Recently we have seen a steady rise in cases brought by former clients against firms seeking refunds of their legal fees. These claims often stemmed from problems with the invoice sent to the client at the end of the case. In some cases invoices had never even been sent. This blog deals with the requirement to send an invoice, and the consequences for not doing so.
This is the first blog in a series covering various aspects of solicitor / own client relationships. You can find the other blogs here:-
Section 69 of the Solicitors Act 1974 states that a solicitor may not bring any action to recover any costs due until after one month from the delivery of a bill of costs. These are often called a “statute bill” or “statute invoice”. The requirements for a statute invoice are set out at section 69(2) and are deceptively simple – the invoice must be signed and delivered. The meaning of “signed” and “delivered” are set out at s69(2A).
Until an invoice is delivered in accordance with the Act, a solicitor does not have any right to take client money. Doing so could (and probably would) be a breach of Rule 5.1 of the Solicitors Accounts Rules.
Unfortunately there is no further explanation within the Act as to what a statute invoice is or what information it must contain. Whether or not an invoice is a statute invoice is therefore regulated by case law. This is a large topic and is explored further in the second blog in this series Avoiding Challenges to your Costs II: What is an Invoice?
It is not uncommon to see solicitors fall foul of the Rules, particularly where the claim has been conducted on a CFA and / or is subject to fixed costs. In those cases invoices are often either not sent, or are not compliant.
The danger of not sending a compliant invoice are significant. Not only is it likely to be a breach of the Accounts Rules, but it creates a serious risk that former clients could seek repayment of costs paid years ago. Section 70 of the Solicitors Act sets time limits for a client to seek an assessment of their own solicitor’s bill. In short, where a bill was paid more than 1 year ago, the Court has no jurisdiction to assess costs at all. However, if a compliant bill was never sent, then that time limit never begins to run. Therefore, the client could at any time request a compliant bill (and can apply under section 68 of the Solicitors Act to compel the solicitor to deliver one) and then seek assessment.
The dangers of a failure to raise a compliant bill should therefore be obvious: it creates an open-ended liability where any client could seek delivery of a bill years after the conclusion of the case. Those costs also become at risk of changes in the law. For example, the case of Belsner -v- Cam Legal Services Ltd  EWHC 2755 (QB) shook the personal injury world by creating a requirement for a client to give “informed consent” to paying more than was recovered from the opponent in costs. It would be bad enough for such a judgment to create a risk on every live case in a solicitor’s caseload, but far worse if it were to a create a risk on every case they had ever worked on.
In summary, solicitors must always invoice their client before taking money. This applies whether the case is privately funded, on a CFA, DBA, subject to fixed costs or any other funding structure. Failure to do so creates significant risks to the firm of future challenge.
You can find out more about our services here or you can contact the Costs Team at CivilCosts@clarionsolicitors.com