A paper tiger

One of the oldest chestnuts in solicitor-own client assessments is the solicitor’s bill which grossly exceeds an estimate, or estimate of costs, or has sometimes been delivered to a client, unsullied by the presence of any estimate as part of the background of facts.

How should a costs judge sitting on a solicitor-own client detailed assessment of costs take into account the factor of an inadequate estimate of costs or the complete absence of one, when a client makes this complaint on the basis that they have received a bill, larger, often far larger than they were expecting?

The starting point is the Code of Conduct which says so far as is material that the duty upon a solicitor is to ensure:

“that clients receive the best possible information about how their matter will be priced and, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of the matter and any costs incurred.”

There has been a lot of law on estimates, their absence or their adequacy over the years, so much so that many costs judges have their own standard formulations of the legal principles to be applied.

An interesting recent case before Costs Judge Leonard illustrates both this practice and the statement of principles which is often applied. The case is called  Clare Griffin v Kleyman & Co Solicitors Ltd [2024] EWHC 1151 (SCCO)

In that case, the judge formulated the principles he had to apply thus:

106. If, on the assessment of costs between a solicitor and a client, it is found (a) that the solicitor has never provided the client with an estimate of the costs that the client was likely to pay or (b) provided the client with an inadequate estimate of the costs that the client was likely to pay, it may be appropriate to limit the amount payable by the client to the solicitor to an amount that it is reasonable, in all the circumstances, to expect the client to pay. That may be less than would otherwise be payable for work reasonably done by the solicitor at a reasonable rate.

107. If no estimate was given, the assessing judge must consider to what extent the costs claimed would have been significantly lower if an estimate had been given when it should have been. If an estimate was given, the extent to which the estimate may offer a useful yardstick by reference to which a reasonable payment may be identified will depend first upon the extent to which the estimate has been exceeded, and second upon whether there is a satisfactory explanation for the extent to which the costs have exceeded the estimate.

108. In order to demonstrate that it is right to limit the solicitor’s recoverable costs, it is not necessary for the client to prove on the balance of probabilities that he or she would, if adequately advised, have acted in a different way which would have turned out more advantageous to him or her. It may be sufficient that the failure to provide adequate advice deprived the client of an opportunity of acting differently, though that is likely to carry less weight, particularly where it is not possible to do more than speculate as to the way in which the client might have acted, if properly advised.

109. The ultimate aim will always be to identify the sum that, in all the circumstances, it is reasonable for the client to pay.

110. As Reynolds v Stone Rowe Brewer [2008] EWHC 497 demonstrates, if an inadequate estimate is given at the outset, then the fact that the estimate was subsequently updated may not be sufficient to prevent the solicitor’s costs from being limited by reference to the original. For instance, by the time the updated estimate is given it may be too late for the client to choose an alternative course of action.

There are some other intriguing points in the case, including consideration of what factors a solicitor should properly take into account, when formulating their estimate: can they assume for example, that the client is a client who will behave reasonably during the course of the matter?

The issues in the case revolved around an estimate of costs which was exceeded, and whether this was due to error by the solicitor, or the fast moving pace of the litigation, and the clients own demands upon the solicitor. The Costs Judge heard substantial evidence, well structured submissions and gave a very full written judgment.

The conclusion of the court after 247 paragraphs of careful and thoughtful evaluation of law, evidence and arguments was:

247. For all those reasons, it would not be appropriate to set a limit upon the Defendant’s recoverable costs by reference either to estimates given or estimates not given. Absent a settlement, it will be necessary to identify the amount that it is reasonable for the Claimant to pay the Defendant by proceeding to a full and detailed assessment of the Defendant’s bills.

On the evidence in that case, as recorded in the judgment, this is an unsurprising conclusion. But I would venture to say that it is an unsurprising conclusion more generally, as the conventional principles applied by the judge far more often than not, seem to produce the result that the court will rarely discount a client’s liability on the basis of shortcomings in the estimates. The law in this area is generally weak, rather than strong, although there will always be instances of extreme behaviour or neglect, around the margins.

I have always thought to this to be an odd approach. It seems to be at odds with the tenor of the Code which is far more robust in its language (and which is of course, made under statutory powers) and I think flows from the law taking a “wrong turn” in the well known case of Garbutt. Garbutt was however, a decision made in an inter partes costs dispute: and the considerations at play (for example limiting the scope for satellite litigation) were very different.

It should also be pointed out, that often to land a blow with an estimate, it is usually necessary to obtain evidence that the failings in the estimation process, had causative effect.

One way that this might be done is to show that the case could have been done a lot more cheaply by another firm, and so the failure to provide an estimate had a causative effect, as the client would have instructed that firm, had they known the true cost. Such evidence can be problematic: both in obtaining it, and in establishing what the client would have done, had they known about it at the time.

In consequence, unless and until there is a development in the law in this case, even stark departures from estimates, may prove to be of no real significance in a case, if there is a reasonable evidential explanation for them.

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