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Jimmy Barber of our Personal Injury team was instructed by Andrew Neill of Chan Neill Solicitors on behalf of the successful claimant in the High Court (Senior Courts Costs Office) in an application under section 70 of the Solicitors Act 1974 for an assessment of a bill delivered by the defendant solicitors in somewhat unusual, even remarkable, circumstances.
Stated very briefly, the key facts of the case were as follows.
The claimant brought an Employment Tribunal claim in 2017. In the retainer letter Riverbrooke Solicitors Ltd (“Riverbrooke”) offered an initial fee estimate of between £6,000 and £10,000 depending on whether the case was settled or went to a final contested hearing.
The claimant’s complaints of unfair dismissal and disability discrimination succeeded at a substantive hearing in August 2017, and the tribunal listed a remedy hearing to take place in June 2018.
On the first day of the remedy hearing, Riverbrooke informed the claimant that its fees were now around £85,000. The claimant was horrified by this substantial increase in fees and terminated the retainer and complained to the Legal Ombudsman.
In February 2020, the claimant and Riverbrooke reached an “informal resolution” through the Legal Ombudsman that, to a draw a line under matters, the claimant would pay Riverbrooke a total of £13,000, reflecting the top end of the initial fee estimate plus VAT and disbursements. Riverbrooke raised a “Final Invoice”, which the claimant paid.
Separately, the Legal Ombudsman referred Riverbrooke to the Solicitors Regulation Authority.
In December 2022, having had no further dealings with Riverbrooke since payment of the agreed amount, the claimant received a nasty surprise when out of the blue she received a “Revised Final Invoice” in the sum of just under £158,000.
The claimant brought Part 8 proceedings and contested this revised bill on the grounds inter alia that (i) the informal resolution brokered by the Legal Ombudsman was a binding contract; (ii) the court’s permission would be needed to raise a revised bill (and permission should be refused); and (iii) the defendant should in any event be estopped from raising a revised bill.
In response the defendant argued that only a “final decision” by the Legal Ombudsman was legally binding and that the informal resolution was therefore not binding; and, citing Foakes v Beer (1884), that the claimant had provided no consideration in offering to make part payment of the debt that she owed Riverbrooke for its fees. The defendant thus considered itself at liberty to seek the balance of its fees in a revised bill.
At a hearing of preliminary issues before Costs Judge Leonard in the Senior Courts Costs Office, the court upheld each of the claimant’s objections to the delivery of the revised bill.
The court rejected the defendant’s submission that there was no consideration for the informal resolution (§47). There was good consideration in the claimant’s terminating her complaint to the Legal Ombudsman, by which she had surrendered the possibility of public vindication of her complaint and foregone her possible entitlement to remedies beyond the reduction of the costs payable, such as compensation or an apology (§48); and the defendant had avoided the substantial risk of the embarrassment of having the Legal Ombudsman’s findings published on its website (§51).
As the defendant was contractually bound by the terms of the informal resolution, the revised bill was assessed at nil (§57).
The court went on to hold that even if the informal resolution had not been a contractually binding settlement, the “Final Invoice” raised by Riverbrooke in February 2020 was a statute bill (§74). A statute bill, being final, is binding upon the solicitor who renders it; the solicitor cannot amend the bill without the agreement of the client or the permission of the court (§63).
The court rejected the defendant’s argument that the “Final Invoice” could not be a statute bill because it was never intended to be final (§65). The court held that the delivery of the “Revised Final Invoice” had in fact been made in response to the Legal Ombudsman’s report to the SRA, which the defendant’s solicitors had interpreted as having been instigated by the claimant (§38), when she had in fact nothing to do with it (§39).
The defendant had not applied to the court for permission to deliver its revised bill (§74) and the court held that permission should not be given in any event (§75).
In Bilkus v Stockler Brunton (a Firm)  EWCA Civ 101, the court explained that the jurisdiction of the court to grant leave to a solicitor to alter or to withdraw her bill was to be carefully and sparingly exercised, being restricted to cases of genuine mistake or error on the part of the solicitor when preparing her original bill (§76).
There was no mistake here because Riverbrooke’s bill was prepared and delivered exactly in accordance with the terms of the informal resolution (§77) and it would be wholly contrary to the public policy underlying the Legal Ombudsman’s scheme rules to allow a solicitor to walk away from the settlement and to render another bill as if it had never happened (§78).
Finally the court held that even if the informal resolution had not been contractually binding upon Riverbrooke, it would have been debarred by promissory estoppel from relying upon the “Revised Final Invoice” (§96).
In the light of the above, there are a few points of principle and practice which solicitors will wish to bear in mind when involved in disputes with their clients over fees:
- If the Legal Ombudsman becomes involved and brokers a settlement on costs (thus obviating the need to proceed to a final decision), the court will deprecate any subsequent attempts by solicitors to extricate themselves from the terms of any informal resolution.
- Solicitors must take care when delivering a bill which meets the requirements of the Solicitors Act 1974. Statute bills are treated as final and circumstances in which they can be altered or withdrawn are rare indeed.
- The Legal Ombudsman has a duty under s.143 of the Legal Services Act 2007 to make a report to the SRA if the Ombudsman is of the opinion that the conduct of the respondent to a complaint is such that the SRA should consider taking action against that person; and that duty is not affected by the withdrawal or the abandonment of the complaint itself.