Re-defining ‘final bill’.

In Slade v Boodia Lord Justice Newey disagreed with both the costs judge and Slade J in their interpretation of what the Solicitors Act 1974 and the subsequent case law suggest must be included within a solicitor’s bill of costs to make it a ‘bill bona fide complying with [the] Act’ – s69(2E) Solicitors Act 1974.

The case concerned the proper treatment of separate interim statute bills (i.e. final bills in respect of the work covered by the bills) for profit costs only and separate interim statute bills for disbursements only.

Newey LJ found that “the 1974 Act nowhere states that a statute bill must encompass both profit costs and disbursements, and I can see no justification for such a rule in the case law either.”

In short, it seems that, as long as the client has not been led to believe that the interim statute bill is inclusive of ‘all costs’ incurred in the period covered by the bill, solicitors can continue to issue separate interim statute bills for profit costs and disbursements. They need not worry that those disbursements will be lost if they were not included within the earlier bill covering the period in which the disbursements were incurred (as opposed to paid).

The Judgment also raises a question as to whether solicitors need to worry about their inability to include outstanding agency fees, overseas office fee earners’ fees and unrecorded time at the time of interim billing. Presumably, provided the client is made aware, at the time the bill is delivered, that there other fees yet to be billed and which relate to the same period, the bill will still be a final bill in respect of the work covered by the bill (Bari v Rosen – para 15).

One might argue that all profit costs, at least, must be included for the period in question but the position is, arguably, no different to the example given at paragraph 32 of Newey LJ’s Judgment i.e. that of the need to include the fees of counsel so that issues of duplication of work between solicitors and counsel can be considered. At para 33 Newey LJ seems to accept the point, but states that the alternative would also be unsatisfactory, i.e. a solicitors right to be paid his fees could be held up by third parties.

However, Newey LJ does not entirely disregard the need for disbursements to be included in an interim statute bill. At para 34 he says: “I would not wish to exclude the possibility of a bill restricted to either profit costs or disbursements failing this test on the particular facts of the case in question. That, however, would be the exception rather than the rule. I do not think it can be inferred that a statute bill must always, or even usually, include both profit costs and disbursements. Separate billing for profit costs and disbursements is common with modern, digital billing, and I do not accept that that need give rise to problems.”  

So it seems, for now at least, solicitors can carry on as usual but the key point to take from this Judgment is that, it is good practice to provide for the separate billing of profit and disbursements in the engagement letter and/or you should be very clear with the client, at the time of billing, as to what costs are included within the interim statute bill and what costs are still outstanding.