That case involved a legal bill to a company for over £1m, with the original estimate in May 2005 having been for £206,000. The law firm’s justification was that more work had been necessary (they had assumed a four-day trial, whereas it was 18 days; many of the witnesses were based abroad; counsel’s fees were higher than anticipated). It was also argued that the managing director of the client company had been actively involved in the day-to-day management of the litigation and was therefore aware of the changing circumstances (ie he was an experienced businessman who should have requested an updated estimate as the case became more complex). In response, the client’s case was very simple: it had been given an estimate of costs, and the managing director had not been made aware that the fees would be increased. The requirement of the Client Care Code to give the client accurate and up-to-date costs estimates was emphasised and the claimant argued that a failure to do so should limit the client’s costs to the estimate provided. The court agreed. Thus, Withers lost £800,000 costs. It is a striking illustration of how the rules work; bear in mind that this was a complex piece of commercial litigation with an experienced client who was involved in the litigation. Nevertheless, the claimant had been given an estimate of the costs and was entitled to rely on that estimate. It is therefore a salutary warning to all litigators.

It is worth noting that the requirements on giving costs information have now changed and can be found in 2.03 of the Code of Conduct:

‘You must give your client the best financial information possible about the likely overall cost of a matter both at the outset and, when appropriate, as the matter progresses.’

But, there is a potential escape clause:

‘If you can demonstrate that it was inappropriate in the circumstances to meet some or all of the requirements in 2.03, you will not breach 2.03’ (2.03(7)).

The new requirement also contains a small but potentially important change. The old Client Care Code said a solicitor ‘should’ give the client the best possible information, whereas the Code of Conduct says the solicitor ‘must’. That distinction may be important and could be argued to mean that no costs at all are recoverable if costs information is not provided. In Garbutt [2005] it was held that failure to provide an estimate did not invalidate the retainer between solicitor and client because the requirement to give an estimate was not mandatory. But, the new Code of Conduct makes this mandatory, and accordingly it is open to argument that a failure to provide mandatory costs information will invalidate the retainer so that no costs are payable at all! The likelihood is that the courts would not be receptive to such an argument, but it is one that could usefully be raised in negotiation with a firm that has failed to provide any costs information. For further information see [2007] 61 Personal Injury Law Journal 18. © Practical Lawyer