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Solicitors Act charge

A Solicitors Act charge is a tool that solicitors can utilise to recover their costs against a client, where exercising a lien is unavailable, inappropriate or ineffective.

It was created by section 73 of the Solicitors Act 1974. Where a solicitor has been employed to prosecute or defend any suit, matter or proceedings, the court can:

  • Declare the solicitor entitled to a charge on any property recovered or preserved through its instrumentality for his or her assessed costs in relation to that suit, matter or proceedings.
  • Make such order for the assessment of those costs and for raising money to pay or for paying them out of the property recovered or preserved as the court thinks fit.

Procedure

The procedure is governed by CPR 67.3 (claims under Part III of the Solicitors Act 1974).

A claim is issued under Part 8 or Part 23 in either the County Court or the High Court if within existing proceedings.

In cases of emergency, where there is a real risk of dissipation of the property in question, you can make an ex parte application for an interim charging order at the same time.

Case example

I have only ever done two applications in my 10 year career, as the circumstances in which they can arise are rare. I illustrate this by reference to an actual case in which I was involved.

We were instructed by the client under a conditional fee agreement (CFA) in 2007 in a clinical negligence claim. A claim was issued against a hospital trust and liability was admitted. The client was not happy with our advice; the CFA was terminated and the client later became a litigant in person.

Our fees were approximately £800,000 (including previous solicitors). We retained and exercised our lien over the papers. We issued an ex parte application and an interim charging order (subject to detailed assessment) was granted over the damages and costs likely to be received by the client. A copy of this was served both on the client as well as solicitors for the trust. Trial was adjourned and the client instructed another firm of solicitors to represent him.

The interim charging order was dismissed because trial had been adjourned and the immediate threat of dissipation of any damages/costs had passed.

A bill of costs was served on the client and Part 8 proceedings for detailed assessment under section 70 of the Solicitors Act 1974 were issued in May 2012.

The new solicitors would not provide an undertaking to hold any damage/costs pending assessment/agreement between us and the client in return for discharge of the lien.

A further application for a Solicitors Act charge was issued by way of an application notice within the costs proceedings. However, it then came to light that the client had compromised his claim with the trust and was due very shortly to receive a sum of approximately £700,000. As such, a Part 8 claim for a Solicitors Act charge was issued urgently ex parte and a further interim charging order was granted. By this time, the trust confirmed that the sum had already been paid to the client’s new solicitors. The new solicitors then confirmed that they were no longer instructed and that the sum had been sent on to the client.

The client made an application to set aside the interim charging order. This was not successful and our interim charging order was made final, albeit for a lesser sum (a sum that would represent a reasonable payment on account of costs instead of all of the estimated costs still subject to detailed assessment).

Although a detailed assessment hearing was listed, this was eventually vacated after costs between us and the client was settled by consent.

Case law

There are very few reported cases concerning a Solicitors Act charge. In Al-Abbas v Al-Dabbagh, the Court of Appeal held that, as no order for costs had been made, a restraining order could not be properly made. That case can be distinguished from ours on the basis that liability had been admitted and offers had been made by the trust to include costs. The question for us was one of quantum and not whether the client had liability to pay us or not. In addition there was an argument about whether a Solicitors Act charge could only apply to assessed costs.

Section 73(1)(a) refers to a charge being made on assessed costs when they are assessed and therefore in contract; section 73(1)(b) allows for a charge on costs not yet assessed (otherwise there would little purpose served by the existence of this subsection).

Conclusion

The case above was very unique in its circumstances; an uncooperative client and his new solicitors, imminent trial date and potential for substantial sums of monies to be paid, and a real risk of dissipation of funds to avoid costs liability to us.

We were unable to secure any undertakings from either the client or his legal representatives, and a lien over his papers was not enough to provide security for our costs. I think the impact of a lien will only diminish as we move towards more electronic and paperless working.

It may well be that you never come across all the right elements for a Solicitors Act charge to bite, but when you do, it is worth knowing that there is an alternative recourse to obtaining security and payment of your costs from a client.

Hodge Jones & Allen Chun Wong

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