NEWS

News and information from the world of
regulatory compliance and risk management

Update clients on cost increases or face sanctions, lawyers warned
8 November 2023

Lawyers must tell clients the ongoing cost of their service if they want to avoid complaints against them being upheld under guidance published by the legal ombudsman today.

The ‘refreshed guidance‘ states that complaints about lawyers’ bills make up one in 10 complaints referred to the Legal Ombudsman’s Office (LeO). Unhappiness with costs also features in many more complaints – in particular, those about lawyers’ standard of communication, where the lack, or quality, of information about costs may be a factor.

Recent court disputes over success fees and informed consent have prompted a renewed attempt to set boundaries.

The ombudsman wants providers to be guided by three key principles: clients should never be surprised by the bill they receive, lawyers should tell clients what they are charging them for, and clear and accurate records should be kept of all cost information.

Managing cost changes is a key area of contention in complaints, and the guidance states it is ‘not enough for a lawyer to agree the possible cost of a service at the outset’. Many clients complain they were not updated or given the chance to try and control costs.

‘We will look for evidence that the lawyer has kept the client informed about the cost of the case on a regular basis,’ said the ombudsman. ‘We will also want to see evidence that lawyers have consulted their clients on how to manage potential cost increases or what course to take, if new options become available.’

In the event of changes, ‘we would expect the lawyer to explain the change clearly, as well as any service options, and provide (estimated or real) costs for them. We would also want to see that the lawyer has asked for instructions on how to proceed. Even if the lawyer feels that there is only one reasonable option for the client to follow, they should not make that assumption on the client’s behalf.’

The guidance recognises that cost increases will sometimes be due to an unexpected development or the client’s own behaviour, but again these issues have to be raised during the course of the service.

On billing complaints, the ombudsman will want to know what the nature of the work was and for evidence to support what is being invoiced.

LeO says it is clear that some complainants do not understand the basis on which they were billed. The guidance adds: ‘This is not helped by the different sorts of charging structures lawyers currently offer: fixed fee, hourly rate, damages-based agreement and so on. Each of these is different and each has advantages and disadvantages from the client’s (and lawyer’s) perspective.

‘Whatever charging structure a lawyer uses, we would expect them to explain how it works, and what it does and doesn’t include. It must be crystal clear to that particular client.’

Source: The Law Society Gazette, 8th November 2023

read more articles