Two recent cost decisions – Green, Mughal, Mughal and Edwards v SGI Legal LLP and Hanley v JC & A Solicitors are likely to impact future professional negligence claims against solicitors. They both involve the issue of the deduction of costs from a client's damages.
The Claimants had entered into CFAs and their solicitors had deducted their fees from their damages in accordance with the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). This provision allows solicitors to deduct up to 25% of the damages recovered for their costs.
The Courts have seen an increase in applications for delivery up of solicitors' files by Claimants looking to challenge their representative's costs and bringing claims for unfair deductions from their damages. These applications have focussed on the delivery up of documents which have traditionally been regarded as the property of the solicitor such as attendance notes, timesheets, diary notes, accounts documents and funding documents.
Both Master Jennifer James and Master Leonard who heard these cases separately refused to order the disclosure of these categories of documents. Master James held that she was "concerned about the floodgates that would likely be opened" by allowing such disclosure even if Claimants agreed to pay the costs of supplying copies.
The Law Society's Practice Note "Who Owns the File" remains the best guidance for practitioners in assessing the categories of documents to which clients are entitled.
Whilst these recent decisions are likely to reduce the number of applications for delivery up of the entirety of the solicitor's file it remains to be seen whether they will also reduce the number of claims relating to deduction of costs from damages as had previously been expected. In fact the case of Parvez v Mooney Everett Solicitors Ltd reported last week seems to suggest not. The solicitors had deducted their costs from Ms Parvez' damages. Amongst the papers in the solicitors file disclosed to Ms Parvez was a document headed 'bill of costs' which she relied on to claim that the costs deducted from her damages were too high. The solicitors argued that it was an internal document, it was not a statute bill and they had never intended to send it to their client. Mr Justice Soole agreed that the district judge had been correct to dismiss the challenge to the costs and he subsequently dismissed the appeal.
In order to avoid claims such as these, solicitors must ensure that they explain to their clients how they will be paid at the outset of the matter and must remind their clients every time settlement discussions take place. This is likely to remain an area of contention between solicitors and their clients and in our view it is an area ripe for dispute.
