What do you need to do to make sure you are getting them right?
- Make sure you’re entitled to raise them
- Make sure your invoice includes everything it is supposed to
Is it really that simple? Based on the wealth of Solicitor Act case law over the last few years in particular, apparently not, but hopefully this article will help you get it right.
What does your retainer need to include?
First things first, if you’re going to raise an invoice to your client, you need to make sure you’re entitled to do it in the first place. A Solicitor can generally only seek their costs from their client once all work has been completed, or when there is a natural break, as a Solicitor’s retainer is an example of an “entire contract”. If you want to raise an invoice prior to conclusion of the matter (an interim statute bill), then your retainer needs to include provision for the same. Any ambiguity in the retainer will be determined against the Solicitor as the drafter of the document.
In Bari –v- Rosen [2012] EWHC 1782 (QB), the Solicitor’s retainer stated he would “send… a regular statutory final bill, which will not be altered subsequently” and he “require[d] payment of the bill by return and will argue about any aspect of the charges subsequently.” He notified the client of his right to seek an assessment of his bills “at any time” in the High Court.
It was this right to seek assessment “at any time” that the client relied upon on assessment, arguing it was inconsistent with a contractual entitlement to issue interim statute bills. The Master considered the whole of the retainer and agreed that, properly construed, the retainer did not provide for the Defendant to render interim statute bills. Whilst the reference to “at any time” was a key part of Master’s finding against the Solicitor, the Master also noted that the Solicitor reserved the right to render a further bill or bills covering the same period as and when the entitlement to a higher hourly rate crystallised. The Master found that the provisions in the retainer agreement were ambiguous and therefore construed them against the Solicitor. The Master’s finding was upheld on Appeal.
In Vlamaki –v- Sookias & Sookias [2015] EWHC 3334 (QB), the retainer provided:
“6.1 To help you budget, we will send you a bill for our charges and expenses at the end of each month while the work is in progress. We will send you a final bill after completion of the work.
6.2 If not paid from monies on account, payment is due to us on delivery of a bill. We reserve the right to charge you interest on the bill at 4% over the base rate prevailing from time to time from the date of the bill if you do not pay our bill within this time …
6.3 If you have any query about your bill, you should contact us straight away.”
Master Campbell noted that the interim bills were not referred to as final bills, but that the bill that would follow after completion of the work was a final bill. The Master found this to be ambiguous and again resolved the ambiguity in favour of the client. On Appeal, Mr Justice Walker agreed, noting that “Absent from those clauses in particular and the retainer in general is any express statement that each interim bill would be a final bill for the period that it covered.”
This week, Costs Judge Nagalingam handed down Judgment in Guest Supplies –v- Spector Constant & Williams [2024] EWHC 2450 (SCCO), following the reasoning in Vlamaki that reference in a retainer to bills being delivered from time to time at regular intervals/appropriate stages but no explanation that these would be final bills for the period meant that the retainer did not permit the solicitor to raise interim statute bills. Furthermore, the fact that some of the invoices overlapped in their periods was fatal to the argument that they were interim statute bills or alternatively a Chamberlain bill.
Therefore when sending your retainer to the client, if you wish to raise regular interim invoices, you must ensure that your retainer expressly permits you to do the same and that it is clear that such invoices are final bills for the period they relate to and nothing else in your retainer contradicts this, including any advice to the client on their entitlement to have the same assessed. If it does not, your invoices will not be treated as statute bills but simply interim on account bills.
What does your invoice need to include?
The Solicitor’s Act requires that a bill is 1) signed and 2) delivered. A bill is signed if it has been signed by the solicitor or an employee authorised to sign bills or if it has been accompanied by a letter that refers to the bill which has been signed. In 2022, the SCCO accepted in Elias –v- Wallace LLP [2022] EWHC 2574 that an email signature was a valid electronic signature to meet the requirements of the Act.
In terms of delivery, in Parvez –v- Mooney Everett Solicitors Ltd [2018] EWHC 62 (QB) it was held that a bill must be sent as a demand for payment in order to be delivered, therefore an internal bill that was prepared and placed on file and made its way into the client’s possession after the file of papers was disclosed to her new solicitors was not delivered and nor could the client treat it as delivered.
In addition to these 2 fundamental requirements, in Ralph Hume Garry –v- Gwillim [2002] EWCA Civ 1500, Ward LJ reviewed the statutes and authorities relevant to the issue as to what constitute a bill and found the legislative intention was that the client should have sufficient material on the face of the bill as to the nature of the charges, supplemented by what was subjectively known to the client, to enable them to obtain advice as to assessment. The onus is on the client to show that a bill does not provide sufficient information:
“This review of the legislation and the case law leads me to conclude that the burden on the client under section 69(2) of the Solicitors Act 1974 to establish that a bill for a gross sum in contentious business will not be a bill “bona fide complying with this Act” is satisfied if the client shows: (i) that there is no sufficient narrative in the bill to identify what it is he is being charged for, and (ii) that he does not have sufficient knowledge from other documents in his possession or from what he has been told reasonably to take advice whether or not to apply for that bill to be taxed. The sufficiency of the narrative and the sufficiency of his knowledge will vary from case to case, and the more he knows, the less the bill may need to spell it out for him.”
Whilst it is not a requirement, it is generally accepted (and indeed was recommended in Ralph Hume Garry –v- Gwillim) that when a Solicitor provides a copy of their time ledger with their invoice, this will be considered sufficient information so as to amount to a statute bill – as seen in the recent case of Pickering –v- Thomas Mansfield Solicitors Limited [2024] EWHC 1107 (SCCO) for example. However, production of the time ledger after delivery of an invoice may not be enough, per the recent Judgment in Guest Supplies –v- Spector Constant & Williams mentioned above.
What is the effect of a statute bill being determined to be an interim on account bill?
You may seek to argue that the provision of interim bills and then a final invoice amounted to a Chamberlain Bill as in Bari –v- Rosen, however in the recent Judgment in Guest Supplies –v- Spector Constant & Williams previously mentioned, Costs Judge Nagalingam highlighted that each case turns on its own facts and in that matter the fact that he had found none of the invoices contained a sufficient narrative and the fact that the invoice periods overlapped, lead him to the conclusion that the invoices in that matter did not amount to a Chamberlain bill.
Ultimately, if the Court finds that invoices delivered are interim bills on account and not statute bills, the time for the client to apply for a detailed assessment does not begin to run until delivery of the final bill. Therefore, if you were hoping to rely on Section 70 of the Solicitors Act and argue that your invoice couldn’t be assessed because the time for doing so had expired, that would no longer be a defence available to you.
What happens if you need to amend your invoice?
A statute bill cannot be amended without the consent of the parties or an order of the court, which will be granted only in exceptional circumstances.
This principle dates back to a 1956 case of Polak –v- Marchioness of Winchester [1956] 1 WLR 819, in which the Court of Appeal confirmed that it had an inherent jurisdiction to permit a solicitor to withdraw his incorrect bill of costs and to substitute a fresh correct bill, but Jenkins LJ confirmed that Judges have to take a strict view to maintain the necessary safeguards.
The examples given of exceptional circumstances in that case were of genuine mistakes or inadvertence and case law since then (Bilkus v Stockler Brunton (a Firm) [2010] EWCA Civ 101; Olukoya –v- Riverbrooke Solicitors Ltd [2023] EWHC 2771 (SCCO)) has reiterated that position. Therefore it is vital that you get your invoice right before you issue it.