100,000’s of clients over charged £100+millions over the last two decades.
MASTER ROWLEY in Breyer Group PLC and Ors v Prospect Law Limited (26 July 2017, unreported), disallowed “administration costs”, even though they were set out in the retainer as specific items a law firm could charge the client, however these items were disallowed on the costs assessment as they were described by the Master, as “overheads” of the law firm.
I have no agenda, I am not politically motivated, I do what I think is right. Over last two decades I have produced reports and stats on the legal costs system in the UK. I was asked by the Law Society of England and Wales (“Law Society”) in 2013, to write the “Tool Kit on Costs Management”. I presume they had faith in my experience as a leading expert in the field of legal costs and costs budgeting.
My first article was published in the 1998 edition of Legal500. The article questioned the legality of law billing practices in the 90s. I for example, questioned how internal photocopying was being claimed on almost all legal bills of major law firms as a disbursement. This was an overhead of the legal practice (unless in exceptional circumstances) and should not have been charged to clients. A minor point, one may say, but an indication of the arrogance of major law firms’ billing polices. The Law Society of England and Wales (“Law Society”) published The Price and Service Transparency Toolkit -7th December 2016, http://www.lawsociety.org.uk/support-services/advice/articles/price-and-service-transparency-toolkit/, which finally dealt with this issue conclusively, they state:
Page 5, refers to SRA Handbook-Code of Conduct
(1.21) ensuring that disbursements included in your bill reflect the actual amount spent or to be spent on behalf of the client”.
To which the Law Society, then list such items, which should NOT be described as disbursements i.e.
“Administration charges such as postage and photocopying”.
What a shame it took The Law Society and now the judiciary nearly two decades to agree with my view on this issue. What a disgrace 100,000s of people have been over charged for photocopying and such other “administration costs” under the heading of disbursements. Ballpark figure this is approx. 2-3 per cent of the majority of solicitors’ bills. This could amount to £100s millions of overcharging over this period. Putting this into context, turnover for the top 100 law firms for 2016, was £20billion.