Trademark dispute – Solicitor’s retainer – Reasonableness – Claimant instructing defendant solicitor – Solicitor giving estimate of likely costs – Final figure exceeding estimate – Costs judge holding defendant not entitled to recover in excess of estimate – Whether defendant limited to claiming estimated costs – Whether defendant entitled to add margin above estimate – Appeal allowed
The claimant instructed the defendant solicitor to advise and to act for it in proceedings relating to an alleged infringement of a trademark. Negotiations between the claimant and the defendant included a retainer and an accompanying estimate from the defendant of the costs likely to be incurred. The estimate was to be updated from time to time as the case proceeded.
The successful litigation was followed by costs proceedings, in which, inter alia, the claimant asked for a detailed assessment of the defendant’s bills, which exceeded the original terms. The claimant contended that: (i) the estimate should not have been exceeded without express authority; (ii) the charges were unreasonable; and (iii) they bore no relation to the original estimate.
The costs judge held that the defendant was bound by the estimate with certain exceptions, already conceded, such as fees for leading and junior counsel, for additional trial days and for the solicitor’s attendance in court on those days. He concluded that the defendant was not entitled to recover costs in excess of the estimated amount. The defendant appealed.
Held: The appeal was allowed.
Pursuant to section 15 of the Supply of Goods and Services Act 1982, it was an implied term in the contract of retainer that a solicitor would be paid reasonable remuneration for its services. On the other hand, section 70 of the Solicitors Act 1974 provided that a client was entitled to a detailed assessment of the solicitor’s bill under specified circumstances.
In a case where a solicitor did not give its client an estimate of costs, it would not generally follow that it would be unable to recover any costs from its client. Where an estimate was provided but the costs subsequently claimed exceeded the estimate, it did not follow in every case that the solicitor would be restricted to recovering only the estimated sum. Precedent indicated that the court might “have regard to”, or could “take into account”, the estimate and that the estimate was a “factor” in assessing reasonableness. However, no detailed guidance was available as to how the court should react on the facts of a particular case because it was impossible to foresee all the differing circumstances that might arise in any individual assessment.
In some cases, the solicitor’s estimate would be a useful yardstick with which to measure the reasonableness of the final bill, although in others, the amount of the estimate would be a factor in considering what sum it was reasonable to expect the client to pay. There was no authority giving the solicitor any kind of automatic entitlement to add a margin to the estimate, but nor was there any authority for allowing the client to cap its liability at the estimate plus a margin: Leigh v Michelin Tyre plc [2003] EWCA Civ 1766; [2004] 1 WLR 846 and Lahey v Pirelli Tyres Ltd [2007] EWCA Civ 91; [2007] 1 WLR 998 considered.
None the less, a margin might be useful. Where an excess of the final bill over the estimate called for an explanation, the outcome was heavily dependent upon the extent of the excess. A modest excess did not call for much explanation, whereas a substantial excess required a great deal. The court might then be required to exercise its judgment as to what figure could properly be added to the estimate so as not to exceed the sum that it would be reasonable to expect the client to pay.
Martin Farber and Simon J Brown (instructed by Crane & Staples, of Welwyn Garden City) appeared for the claimant; Jeremy Morgan QC (instructed by Withers LLP) appeared for the defendant.
Eileen O’Grady, barrister
