Solicitor-client disputes remain largely unresolved

Disputes between solicitors and their clients over legal costs remain prevalent, with few Costs Lawyers reporting a significant reduction following the Court of Appeal’s 2022 Belsner ruling, according to the latest survey by the Association of Costs Lawyers (ACL).

The poll of 103 members – around 20% of the ACL’s membership – revealed that only 12% of respondents had observed fewer challenges to solicitors’ bills by former clients. This suggests the ruling has not curtailed the volume of solicitor-client disputes as intended.

Mediation and Budgeting Challenges
Nearly a quarter (24%) of Costs Lawyers reported increased interest in mediation for resolving disputes, though 23% said they had never participated in one. Meanwhile, solicitors continue to struggle with adhering to budgets.

The survey showed that:

• Only 10% of solicitors always stick to their budgets.
• 54% sometimes exceed them, and 24% always exceed them.
• Applications to vary budgets have increased, with 33% of respondents observing a rise.

These figures have remained consistent over the years, indicating a persistent issue with financial discipline in legal cost management.

Growing Demand for Costs Lawyers
Despite these challenges, the Costs Lawyer profession is thriving. Over half (51%) of respondents reported growth in their firms or departments in the past year, largely driven by increased workloads (68%) and recruitment (39%). Only 11% said their practices had contracted.

ACL Chair Jack Ridgway said:

“It can be difficult to change behaviours in the legal profession, as solicitors’ continuing struggles to stick to their budgets demonstrate. Helping ex-clients challenge bills is also the business model of some solicitors’ firms, so it is perhaps no great surprise that little seems to have changed since Belsner.”

Fixed Costs Regime Concerns
The extended fixed costs regime introduced in October 2023, which provides for a fixed fee of £500 for disputes, has sparked concern among Costs Lawyers.

• 39% said the £500 fee made it difficult to undertake the necessary work.
• 42% feared the regime would severely impact some colleagues’ practices.
• Only 14% believed the process would benefit all parties involved.

Additionally, 23% predicted that excluding part 36 rules from the process would increase disputes rather than resolve them.

Looking Ahead
The Costs Lawyer profession remains resilient amid economic challenges and structural changes in the legal landscape. Ridgway expressed optimism about the future, citing strong recruitment and the uptake of the new Costs Lawyer Qualification.

“The growth in our sector, despite headwinds, highlights the value Costs Lawyers bring to solicitors and clients alike. Our profession continues to adapt, ensuring a pipeline of well-qualified and regulated practitioners to meet evolving demands.”

The survey underscores the ongoing challenges in solicitor-client cost disputes but also highlights the vital role of Costs Lawyers in navigating this complex terrain.