The Solicitors Act – time for change?

Since the introduction of the Legal Services Act 2007 (LSA) and the extension to persons authorised to provide legal services, I have mulled over the continued relevance of the Solicitors Act 1974.

The recent ruling in Bentine v Bentine [2013] EWHC 3098 (Ch) brought it to mind again. Proudman J had to determine whether costs disallowed for want of retainer should be excluded from the total of invoiced costs for the purposes of the ‘one-fifth rule’ contained in section 70(9) of the Act.

This provides that if a solicitor’s bill is reduced by one fifth or more, then the solicitor will bear the costs of the assessment. If the bill is reduced by less than one-fifth or is not reduced, then they are paid by the paying party, unless there are good reasons found to depart from this rule. She ruled that costs disallowed for want of retainer should be excluded for the ‘one-fifth’ rule calculation.

Ignoring the issues of contract law involved, the judgment reminds us of the special costs rules applicable only in solicitor-and-client disputes. Is there still a need for section 70(9) in 2013 when CPR 44.2 gives the court a wide range of costs orders that it can make to meet the justice of a case?

The LSA is a jungle that most struggle to navigate. In part it appears to duplicate the Solicitors Act. By section 14 of the LSA, only an authorised person or an exempt person can carry out a reserved legal activity and by later provisions a crime is committed by an unauthorised person who carries out a reserved activity, punishable on summary conviction by up to six months’ imprisonment and a fine of up to £5,000.

Under section 20 of the Solicitors Act, an unqualified person who acts as a solicitor is liable on conviction on indictment to imprisonment of up to two years or to a fine, or both. Is this section still necessary given the provisions within the LSA?

In 2013 we still have different costs rules concerning contentious and non-contentious business. Many have questioned the need for this. In general terms contentious business relates to services by a solicitor concerning actual court proceedings. Non-contentious business concerns any services by a solicitor relating to a matter where there are no actual proceedings.

So work done in the expectation of proceedings but where none are issued is non-contentious business. Contingency fees remain unenforceable where they relate to services provided in relation to court proceedings, but are enforceable where there are no proceedings issued and for most tribunal cases. This rule has, of course, since been blurred by the introduction of damages-based agreements.

In Jemma Trust Co Ltd v Liptrott [2003] All ER(D) 164, Costs Judge Rogers had held that it was no longer appropriate for solicitors to charge for administering a large estate based on work done by both hourly rates and with an additional value element. The Court of Appeal disagreed and held that solicitors administering an estate were entitled to charge fees based on the value element. Charges for legal services based on a value element would be unenforceable for contentious business. Why in 2013 should there be a distinction, particularly when value element charging for contentious business may reflect fees of an unfair level?

Without disputing the need for client protection, is there still a need for detailed assessment procedures as laid down in the Solicitors Act? All authorised persons must have service complaints procedures in place, with clients dissatisfied with the first-stage complaints procedure having the right to seek redress by the Legal Ombudsman, who can disallow or reduce charges.

Where a client who is in debit for fees fails to avail himself of the right to a detailed assessment under the Solicitors Act, he can defend any debt recovery action and achieve the detailed assessment within that action. Is there not a case for revoking the assessment procedures under the Solicitors Act and replacing them with a simplified procedure that requires first the Legal Services Act complaints procedures to be followed?

That also brings in all other categories of authorised persons – why should I not be subject to similar client protection measures that solicitors’ clients enjoy?

Do not for one moment think that I am advocating the drastic removal of client protections – those protections are as important now as they ever were. However, we are in 2013 dealing with the delivery of legal services in a far different way than was envisaged when the Solicitors Act was introduced. Nearly 40 years later, Costs Lawyers, patent attorneys and trade mark attorneys all have independent rights to conduct litigation, as from next month will barristers.

In the not too distant future, chartered legal executives are likely to join the list, while even the Council for Licensed Conveyancers and Institute of Chartered Accountants in England and Wales want the power to grant litigation rights.

With the Ministry of Justice reviewing the current state of legal regulation, and ministers indicating that there will be changes, it may well be that at some point we will have yet another Act of Parliament dealing with the legal profession. This would provide the perfect opportunity to sort out this inconsistency of approach.

Murray Heining is chairman of the Association of Costs Lawyers

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08 Jun 2016

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