Client care letters must carefully define the type of work to be done and the costs which may result from that work.

18/02/2010

Section 87 of the Solicitors Act 1974, provides, inter alia:
(1) ... 'contentious business' means business done, whether as solicitor or advocate, in or for the purposes of proceedings begun before a court or before an arbitrator ... not being business which falls within the definition of non-contentious or common form probate business contained in [section 128 of the [Senior Courts] Act 1981]'.

In January 2001, Bilkus engaged Stockler Brunton (Stocklers) to act for him in connection with a dispute about his interest in a company (CM Ltd). The sole issued share was registered in the name of a former business partner. He claimed that CM Ltd had been formed as a vehicle to carry on the business, and it had been orally agreed that each hold 50 per cent of the issued shares. He claimed that in breach of that agreement, no share in CM Ltd had been issued to him and he had also been excluded from its management from August 2000.

Stocklers issued a client care letter on 25 January 2001. Bilkus successfully issued proceedings for a declaration as to his entitlement, specific performance of the agreement to constitute him a 50 per cent shareholder, and injunctive relief before issuing a petition under s 459 of the Companies Act 1985.

Proceedings concluded in 2003, when it was directed that Bilkus should sell his share. Issues as to valuation were resolved in August 2004 such that Bilkus' share was fixed at £6.6m.

A dispute arose between the parties relating to the firm's bill for services. The claimant changed solicitors, and commenced proceedings under s 70 of the Solicitors Act 1974, seeking detailed assessment of all the bills delivered to him by the firm. The hearing was confined to a single item on a single bill, namely the sum of £50,000 charged on the firm's invoice, described as 'Uplift on all bills since April 2001'.

The master refused the firm permission to amend its invoice. The master held that:

1. all of the bills included contentious work
;
2. insofar as the uplift claimed related to non-contentious business, it was not claimed 'as a value element' and therefore could not be allowed as such under the Solicitors' (Non-Contentious Business) Remuneration Order 1994, SI 1994/2616
; and

3. as a matter of construction of the claimant's retainer, the fees chargeable by the firm were confined to time charges at specified hourly rates plus disbursements.

The firm appealed to a judge and was unsuccessful. The firm then appealed to the Court of Appeal and was again unsuccessful.

The Court of Appeal held:

1. Whether work done by solicitors was contentious or non-contentious depended not on the nature of that work, but on whether it was done 'in or for the purposes of proceedings begun before a court or before an arbitrator'. The work done in relation to a valuation carried out by an independent expert, even though highly disputed, was not intrinsically contentious. The words 'in or for the purposes of proceedings' should be construed as a composite whole.
   The valuation of the shares in C Ltd was carried out under a court order pursuant to directions given by the court.


2. Sections 57 and 59 of the 1974 Act did not require separate agreements relating to contentious and non-contentious business. A single written agreement, signed by both parties, might cover both kinds of business. Whether the agreement did so would depend on its true construction in the circumstances prevailing when the business in question was carried out. It was incumbent on a solicitor who sought to charge a client on a different basis from that previously agreed to make his intention clear to his client, who had to be given an informed opportunity to agree or to reject the new basis of charge, and if he so chose to cease to instruct the solicitor.
   Here the terms of the letter applied to the contentious business then anticipated. When the firm had continued to act after judgment had been given on 29 October 2003, without seeking the claimant's agreement to any other basis of charging he had been entitled to assume that nothing had changed.


3. A solicitor could not withdraw the bill he had delivered to his client without the leave of the court or the consent of the party. The jurisdiction of the court to grant leave to a solicitor to alter or withdraw his bill was sparingly exercised, being restricted to cases of genuine mistake or error on the part of the solicitor when preparing his original bill.

Bilkus v. Stockler Brunton (a firm) [2010] EWCA Civ 101

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