In Richard Slade and Company v Boodia and Boodia [2017] EWHC 2699 (QB) the Queen’s Bench Division of the High Court, in an appeal from the Senior Courts Costs Office, upheld the Cost Master’s finding that interim statute bills must include disbursements.
As the bills did not include disbursements, they were not interim statute bills, and thus were not final bills for the period described, because not all of the costs were included in the bill.
Consequently the clients were not time-barred from seeking Solicitors Act assessments under the Solicitors Act 1974 for all 61 invoices involved.
The term “interim” statute bill is a little confusing, as in fact the whole point of such a bill is that it is final and complete for the period it covers. That finality and completeness allows solicitors to sue on the bill pursuant to the provisions of section 69 of the Solicitors Act, but prevents the solicitor from charging any further fees for that period.
Thus finality and certainty is there for both parties, and a client can decide whether or not to pay or dispute the bill. The courts have long realised that the wording is somewhat unfortunate. In Bari v Rosen (trading as RA Rosen & Co Solicitors) [2012] 5 Costs LR 851, the court, at paragraph 15, said:
“… a solicitor may contract with his client for the right to issue statute bills from time to time during the currency of the retainer. Such bills are known as “interim statute bills”. They are nevertheless final bills in respect of the work they cover, in that there can be no subsequent adjustment in the light of the outcome of the business. They are complete self-contained bills of costs to date.”
In Bari, the High Court adopted that wording and reasoning.
It is important to note the wording that “there can be no subsequent adjustment in light of the outcome of the business.”
Thus if a bill is genuinely an interim statute bill charged at the discounted rate in a no win lower fee agreement, then there can be no subsequent further charge.
In Slade, the court did briefly refer to the situation of a conditional fee agreement case saying, at paragraph 52:
“The only potentially practical difficulty would be in a CFA case. Until the outcome of the case was known the client’s liability for costs could not be determined. However, where a decision was to be made between an interpretation that caused inconvenience to a solicitor and one which caused prejudice to a client, the client’s interest prevails.”
The point here is that generally a solicitor can deliver an interim statute bill, as they will know the work done to date and any disbursements incurred, and thus a final interim statute bill can be delivered, which the client has to pay, and the solicitor can sue on the bill if it is not paid.
Obviously that cannot be done in a conditional fee case, as the final bill for that period will not be known until the case is concluded.
It is also most important that solicitors in conditional fee cases, whether no win no fee or no win lower fee cases, make it clear when delivering a disbursements only bill, that it is not an interim statute bill. Otherwise it may be found that the solicitor can deliver no further charges for that period, and thus cannot charge profit costs.
Proper wording of the bill avoids that problem, but creates another problem, namely that the solicitor cannot sue on an interim on account bill as compared with an interim statute bill.
Thus it is essential to obtain payment on account of such costs, and then an interim on account bill can be delivered and the costs transferred from client account to office account to discharge that bill.
Generally, care needs to be taken when delivering an interim statute bill to ensure that all disbursements to date are included.
There is an obvious problem in relation to counsel’s fees, in that counsel may be carrying on work generally and not have delivered a fee note for work done to date.
This is recognised in paragraph 54 of the Slade judgment, where the court says:
“Master James recognised in paragraph seven of her judgment the practical difficulties of obtaining and including disbursements such as fees for counsel and experts to coincide with the period in time to which a solicitor’s fees relate. The Master recognised that her answer that interim non-statute bill could be rendered carried the disadvantage by reason of Section 69 their payment cannot be enforced by taking proceedings.”
The benefit of having a final interim statute bill is that the solicitor can sue on it and the client has strict time limits in which to challenge the bill under the Solicitors Act.
The disadvantage from the solicitor’s point of view is that they cannot revisit the work done in that period, and thus it must be a carefully calculated and costed bill for work done during that period.
Thus if a solicitor, in a long ongoing matter, simply wishes to bill say £2,000.00 a month and then adjust the total each year, or at a natural interlude, or at the end of the case, then the solicitor must ensure that it is not an interim statute bill.
Perhaps the most significant area where solicitors must ensure that the bill is not an interim statute bill is where they are acting on no win lower fee basis and thus charging the client the discounted fee as the matter proceeds, but with the right to charge the full primary fee, plus a success fee if appropriate, in the event of a successful outcome.
Such bills are in fact “on account” bills and this should be made clear in the text of the bill.
Furthermore, the bills should not refer to Solicitors Act assessments as that indicates that they are statute bills. That was the case in Slade but the court held that it “would be reluctant to make a finding of a fatal flaw in the retainer” for that reason (paragraph 3, Slade).
Where a series of interim, and not statute, bills is delivered as part of a running account in respect of one piece of work, then the time for requesting assessment, and the time from when the solicitor can sue on the bills, runs from the date of delivery of the final, statute, bill.
Such a bill is known as a Chamberlain Bill, following the case of Chamberlain v Boodle and King [1982] 3 All ER 188.
Here the court examined the authorities and stated that in order for a bill to be a statute bill, whether interim or final, it “must be complete, self-contained and final in relation to costs to date” (paragraph 17, Slade).
A solicitor may render a bill and client may pay that bill without it constituting a statute bill (paragraph 22, Slade).
That is what is happening when a bill for the discounted element of the fee in a no win lower fee agreement is delivered and paid.
