Payments on account are a routine feature of the solicitor/client relationship. Solicitors are typically entitled to seek payments on account of their fees under the terms of their retainer, which usually includes an express provision to this effect.
In addition to the retainer, the relationship between a solicitor and their client is underpinned by the Solicitors Act 1974 (“the Act”). Where a client retains a solicitor to conduct contentious business, Section 65.2 of the Act permits the solicitor to request that the client pay a reasonable sum on account of costs incurred, or to be incurred, in conducting that business. Therefore, a solicitor engaged in contentious business is entitled to request a payment on account, even if this is not expressly provided for by the retainer.
Requests for payments on account are distinct from interim statute bills, which are final bills for the work or period to which they relate. Once delivered, a solicitor may commence proceedings against the client if an interim statute bill remains unpaid more than one month after delivery, provided it complies with the requirements of Section 69 of the Act. A client who receives an interim statute bill may request detailed assessment thereof under Section 70 of the Act. If a purported interim statute bill is found to be ineffective or non-compliant with Section 69, it will be treated as a request for a payment on account.
In contrast, payments on account are merely sums requested or paid towards fees and disbursements without necessarily being tied to a formal bill, and may not reflect the final sums to be billed for the work to which they relate. Payments on account do not trigger Sections 69 or 70 of the Act and therefore cannot be sued upon by a solicitor, or be subject to detailed assessment if challenged by the client. However, where a client refuses or fails within a reasonable time to make a requested payment on account, that refusal or failure is deemed to be a good cause whereby the solicitor may, upon giving reasonable notice to the client, withdraw from the retainer.
Payments on Account in Solicitor’s Act Assessments
Where a solicitor has delivered a valid interim statute bill and that bill is subject to detailed assessment under Section 70, the solicitor may seek a payment on account towards the challenged fees before the conclusion of the assessment proceedings. This can be pursued pursuant to CPR 47.16, which empowers the court to make an Interim Costs Certificate for such sum as it considers appropriate, at any time after the Receiving Party has requested a detailed assessment hearing.
Although CPR 47.16 does not expressly cover detailed assessments under the Act, it is nonetheless the appropriate mechanism for seeking a payment on account once detailed assessment proceedings have been initiated. This issue was considered by Master Leonard in Warren v Hill Dickinson LLP [2019] EWHC B1 (Costs), wherein Mr Warren had commenced detailed assessment proceedings in respect of four interim statute bills delivered by Hill Dickinson.
Hill Dickson applied for an Interim Costs Certificate, submitting that Default Costs Certificates obtained on Mr Warren’s instruction (for inter partes costs) established a minimum baseline of what Mr Warren was liable to pay his solicitors, and that the sums certified as recoverable between the parties could not exceed that amount. Moreover, the sum requested equated to 69% of the interim statute bills that were challenged and, given that those bills were subject to assessment on the indemnity basis in accordance with CPR 46.9, the assessed costs would exceed the payment on account sought.
Mr Warren challenged Hill Dickinson’s application, arguing that CPR 47.16 applied only to inter partes detailed assessment proceedings, not to assessments brought under Section 70 of the Act. Master Leonard rejected Mr Warren’s interpretation of the rules, holding:
“…I am unable to accept that section 70(1) of the 1974 Act prohibits the issue of an Interim Costs Certificate in detailed assessment proceedings between a solicitor and a client, and it seems to me that the rules, on careful examination, do provide for it.”
Having determined that the court had jurisdiction to make an Interim Costs Certificate, Master Leonard considered the amount to be ordered:
“When considering what if any amount should be awarded by way of an Interim Costs Certificate one normally takes a broad view (without coming to any final conclusion) of the likely outcome based upon the Points of Dispute.”
“The Claimant pursued Mr Burns for sums of over £2 million to a four-day trial with leading counsel on both sides. He says that he relied upon an estimate of £110,000, excluding VAT and 100% success fee, for the total cost of the action. In the circumstances, it seems to me to be difficult for the Claimant to resist the payment of at least that amount.”
“On the limited information I have to date, it seems to me right to order the issue of an interim costs certificate in the sum of £350,000. It seems to me highly unlikely that the amount ultimately due to the Defendant would be any less than that.”
Conclusions
Requests for payments on account serve as a useful tool to control cash-flow and secure partial payment towards fees incurred, or to be incurred, without issuing an interim statute bill. Provided the work relates to contentious business, a solicitor is entitled to request a payment on account from their client, even if not expressly provided for by the retainer. Where interim statute bills have been delivered and are subject to detailed assessment, a solicitor may nonetheless obtain a payment on account against the challenged fees pending the outcome of the assessment, provided the application is made after the detailed assessment hearing has been requested.