All solicitors know, or should know, that they are under a duty to inform their clients about how much their services will cost. Under the old SRA Handbook this was a duty to give – “the best possible information, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of their matter”. Under the new Standards and Regulations which came into force this week there is a similar duty to ensure that “clients receive the best possible information about how their matter will be priced and, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of the matter and any costs incurred.”
In litigation this means that there is a duty to provide regular costs updates. Failure to do this can be very expensive as illustrated in the case of Dunbar v Virgo Consultancy Services Ltd [2019] EWHC B12 reported by barrister, Gordon Exall –
In this matter the solicitors’ bill was for £84,000.00. They had time recorded nearly £96,000.00. The solicitors had never provided any costs updates. In fact, there was no proper discussion about costs until the matter was concluded.
The facts, briefly are that the underlying matter involved a prosecution in Greece. The client had agreed a fixed fee of £24,000.00 with Greek lawyers and a further fee of £10,000.00 with the defendant firm for assisting in this country. At some point and for reasons that are unclear, the defendant firm sacked the Greek lawyers and continued to act themselves. This was not explained to the client nor was any estimate given of the cost of the work to be done by the solicitors. He did not, therefore, give ‘informed consent’. After taking into account sums already paid, the solicitors received just £8000.00. They did not recover any VAT as this had not been mentioned!
At one level this seems a harsh decision because the lawyers had done the work. On the other hand, they had failed to make their client aware of the likely costs of their actions.
A reminder might not be necessary to all. But the lesson is – always provide full and clear costs information at the start and as the matter progresses.