Solicitors Act Assessment: Cash Accounts
When to Use, and What to Include/Exclude
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What is a Solicitors Act Assessment?
A Solicitors Act Assessment can be utilised by a Client to have the Court assess their Solicitor’s costs provided for legal services, usually with the aim of having their Bill reduced. Following issuance of Part 8 proceedings and a Solicitor Client Assessment having been completed, a final Court Order for costs will set out the amount payable by the Client to the Solicitor once the award for costs has been determined.
If the Client does not have their costs reduced by more than 20%, they will be held responsible for paying the costs of the assessment.
Section 70 (9) of the Solicitors Act states that:
(a) the order for assessment was made on the application of the Solicitor, and the party chargeable does not attend the assessment, or
(b) the order for assessment or an order under subsection (10) otherwise provides,
the costs of an assessment shall be paid according to the event of the assessment, that is to say, if the amount of the bill is reduced by one fifth, the Solicitor shall pay the costs, but otherwise the party chargeable shall pay the costs.”
Preparing Cash Accounts is an exercise which takes place when an initial breakdown is prepared for assessment, and is updated as the final step, in an assessment which comes under the Solicitors Act 1974. It is something which is commonly misunderstood, and this article aims to clarify the misunderstandings which usually occur in relation to Cash Accounts arising from a Solicitors Act assessment.
The guidance in relation to cash accounts is not very detailed within the civil procedure rules, nor in the practice directions.
The purpose of Cash Accounts is to determine how much each party owes, and to whom, following the Court’s completed assessment of a statute bill.
The requirement for Cash Accounts is found in Section 70 (7) of the Solicitors Act 1974:
s.70 (7): Every order for the assessment of a bill shall require the costs officer to assess not only the bill but also the costs of the assessment and to certify what is due to or by the Solicitor in respect of the bill and in respect of the costs of the assessment.
The Court’s procedure in determining who owes what is explained in some detail at 6.19 of Practice Direction relation to CPR 46, which states the following:
6.19 After the detailed assessment hearing is concluded the Court will –
(a) complete the court copy of the bill so as to show the amount allowed;
(b) determine the result of the cash account;
(c) award the costs of the detailed assessment hearing in accordance with Section 70(8) of the Solicitors Act 1974; and
(d) issue a final costs certificate.
In relation to subparagraph (b) above, the result of the Cash Account refers to the difference between the debit and credit aspects of the Cash Account. In practice, it will include the sum which has already been received on behalf of the Client, minus the sum of fees which have been paid out on behalf of the Client and minus the amount of which the bill has been assessed. Where no sums have yet been paid out on behalf of the Client or by the Client, the Court can exercise its power to strike out certain items from the Cash Account which should have been in the statute bill. The final act would be to include the costs of the assessment, depending on the outcome of the assessment or an order received awarding costs.
It can be a tricky task to identify which items in the Cash Accounts are credits, which are debits and which have no place in the Cash Account at all.
Solicitors Act Assessment: What Should be Included in a Cash Account?
The following items can be included in a Cash Account:
In the debit part of the Cash Account, the following can be included:
- Damages which have already been paid out to the Client.
- Any adverse costs which have been awarded and paid out.
- Payments made to a medical expert for medical treatment on behalf of the Client which constitute damages and not costs (such as physiotherapy and not disbursements).
- Fees paid to any other agency on behalf of the Client which are not disbursements as these will be included in the Bill of Costs.
In the credit part of the Cash Account, the following can be included:
- Any damages which have been received from the third party.
- Any costs which have been received from the third party.
- Any interim payments received or a payment on account of either disbursements or costs received from either the Client or the funder of the case
- Any other funds which have been received from either the Client, the third party or a funder.
Solicitors Act Assessment: What Should be Excluded from Cash Accounts?
The following will not have a place in Cash Accounts and most of these items will be recoverable during detailed assessment proceedings on payment of the Bill of Costs or assessment of a Bill.
- Disbursements such as court fees, expert fees to obtain reports and Counsel fees. These general disbursements are to be included in the statute bill.
- The ATE Premium.
- Any funds received from the Client as paying part of a statute Bill or client deductions.
- Funds which have been provided by the Client to pay Counsel fees.
- Payment of expert fees.
- Payment of Court fees.
- Transfers made from the Solicitor client account into the office account.
The sums included in the debit and credit sections should be totalled and essentially relate to profit costs and VAT amounts (and damages amounts), and the difference between the two columns (total of credit section minus the total of the debit section) shows the amount which is owed. At the end of the case, following a Solicitors Act assessment, the Cash Account should be zero in balance.
If at the end of a case, or at the end of a Solicitors Act assessment, there is a positive balance, then that amount is owed to be paid from the Solicitor to the Client.
In reverse, if the balance following a Solicitors Act assessment is negative, then that amount is owed from the Client is to be paid to the Solicitor.
What if there is a Dispute?
If there is a dispute on the amount of money included or leftover in the Cash Account following the case being finalised and subject to a Solicitors Act Assessment, then you can dispute this costs claim. There are different time limits on submitting a request for assessment on any solicitor fees or solicitor bills.
How Can ARC Costs Assist?
ARC costs can assist in both the dispute /recovery of costs. As Costs Draftsman and Costs Lawyers, we hold extensive experience in acting for both paying and receiving parties, and how best to proceed in this complex area of costs law.
If you are the Solicitor, we can assist in preparing the statute bill and subsequent Bill of Costs for assessment on your behalf, which will accurately reflect the work you have done on the case and any disbursements you have incurred.
If you are the Client and have been served with a statute bill which you deem to be unreasonable, we can assist with challenging this. We can do this initially through negotiations with the third party and subsequently in issuing Part 8 proceedings in the High Court if necessary, and preparing formal Points of Dispute as to any concerns with regards to the Bill of Costs received.
Whatever your interest in costs is, as either the paying party or the receiving party, we can represent you through Detailed Assessment proceedings and at the final hearing (often at the Senior Courts Costs Office) as specialist Costs Lawyers.
Alongside dealing with overall detailed assessment proceedings and Solicitor assessment bills, we provide additional services in relation to preparing Costs Budgets, inter-partes costs recovery, and also the dispute of CPR 45 fixed fees.
If you require any assistance or wish to discuss a costs query, please do not hesitate to contact us on 01204 397302 or via email at email@example.com. Alternatively, you may complete an instruction form found here and attach any relevant documentation, and a cost specialist will contact you to discuss your query.
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