When instructing a solicitor it is of paramount importance that you are fully aware of the obligations you are assuming and potential liabilities. It is only when you fully understand the potential financial cost of bringing or defending a legal case or instructing a solicitor to that you can make an informed choice as to the most cost effective and pragmatic course of action.
It is recommended that you meet more than one solicitor before choosing who to instruct. Details of solicitors in your location can be found at http://solicitors.lawsociety.org.uk/
To ensure you fully understand the proposed terms of engagement offered by your solicitor it is recommended that you put the following questions to your solicitor:
- Will I be charged for an initial consultation–Choosing a solicitor who is best placed to deal with your specific requirements is a difficult decision for someone to make. An initial consultationby phone, face-to-face, letter or online can help you make your decision. A solicitor can charge you for an initial consultation but you should be advised of this before you arrange a consultation and any conditions attached.
You may be offered 30 minutes free of charge but will be charged for any time taken over 30 minutes. A lawyer should discuss costs with you and provide the best possible information so you can make an informed choice about the costs and benefits of instructing the solicitor
- What expertise / experience do you have of cases like mine?– Like any job, someone who is experienced will provide you with a better service and take less time to complete it. So make sure that the solicitor is entirely familiar with cases like yours.
- What is the process and what is expected of me? – It is important that you understand what will happen if you progress with your instruction and what this involves. This is your opportunity to understand exactly what you face, how long it will take and what you will have to do. Make sure that the solicitor explains this clearly. If you do not understand, do not be afraid to ask further questions. Most people have little involvement with solicitors and understandably know very little about the law. A good solicitor will be happy to answer your questions as this ensures that your expectations are realistic and that they can provide you with a service that you are happy with.
- Who will be working on my case–You need to ensure that the person or people dealing with your case are sufficiently experienced to enable them to put your case in the best possible manner. However you do not want a partner or very senior solicitor dealing with your case where a more junior solicitor can deal with your case competently. The more senior the person working on your case, the more expensive it will be.
It is good practice for work to be delegated to more junior fee earners or administrative assistants where appropriate. This will also save you money. Seek assurances from the solicitor that this will take place on your case.
- How do you charge? – Traditionally solicitors charge for the work they complete based on time expended and charge their client’s either monthly or at the end of the case. However it is becoming increasingly common for fixed fees to be charged for particular types of work. Other alternatives are Conditional Fee Agreements which are more commonly known as No Win, No Fee Agreements and Damages Based Agreements. This is where you agree that your solicitor will be paid out of damages you recover from your opponent.
Fixed Fee – For some types of work such as conveyancing or debt recoverysolicitors offer to work for a fixed fee. This has the benefit of giving you certainty about the costs you will have to pay.
These fixed fees will be based upon assumptions as to how much time is required and how the instruction progresses. It is important to understand in what circumstances additional costs will be payable over and above fixed fees offered.
However you may find that the matter settles very quickly and you still have to pay the agreed fixed costs.
Hourly rate – This is where the solicitor records all time they spend and charge you at an hourly rate based upon the experience of the person conducting the work. This means that every letter, call and piece of work costs you money. If this is the case you need to remember this when communicating with your solicitor and ensure that you keep your communications to the minimum necessary to enable you to understand the advice from your solicitor and provide instruction. A solicitor is not allowed to charge for routine incoming letters and e-mails so where possible write and e-mail rather than call your solicitor.
Conditional Fee Agreement (CFA) – This is more commonly known as a No Win No Fee Agreement. Your costs are charged on an hourly basis. However, if your case is unsuccessful you do not pay your solicitor (you will most likely need to pay for court fees, medical reports and other disbursements). If you win you will often need to pay your solicitor a success fee. This is an additional percentage of your solicitor’s costs which is based on the hourly rate costs. The percentage is based upon how risky the solicitor considers your case. You should request clarification of how any success fee is calculated. This is capped at 25% of the damages you receive
Damages Based Agreement (DBA) – This is where a solicitor agrees to charge you a percentage of the damages you recover from your opponent. The benefit of this is that you do not have to find money to pay your solicitor regardless of the outcome (except court fees, expert reports and other disbursements). The disadvantage of this is that the case may settle very quickly and you will still be liable to pay the agreed costs from your damages. In this case your solicitor could obtain thousands of pounds for just a few letters. The problem with these agreements is that at the outset it is difficult to be sure how the case will progressand the risks that will be faced. This can mean that the solicitor assumes a large amount of work will be done and therefore a large fee will be charged.
- Hourly rate–In most cases your solicitor will charge you based on the time they expend on your case. The biggest factor is the amount they charge per hour.
You need to consider whether the hourly rate is reasonable before instructing your solicitor because once you have agreed an hourly rate you are in most circumstances unable to challenge this rate.
