Personal injury clients must have been informed of their solicitors’ bill – and agreed to it – before payments can be taken, the Supreme Court ruled today. In Oakwood v Menzies, five justices agreed that the opportunity for clients to consider the detail of their bill was of ‘central importance’.
The ruling, which overturns a Court of Appeal judgment, will be a boost for clients pursuing costs challenges against their former firms and could potentially mean firms changing their business and charging models.
Lord Hamblen, giving the lead judgment, said the authorities provide strong support for the client’s case of the need for an agreement about the amount to be paid. Delivery of the bill, he added, ‘does not suffice’.
‘The right to seek assessment, and any assessment carried out by the court, involves a dispute as to the amount of costs claimed and is directed at the specifics of the bill of costs,’ said Hamblen.
‘That being so, it would be surprising if payment was to occur without there being any opportunity for the client to consider the detail of the bill of costs and to decide whether and to what extent it should be paid.’
He added that client protection was diminished if payment occurs before there is any opportunity to consider the bill of costs and whether and, if so, to what extent, it should be paid.
The central issue of the appeal concerned what constitutes ‘payment’ for the purposes of seeking assessment of a solicitors bill.
The appellant Dean Menzies had settled his personal injury claim in 2019 for £275,000. His representatives, Leeds firm Oakwood Solicitors, had said they would retain 25% of his damages on account until negotiations with the defendant insurer were completed.
Following those negotiations, the firm provided Menzies with a final bill in July 2019 stating that its total fees were £74,000, of which £38,000 had been recovered, leaving a shortfall of £36,000 which was deducted from the amount retained on account.
Menzies brought proceedings in April 2021 to request an assessment of the final bill but the costs judge found that as the claim had been brought more than 12 months after payment of the bill, it was time-barred. The High Court allowed Menzies’ claim for an assessment but the Court of Appeal overturned that decision, prompting Menzie to appeal to the Supreme Court.
Oakwood had submitted that requiring client agreement about deductions would have serious repercussions for solicitors’ practice management in modern conditions. The firm stressed that solicitors are already required to be upfront about the likely costs to be incurred and usually agree in advance the structure of fees to be charged and mechanism by which those fees would be billed and paid. To require further agreement, it was submitted, would allow a recalcitrant client to ‘frustrate and delay’ the payment of bills.
Hamblen said these concerns were overstated, saying there was no reason why there cannot be a prospective agreement as to the costs to be charged.
‘It is open to solicitors to agree terms with their client that will assist in establishing acceptance of and agreement to the bill,’ added.
Following the ruling, Menzies’ new representatives, Leeds firm JG Solicitors, said the decision was an important victory for consumer protection which entrenches the right that clients must give specific authorisation to a deduction before statutory time limits start running.
James Green, managing director of JG Solicitors Ltd, said: ‘This judgment provides the vital clarity we have been seeking for both clients and solicitors on this issue. This is a victory for consumer rights, and I'm delighted to see my client get justice in the Supreme Court.’
This article is now closed for comment.
24 Readers' comments