Your Legal Costs Duties

New legal services costs transparency rules came into force in October 2019, under Part 10 of the Legal Services Regulation Act 2015. Expand the links below to find out what these mean for you and your practice.

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Costs Transparency Rules

The purpose of Part 10 of the Act is to make legal fees and costs charged by legal practitioners more transparent for clients by requiring legal practitioners to notify them in advance of what costs are likely to incur for the legal service or advice they require.

This allows clients to budget and plan in advance for these expenses.

For solicitors

Solicitors previously had obligations under section 68 of the Solicitors (Amendment) Act 1994 to provide clients with particulars in writing of the actual charges or an estimate of the charges or the basis on which charges are to be made for the legal services they will provide.

For barristers

Prior to the commencement of section 150 of the Legal Services Regulation Act 2015, barristers were not required by law to provide written details outlining the basis for their fees.

However, section 12 of the Bar Code of Conduct contains guidance for barristers in relation to fees.

Under section 68 of the 1994 Act there was no obligation to update the initial section 68 letter if the solicitor learned of circumstances that would result in significantly greater legal costs being incurred than had been previously disclosed.

Now, a legal practitioner is obliged to issue a new section 150 notice if they become aware of any factor that would result in legal costs likely to be incurred being significantly greater that those set out in the original section 150 notice.

Cooling off period

A new “cooling off” period: There was no obligation under the 1994 Act for the solicitor to wait until the client confirmed they wished to instruct the solicitor after the receipt of the section 68 letter.

Now, a legal practitioner must wait for the period specified in the section 150 notice (a period of not more than 10 days) to expire before providing any legal services unless the client confirms that he wishes to instruct the legal practitioner or have the legal practitioner continue providing legal services in the matter.

It is important to note that this requirement also applies to subsequent section 150 notices issued by legal practitioners.

Complaint to the LSRA

One of the grounds for clients making a complaint about a legal practitioner to the Legal Services Regulatory Authority is that the amount of costs sought by the legal practitioner in respect of legal services provided to the client by the legal practitioner was or is excessive.

In the investigation of such a complaint the LSRA will require the practitioner to provide copies of all letters sent in accordance with section 150.

Seeking an amount of costs in respect of the provision of legal services that is grossly excessive may also constitute misconduct.

In deciding whether to impose a sanction on the legal practitioner or refer the complaint to the Legal Practitioners Disciplinary Tribunal, the LSRA Complaints Committee will consider the failure to provide a section 150 notice or providing an inadequate section 150 notice as a factor in their decision.

Referral to Legal Costs Adjudicator

Where a bill of costs is referred to the Legal Costs Adjudicator, they may decide not to confirm a charge in respect of a matter or item if the matter or item was not included in the section 150 notice or is not the subject of an agreement referred to in section 151.

However, the Legal Costs Adjudicator has discretion to confirm charges in such situations where they are of the opinion that to disallow the matter or item would create an injustice between the parties.

Complying with section 150 costs rules

Section 150 requires legal practitioners to provide their clients with a notice written in clear language.

It must set out what legal costs will be incurred in relation to the matter.

The costs notice must be issued after a legal practitioner has received instructions, but before he or she has started providing the advice or legal service.

Where it is not ‘reasonably practicable’ for a legal practitioner to disclose legal costs after initial instructions from a client, the practitioner must set out the basis on which the legal costs are to be calculated e.g. hourly rates.

As soon as it become practicable to do so, the legal practitioner shall provide the client a notice setting out what legal costs will be incurred.

A ‘section 150 notice’ – or costs notice – should detail the amount of legal costs that have been incurred up to the date the notice is provided.

It should detail the legal costs that are of a fixed nature that are certain to be incurred (e.g. Property Registration fees, stamp duty on documents filed in court).

If it would be impracticable for a legal practitioner to certify legal costs, the basis on which they are to be charged should be outlined.

The notice should contain details of the amount of VAT to be charged.

It should set out the basis on which the amounts were or are to be calculated by reference to the following criteria:

    • The complexity and novelty of the issues involved;
    • The skill or specialised knowledge applied;
    • The amount of time and labour reasonably spent;
    • The urgency attached by the client to the matter;
    • The place and circumstances in which the matter was transacted;
    • The number, importance and complexity of documents;
    • The amounts or values of money, property or an interest in property;
    • Whether or not there is an agreement to limit the liability of the solicitor;
    • Any research or investigative work undertaken and the time spent on it;
    • The use and costs of expert witnesses or other expertise.

The notice should state the legal practitioner’s obligation to issue a new section 150 notice to the client where he or she becomes aware of any factor that would result in legal costs likely to be incurred being significantly greater that those previously disclosed.

The costs notice should also set out a “cooling off” period of up to 10 working days.

Yes. Where the legal service related to litigation or is likely to result in litigation. the section 150 notice must:

    • Outline the work to be done at each stage of the litigation process and the costs or likely costs or basis of costs involved in respect of each such stage, including the likelihood of engaging a practising barrister, expert witnesses, or providers of other services.
    • State the legal practitioner’s obligations under section 150(6) (i.e. a legal practitioner must ascertain the likely cost of basis of cost of engaging a barrister, expert witness or any other service provider before engaging them, they must provide the client with details of what likely cost of engaging them will be and they must satisfy themselves that the client approves of the engaging of the person).
    • Information as to the likely legal and financial consequences of the client’s withdrawal from the litigation and it discontinuance.
    • Information as to the circumstances in which the client would be likely to be required to pay the costs of one or more other parties to the litigation and information as to the circumstances in which it would be likely that the costs of the legal practitioner would not be fully recovered from other parties to the litigation.

