The High Court provides guidance to solicitors and their clients regarding interim “statute” bills
An interim “statute” bill is a complete and final invoice for a defined period of a client’s instructions to his or her solicitor, and can only be delivered if there is an express (or implied) agreement to do so, or if there is a natural break in the proceedings.
Whether a solicitor’s interim invoice is a “statute” bill, or merely a request for payment on account, is important because the time limits for a client to seek assessment of a solicitor’s bill under the Solicitors Act 1974 only begin to run once the client has been delivered with a statute bill (interim or final) and a request for payment on account cannot be assessed by a court. It is also the case that a solicitor can only sue his former client for unpaid costs if the invoice(s) are statute bills.
In his recent judgment in Richard Slade and Company -v- Erlam (on appeal from a decision of District Judge Batchelor in the County Court) His Honour Judge Gosnell has provided guidance to solicitors and their clients regarding the requirements for a solicitor who wishes to deliver interim “statute” bills.
District Judge Batchelor in the lower court had concluded that for an interim invoice to be a “statute” bill the solicitor must also have made clear that the time for challenging the bill runs from the date the invoice is delivered, and not at the conclusion of the litigation. HHJ Gosnell disagreed with this.
In reaching his decision, HHJ Gosnell noted that: “When dealing with a client’s right to seek an assessment of costs from his or her solicitors the Act seeks to strike a balance between allowing a reasonable time for a client to question the quantum of costs whilst protecting solicitors from having to deal with stale allegations of overcharging. Whilst the Act purports to regulate those rights it does not go so far as to oblige the solicitor to advise the client of those provisions in the terms, nor to explain in plain English what the actual consequences of the application of those term are for the client. I am personally sympathetic to the argument that it probably should”.
In the absence of any other obligation on a solicitor in this regard, HHJ Gosnell stated “I take the view that if there is a clear contractual term reserving the right of a solicitor to deliver interim statute bills then he is entitled to do so, without having to spell out what the legal consequences of such an act would be for the client”.
The relevant term in the Appellant solicitor’s retainer was held to be clear and unambiguous: “Bills are rendered monthly in arrears. Our bills are detailed bills and are final in respect of the period to which they relate, save that disbursements (costs and expenses which we incur on your behalf), are normally billed separately and later than the bill for our fees in respect of the same period.”
The take away from this case for solicitors who wish to deliver interim statute bills is that this must be clearly set out in their retainer. Further, it might be sensible to attempt to “futureproof” your standard terms by explaining exactly what that means for the client’s right to an assessment. Given the current trend towards greater consumer protection, it is certainly possible that another High Court Judge will reach a more consumer friendly conclusion than HHJ Gosnell, but for the time being the costs judges will have no choice but to follow Erlam.
We act for both solicitors and clients in relation to disputes regarding costs and are ready to discuss any issues that you may have.
