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Dispute resolution and estimating legal costs. Why is this necessary and important?

It is an SRA Code of Conduct requirement that lawyers, at the outset of the claim, provide their clients with the best possible information regarding their liability for legal costs. This is in spite of it being difficult at times, given that the information available is often limited when receiving initial instructions.

To satisfy the requirement that the best possible information is provided to the client, an estimate of the full legal process is required. The estimate should be reviewed and updated when necessary, as it is essential that the client is regularly appraised regarding their potential legal spend.  This information allows the client to establish whether pursuing the claim is commercially viable and whether the outcome justifies the potential liability to have to pay the opponent’s fees.

In the case of  Dunbar v Virgo Consultancy Services Ltd [2019] EWHC B12 (Costs), the solicitor had failed to provide the client with an adequate cost estimate, Master Leonard reduced the Solicitors’ claim for costs of £84,000 to £8,000 and commented that:

I am unable to accept the Defendant’s attempted justifications for failing to give any estimate of costs. It would have been perfectly possible to give estimates based upon the information known to the Defendant from time to time. That is what the Code of Conduct requires”.

Providing the client with an estimate of fees is best practice in any event. It enables the client’s expectations to be managed. This in turn can lead to less disputes regarding the level of fees. Sophisticated estimates can be prepared for complex claims and scoping the work properly will justify any scope creep. The estimate allows early identification of any unrecoverable costs and therefore the client can be notified. To not do so can cause these costs to be vulnerable to reduction during any solicitor and client assessment.

In addition to identifying out of scope work, the estimate should be monitored, and the client updated, if the estimate is subject to change.

The estimates are used as a yardstick to measure reasonableness rather than the restrictive nature of a quote. That said, if the matter proceeds to a solicitor and own client assessment, and the client can show reliance on the estimate, then the costs are at risk of a reduction as a result of that reliance.

If you require any assistance with your legal costs requirements, please do get in touch with the team on 01733 350 880, or by email mail@aandmbacon.co.uk. For more information please do visit our website www.aandmbacon.co.uk.

Published 23 November 2021

Author – Sue Fox

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