REVIEW YOUR RETAINER NOW!
I had the honour of a private audience with Dr Mark Friston before the launch party to celebrate publication of the 4th edition of his eponymous 2,000 page work on Costs. He thinks that the greatest problem on the horizon for Solicitors is their client retainer documentation. The new Intermediate Track goes live on October 1st. At the core of it is a fixed costs regime which blithely ignores units of time , grades of fee earner and office location ( save for a Greater London weighting). It was only last October in BELSNER that the Court of Appeal condemned solicitors for failing to give their client a transparent explanation of the impact of fixed costs. This is what was said.
In this case, the Client was given most of the information she needed to make those decisions, with the exception of one vital matter, namely the fixed recoverable costs that the defendant’s insurers would pay within the RTA portal. It would have been straightforward for the Solicitors to inform the Client of the level of the fixed recoverable costs that could be recovered at stages 1 and 2. The Client was told that the Solicitors estimated their base costs at £2,500 (net of VAT and disbursements), and that many such claims would settle within the RTA portal after production of medical evidence and financial losses. She was also given an estimate of £2,000 for her damages. Had she also been told of the level of the fixed recoverable costs, she would have been able to compare the likely recoverable costs with the amount she was being asked to agree to pay the Solicitors. As the Client submitted to us, she would then have known that she was assuming a liability to pay the Solicitors five times the costs she would be getting back from the defendant. I do not think that the Solicitors can be said to have complied with either [8.7] or [8.6] of the Code without providing that information.
- For these reasons, the Solicitors neither ensured that the Client received the best possible information about the likely overall cost of the case, nor did they ensure that she was in a position to make an informed decision about whether she needed the service they were offering on the terms they were suggesting.
- In my judgment, it is wholly unsatisfactory for solicitors generally, and these Solicitors in particular, routinely to suggest that their clients agree to a costs regime that allows them to charge significantly more than the claim is known in advance to be likely to be worth. Solicitors do not resolve this unsatisfactory state of affairs by allowing a discretionary reduction of their charges after the case is settled.
So, with fixed costs in matters worth from £25,000 to £100,000 everyone should urgently review what they send out to clients.
Dominic Regan, Director of the Knowledge Hub, Frenkel Topping
18.07.2023