The Engagement Letter should contain either a realistic costs estimate (excluding VAT) or a statement as to why none can be provided at that time and an agreement as to when one will be provided. An absence of clear and realistic costs estimates, missing, incomplete or unsigned Engagement Letters or a failure to comply with the Code may cause fees to become partly or wholly irrecoverable.
You should also agree with the client how and when to provide further fee updates. Most clients like weekly or monthly updates by email, with ad-hoc updates where circumstances require, e.g. when approaching certain fee levels.
When updating clients on fees you should refer back to any previous estimates and explain how we are progressing relative to them. If an estimate or part of one needs to be adjusted, you should explain why. Ideally it would be because an assumption has been breached. You should make sure to say what, if any, out-of-scope work has been undertaken and if the assumptions need to be updated.
There is a simple budget tool in Keyed-In that we recommend. It allows you to set a costs budget and you'll receive weekly email alerts monitoring fees against that budget. You can revise the budget at any time. See this guide entitled How to Set a Matter Budget on Keyed-In for more details.
The SRA requires all law firm to publish prices on the following:
¢Residential conveyancing
¢Probate
¢Employment tribunals (claimant and defendant work)
¢Immigration (personal applications only)
¢Debt recovery (up to £100,000)
¢Licensing applications or applications to vary a licence.
As well as prices, the rules also require us to publish information on:
¢What services are included within the displayed price.
¢Any services not included in the price that might reasonably be expected to be included.
¢Typical timescales and key stages of the matter.
This is achieved on our website here. If you have any comments on this, then contact the Director of Operations and Compliance.
Failing to provide costs estimates or to adhere to them is one of the most common complaints to the Legal Ombudsman. The Legal Ombudsman emphasises the importance of clear and accurate communication regarding costs in legal services. Key points include:
PLC has useful information on your regulatory duties in relation to costs. Paragraph 8.7 of the Code provides that you should keep your client informed on costs. Clients must receive the best possible information about how their matter will be priced and, both at the time of engagement and when appropriate as their matter progresses, about the likely overall cost of the matter and any costs incurred.
The established precedents underline the binding nature of a solicitor's initial estimate and that an Engagement Letter forms the contract with the client. Consequently, any deviation from that estimate is a variation of contract that must be agreed by the client in writing. For this reason, you are advised to have the client confirm their agreement by email. Any such email should be passed to the Clients Team. This will allow Central Office to keep these emails with the Engagement Letters to which they relate and to update our records as to the current level of anticipated fees. You should, of course, also ensure other lawyers working on the matter are kept informed.
It is an important part of our culture that each colleague has control over their own fees. This means, wherever one colleague wants to give an estimate (the estimating lawyer') in connection with work to be carried out by another lawyer(s), then the estimating lawyer must ask the other lawyer(s) to provide their own sub-estimate and must let the other lawyer know all relevant circumstances surrounding the client and the estimate requested. The other lawyer should then produce a sub-estimate (with assumptions if needs be) to the estimating lawyer for onward transmission to the client (together with other sub-estimates and assumptions as appropriate). Subject to the assumptions, each sub-estimate will be binding on the lawyer giving it. Work outside the scope of the estimate, or where the assumptions are breached, is charged at the usual headline hourly rate.
Costs on Account need to be considered in conjunction with fee updates. It may be necessary to ask for further Costs on Account and the sending of a fee update might provide the right opportunity for this. You should note that having sufficient Costs on Account does not remove the duty to provide regular fee updates.