Charging clients in 10-minute units, rather than the traditional six, is a sufficiently unusual practice that their express agreement should be sought before starting work even if it is mentioned in the retainer, a costs judge has ruled.
Master Rowley said this was because of the likelihood that they would not be able to recover the full amount in the event of assessment.
It illustrated the situation “where costs expressly agreed can nevertheless be disallowed to some extent because of the provision at 46.9(3)(c) regarding their unusual nature”, he continued.
Under that part of the CPR, solicitor and client costs are presumed to have been unreasonably incurred if they are of an “unusual nature or amount” and the solicitor did not tell the client that, as a result, the costs might not be recovered from the other party.
In Breyers & Ors v Prospect Law Limited, Master Rowley was dealing with preliminary issues raised in the course of Solicitors Act 1974 proceedings brought by 15 solar photovoltaic companies against their former solicitors, who brought successful judicial review proceedings on their behalf against the government.
The master was asked whether various items were sufficiently unusual that they needed to have been brought to the clients’ attention, most eye-catchingly Prospect billing in 10-minute units for routine telephone calls, letters, emails and texts it sent and received, which was recorded in the client-care letter.
He said that while some firms of solicitors charged on the basis of 10-minute units, this was usually in transactional, rather than contentious, work and he had never seen any bill charged like this, in large part because the CPR themselves envisage routine work being charged in six-minute units.
“Given that this is an uncommon practice, it seems to me that the express agreement of the claimants to the terms of the client-care letter is not the end of the matter.
“The claimants needed to be told that routine items claimed at 10 minutes were unlikely to be recovered on that basis.”
Master Rowley found the warning given by the firm to the claimants about recoverability was couched in “the general terms given by solicitors in their client communications”. It reflected the fact that nearly every bill is reduced on detailed assessment, and cited 30% as a common percentage.
This was too general to cater for the 10-minute units, he concluded, while the 30% figure was misleading – even if, say, 70 out of 100 letters were allowed, only 60% of each of those items would be allowed, as six-minute rather than 10-minute units.
This meant that overall the value of only 42 of 100 letters would be allowed.
There was also disagreement over the figure to which the one-fifth rule would apply. Prospect had received £73,720 in payments on account for the common costs of the action at the point the statute bill was requested.
The statute bill it then drafted was for £99,800 from each client, but the firm decided not to claim any more than the £73,720, and said that if on assessment more was allowed, it would still only be entitled to that sum. The firm said the statute bill simply provided an explanation to show the work that was done.
The claimants described as “pernicious” the approach of solicitors discounting their bill as an attempt to deter their clients from assessment.
But Master Rowely said: “It does not seem to me to be an approach which ought to be criticised. The solicitors are either providing a genuine discount to the client in the hope of avoiding a Solicitors Act assessment which, since litigation is meant to be a last resort, is a welcome attempt to settle without litigation.
“Alternatively, a bill rendered at a figure which can amply be justified by the amount of work actually undertaken ought to demonstrate the reasonableness of the sum claimed.
“In either event, and to some extent they are two sides of the same coin, they seem to me to be a perfectly proper approach to dealing with the issue of costs.”
As a result, he said, when he came to determine the costs as required by section 70(9), the profit costs figure from which he would consider whether one-fifth has been reduced was £73,720.
The final issue before the court was the fact that the defendant firm had exceeded its estimates, but Master Rowley found the overall figure was not an unreasonable amount to pay in principle simply because it exceeded the prior estimates, based on the MasterCigars test, “since no, or no sufficient, reliance was placed upon the estimates to justify the costs as a result”.