The costs notice should also set out a “cooling off” period of up to 10 working days.

After providing a client with a section 150 notice, a legal practitioner should not provide any legal services for the period specified in the notice, unless:

  • the client confirms that they wish to instruct the legal practitioner, or
  • for the legal practitioner to continue to provide legal services (in the context of “new” section 150 notices).

There are three exceptions to this “cooling off” period:

  1. Where it is the legal practitioner’s professional opinion that not to provide the legal services in question would be in breach of a statutory requirement or the rules of court, or would prejudice the rights of the client in a matter that could not later be remedied.(e.g. if a delay in instituting proceedings would result in the client’s case being statute barred, injunctions or urgent domestic violence applications)
  2. Where a court orders a legal practitioner to provide legal services to the client.
  3. Where the matter involves litigation, a notice of trial has been served in relation to the matter, or a date has been fixed for the hearing of the matter concerned.

Yes, if a client seeks clarification in relation to a notice, a legal practitioner must provide this as soon as is reasonably practicable.

Where a practising solicitor instructs a barrister on behalf of a client, the barrister is obliged to provide a section 150 notice to the solicitor.

Where a solicitor (or a client) requests further clarification in relation to a section 150 notice provided by a barrister, the solicitor shall pass this on to the client.

Yes. A legal practitioner can still make an agreement in writing regarding the amount, the manner of payment or all or part of the legal costs that are payable by the client to the legal practitioner for legal services.

There is no need to provide a separate section 150 notice in addition to their legal agreement in relation to costs where the legal agreement contains all the details required in a section 150 notice (as set out in section 150(4) of the Act).

The Act requires clients who dispute any aspect of a bill of costs to send the legal practitioner a statement in writing setting out the nature of their dispute. This must be done within 21 days of the bill of costs being provided to the client.

A legal practitioner on receipt of this statement should take all appropriate and reasonable steps to attempt to resolve the dispute by informal means. This may include mediation, if the client is agreeable to this.

Where the legal practitioner or the client, after having made reasonable attempts to resolve the dispute, considers that there are no prospects of resolution, he or she will inform the other party in writing.

Where a client does not pay some or all of a bill of costs within 30 days of receipt of the bill, this shall not be considered as a dispute.

However, where a bill of costs or any part of it remains unpaid within 30 days of its receipt by a client, the legal practitioner may apply to the Chief Legal Costs Adjudicator for the bill of costs to be adjudicated upon.

Bill of Costs

When you have completed providing legal services, a legal practitioner should as soon as practicable prepare and sign a bill of costs which shall contain the following details:

  • a summary of legal services provided to the client in connection with the matter concerned;
  • an itemised statement of the amounts in respect of the legal costs in connection with the legal services;
  • the registration number of the legal practitioner for the purposes of VAT and the amount of value-added tax chargeable in respect of the amounts referred to in paragraph (b);
  • where time is a factor in the calculation of the legal costs concerned, the time spent in dealing with the matter;
  • the amount, where known to the legal practitioner, of any damages or other moneys that are recovered by, or payable to, the client and that arose from the matter in respect of which the legal services were provided;
  • the amount of any legal costs recovered by or payable to the legal practitioner
  • concerned on behalf of the client, including costs recovered from another party,
  • or an insurer on behalf of another party, to the matter concerned.

In addition, to the bill of costs, you should include an explanation in writing of the procedures available to the client should the client wish to dispute any aspect of the bill of costs, which should include the following information:

  • that the client may discuss the matter with the legal practitioner;
  • that the client is obliged to communicate to the legal practitioner the existence of a dispute on any aspect of the bill of costs, and the date and means by which this is to be communicated;
  • that, where a dispute is communicated to the legal practitioner, the legal practitioner is obliged to attempt to resolve the dispute by informal means, including mediation;
  • that the client may have the dispute referred to mediation, including a reference
  • to the procedures available for such mediation;
  • that the client may apply for adjudication of legal costs, including the contact
  • information for the Taxing Master’s Office and the potential cost to the client of seeking an adjudication of a bill of costs; and
  • the date on which the legal practitioner may make an application for an adjudication in the event that the bill of costs or any part thereof remains unpaid.

Yes, you are still required to provide a bill of costs. The legal costs agreement should be annexed to the bill of costs.

Where the legal costs agreement concerns all of the legal costs that are payable, an invoice prepared by the legal practitioner containing a summary of the costs and outlays pursuant to the agreement along with a copy of the agreement, shall constitute a bill of costs for the purposes of this section.

The Act requires clients who dispute any aspect of a bill of costs to send a legal practitioner concerned a statement in writing setting out the nature of their dispute within 21 days of the bill of costs being provided to them.

A legal practitioner on receipt of this statement should take all appropriate and reasonable steps to attempt to resolve the dispute by informal means which may include mediation if the client is agreeable to this.

Where the legal practitioner or the client, after having made reasonable attempts to resolve the dispute, considers that there are no prospects of resolution, he or she will inform the other party in writing.

Where a client does not pay some or all of a bill of costs within 30 days of receipt of the bill, this shall not be considered as a dispute.

However, where a bill of costs or any part of it remains unpaid within 30 days of its receipt by a client, the legal practitioner may apply to the Chief Legal Costs Adjudicator for the bill of costs to be adjudicated upon.

Yes, a barrister is obliged to provide a bill of costs where they he or she has completed providing legal services in relation to a particular matter.

This obligation is met by providing the bill of costs to the solicitor who instructed the barrister in the matter.