Costs dispute between solicitor and client resolved

Background of the Case

The High Court's Senior Courts Costs Office recently resolved a dispute between Jennifer Underhill and Thackray Williams Solicitors regarding a legal bill that exceeded initial estimates. The case, presided over by Costs Judge Nagalingam, centred around a bill of £3,841 plus VAT for legal services provided over a five-week period in 2023.

The Dispute

The dispute arose when Underhill contested the amount billed, arguing that it exceeded the initial estimate of £1,470 plus VAT provided by the solicitors. The solicitors had undertaken work related to a pre-action letter and subsequent negotiations, which culminated in a settlement agreement with Underhill's former employer.

Details of the Case

The solicitors had initially provided a fixed fee service for an initial consultation and written advice, charging £250 plus VAT, which was not disputed. However, the costs for subsequent work, including advising on a settlement agreement, were contested. The solicitors claimed they had written off a significant portion of the costs, but Underhill had not received a bill for this work.

Time Ledger Discrepancies

A key issue in the case was the accuracy of the time ledger provided by the solicitors. Discrepancies were found in the recorded hours, which did not match the billed amount. The court found that the write-off amount claimed by the solicitors covered these discrepancies, but noted potential implications for the costs of assessment.

Client Approval and Costs Reasonableness

The court examined whether the costs incurred were reasonable and whether Underhill had approved them, either expressly or impliedly. It was determined that while Underhill had approved the incurrence of costs, she had not approved the amount, as she was not informed when the initial estimate was exceeded.

Assessment of Costs

Judge Nagalingam assessed the costs on a broad brush basis, ultimately reducing the bill to £3,150 plus VAT. The assessment took into account the fixed fee work, disallowed partner time, and administrative tasks, as well as the work related to the settlement agreement.

Costs of Assessment

Under section 70 of the Solicitors Act 1974, the court considered the costs of assessment. Although the reduction in the bill did not meet the one-fifth threshold for the solicitors to pay assessment costs, the court found special circumstances in the case, leading to no order as to costs for the assessment.

Conclusion

This case highlights the importance of clear communication and transparency in legal billing, particularly regarding estimates and ongoing costs. Legal practitioners are reminded of the necessity to keep clients informed of costs developments to avoid disputes.

Learn More

For more information on employment law, see BeCivil's guide to UK Employment Law.