Interim billing conundrum

 

A common practice is for solicitors to agree, within the terms of their engagement letters, to send clients ‘interim statute bills’ during the course of a matter. Interim statute bills are, of course, bills that are compliant with the provisions of the Solicitors Act 1974 and are ‘final invoices’ for the period covered by the invoice. However, the solicitor might then decide to send a disbursement-only invoice for counsel fees, that were not available to include in the previous invoice, for example. The solicitor may assume that this disbursement-only invoice and the preceding invoice(s) are individual interim statute bills as per the terms of the engagement letter. Not necessarily so, says Mrs Justice Slade DBE in Richard Slade and Company Solicitors v Boodia and Boodia [2017] EWHC 2699 (QB) on appeal from Master James.

Unless all of the costs incurred during the period covered by the interim bill are included (i.e. all profit costs, disbursements and counsel’s fees, as may apply) then regardless of the terms of engagement, the invoice will not be a “complete, self-contained bill of costs to date” and thus cannot qualify as a ‘Statute Bill’ – Bari v Rosen (t/a RA Rosen and Co Solicitors [2012] 5 Costs LR 851 applied. The fall back position is that the interim bill represents nothing more than a request for a payment on account.

In the event of a dispute with the client over fees, the solicitor may invite the court to treat both bills together as a ‘Chamberlain style statute bill i.e. treating a series of interim bills as a single statute bill. However, if there is any doubt as to the costs covered by an invoice, such as a disbursement-only invoice which is unclear as to the period covered by the disbursements, it is unlikely that the court will allow this – as was the outcome of the present case.

It’s not just the odd disbursement that could prove problematic. It is not uncommon to see billing periods overlap between interim bills, for example where fee earners have recorded their time after the billing period has closed the result might be Bill 1: 01/01/2017 to 31/03/2017 and Bill 2: 25/03/2017 to 30/06/2017. Based on Mrs Justice Slade’s Judgment, this example would mean that Bill 1 cannot be an interim statute bill because not all of the billed costs for the period to 31/03/2017 were included.

The key point to remember from this Judgment is the fact that the court will look at what information was given to the client at the time the interim bill was delivered and what the client would have understood from that information. If that information is unclear, the court is more likely to find in favour of the client and grant whatever relief the client seeks. A client’s argument might be that he understood the first period to have been billed in full and that any ‘stray costs’ should be disallowed.