Jennifer Underhill v Thackray Williams Solicitors

In a solicitor-client assessment, an estimate for specified initial work does not necessarily cap the retainer where the client understood that further work might follow. Costs may be incurred with the client’s express or implied approval even though their amount lacks such approval. In that event, the costs are not automatically disallowed. The costs officer must assess what amount is reasonable, and may do so on a broad-brush basis where that is proportionate. The statutory one-fifth rule governing the costs of assessment may be displaced where special circumstances exist, including an unclear bill, unreliable time records, an inadequately explained write-off, and a costs update given only after the costs had been incurred.

The claimant instructed the defendant solicitors in connection with an employment dispute. An initial fixed-fee meeting and advice were paid for separately. The present assessment concerned a later bill for £3,841 plus VAT covering work over approximately five weeks, including pre-action correspondence, advice and settlement negotiations.

The claimant relied on an earlier estimate of £1,470 plus VAT and argued that further costs lacked approval. The defendant relied on the wider retainer and the claimant’s express or implied approval of the work. The issues were the scope of the retainer, the effect of the costs estimate and updates, the reasonableness of the time and charges, and responsibility for the costs of assessment.

1. Scope of retainer. The retainer was not limited to preparing a pre-action letter. Read as a whole, the client-care material contemplated further correspondence, negotiations and, if necessary, tribunal proceedings. The estimate of 5–7 hours related to preparation of a pre-action letter and a without-prejudice letter, and was not a general cap on all work.
2. Approval of costs. Under Civil Procedure Rules 1998, CPR 46.9(3), costs are presumed reasonably incurred where incurred with the client’s express or implied approval, and reasonable in amount where their amount was expressly or impliedly approved. The claimant expressly approved the work beyond the pre-action letter through the funding arrangement and, alternatively, impliedly approved it by receiving advice and giving instructions. The defendant did not establish express or implied approval of the amount of those additional costs because it failed to keep the promised constant and regular review of costs and did not warn the claimant before the estimate was exceeded.
3. The absence of approval of amount did not automatically disallow the excess. The reasonable amount was assessed proportionately on a broad-brush basis, having regard to the points of dispute, responses, submissions, work undertaken, the fixed-fee work, disallowed partner time, administrative work, and the separately remunerated settlement-agreement work. The bill was reduced to £3,150 plus VAT.
4. Costs of assessment. Although the reduction was about 15.39%, and therefore below one fifth, the court exercised its discretion under sections 70(9) and 70(10) of the Solicitors Act 1974. Special circumstances included the unclear scope of the bill, inaccurate time totals, an inadequately explained write-off, and a purported costs update supplied only after the costs had been incurred. There was no order as to the costs of assessment. Payment was allowed within 35 days, subject to credit for payments on account and any agreed payment plan.