Oakwood Solicitors Ltd v Menzies: Costs Judgements shakes up Personal Injury Billing Practices

Mr. Menzies settled his personal injury claim for £275,000 in 2019 and his pre-agreed conditional fee arrangement (CFA) stipulated that Oakwood would retain 25% of his damages until negotiations with the defendant insurer were complete. The firm then provided Mr. Menzie with a final bill for £74,000 of which £38,000 had been recovered. Mr. Menzies applied for an assessment of those costs more than 12 months after the solicitors (Oakwood) had issued the final statue bill.  

According to s70(4) of the Solicitors Act 1974 there is no right to apply for an assessment 12 months after payment. The appellant, Mr. Menzies, contested that for the threshold of “payment” to be reached under s.70(4) the client should have been informed of and have agreed to the specific amount to be paid. Oakwood argued that as Mr. Menzies had agreed to a contract which said fees may be deducted from moneys held to the client’s account, no further agreement was needed.  

The court ruled that clients must be informed of their solicitor’s bill and have agreed to it before the threshold of “payment” is met. Lord Hamblen, giving the lead judgement, wrote that delivery of the bill “does not suffice” and that, if the solicitors’ case was accepted, it would mean that “payment can thus occur before the client has an opportunity to see, consider or take advice in relation to the bill of costs” and, therefore, that “[c]lient protection [would be] diminished.” 

The court also rejected the respondent’s argument that there were significant practical repercussions for solicitors’ practice management. Oakwood’s counsel argued that, if further agreement was required, a recalcitrant client could frustrate and delay the payment of bills. The court rejected these arguments, noting that “there is no reason” why some or all of the costs cannot be agreed in advance via agreeing a fixed fee or by fixing costs with a mathematical formula (used in the present case but only to cap costs). Moreover, the court ruled that the statutory wording has remained “materially unchanged” for 180 years with “no evidence that it has caused real practical difficulty”.  

This case saw four Chambers ranked barristers involved. You can see the costs litigation ranking table here: Costs Litigation, All Circuits, UK Bar | Chambers Rankings 

For the appellant, Mr. Menzies was Roger Mallalieu KC of 4 New Square leading Gemma McGungle of 18 St John’s Street. 

For the respondent, Oakwood Solicitors was the King’s Chambers’s Craig Ralph and Erica Bedford.