1. The law

Sections 149-61 of the Legal Services Regulation Act 2015 were commenced on 7 October 2019. These provisions replace solicitor’s obligations under section 68 of the Solicitors (Amendment) Act 1994.

2. The notice

Under section 150 of the act, a solicitor is obliged, on receipt of instructions, as soon as it becomes practicable to do so, to give the client a notice setting out the legal costs to be incurred or, if not practicable, set out the basis on which the legal costs will be calculated. Costs in contentious matters cannot be a percentage/proportion of damages or moneys recovered, other than in debt-collection cases. In every case where a solicitor becomes aware of a matter that is likely to significantly increase the costs above those indicated in the notice, then the solicitor is required, as soon as becoming aware, to provide the client with a new notice. Every time there is a change in instructions, or an additional matter has to be dealt with, then a new notice must also be provided to the client.

The notice should contain:

• The legal costs incurred at the date of the notice; the legal costs of a fixed nature or that are certain to be incurred; and the legal costs likely to be incurred,
• The basis of calculation of the legal costs, explained by reference to paragraph 2 of schedule 1 of the Legal Services Regulation Act,
• A statement to say that, if the solicitor becomes aware of any factor that might result in significantly greater fees, a new notice will be provided to the client,
• That the solicitor can suspend providing legal services pending receipt of confirmation from the client that they wish the solicitor to continue to provide legal services in the matter (the suspension period applies to subsequent notices), and
• The amount of VAT chargeable.

Where clarification in relation to a notice is sought by a client, this must be provided as soon as reasonably practicable.

3. Law Society templates

The Society has issued template notices and guidance, which are available on the Law Society’s website. The templates deal with general matters, including litigation and personal injuries, together with a draft bill of costs and guidance notes. The notice should be written in clear language that is easily understood.

4. Office procedure

Make sure you have procedures in place to ensure a notice is issued to the client as soon as is practicable after instructions are received. Consider adopting an office system where, when first opening a file, you have a separate folder dealing with compliance/regulatory matters to include: your letter of engagement, AML compliance, the notice, and terms of business.

5. Litigation

There are extra obligations for solicitors with regard to notices for litigation matters. The solicitor is obliged to set out an outline of the work to be done at each stage of the litigation process, and the statement of the likely costs or basis of costs of engaging counsel, expert witnesses, or such other services. Client approval is required before engaging any such persons. The client must be advised of the possibility of being responsible for, not only their own legal costs, but the other side’s legal costs and, where a case is discontinued, that the client may be required to pay the legal costs of other parties to the litigation. When instructing a barrister, the barrister must provide a notice, which must be approved by the client in advance.

6. Contract for fees

A solicitor and client can make a contract concerning fees, the amount, and the manner of payment, pursuant to section 151 of the act. In such a case, a notice is not required, but the contract must contain all the information that a notice should contain. Where such a contract exists, it will constitute the entire agreement, and no other moneys/fees are recoverable.

7. Bill of costs

A signed bill of costs (BOC) must be provided to the client as soon as practical after concluding the provision of legal services (section 152 of the act). The BOC must contain a summary of the legal services provided to the client in connection with the matter concerned; an itemised statement of the amounts in respect of legal costs in connection with legal services; VAT registration number; where time is a factor in calculating legal costs, the time spent dealing with the matter; where damages or other money are recovered, details of that amount; and the amount of legal costs recovered on behalf of the client, including costs recovered from another party or an insurer on behalf of another party to the matter concerned. The BOC must, further, be in such form (if any) as may be specified in the rules of court.

8. BOC dispute procedure

Along with the BOC, the solicitor is obliged to provide to the client an explanation in writing of the procedure available to the client should the client wish to dispute any aspect of the BOC, and it must contain the following information: that the client may discuss the matter with the solicitor; that the client is obliged to communicate to the solicitor as to the existence of any dispute on any aspect of the BOC, and the date by which, and the means by which this is to be communicated; that the solicitor is obliged to attempt to resolve the dispute by informal means, including mediation; that the client may have the dispute referred to mediation; that the client may apply for adjudication of legal costs, and it must provide contact information for the Office of the Legal Costs Adjudicator, and the potential cost to the client of seeking an adjudication of the BOC; and the date on which the solicitor may make application for adjudication in the event the BOC remains unpaid (see section 152(3) of the act).

9. Time limits

The time limits for referring the BOC for adjudication start from the date the bill is issued. The time limit for a client referring the BOC for adjudication is the earlier of three months from the date of payment, or six months after giving the BOC to the client. For the solicitor, it is between 30 days and 12 months from the date on which the BOC was provided to the client.

10. Sanctions

The notice and BOC must contain all the information required under the act. Failure to include the required information could result in not being paid, or it could be held to be misconduct. In circumstances where the BOC is being adjudicated by a legal costs adjudicator (LCA), the LCA does not have the authority to confirm a charge that was not included in the notice, unless the LCA is of the opinion that to disallow the charge would create an injustice between the parties.

Failure to comply with the act may constitute misconduct where the act or omission consists of a breach of the act. Seeking excessive fees may also be considered misconduct.