Interim and Statute Bills
The critical distinction between solicitors’ interim and statute bills is that an interim bill is not final in relation to the work that it relates to, whereas a statute bill will be understood to be so. As explained in the Infolegal Factsheet 10 “The Billing Process” (available to Infolegal subscribers as part of their membership) there are “swings and roundabouts” to bear in mind here in choosing which format of invoicing is best in certain situations. The firm will not be limited to the amount contained in an interim bill and so might be able to add a supplement to this figure at a later date, but as it is not a final bill it will not be possible for the firm to sue a client for its recovery if payment is not forthcoming. Statute bills, however, reverse these two material considerations.
It is also important to remember that an invoice will be assumed to have been delivered on an interim basis unless it has been specifically described as being otherwise. Furthermore, there are time limits in place for statute bills to be challenged, and despite some backdrop provisions in this respect these will usually be held to apply if disputed at a later stage. This proved to be the basis of a recent dispute with the claimant seeking a ruling that the firm had not delivered valid statute bills, and so had no grounds to sue their former client for their recovery.
The case on this point was Elias v Wallace LLP [2022] EWHC 2574. Here the disgruntled former client of the firm disputed the bills in question on grounds that they had not been validly presented to him, and in particular that they had not been signed and delivered by the firm as statute bills as they were required to be by section 69 Solicitors Act 1974. As such, it was claimed, they could not be regarded as being valid statute bills and so were not enforceable as such. The firm was successful, however, and the former client was therefore required to pay the £27,168 in question.
The rather obvious problem with these statutory provisions from almost 50 years ago is that there were no email facilities then and all written communications were instead dispatched and received via traditional “snail mail”. This point has since been acknowledged, however, and section 69 was amended by the Legal Services Act 2007 to provide that the required signature on an invoice might be electronic. For this to happen, however, there must in the first place be client consent to the receipt of electronic invoices..
On this point it was held that the firm’s Terms of Business document did state that the client agreed to the service of notices and documents by the email address notified to the firm. It was also held to be a material consideration that most of the communications to and from the firm were electronic, as will obviously now be the case at the great majority of firms in most or all of their correspondence.
Another issue for consideration was that the invoices had been sent by way of email attachments and so, it was claimed, had not therefore been signed as also required by section 69. On this point Senior Costs Judge Gordon-Saker ruled that the signature block, even if added to the message automatically, would still have been added with what had been referred to in an earlier decision as “authenticating intent”, and so the claimant failed on this point also.
All in all this decision will probably be seen to be a welcome exception to our usual monthly notes by reassuring firms that they are probably already doing the right thing at present. The decision can also probably be welcomed as seemingly updating these rather anachronistic provisions so as to make them better suited for the modern age.
Retainer Scope
Another more general issue to have risen of late is the scope of solicitors’ duties and so what firms might be responsible for if and when the retainer is stated to be limited in some way. The starting point here should probably be that the client and firm should assume that the instructions will be understood to embrace all of the issues that will emerge from the work to be done, other than those that the firm excludes from the agreement. The most common exclusion will, of course, be any related tax advice from the matter in hand, and many firms will include this as a specific exclusion in their Terms of Business documentation.
Where there are no such exclusions, however, the client will be entitled to assume that the solicitor will undertake responsibility for all of the related issues that could reasonably be seen to arise within the retainer. In deciding so in the case of Normans Bay Ltd v Coudert Brothers [2004] EWCA Civ 215 it was also ruled that it would be the solicitor’s responsibility to resolve any misunderstandings as to the scope of the issues on which advice has been sought, and so they will risk liability if they fail to do so.
This topic arose as a more frequent concern when the issue of “unbundling” legal services became more mainstream a few years ago following the financial crash in 2008. On this point the Court of Appeal ruled in the case of Minkin v Landsberg [2016] 1 WLR 1489 that even though an adviser might agree to take on limited instructions their responsibilities might in fact be wider than that, and so should be understood to include any elements that are “reasonably incidental” to the issues that are covered by the instructions. Reference was also made to the duty of professional advisers to provide warnings of known risks, and it was also accepted that “reasonably incidental” might itself be what was memorably referred to as being an “elastic phrase”.
This area has now again come under review in the case of Lennon v Englefield and Others [2021] EWHC 1473 arising from a London property sale. The claimant was the owner of the property who chose to instruct the solicitors through Mr Philip Englefield as her trusted third party adviser. Unknown to her and the solicitors acting in the sale Englefield had in fact been struck off as a solicitor some time ago following the theft of a significant amount of client funds and had been imprisoned at the time for this offence. Mr Englefield then misappropriated a large amount of the sale proceeds from this transaction and a claim was made against the vendor solicitors to cover these losses.
The grounds for the claim included that her solicitors acting in the sale had not undertaken valid CDD under the Money Laundering Regulations then in force, and had also owed her a duty of care which had been breached. These grounds for the claim failed, but it was also claimed that the solicitor acting in the sale should have advised her of her error in being represented in the sale by someone who had described himself on his notepaper as a “legal adviser and facilitator”. She argued that it would have been reasonably incidental for her solicitors to have advised her of the risks in involving Mr Englefield in acting as her representative since his disciplinary record could have been checked quite easily via the SRA or SDT websites.
This claim also failed, however, on grounds that it would have not been part of the solicitor’s responsibility to have advised the claimant as to her personal arrangements for the sale, and so the “commercial wisdom” of the instructions that they had received.
Even though this claim proved to be unsuccessful it should be taken as a timely reminder of the importance of applying careful thought to the drafting of the retainer correspondence in all matters. Liability for such a lack of care might not follow, but the concerns that will follow if a complaint or claim is then made, along with the wasted office time and potential problems with the firm’s PII renewal process, should nonetheless be real concerns for all. Looked at in another way prevention, as always, is much preferable to the possible cure.