Practice notes
Repeal of remuneration certificates - 06 August 2009
1 Introduction
1.1 Who should read this practice note?
All solicitors who bill clients for non-contentious work.
1.2 What is the issue?
Until now the Solicitors' (Non-Contentious Business) Remuneration Order 1994 has set out the requirements that apply when issuing a bill for non-contentious business. An important part of this process has been the option for the client request that you obtain a remuneration certificate if they dispute the bill that has been issued. Major changes are coming into force on 11 August 2009.
The Legal Services Act 2007 (LSA) has amended section 56 of the Solicitors Act 1974, which details the requirements relating to Remuneration Orders for non-contentious business. The Act thus abolished the provisions concerning remuneration certificates. A new Order - the Solicitors' (Non-Contentious Business) Remuneration Order 2009 comes into force on 11 August 2009 implementing these provisions. Consequently, the remuneration certificate procedure is abolished from that date. The new order does not contain any information requirements for clients, but some of the information requirements have been carried over into a new professional rule.
If your normal procedure is to include the requisite client information on your bills, you will need to make amendments to your billing procedures to take account of the changes.
The Order has been made hurriedly and, therefore, the Solicitors Regulation Authority (SRA) is introducing an "emergency" rule to the Solicitors Code of Conduct 2007 to preserve clients' existing statutory rights to information about remuneration, while consulting on the introduction of a definitive rule.
This practice note covers the following areas:
- Previous arrangements
- The “emergency” rule
- Proposals for new arrangements and the definitive rule
2 Previous arrangements
Before bringing court proceedings to recover non-contentious costs, article 6 of the Solicitors' (Non-Contentious Business) Remuneration Order 1994 required that you must inform any entitled person, in writing, of:
- the right to a remuneration certificate
- statutory rights to assessment (taxation) by the court, and
- your right to charge interest on a bill
Article 7 stipulated that, when deducting non-contentious costs from money held on behalf of a client, you must also provide this information in writing to any entitled person who objects in writing to the amount of the bill.
For the purposes of this legislation, an "entitled person" meant a client or "entitled third party". An "entitled third party" was defined within the legislation.
These requirements have been replaced with a new Order and the emergency rule.
2.1 Remuneration certificates
Previously, clients dissatisfied with your fees could request that you apply for a remuneration certificate from the Legal Complaints Service (LCS).
The certificate was a statement of the amount that the LCS considered appropriate to be paid by the client for the work. This figure was based on the LCS’s assessment of the work completed. Both you and your client had an opportunity to review and comment before the certificate was issued.
Remuneration certificates are not included in the new Order and clients will no longer be able to obtain them in respect of bills dated on or after 11th August 2009.
3 Impact of changes to the legislation
3.1 Current arrangements: the "emergency" rule
The SRA are currently consulting on the content of a new rule on giving clients information about challenging a bill. However, to make provision until the new rule can come into effect, the SRA has approved an emergency rule 2.08 to be included in the Solicitors’ Code of Conduct 2007. This covers the information that must be provided to a client prior to a solicitor bringing proceedings to recover non-contentious costs.
3.1.1 Obligations under the "emergency" rule
Before bringing proceedings to recover non-contentious costs, or if you deduct your costs (other than disbursements) from money held for or on behalf of a client or estate in satisfaction of a bill and an entitled person objects in writing to the amount of the bill within the prescribed time, you must do the following under the "emergency" rule:
- Inform the client or other entitled person in writing of their rights in relation to having the bill assessed by the court under sections 70, 71 and 72 of the Solicitors Act 1974
- Inform the client or other entitled person in writing that you are entitled to charge interest on the outstanding amount of the bill in accordance with article 5 of the Solicitors' (Non-Contentious Business) Remuneration Order 2009
You are not required to provide the client or other entitled person with information about their right to request a remuneration certificate as this is no longer applicable. You should amend any standard documentation accordingly.
The definition of "entitled person" remains unchanged. For the purpose of this rule, the "prescribed time" is:
- three months after delivery of the bill or notification to a client or entitled third party, or
- a lesser time specified in writing to the client or entitled third party at the time of delivery of the bill or notification. This period cannot be less than one month.
