Solicitors' "back-of-the-envelope" costs successfully challenged
Jan Samuel 08-11-2023
In 2013, Ms Kenton instructed a firm of solicitors (known as ABC) to bring a claim against three individuals, for negligently allowing her mother to sell shares at an under value. That claim collapsed and in May 2018, Ms Kenton was ordered to pay costs to her opponents, of over £200,000.
In May 2018, Ms Kenton brought a professional negligence against ABC, and was advised by her new firm that their fees would be around £40,000 and they agreed to act for her under the terms of Conditional (no win no fee) Agreement (CFA). The terms of the CFA provided that Ms Kenton would pay an extra success fee of 90% of the firm's fees if the matter concluded at trial, or 80% of their fees, if it concluded before the trial took place. The case was settled at the end of October 2020 before a trial took place, with ABC agreeing to pay the claimant damages of £295,000, plus her costs.
An agreement was later reached where ABC paid Ms Kenton £138,000 of the £152,000 costs which had been incurred in bringing the professional negligence claim against them.
However, that was not the end of the matter. In May 2022, Ms Kenton's professional negligence solicitors sent her a bill in the sum of £432,000, for the work done in bringing the claim against ABC, nearly ten times the original estimate. Understandably, Ms Kenton was very unhappy about the level of costs, and asked the court to assess the bill. The Judge said that “little care was taken” with the costs advice provided to Ms Kenton by her professional negligence solicitors.
Ms Kenton's solicitors did not submit any evidence to the court explaining why their fees so far exceeded the estimates they had provided to her. The court did not accept the solicitor’s argument that they had to deal with a lot of files disclosed by ABC and the judge said that “a solicitor working in this field should have a reasonable idea of how big those files are likely to be”. The court therefore concluded that the costs estimates provided by the professional negligence solicitors were inadequate and “hopelessly unrealistic”.
Giving his judgment in relation to costs, the Judge said that Ms Kenton's solicitors: “did not provide [her] with proper costs information ... The back-of-the-envelope calculations ... did not set out the estimated costs to trial in the event that the claim did not settle. The costs letters, setting out the costs incurred to date, were confusing”. The Judge was also very critical in the way in which the CFA risk assessment had been conducted and said that it did not justify the level of success fee which the firm sought to charge its client.
In the end, the Judge found that Ms Kenton had to pay her solicitors fees of just £60,000 plus VAT in relation to her professional negligence claim, rather than the £432,000 they were claiming from her.
This case highlights the vital importance of solicitors' firms providing comprehensive and coherent advice on costs to their clients at the very outset of a matter. In some cases, it will not always be possible to advise clients exactly what costs would be incurred with taking a matter all the way to trial. However, experienced litigation solicitors should be able to at least give clients a rough idea of the minimum and maximum fees they could incur in these circumstances.
At Samuels Solicitors LLP, we are experts in helping clients sue solicitors for the poor work they have done, and in bringing claims for professional negligence.
If you believe that you are being charged too much by your solicitors, or if they are seeking extensive and unrealistic costs from you under the terms of a conditional fee agreement, we can help.
Contact us today to speak to one of our experienced professional negligence solicitors.