Cost estimates limiting recoverable costs.
With the growth of fixed costs, we expect solicitor-client disputes to increase as solicitors seek to recover costs from their clients. This case illustrates the importance of providing high-quality cost estimates to your clients and is relevant to all solicitors who will seek to recover solicitor-client costs.
In the case of Kenton v Slee Blackwell  EWHC 2613 (SCCO), the Claimant brought Solicitor Act assessment proceedings against her former solicitors due to being billed £340,000 for a claim the solicitors estimated would cost up to £20,000.00 if a settlement was reached before proceedings were required and up to £50,000 if the case went to hearing. The Defendant had acted for the Claimant when she brought a professional negligence claim through the solicitors and had recovered £295,000 in damages with costs to be assessed.
When the Claimant originally instructed the Defendant and was given the cost estimate of £20,000, she queried the amount to ensure it was accurate and the solicitor assured her that the solicitor’s basic costs had never exceeded £85,000 before. The judge found that the estimate was unrealistic, and the Claimant had queried the cost estimate, demonstrating her reliance on it. Throughout, cost letters were sent which were set out confusingly. They gave a running total of the costs, which exceeded the estimate, and informed the claimant the cost may be more or less than the figure recorded.
Examining the success fee, the judge took issue with the Defendant’s risk assessment. The judge felt the methodology was unclear and did not justify the stage success fee of 80% and 90%. The judge also found that the success fees were set too high, and the chance of success was higher than the 55% suggested by the initial 80% success fee.
The judge ultimately held that the reasonable sum of profit costs was £40,000 and an appropriate success fee was 50%. For solicitors seeking costs from their clients, this case highlights the need to be accurate in your estimates and careful with your risk assessment. Inaccurate estimates limited the Defendant’s recovery and an inadequate risk assessment meant that the judge felt it was appropriate to limit the Defendant’s success fee.
How can PIC help?
PIC provide advice on a range of cost issues. When considering providing an estimate it can be useful to seek the opinion of a costs expert, who has the benefit of seeing a large range of cases go to trial and can offer advice on what sort of costs could be expected beyond a solicitor’s own experience. This can be especially helpful when advising on a rare case type that you may not have a large amount of experience with.
Sam Ewart, Law Costs Draftsperson