Ethics and Professional Conduct – 4ed (2024) Chapter 5 Client Care and Costs

Client Care and Costs

• The chapter is about acting honestly and with integrity in providing legal services, maintaining trust, showing service, and handling assets.
• The legal services market is competitive
• Firms spend a lot on advertising, making client retention through outstanding service essential.

Introduction

• Addresses client care, cost information, client letters, Consumer Contract Regulations 2013, fee structures, and billing matters.

Client Care

• Solicitors must meet minimum service standards, acting in the client's best interest.
• Solicitors should not exploit their position or mislead clients.
• The Code isn't strict on client care systems; standards vary based on the practice and clients.
• Solicitors are required to give understandable information to clients, enabling informed decisions about services and options.

Level of Service

• Service must be competent and timely.
• Solicitors must maintain current skills and knowledge.
• Competence involves considering the client's characteristics and needs.

Responsibilities

• Solicitors and clients each have their responsibilities which should be clearly defined at the outset.
• Solicitors should keep clients informed and seek instructions.
• Clients should update solicitors on relevant changes.
• Limitations imposed by third parties, like insurers, should be explained.

Competence and Supervision

• Solicitors must be knowledgeable in current law to serve clients effectively.
• Solicitors need to ensure those they supervise are competent, and stay updated on ethical and regulatory obligations.
• Managerial solicitors are accountable for supervised work.

Information on Regulation

• It must be ensured that clients know how and if services are regulated, including the protection of the SRA Compensation Fund.
• The SRA is the principal regulator, with the FCA involved sometimes.

Information About Costs

• Clients need complete legal service cost information to make informed decisions.
• Clients should be given the best, most accurate pricing info initially and as things progress
• Costs include fees and disbursements defined in the SRA Glossary.
• An accurate cost estimate must be provided while taking care, or it will be binding.

Costs in Litigation

• Solicitors should discuss potential outcomes of litigation and justify expenses to the client
• This includes the risk of paying the other party's fees.
• Legal expenses insurance should be considered.

Client Care Letter

• A good amount of information must be communicated to clients at the start
• Some data is required by the SRA, other rules, and good practice
• It's prudent to provide all client care information in writing as a letter because it can show compliance with the Code and Principles

Consumer Contracts Regulations 2013

• Solicitors must comply with the Consumer Contracts Regulations 2013, which apply to contracts with clients
• The requirements vary if its on or off the solicitor's premises.
• For contracts that are off-premises, client must know they can cancel it without reason within 14 days
• Solicitors should make sure their letters have any additional info if the contracts may vary

Fees and Costs

• The solicitor and client must agree on fees at the start of the retainer
• The way a solicitor is remunerated, and fees are restricted is by the SRA
• Restrictions vary according to the work type
• There is a distinction between contentions and non-contentious businesses

Contentious and Non-Contentious Business

• Contentious business involves court or arbitrator proceedings, starting once proceedings are issued.
• Non-contentious business does not involve court
• Non-contentious business is governed by the Solicitors' (Non-Contentious Business) Remuneration Order 2009.

Options for Solicitors' Fees

• Solicitors may charge a fee for work done in different ways. Solicitors must make sure that any arrangement is legal and the client is fully informed.
• Hourly rates are a common way to charge
• Fixed or variable fees are other available options

Conditional Fee Agreements (CFAs) and Damages-Based Agreements (DBAs)

• Agreements allowed by law are Conditional Fee Agreements (CFAs) and Damages-Based Agreements (DBAs).
• A CFA can have the client agree to charge nothing if they lose, but they pay their fees plus any agreed upon uplift if they win
• DBA is when the solicitor's fee is an agreed percentage of the damages if a client recovers damages
• The solicitor must carry out risk assessment to calculate success fee
• Lawyers cannot carry out a CFA for criminal or family proceedings

SRA Transparency Rules

• The SRA Transparency Rules also require that certain costs are included in their publications
• Solicitors may enter a contingency fee arrangement in respect of non-contentious work, but to be enforceable this must be in the form of a non-contentious business agreement

Other Methods

• A solicitor may agree to be remunerated by alternative means, e.g., shares in a company

Money on Account

• Requiring money on account is standard, but in contentious business, a solicitor may need the client to pay a reasonable costs sum.
• The solicitor can end the retainer if it isn't paid in a reasonable time, but there's no such legal right in non-contentious business

The Solicitor's Bill

• Certain legal forms must be followed for a solicitor to obtain payment from the client. The bill must contain enough information for the client to be satisfied that the bill is reasonable, and also provide information of the period that the bill relates to
• It must be signed by a solicitor or employee
• Delivery by hand or post is required unless email is agreed

Interim Bills

• A solicitor can bill the client before things are done, especially if things are going to go on for a while
• Law Society recommends that this be expressly reserved
• Interim bills come in 2 types:
  • Interim 'statute bills' follow all rules per the Solicitors Act 1974.
  • 'Bill on account' that are payment requests toward the final bill.

Interest on Bills

• Solicitors may charge interest on an unpaid bill one month after being delivered
• The rate of interest charged must be less than the rate of payable judgment debts, at 8%

Enforcement

• Subject to certain exceptions, a solicitor may not commence a claim until a month has passed
• The High Court has the power to allow the solicitor to commence a claim against their client within a month

Client Right to Challenge Bill

-Client may call into question the solicitor's bill.

• Client must comply with specific requirements
• There are certain options available to challenge the bill

Assessment by the Court

• Clients may have the bill assessed, sometimes referred to as 'taxed'.
• These assessments should be done within one month
• If this is not done, the client may still apply to the court, but it may take a leave of court

Non-Contentious Proceedings

• When assessing a solicitor's bill in a non-contentious proceeding, the court must consider:
  • The matter's complexity
  • Skill/knowledge used
  • Time spent
  • Number of documents prepared
  • Place of transaction
  • Value of any money
  • Any land involved
  • How important the issue is to the client

Contentious Proceedings

• When considering whether a bill is reasonable for contentious proceedings, the court must take into account:
  • the conduct of parties
  • money involved
  • complexity
  • how important this is to anyone involves
  • effort, any knowledge and responsibility

Using the Firm's Complaints Procedure

• Clients must be informed of their right to complain in writing
• Inform the client the right to contact the Legal Ombudsman should the client not be satisfied with the firm's response

Non-Contentious Business Agreement

• A solicitor and client may form a non-contentious business agreement
• This must follow the Solicitors Act 1974

Contentious Business Agreements

• Solicitors may enter into a controversial business agreement, however remuneration by a contingency is not an option
• The agreement must state it is a contentious business agreement, be in writing, be signed by the client and contain all the terms.

Overcharging

• Solicitors must act in the client's best interests
• Solicitors must show integrity
• Cost officers have to inform the SRA if they lower more than half the costs on a non-contentious matter

Commission

• The solicitor client relationship is a fiduciary
• Paragraph 4.1 obliges a solicitor to properly account to a client for any financial benefit the solicitor receives as a result of the client's instructions
• Any commission, discount or rebate are considered a financial benefit

Summary Points

• Service provided has to be satisfactory
• Be responsible and address all concerns
• Make sure to inform the client properly on charges
• Don't use any form of misleading statements
• Communication has to be clear
• Distinctions are made in controversial and non-controversial matter