Legal Cost Specialists

Posts made in June, 2022

Ideal length of retainer documents

By on Jun 27, 2022 | 0 comments

Part of my work involves drafting conditional fee agreements for solicitors and advising them on their other retainer documents, such as client care letters. Another part of my work involves advising lay client as to the retainer documents that they have been sent by their solicitors. This dual role gives me the opportunity to see a number of solicitor documents currently in circulation. What is the ideal length? The SRA has provided some guidance on the contents of client care letters.  (In a similar fashion, so has the Costs Lawyers Standards Board (CLSB).) Among the key observations of the SRA concerning client care letters: Some client care letters are clearly drafted with the aim of simply complying with the SRA obligations, rather than to provide information to clients in a user-friendly way. Some are too lengthy with dense paragraphs and small font sizes, which makes finding key information difficult for clients. It is important that client care letters are easy to understand, including by those with low literacy levels, in a state of emotional distress or for whom English is a second language. The SRA checklist includes the question: “Is your letter concise?”. One set of retainer documents I was recently sent to review, produced by a large personal injury firm, included a cover letter, a further letter explaining funding options, the firm’s Terms of Business, the conditional fee agreement, including its own further conditions, a privacy notice in relation to data protection issues and a guide to personal injury claims. Much of this was in small font and dense paragraphs. It ran to approximately 40 pages and 20,000 words. What is the likelihood that the average client reads this, let alone understands it? What is the likelihood that the solicitors spent the necessary time to go through these 20,000 words with the client to ensure that the client properly understood what they had been sent? Increasingly, the approach of the courts, to the extent to which there is a solicitor/own client costs dispute, is to give consideration as to whether or not there has been informed consent by the client as to what they are signing up to. So far as the courts accept that informed consent is...

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Impact of inflation on costs

By on Jun 24, 2022 | 0 comments

A client recently asked me my view as to the impact of the current upsurge in inflation on cost matters. These are my initial thoughts: Interest on unpaid costs currently runs at 8%. When the Bank of England base rate was very low, and inflation was very low, this 8% return on unpaid costs was potentially attractive to receiving parties (although this would have to be weighed up against cash flow issues). Now that inflation is running at close to 10%, the 8% rate is no longer particularly attractive as it fails to adequately compensate receiving parties from being kept out of money that is potentially due to them. It is possible, to the extent to which receiving parties give the matter any thought, that this may encourage some to try to settle costs disputes at an earlier stage. It remains to be seen as to whether the judgment rate of 8% is increased to reflect the current high levels of inflation. However, given that no attempt was made to reduce the judgment rate during the long periods of relatively low inflation, it may be that a similar approach of inaction will be adopted now. The argument on the other side is that a judgment rate well in excess of what would be commercially available to investors, and well in excess of the rate of inflation, was not problematic as the high judgment rate positively encouraged early settlement and/or sensible payments on account. Conversely, if the judgment rate is no longer even keeping pace with inflation, then it should be revised upwards. The current high level of inflation is likely to put pressure on those that set the Guideline Hourly Rates to increase these sooner rather than later, and it was certainly anticipated within the last rate review that these should be updated on a regular...

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