The court used to publish guidelines for appropriate hourly rates. The most recent being in 2010. These figures are still used as broad approximations of what is appropriate if costs are assessed by a court or are negotiated with your opponent. However in complex cases it is more likely that an hourly rate higher than the guidelines will be permitted by the court or agreed by your opponent. The guideline rates are available here. http://webarchive.nationalarchives.gov.uk/20110218200720/http:/www.hmcourts-service.gov.uk/publications/guidance/scco/previous_rates.htm
- Costs estimate
Solicitors have to provide you with an estimate of your costs at the outset of your case and provide updates during the case. If you are not advised properly as to the extent of your costs liability there is a strong possibility that you will be able to reduce your legal costs to the level of the last estimate provided by your solicitor.
Often solicitors give you a rough figure of say £5,000 to £7,000. This is not sufficient for you to assess the reasonableness of the estimate provided. You should ask:
- What work is anticipated, at what hourly rate and based on what assumptions? – You should request confirmation of how many hours are anticipated to be required, who will complete this work and what assumptions are made when this estimate is calculated. This will ensure you have the necessary information if you wish to challenge your costs when presented with a bill.
- How the success fee is calculated? – If the solicitor is charging you a success fee you need to ask on what basis this is calculated. The solicitor should have identified specific risks to justify a success fee.
- Are any other costs payable? –For example court fees, expert reports, photocopying charges, charges for bank transfers etc.
- Does the estimate include VAT? – Often estimates provided exclude VAT. If this is the vase you will be hit with an unexpected 17% increase in the costs you have to pay. Ensure the solicitor is clear on this point.
- Does it include everything–This is a great catch all question which prevents the solicitor from charging you for anything you have not been advised of.
- How can you keep costs low– Often a significant proportion of costs can be generated in organising documents, obtaining information and in other tasks which you would be able to do yourself. Make clear to your solicitor that you are willing to complete work to keep your costs low.
- After The Event (ATE) Insurance – If you do not have existing Before The Event (BTE) Insurance, if it is available, it is very wise to take out insurance against having to pay your opponents costs and your disbursements. The cost of this insurance is not recoverable from your opponent
There are two types of ATE policy. There is either a single premium or a staged policy where a premium is payable at the outset, a further premium on issue and a final premium if the case goes to trial.
- You should ask your solicitor whether they receive a commission on policies they recommend?
- Have they reviewed policies from alternative providers to ensure best value?
- What will the premiums be at all stages of the case. Without this information you could be in for a big shock if the case goes to trial.
- What costs do I pay if I win? – You need to be sure what financial position you will be in if you win.
Success Fee – If you have conducted via a Conditional Fee Agreement you will in most cases need to pay a success fee out of your damages.
Costs not recovered from your opponent – There is also a risk that you will have to pay any shortfall between the amount of costs billed by your solicitor and those recovered from your opponent. If this is the case you could face a substantial bill which may exceed the damages you recover from your opponent. Without clarifying this position you cannot assess whether it makes financial sense to progress a case further.
Proportionality – There have been recent changes to the rules which mean that where disproportionate costs are incurred, even if necessary, the court can disallow costs. Ask your solicitor whether you would be liable for your solicitor’s costs if they were reduced on the basis of proportionality. Brian May of Queen fame found his costs reduced from £208,236.54 to £42,000!
- What costs do I pay if I lose?
According to Charles from Check My Legal Fees “You need clarity from your solicitor what costs you will have to pay if your claim is unsuccessful”. This can include your solicitor’s costs, your disbursements and your opponent’s costs.
You also need confirmation that your BTE insurance (if you have any) or a proposed ATE insurance policy will cover all of the costs you may be expected to pay or any exclusions which may leave you facing a bill.
- Before The Event (BTE) Insurance
If you have legal expense insurance your insurer will refer you to one of their solicitors. However if you wish to instruct a solicitor not recommended by your insurer please ensure that you make that solicitor aware that you have insurance and provide the solicitor with your details of your insurance policy.
If your BTE insurer is not made aware of a claim at the outset there is a real risk that indemnity will be refused.
- When will I be billed and how long will I have to pay
You need to understand the solicitor’s policy in relation to payment to ensure you will be able to meet the costs charged by your solicitor.
Often solicitors require payment for disbursements before they are incurred. This can be especially important where a claim needs to be issued and you are required to pay a court fee. This can be a significant sum of money. If you are not able to put your solicitor in funds you claim may be struck out due to limitation. (A claim needs to be issued at Court within 3 years for personal injury claims and 6 years for most other claims)
It is much better to have certainty on this point at the outset rather than after you have received a request for payment of disbursements or a bill from your solicitor.
If you are unable to pay your solicitors bill your solicitors may refuse to act or may take action against you to recover their fees.
Unhappy with your solicitors bill?
CheckMyLegalFees.com are experts in challenging solicitors’ bills. We are happy to provide you with initial advice for free. If we think we can reduce your costs we will challenge your solicitors fees on a No Win, No Fee basis.
If you receive a final bill or an interim bill or invoice and you feel the costs are excessive contact us.
Please be aware that time is of the essence. You have an automatic right to challenge your solicitor’s costs within 1 month and on application within 12 months of your solicitor validly serving a final bill of costs which is compliant with the Solicitors Act 1974.
This is regardless of whether you have paid the bill.
If you have not received a final bill in the format required it is possible to challenge your legal bills from the last 6 years.