Costs Information and the LeO

We have, in previous articles, covered the SRA’s requirements in relation to price transparency.  However, these requirements have tended to focus on the need for firms to ensure that they provide clear details of their costs and disbursements on their website.

Now, the Legal Ombudsman has issued updated guidance as to what they will expect firms to have done in relation to price transparency – expectations which go beyond the website and into the core of the work done by a firm.

The report, entitled “An Ombudsman’s View of Good Costs Service – Second Edition”, ( looks at the issue of costs information provision at three key stages in a transaction:

  • Pre-engagement
  • Engagement
  • Delivery of service

and then goes on to look at what firms can reasonably do in terms of enforcement of unpaid bills.

That this is seen to be a real issue by the LeO is not in doubt.  They state that during the year 2018-2019, 13% of the cases they accepted were in relation to costs complaints.  That is not just a problem for them.  Firms should constantly be aware that, no matter how well they undertake a matter from a legal and administrative point of view, if the client is dissatisfied as to the way that costs have been explained to them then they are unlikely to instruct the firm again.

Where the LeO report will prove to be extremely useful to firms is in the way in which it not only highlights the stages at which costs should be explained but also gives case examples of how problems might arise in practice.  This is not limited, as is the case with the SRA Transparency Regulations, to certain specific areas of work but applies across the board and looks at scenarios other than web-delivered information. For example, in relation to the giving of “reasonable estimates”, the guidance states:

“It can help customers if they understand what factors have gone into the estimate: why do you expect the costs to be around that figure? Are there different ranges, depending on a variable beyond your control (the attitude of the other side in a divorce, the willingness of the defendant company in a personal injury case to settle, the approval by a court to dismiss significant parts of the claim)? Highlighting relevant factors at an early stage will help you discuss any adjustments you need to make to the estimate, as the case progresses.”

The guide also gives examples of what the LeO would look at in relation to dealing with a complaint relating to costs.  Thus, for example, in relation to client care letters it states:

“The Legal Ombudsman will consider whether, after reading the client care letter, would the customer have a clear understanding of the likely course of their case, what service would be provided, and how much it would cost? We would be looking at this to ensure the information was appropriate for the particular customer, rather than for an average customer, as cost information – like any information – should be tailored to the needs of the customer.”

In an area where regulation can seem to impose difficult goals upon firms – for example the SRA’s requirement that firms be able to reduce the complexity of  pricing to a statement on a website – this is a useful and practical guide and one which firms should read if they are to avoid issues arising in the future.

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