What information should my client retainer include to avoid challenges?

Welcome to the fifth instalment of my series, answering questions asked by some of our amazing solicitor clients. Today, I am going to discuss the following question which I was asked a few weeks ago

“What information should my client retainer include to avoid my costs being successfully challenged under Section 70 of the Solicitors Act 1975, and how can I protect my firm’s position as the case progresses?”

As most solicitors know, fee disputes can often introduce an element of unwelcome unpredictability in a case. This is particularly the case in costs claims under Section 70 of the Solicitors Act 1975, which empowers clients to challenge the legal costs charged by their solicitor.

So, what can you do to secure your practice against such challenges? Well, there are a few important principal areas to consider.

Clearly defining the scope of work

Imagine you've taken on a case in commercial litigation. The specifics of the tasks you'll undertake need to be crystal clear - drafting and filing the claim, court appearances, negotiations, etc. But it's just as important to stipulate what isn't part of the deal, for example, bringing in a specialist for expert testimony or pursuing an appeal. commercial litigation

Detailing the fee structure

When it comes to fees, there's no room for ambiguity. If you're billing by the hour, don't just state your hourly rate. Give an estimate for the total hours you anticipate the case will take. If it's a flat-fee arrangement, be meticulous about what tasks are covered. And if there's a potential for extra costs, for example if the case goes to trial instead of an early settlement, that should be made clear out from the outset. If you are instructed on an ongoing basis, provide up-to-date costs information on a six-monthly basis if the client is not billed periodically for work already done.

Types of interim bills

Your retainer should be clear as to whether interim “bills” (bills to the client during the course of their instructing you) are final “statute” bills for the period they cover or are invoices on account of costs which can be exceeded when a final statute bill is raised. If they are interim statute bills, they are final for the period and cannot be exceeded when a final statute bill is raised, but they can be enforced if the client fails to pay. If, on the other hand, they are intended as only invoices on account of costs, they are merely requests for monies to cover some of the costs you have incurred. They can be exceeded when a final statute bill is raised at the end of the retainer, however they cannot be enforced as they are not bills in the true sense of the word.

Expounding on expenses and disbursements

These ancillary costs can sneak up on a client and lead to disputes down the line. Court fees, travel costs, expert witness fees, and even things like copying and postage charges all need to be accounted for. If your case strategy might involve instructing Counsel, be explicit that their charges will come as an extra on top of your own. And don't forget to include information about VAT charges. You should also agree all expenses, in particular Counsel’s and experts’ fees, with the client before they are incurred.

Setting down clear billing and payment terms:

Always set out the billing schedule, payment terms, and accepted methods of payment clearly. Remember to specify if there are any charges for late payment, including how and when interest is calculated.

Stating the client's right to challenge the bill

It's not just good practice to clarify this right; it's mandatory under Section 70. Ensure that clients know they have an absolute right to challenge a statute bill within a month of it being delivered, and the right to apply for an assessment within 12 months of the bill being delivered, subject to the discretion of the court. After 12 months, or once the bill has been paid (even if it is within 12 months), that right ceases to exist save in special circumstances. It is therefore vital that the retainer clearly explains the consequences of not challenging a statute bill within the required time limits or before the bill is paid.

Outlining termination clauses

It's the provision everyone hopes never to use, but it's crucial to address it head-on. Specify the notice period required, what happens financially if the client chooses to terminate at various stages, and your right to cease acting for the client in specific circumstances. Be clear about the circumstances in which you, as their solicitor, can terminate the client’s retainer.

Agreeing on alternative dispute resolution procedures

It's always wise to have a plan B. Include a provision in your retainer that you both agree to an alternative dispute resolution process, such as mediation or arbitration, before any legal action commences in case of a disagreement over fees. alternative dispute resolution

The client care letter

This is your chance to summarise the key points in a language that's clear and accessible. Reiterate the essential terms of the retainer, explain your fees, and assure the client of your commitment to their case.

Regularly revisit your retainers

These points are important and should be considered when drafting any solicitor/client retainer, but don’t make the mistake of seeing them as just 'one and done' documents. Think of them as living, breathing agreements that need to be reviewed and updated regularly to keep up with changes in the law, your practice, and client expectations. Of course, you can do this yourself, but working in tandem with an experienced costs lawyer when crafting these agreements can prove invaluable. A second pair of eyes and an understanding of the latest legal regulations can ensure that your retainers remain robust, comprehensive, and worth their weight in gold. costs lawyer

So, there you have it. A retainer agreement isn't just a formal requirement, it's your protection against unwelcome, and potentially costly, fee disputes. Remember, communication is king, and a comprehensive, transparent retainer is the first step in creating a lasting, successful relationship with your clients.

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