When Is Payment Not Payment?

The long-running dispute between a personal injury claimant and his solicitor’s firm has finally ended up in the Supreme Court, with a recent decision turning on the meaning of the word payment.

Section 69 of the Solicitors Act 1974 sets out the requirements for a bill sent by a solicitor. Provided the requirements are met, under s 70 clients can only expect their bills to be assessed by the court if they request this within strict time limits, unless there are special circumstances.

However, the issue becomes muddled when costs are deducted from funds the solicitor holds. There may be questions about when the time limit starts, such as when money is transferred from the client account to the office account or when a bill is sent, received, or paid.

The Supreme Court in Oakwood Solicitors Ltd v Menzies [2024] UKSC 34 decided that for the bill to be paid for the purposes of s 70, the client must have:

·        received a statutory bill; and

·        provided agreement to the amount sought in the bill.

A clause advising that the funds will be deducted from money held, often included in conditional fee agreements, is not sufficient. Whether a court will accept a specific clause explaining when and why agreement is implied, is untested.

As this will cause some consternation among colleagues in practice, By Lawyers have:

·        amended the Conditional Fee Agreement to include an implied conduct clause as a first line of defence;

·        created an Enclosure – Explaining the Bill precedent, which will be added to all matter plans over the next few weeks to accompany invoices if practitioners wish;

·        updated the example invoices.

We would love to hear any suggestions about how we can continue to help you enjoy practice more.