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I have recently been involved in a protracted dispute that involved me personally and my business interests. Legal fees have significantly exceeded (doubled) what was originally agreed and the firm has not really kept me updated on increased costs or explained how they’ve been incurred. Is it possible to challenge these costs and bring a claim for professional negligence?
Jonathan Sachs, a partner and head of professional negligence at law firm Broadfield, says the structure for legal fees charged by solicitors is not simple. It is based on an Act of Parliament — Solicitors Act 1974 — and is very confusing. In the 1970s, bills relating to costs could be a few hundred pounds, but now they often total thousands and can even stretch to millions of pounds.
A customer’s rights are based on the client care letter, the terms of business of the solicitor and the 1974 act. That client care letter normally states that estimates are neither fixed nor binding. However, all is not lost.
Check that the hourly rates on the invoices are the same as stated in that letter and are not, as is often the case, different. Take a look at computerised time records and check that there is no duplication or excessive time charges. Also, check whether there is a duplication of costs relating to people in meetings as they can often be challenged.
It should also be noted that if a solicitor gives you an estimate without saying it might change, it’s legally treated as a fixed price. That means they can’t charge you more than the amount they quoted.
But check whether you personally approved any large, unexpected costs, such as fees for a barrister, expert fees or a company managing electronic documents.
As a rough rule, a variable estimate for those larges fees cannot be exceeded by more than 15 per cent to 20 per cent unless the client is forewarned. Therefore, doubling the fees should be challenged through the firm’s complaints procedure. If that fails, complain to the Legal Ombudsman or apply to challenge the invoices in the High Court.
Our next question
I am 58 years old and a UK citizen who has lived in Hong Kong for 12 years. I have three children who are all adults and two grandchildren, all based in the UK. I own a UK property and hold an investment portfolio in Hong Kong. I understand that the scope of inheritance tax changed recently. What are the changes and how will they impact me?
In such circumstances, a specialist costs lawyer should be engaged. Please note that there are strict time limits of one year to challenge costs from delivery of an invoice either at the Legal Ombudsman (where you have not already complained to the firm) or the High Court.
Sometimes a solicitor’s failure to properly estimate costs, provide a costs benefit analysis or advise you to obtain insurance against losing can amount to professional negligence. Advice from a specialist lawyer from the Professional Negligence Lawyers Association should be obtained. There is, after all, no point in winning a case and all the recoveries being paid to your lawyer.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to [email protected].
