Predictable costs and the client

Judith Purchas, the remuneration policy adviser at the Law Society, warned that the predictable costs scheme has implications for retainers with a number of choices to be considered and understood. Costs recovered belong to the client and under the Predictable Costs Scheme this means that unless the client is liable under the retainer for the amounts prescribed by the Predictable Costs Scheme, then the solicitor will have to account to the client for any amount by which the predictable costs exceed the actual costs calculated under the terms of his retainer. Where the work is conducted under before-the-event legal expenses insurance, the contract between the client and the insurer will dictate the appropriate retainer. Where solicitors are working on a no win, no fee conditional fee agreement, it may be appropriate to consider amending the agreement to include a new paragraph providing either that the client is liable only for the predictable costs figure, or is liable for any actual costs incurred over and above the predictable costs figure. It is important to remember that s74(3) of the Solicitors Act 1974 provides that no amount may be allowed between the solicitor and his own client that could not have been allowed between the parties unless they have an express written agreement to the contrary (see also CPR rule 48.8(1A)). Using the present Law Society model, CFA practitioners should be aware that they will have to account to their clients for any excess between the figure from the scheme and the actual costs. Under the traditional retainer, if the predictable costs figure exceeds the figure incurred on the time charge basis, the solicitor will have to account for the difference to the client. Otherwise, the client should be informed that the predictable costs figure will be a ceiling on what can be recovered from the other side, unless the costs are assessed at a figure more than 20% greater than the predictable costs figure under rule 45.12. Again, solicitors should be mindful of s74 of the Solicitors Act if they wish to preserve heir right to recover any shortfall in costs from the client.