The Court of Appeal has ruled that payment of a bill to personal injury solicitors was completed when they deducted the money from the client’s damages.
Judges said in Menzies v Oakwood Solicitors Ltd that the conditional fee agreement between the parties had specifically authorised the solicitors to recoup their fees out of the claimant’s compensation.
It followed that payment of the bill was effectively made more than one year before the bill was challenged and therefore that the deduction could not be reassessed.
Judges also reiterated their call for the rules around solicitor costs to be updated, pointing out that the Solicitors Act 1974 which dictates such matters has barely changed in wording since the Solicitors Act 1843.
‘The world of 2023 is a far cry from the early days of Queen Victoria’s reign,’ said Sir Geoffrey Vos, master of the rolls. ‘The balance between the protection of consumers on the one hand and certainty on the other needs to be re-evaluated in order to produce a system fit for the current century.’
The case itself was a challenge led by costs recovery firm JG Solicitors to deductions from client damages by Leeds practice Oakwood Solicitors.
Oakwood’s client had suffered serious injuries in a road traffic accident and the firm secured an offer in March 2019 for a global sum of £275,000.
The client had indicated he wanted to settle the claim and the solicitors stated that they would take 25% from the award, which was retained pending costs negotiations with the defendant.
The client was paid in July 2019 and took no further action to challenge the bill for nearly two years, explaining that he had just placed his trust in his solicitors.
On first instance, Costs Judge Rowley held that the application for assessment was time-barred, albeit he noted that the solicitors’ letter and accompanying bill was ‘amongst the most impenetrable documentation that I have seen’.
On appeal, Mr Justice Bourne upheld the client’s challenge, saying that there had been no ‘settlement of account’ and that the final solicitors’ letter in July 2019 had not made it clear there was a choice between declining or agreeing to the deductions made.
Appeal court judges said the action of payment of a solicitor’s bill was no different to paying any other bill.
‘The delivery of a compliant bill will give the client the necessary knowledge,’ added Vos. ‘The requirement of consent does not, in our view, require that consent be given after the delivery of the bill, if the client has already validly authorised the solicitor to recoup his fees by deduction from funds in his hands.’
