The recent case of Allen v Brethertons LLP provided several points of interest in relation to client challenges to Bills which practitioners need to be aware of. The rise in Solicitor own Client disputes has been unprecedented and the case re-affirmed a number of points.
Firstly, the case confirmed that a bill must be delivered to the client in relation to all costs received this includes any portal or fixed costs paid by any paying party. In this particular case the bills were addressed to the client at his home address but the first two, rendered in respect of interim Stage 1 and 2 Costs received from the Defendant in the substantive matter, stated that they were payable by the Defendant insurer and were not delivered, as a result of which the Court ordered delivery of the bills.
The case also emphasised the importance of wording terms of business and accompanying documents accurately, particularly in respect of statements regarding the percentage of damages to be deducted. In this matter, the statement “if you obtain £10,000 compensation I would be able to deduct £2,500 towards my success fee and you would receive £7,500” meant exactly that. There was no opportunity for the Solicitor to then legally make any further deductions for unrecovered disbursements such as medical report fees.
The case also highlighted a common misconception by Solicitors that the costs become costs of the Solicitor. They don’t, whether the amount of recoverable costs is prescribed by statute, i.e. fixed costs, or not they always belong to the client. Within this case it was argued that CPR 45.18 states than Stage 1 and Stage 2 costs are “legal representative costs”, however, it was found that this was only done to distinguish those costs from an advocate’s costs which attract different fees within the fixed costs regime. As such it was decided that this did not create any exception from the principles applied in the case of Cobbett v Wood  2 KB 420 i.e. that the costs do not become the costs of the Solicitor rather than the client.
It is clear that there has been a significant rise in the number of Solicitor own Client challenges over the last few years and Solicitors are struggling to grasp the concept around who costs belong to. Solicitors simply cannot seek to argue that on the one hand the client is contractually responsible for all its costs and disbursements, even if they are fixed by statute but on the other hand seek to argue that the client is not entitled to receive a bill for, or challenge, part of them because they are their costs rather than the client’s costs. This is something that Solicitors need to be acutely aware of before responding to disputes by clients.