Updating a litigation client when the costs estimate will be substantially exceeded (Code 8.7)
Neha Kapoor instructs a firm to bring a breach of contract claim against a former supplier. The client care letter estimated the firm's total costs to trial at £18,000. Since then the defendant has served a counterclaim and an expert has had to be instructed. The fee earner now realises that the total costs to trial are likely to be about £35,000. He decides to tell Ms Kapoor only when he sends the final bill, because the client care letter clearly described the figure as an estimate.
Which of the following best describes the fee earner's obligation?
Choose one answer to see the reasoning.
Worked answer
Correct answer C: He must give Ms Kapoor updated information on the likely overall cost now, so that she can make informed decisions about how to proceed.
THE RULE TO REMEMBER
Clients must receive the best possible information about likely overall cost at engagement and, when appropriate, as the matter progresses, including a prompt update when an estimate will be materially exceeded.
Updating a litigation client when the costs estimate will be substantially exceeded (Code 8.7)
Paragraph 8.7 of the Code requires a solicitor to ensure that clients receive the best possible information about how their matter will be priced and about the likely overall cost of the matter and any costs incurred. This must be given both at the time of engagement and 'when appropriate as their matter progresses'. Paragraph 8.6 adds that clients must be put in a position to make informed decisions about how their matter will be handled and the options available to them. The likely cost has nearly doubled because of the counterclaim and the expert evidence. That is exactly when an update is appropriate: Ms Kapoor may want to reconsider settlement, funding or whether the claim is still worth pursuing. Waiting until the final bill defeats the purpose of the rule. Calling the original figure an estimate does not remove the duty to keep it up to date.
Why A is wrong: Whether or not the estimate is contractually binding, para 8.7 requires costs information to be updated when appropriate as the matter progresses.
Why B is wrong: The duty under para 8.7 is the solicitor's own; it does not depend on the client asking.
Why D is wrong: The Code does not turn an estimate into a fixed fee; it requires the best possible information, including updates.
Why E is wrong: Telling her only at the end deprives her of the chance to make informed decisions while the costs are being incurred.
A little more practice done.
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