Conduct on Fees and Costs

In relation to fees, there is an inherent conflict of interest between lawyer and client. Given a knowledge imbalance in favour of lawyers, a few general principles suggest themselves.

The third general principle suggested for regulation of lawyer’s fees is that clients should be aware of any actual or potential conflicts arising in relation to different funding mechanisms. Fourthly, clients should be regularly updated on their liability for fees and the amount owed. Fifthly, there should be effective, fair and accessible review procedures to identify any failure by the lawyer to abide by the above principles or to rectify overcharging.

A. A Brief History of Rules on Fees and Costs

Under the Solicitors Act 1974, non-contentious business agreements and agreements on costs in contentious matters had to be in writing.^[1934] Until 1991 there were no rules or specific legislation on what information solicitors had to provide on costs. In 1991 the Law Society promulgated Written Professional Standards on Information on Costs, to supplement the introduction of Rule 15 of the Solicitors’ Practice Rules 1990.

The Law Society Guide 1999 provided a fairly brief 40 pages to the topic includ­ing all annexes. These contained little that could be described as general principles of an ethical nature. Significantly, the first ‘general principle’ dealt with in the relevant chapter was the power of solicitors to ‘require’ payments on account from clients.^[1935] The Bar Code said little about fees in relation to clients, except to state that a barrister may charge on any basis or by any method he thinks fit.^[1936]

The rules on costs developed through iterations of the Guide.

Under the 2007 Code, solicitors had to provide clients with ‘the best informa­tion possible about the likely overall cost of a matter both at the outset and, when appropriate, as the matter progresses’. They also had to explore how payment was to be made, and the availability of legal aid, insurance or other third party funding.^[1939] Information on costs had to be clear and confirmed in writing and regularly updated.^[1940] Solicitors had the burden of proving that it was inappropriate to meet all or some of the requirements in the circumstances, for example, for repeat work. The rules were legally binding on solicitors, unlike the previous guidance.

B. Fees under Outcomes Focused Regulation

i. Principles and Outcomes

None of the principles in the SRA Handbook are directly concerned with fees, although several may be said to be indirectly so. Of the 16 outcomes relating to clients in the Handbook, three relate directly to fees. The first outcome is that ‘you only enter into fee agreements with your clients that are legal, and which you consider are suit­able for the client’s needs and take account of the client’s best interests’.^[1941] The second is that ‘clients receive 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’.^[1942] The third outcome on fees is that ‘clients are informed of their right to challenge or complain about your bill and the circumstances in which they may be liable to pay interest on an unpaid bill’.^[1943]

ii.

Approximately one-third of indicative behaviours in Chapter 1 are concerned with fees. In order to meet the outcomes, solicitors are advised to discuss whether the outcomes of the client’s matter justify the expense and risk involved, including any risk of paying someone else’s legal fees.^[1944] They should clearly explain their fees and any possible changes^[1945] and warn the client about any other payments for which they may be responsible.^[1946] At the conclusion of the matter, solicitors should ensure that disbursements included in their bills reflect the actual amount spent, or to be spent, on behalf of the client.¹⁵⁸

Solicitors are also advised to discuss how the client will pay, considering the avail­ability of sources of third party funding, such as a trade union.¹⁵⁹ They should provide information in a clear and accessible form, appropriate to the needs and circumstances of the client.¹⁶⁰ This might include details of any fee arrangements gov­erned by statute, such as conditional fee agreements.¹⁶¹ Where they act for a publicly funded client, they should explain how their publicly funded status affects costs.¹⁶²

VIII.