The final decision on Menzies V Oakwood was handed down on 23rd October 2024 in the Supreme Court.
Unfortunately, in this case, Oakwood Solicitors Ltd lost and Mr. Menzies was granted his Appeal. This has been a difficult decision to accept, but we must be proactive now it’s received.
We believe it is important to know the facts of Menzies to really understand the Judgment, in case those reading believe their Firms are protected by a retainer or authority form to a client at the point of acceptance of an offer.
Speaking about the case, Katie Bell, Director, Solicitor Advocate (Civil) & Head of Costs at Oakwood Solicitors Ltd, said:
“To say we are disappointed with the final outcome of the Limitation Preliminary point would be an understatement, but it’s just another bump in the road on these types of cases.
“We are in a culture now where unfortunately this is the norm these days and these types of claims will keep coming through your doors. Following the steps above should protect any future work and ensure the 12 month limitation starts to run.
“I could say I don’t find the Judgment practicable or relevant in the current century, where we have different retainers and agreements with clients, but this won’t change where we are. Change your policies and protect your Firms is the best advice to give.”
Below we break down the circumstance of this case, and what Firms should implement to ensure they are protected.
The circumstances of the case explained
Mr. Menzies was a former client of Oakwood Solicitors Ltd where we acted for him on an RTA case. Following the successful outcome of his case, we deducted a percentage of his Damages to cover our shortfall in costs, as outlined in our Retainer.
Mr. Menzies was given a detailed Retainer at the outset of the claim with all information in about the deduction and the Solicitor Act Assessment process of challenging his Solicitors fees.
He was then given a Statute Bill at the end of his case that explained all the costs of his claim, the amount recovered from the Defendant and the shortfall in the Firms costs.
Due to the level of Damages Mr. Menzies successfully recovered from the work of Oakwood’s Fee Earners, his 25% cap of Damages was a high Sum.
The full amount was not taken from Mr. Menzies, as the shortfall in costs was less than 25% of his Damages, so Oakwood took the shortfall amount as per the Retainer with Mr. Menzies and sent the remaining amount of the deduction to Mr. Menzies.
Solicitors Act Assessment pursued
Some 20 months after the case was concluded, Mr. Menzies instructed the Firm of JG Solicitors to pursue a Solicitor Act Assessment for him to challenge the amount of fees he paid Oakwood as a deduction from his Damages.
Oakwood Solicitors Ltd deemed Mr. Menzies was Statute Barred in bringing his case, as it had been 12 months since payment of the Bill had taken place. Oakwood Solicitors Ltd disputed the Solicitor Act Assessment Claim brought by Mr. Menzies on the basis the same was outside of limitation.
Since then, Oakwood Solicitors Ltd has had four Hearings all on Limitation.
- First Hearing – SCCO – Cost Judge Rowley agreed that Mr. Menzies had brought the claim out of time and asserted he was Statute Barred by section 70(4) of the Solicitor Act 1974.
- Second Hearing – High Court – Justice Bourne granted the Appeal and asserted payment was not affected by a settlement of account. In essence, he asserted the Client had not made payment for the 12-month time limit to start to run under the Act as he asserted Oakwood had not obtained agreement specifically from Mr. Menzies for the Deduction in order to demonstrate that the account was settled.
- Third Hearing – Court of Appeal – The question before the Court of Appeal was what amounts to payment of the Bill in accordance with section 70(4) of the Solicitor Act 1974. Sir Geoffrey Vos, Master of the Rolls, Lord Justice Lewison and Lady Justice Smiler were presiding over the case. The Appeal was successful, and Mr. Menzies was found to be Statute Barred from bringing his claim.
- Fourth Hearing – Supreme Court
Supreme Court Proceedings
JG Solicitors made an Application to Appeal the Court of Appeal’s decision on three grounds. Only one was successful – The Court of Appeal was wrong in law to find that the term “payment” in Section 70(4) of the Solicitor Act 1974 does not require a “settlement of Account”.
The Supreme Court Justices determined that payment required some form of agreement by the Client to the Bill presented.
The Supreme Court agreed there was a valid retainer in place that assessed a mathematical sum owed by the client as a cap, they agreed bills had been sent to the client at the conclusion of the case and payment of the same had been taken from the deduction on client account.
They however asserted it could not be payment in terms of the Solicitor Act as no agreement from the client had been received before payment took place.
What does this mean for Firms?
In essence regardless of your retainer with the client, your explanation to the client at the end of the claim, your authorities with the client agreeing Damages with a section showing the deduction cap being taken, the presenting of the client with a Bill and the client not responding or challenging the costs taken from Damages, does not satisfy payment in terms of section 70(4) of the Act.
Mr. Menzies had full details throughout his claim of what he would be charged. He even asserted he was surprised to receive some of the deduction back as he had thought the full amount would be taken for conducting his case.
None of the above is sufficient. You must get from the client a signed authority at the conclusion of the case once costs are agreed and the Final Statute Bill presented to the Client, to constitute payment for limitation to start to run under the Act.
How to protect Firms going forward?
So how do we protect our Firms going forward? If you have a standard CFA with deduction then do the following:
- Ensure you have a detailed Retainer and accompanying letters to the Client at the onset explaining the deduction to be taken from Damages and the Client’s right to have these assessed. This should be plain English and easy to understand by the client. This was not helpful for the payment argument in Menzies, but you must still ensure the retainer is sound.
- Ensure you send detail letters and authorities to the client at the point of accepting the Damages offer explaining the amount of deduction you will be taking from the Client’s Damages and ensure they send written confirmation accepting the offer with the deduction been taken.
- If a deduction is been taken from damages leave this on your client account until agreement is received from the client.
Following Menzies you must:
- When costs are agreed send out a detailed letter, a compliant section 69 Final Statute Bill and form of authority to the client to agree the amount held from damages as a deduction can now be used to pay the Solicitors outstanding costs as payment of the Bill presented.
- Give the client their options to raise a Solicitor Act assessment in one month if they wish to challenge the Bill.
- If the client returns the authority you can bill the deduction in payment of the Bill.
- The client can still raise a Solicitor Act assessment in 12 months if they prove special circumstances, but the 12 month limitation period will start to run.
- If they do not return the authority and one month lapse without the client commencing a Solicitor Act Assessment then you as the Solicitor will have to commence the assessment to be able to recover the costs of the Bill.
The notion from the Supreme Court that Solicitors can commence their own assessment after the one month period and recover their costs of doing the same will inevitably backlog the High Courts and Judiciary and result in Solicitors being owed more costs that will be difficult to recover.
It is important to remember Menzies is a limitation point. Yes, Firms will probably be in a situation now where old clients have a right to assessment, but this does not mean they will be successful.
Remind former clients of Belsner and referring their case to the Legal Ombudsmen, being the most appropriate forum for their complaint on fees charged.
The Solicitor Act gives client’s the right to challenge our Bills. Make sure you have the correct processes in place to protect your Firms and fight these claims when they are presented.
Further reading
Menzies V Oakwood Solicitors – Protecting Solicitors from old Clients bringing claims for their Deductions
WHAT TO DO NEXT
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Katie Bell is a Director, Solicitor, Higher Rights Advocate Civil Proceedings, who is the Head of the Cost Department. Katie has worked for the firm since November 2010, specialising in Cost Litigatio…
