Amanda Kenton v Slee Blackwell Plc

When assessing what a client should reasonably pay under a solicitor’s costs bill, an estimate is not a fixed-price cap. The court must consider the estimate, the client’s reliance on it, the manner and extent of that reliance, the size of any excess, the adequacy of explanations and all other relevant circumstances. An inaccurate estimate may justify a substantial reduction where it deprived the client of an opportunity to act differently and was not properly corrected. Client approval creates a presumption of reasonableness only if it was informed, following a full and fair explanation. A success fee must be based on a proper, case-specific assessment of risk and prospects of success.

The defendant solicitors acted for the claimant under a conditional fee agreement in a professional-negligence claim against another firm. The agreement provided for staged success fees of 80 or 90 per cent, subject to a cap, and the claimant received initial estimates of basic costs of £5,000–£20,000 before proceedings and £30,000–£50,000 to trial.

The claim settled before proceedings after mediation. The defendant’s bill claimed substantially higher profit costs and a success fee. At the outset of the detailed assessment, the court had to determine the reasonable profit costs and success fee payable by the claimant, including the effect of the estimates, later costs information and the risk assessment.

1. The court determined that the reasonable profit costs payable by the claimant were £40,000 plus VAT and that the reasonable success fee was 50 per cent of the basic charges, namely £20,000 plus VAT.

2. An estimate is not a fixed or maximum price. The court must determine the sum it is reasonable for the client to pay, having regard to the estimate and other relevant matters. Reliance is important. The court should consider whether the client relied on the estimate, how the client relied on it, whether the estimate deprived the client of an opportunity to act differently, the extent by which the estimate was exceeded, the explanation for the excess and the justice of any deduction. No automatic 15 per cent margin applies.

3. The estimates were hopelessly unrealistic for a document-heavy professional-negligence claim seeking substantial damages. The claimant relied on them by entering into the conditional fee agreement and lost the opportunity to consider alternative representation. The later standard letters were confusing and did not provide proper updated estimates. In those circumstances, a figure close to the estimate was appropriate. The claim settled before issue following mediation, so £40,000 was reasonable.

4. Under CPR 46.9(3), client approval means informed approval following a full and fair explanation. The defendant’s risk assessment did not properly assess the prospects or risks of the particular case. The resulting staged success fees were therefore not supported by informed approval and the presumption of reasonableness did not apply.

5. The success fee was nevertheless assessed on the evidence. The 80 per cent fee implied prospects of success of about 55 per cent, which was unduly pessimistic. A realistic assessment was 67 per cent, producing a reasonable success fee of 50 per cent.