The new "emergency" rule will come into effect on 11 August 2009 , or when the Lord Chancellor concurs in the rule, whichever is the later.
3.1.2 New SRA guidance on what to do when a client is unhappy about the bill
To coincide with the end of remuneration certificate, the SRA will on 11 August 2009 issue a new guidance note 49A, as part of the guidance on rule 2.05 (complaints handling):
"Where your client is unhappy with your bill you should treat this like any other complaint about your service. In such circumstances it may be helpful, when responding to the complaint, to provide a detailed narrative of your bill so that your client can clearly understand how the costs were incurred. You may be required to provide the Legal Complaints Service with such a narrative where a complaint about your bill is referred to them."
It should be noted that this guidance applies to contentious as well as non-contentious costs.
3.2 Proposals for the new rule
The SRA is currently consulting on a definitive new rule. This consultation process will be concluded on 13 October 2009. It is proposed that the new rule will require you to inform your clients that they have a right to object to a bill by way of the firm's complaints procedure. If the client remains unhappy they may be able to make a complaint to the LCS (or in future the Office for Legal Complaints), and / or by applying to the court for an assessment of the bill under Part III of the Solicitors Act 1974.
Under this proposal, you will also be required to inform clients that if all or part of the bill remains unpaid you may be entitled to charge interest.
Subject to consultation, it is envisaged that this information will need to be detailed on the bill itself, or by way of an accompanying letter.
Further information about the proposed new rule can be found in the SRA Consultation Paper 19, which can be accessed at the SRA website.
4 More information
4.1 Legal and other requirements
The following pieces of legislation describe the previous and current requirements relating to Remuneration Orders. The links will take you to the Statute Law Database website. Please note that the legislation contained in this database may not include the most current amendments.
- Solicitors' (Non-Contentious Business) Remuneration Order 1994 (revoked)
- The Solicitors' (Non-Contentious Business) Remuneration Order 2009
- Solicitors Act 1974 section 56 (as amended)
- Administration of Justice Act 1985 Schedule 2 paragraphs 22 and 23 (as amended)
- European Communities (Lawyer's Practice) Regulations 2000 (S.I. 2000 /1119) Schedule 4 paragraph 7(2)
- Legal Services Act 2007 (Registered European Lawyers) Order 2009 (S.I. 2009/1587) article 3(7)(c)(i)
4.2 Professional conduct
The following sections of the Solicitors' Code of Conduct 2007 are relevant to this issue:
- Rule 2.08 Information on challenging a non-contentious bill
- Guidance note 49A to rule 2 (client relations)
4.3 Further products and support
4.3.1 Law Society Practice Advice
- The Law Society's Advice on client care and complaints handling
- The Law Society's Complaints management
4.3.2 Lawyerline
Now run by the Law Society, this service provides advice on client care and complaints handling. Call 0870 606 2588. Lines are open from 09.00 to 17.00, Monday to Friday. E-mail: lawyerline@lawsociety.org.uk .
Visit the Lawyerline web page.
4.4 Status of this practice note
Practice notes are issued by the Law Society for the use and benefit of its members. They represent the Law Society's view of good practice in a particular area. They are not intended to be the only standard of good practice that solicitors can follow. You are not required to follow them, but doing so will make it easier to account to oversight bodies for your actions.
Practice notes are not legal advice, nor do they necessarily provide a defence to complaints of misconduct or of inadequate professional service. While care has been taken to ensure that they are accurate, up to date and useful, the Law Society will not accept any legal liability in relation to them.
For queries or comments on this practice note contact the Law Society's Practice Advice Service.
4.5 Terminology in this practice note
Must - a specific requirement in the Solicitor's Code of Conduct or legislation. You must comply, unless there specific exemptions or defences provided for in the code of conduct or relevant legislation.
Should - good practice for most situations in the Law Society's view. If you do not follow this, you must be able to justify to oversight bodies why this is appropriate, either for your practice, or in the particular retainer.
May - a non-exhaustive list of options for meeting your obligations. Which option you choose is determined by the risk profile of the individual practice, client or retainer. You must be able to justify why this was an appropriate option to oversight bodies.