Recovering from Clients
The financial relationship between solicitor and client is basically contractual. The contract can stipulate for payments on account, for example, and solicitors are free to sue if fees are not paid.
Certain general rules relating to payment may be more significant than in other relationships. Two are particularly relevant. First, solicitors have a lien over papers and property held by them where fees are not paid. Secondly, solicitors may refuse to do further work until they have been paid. In general, the duty of confidentiality and legal privilege are not waived where the solicitor sues a client for fees.[2017]A. Transfer of Fees
Solicitors often ask for ‘payments on account of costs’ before beginning work on a case or matter. When a solicitor instructed in a contentious matter asks for a sum on account of costs, ‘and the client refuses or fails within a reasonable time to make that payment’ the solicitor can terminate the retainer on reasonable notice.[2018] On the conclusion of a matter, or as agreed with the client, money can only be transferred from the firm’s client account to the office account if the client or the paying party has been given or sent a bill of costs, or other written notification of the costs incurred.[2019] Payments by clients ‘on account of costs’ remain client money until this has been done.[2020]
B. Suing for Fees
A solicitor can only sue for costs having issued a bill. Under the Solicitors Act 1974 a valid bill for this purpose must be signed by the solicitor or an employee on his behalf, or enclosed with a signed letter. The bill must be delivered personally, sent by post or left at the client’s business, dwelling house or last known place of abode.[2021] No action can be brought until one month after the delivery of the bill of costs.
Where the bill relates to contentious matters the solicitor must always seek the leave of the court.[2022]i. Contentious Business
Under the Act, bills in respect of contentious business may be either a gross sum or an itemised bill.[2023] If the solicitor delivers a gross sum bill, clients have three months to require delivery of a detailed bill. The court may order assessment of a gross sum bill within one month from the service on that party of the writ or other originating process.[2024] Clients can also request a solicitor and own client assessment under the Solicitors Act 1974, section 70 and Part 48 of the CPR. When the costs to be assessed are discounted by 20 per cent or more, the solicitor pays the costs of the assessment.
ii. Non-contentious Business
A committee of senior members of the government, judiciary and professions can make orders for the remuneration of non-contentious business. The former rule, requiring solicitors to obtain a remuneration certificate before suing, no longer applies.[2025] It has been replaced by the right to complain and to seek assessment by the court. While solicitors have an obligation to advise clients of these rights, the procedure appears to offer clients less protection than that provided previously. There are special provisions relating to contentious business agreements.[2026]
C. The Solicitor’s Lien
In general, a client’s failure to pay fees is a good reason to cease acting for the client, on reasonable notice.[2027] Normally a solicitor must return all the client’s papers at the end of a case. The solicitor’s lien enables the solicitor to retain papers and property belonging to the client pending the payment of the bill.[2028] The client must be informed about this at the outset of the case.[2029] The lien does not arise until a properly itemised bill has been delivered to the client. It applies to all papers of the client held by the solicitor, not simply to those relating to the unpaid bill.[2030]
The lien is not unique to solicitors; any person who has done work for another may retain the property on which the work has been done pending payment.
However the power is particularly effective in the case of solicitors as they frequently have possession of large sums of client funds. Holding on to papers will also make it difficult for the client to instruct another solicitor.The court has discretion to order a solicitor to deliver up any documents in his custody.249 It will normally do this where the client needs the documents for continuing litigation. The order is usually conditional on the client giving an undertaking to restore the documents to the solicitor at the end of that litigation. Further conditions might be imposed by the court, depending on the circumstances of the case. For example, in Ismail v Richards Butler250 the ex-client was required to provide further security for the payment of the outstanding bills.
XI.