of and agreement to the bill.

Dan Stacey and Alice Nash of Hailsham Chambers said this should act as a spur to firms to ensure these matters are outlined earlier – even if solicitors think they might still be able fight off claims.

‘If payment has not been made, if 12 months has elapsed from delivery of the bill, there is no entitlement to challenge as of right,’ explained Stacey and Nash. ‘The client has still to prove that “special circumstances” exist which entitle them to challenge under section 70(3) and solicitors can argue that no such circumstances exist.

‘But there is no doubt that solicitors are well advised to seek to include appropriate wording in their retainer documentation, and/or their final bills and accompanying correspondence.’

 

This article is now closed for comment.