Solicitors negligence claims: failing to give correct advice on legal costs

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Emma Slade, looks at solicitors negligence claims against lawyers who fail to give correct advice on legal costs

Whenever an individual or company becomes involved in any sort of litigation, one of their main concerns is likely to be how much money it will cost them.

Its never easy for a solicitor to give a definitive estimate of legal costs. Litigation is by its nature open ended. There are many variables in a case, making it difficult to predict which path a case is likely to take. And because legal costs in a litigation dispute are generally based on the amount of time the lawyer needs to spend on it, this can make giving a costs estimate extremely tricky. Nevertheless the duty to advise is clear. The Solicitors Code of Conduct gives guidance on how a solicitor should deal with the issue of legal costs. Among the obligations a solicitor owes are the following:

  • To ensure any fee arrangement entered into with a client is suitable for the client’s needs and takes into account the client’s best interests
  • To consider whether the likely benefit of the work justifies the expense; especially taking into account the potential risk of being liable for another party’s legal fees
  • To review any alternative methods of funding (eg public funding, legal expenses insurance) as well as suitable methods of future funding
  • To give the client the best costs information, both at the outset and throughout the case

It is the last requirement that often catches out unwary solicitors out as many fail to appreciate that the duty to review legal costs is an on-going one. Solicitors negligence claims can arise as a result.

While most firms of solicitors generally have a system in pace to ensure their clients are regularly updated on the level of costs incurred, some overlook the fact that the review should consider not just the legal costs incurred to date but also the methods of funding available going forward.

There can be changes in the client’s circumstances and/or their case that would warrant a fresh look at funding. Examples of such changes might include:

  • A change in the client’s financial circumstances making them eligible for public funding
  • Their case becomes suitable for a Conditional Fee Agreement (CFA). Even if the solicitor is unwilling to work on a CFA basis the client should be informed that CFA funding might be available with another firm.
  • A consideration of the need for and availability of After the Event Insurance (ATEI). It is not uncommon for solicitors to fail to give consideration to the possibility of obtaining ATEI (and thereby protecting their client from paying their opponent’s costs if they lose) or failing to ensure that the limit of indemnity of a policy is sufficient.
  • A change in the law that alters the funding arrangements

Changes in the law have led to a number of solicitors negligence claims in recent years.

In April 2013 litigation costs were fundamentally revised by Government. Under the new rules success fees in CFA cases and ATEI premiums can no longer be recovered from the losing party as was previously the case. The old system was therefore much more favourable to claimants than the present one. Solicitors were on notice of these changes before they were made and the astute ones took action to ensure that their clients’ cases were dealt with under the old, more favourable, rules. However, not all solicitors acted with foresight and many litigation clients have lost out as a result.

Because higher value claims tend to take several years to conclude a good number of the cases which are now being settled are ones that could have been dealt with under the old rules. Many clients are therefore now realising that because their solicitors failed to ensure that CFA’s and ATEI policies were entered into prior to 1st April 2013 they have incuured significant costs liabilities which could have been avoided.

These cases (and others relating to negligent costs advice) are resulting in professional negligence claims being made against solicitors.

We deal with solicitors negligence claims on a national basis. If you feel you have a solicitors negligence claim against your solicitor then call Emma Slade on 01271 372128 for a free case assessment. Alternatively, you can contact us by e-mail at [email protected]