Vulnerable Clients and Legal Costs: Getting the Retainer Right

A client signs the retainer, agrees the hourly rates and returns the paperwork. Months later, they say they never understood how much they might have to pay.

For solicitors, a signature is an important record, but it does not answer every question about the explanation given or the client’s understanding. Where vulnerable clients are involved, the way costs information is communicated deserves particular attention.

Getting the retainer right means looking beyond the document. The client needs an explanation of the legal service, funding arrangements and potential financial consequences that works for their circumstances. That includes any hourly rate uplift, success fee or shortfall they may have to meet personally.

Recognising vulnerability without making assumptions

Vulnerability can arise from bereavement, financial pressure, disability, mental health difficulties or the circumstances of the dispute itself. It may be temporary, fluctuate or become apparent after instructions begin.

The vulnerabilities consumers experience do not always fit a standard checklist. A confident professional may struggle to absorb information following a serious injury. Someone comfortable discussing their case may find percentage deductions difficult to understand.

Ask what would help the individual participate. Shorter discussions, accessible documents or a written example may be more useful than providing additional pages of standard terms.

Supporting vulnerable persons starts with understanding their needs, rather than assuming everyone with the same diagnosis needs the same assistance.

Vulnerability and mental capacity are different

A person can be vulnerable and retain mental capacity to instruct a solicitor and agree fees. A mental health condition does not automatically establish that someone is lacking capacity.

Under the Mental Capacity Act 2005, capacity is presumed unless established otherwise. Practical support should be provided before concluding that someone cannot make the relevant decision. An unwise decision alone does not establish incapacity.

Where concerns arise, consider the particular decision and the person’s ability to make it at the relevant time. Understanding a retainer and conducting litigation can raise different questions.

Do not assume a relative can sign or instruct on someone’s behalf. Establish their authority and consider whether specialist capacity advice or a litigation friend is required.

What the SRA expects from costs information

The Solicitors Regulation Authority’s Code of Conduct requires solicitors to consider clients’ needs and circumstances.

The SRA Code of Conduct also requires information to be communicated in a way clients can understand, enabling informed decisions. Clients should receive the best possible information about pricing, likely overall costs and costs incurred, both initially and as appropriate during the matter.

A legal representative should therefore consider whether the explanation has worked. Asking a client to describe their understanding of the likely deductions can reveal confusion that “Do you understand?” misses.

You should record the discussion and any adjustments agreed. You should also avoid relying solely on a standard acknowledgement.

Explain the client’s liability separately from recovery

One common source of disagreement is the difference between the firm’s charges and the amount recoverable from an opponent.

The retainer should explain whether the client may be responsible for a shortfall, how it arises and any contractual limits. The applicable costs regime matters: fixed recoverable costs may produce a different recovery from an hourly assessment.

You may wish to use figures where possible. For example, explain what happens if the firm’s charges are £12,000 but the opponent pays £8,000. Whether the client owes the difference depends on the agreement and applicable law.

Our legal costs negotiation service supports the recovery process, but negotiations cannot replace clear initial advice about personal liability.

Hourly rate uplifts need a proper explanation

An hourly rate above the guideline figure is different from a CFA success fee. Using “uplift” for both without explanation can confuse clients. The guideline hourly rates are assessment benchmarks, not an automatic ceiling. However, agreeing a higher contractual rate does not guarantee that the opponent will pay it.

Where enhanced rates are proposed, explain the rate, why it is being charged and the potential shortfall. Any claim against an opponent needs supporting justification based on the work and circumstances.

Client vulnerability does not automatically justify a percentage increase. Consider the actual demands of the instruction and appropriate fee earner involvement.

Our article on justifying uplifts on guideline hourly rates explores the evidence needed.

Success fees: distinguish the percentage from the deduction

Under a conditional fee agreement, a success fee is generally calculated as a percentage uplift on basic charges. A cap on the deduction from damages is a separate calculation.

A client may hear “25%” and assume this describes the success fee itself. The solicitor should explain the contractual percentage, the charges to which it applies, any applicable damages cap and other proposed deductions.

For example, a 100% success fee doubles the relevant basic charges before any applicable cap is considered. That is different from automatically taking 25% of compensation.

Use a worked example covering VAT, insurance and shortfalls where relevant. A statutory maximum should not be presented as an automatic entitlement to charge that amount.

Additional support is not a blanket charging justification

Some instructions require additional necessary professional work. That work should be identified accurately, recorded clearly and considered against the retainer and applicable assessment principles.

However, reasonable adjustments for disabled clients require separate attention. Under the Equality Act 2010, a person subject to the reasonable adjustments duty cannot require the disabled person to pay the costs of complying with it.

Firms should distinguish substantive legal work from the cost of meeting that duty. Neither charging the client nor recovering an amount from an opponent should be assumed simply because extra time was spent.

Clear records help explain the distinction when preparing bills of costs.

Review funding and understanding as circumstances change

Legal aid, insurance or another funding arrangement may be relevant. Eligibility, scope and restrictions need checking; vulnerability alone does not establish entitlement.

Where the Legal Aid Agency funds the work, do not assume a private retainer permits additional charges for services covered by the certificate. The funding rules require specific consideration.

Our legal aid costs service can assist with billing requirements.

Costs advice also needs revisiting when estimates increase, additional work becomes necessary or the client’s circumstances change. Explain the development, revised figures and available options before seeking further agreement.

Why approval and supporting records matter

Where CPR 46.9 applies, client approval can affect the presumptions used on solicitor and client assessment. The rules also address unusual costs where the client was not warned about possible non-recovery.

The legal effect depends on the agreement, proceedings and circumstances. Regulatory compliance, contractual liability and assessment are related questions, but they are not identical.

Keep evidence of explanations, questions, estimates, amendments and authority. These records can become important in detailed assessment proceedings.

Discuss your retainer and costs concerns with ARC Costs

If you are unsure whether your retainer adequately explains an uplift, shortfall or deduction, reviewing it early can help identify the issue before billing.

Our costs lawyers can discuss the charging arrangements, supporting records and costs questions requiring attention.

Call 01204 397302 or email info@arccosts.co.uk. We’ll help you work through the costs position and agree the support your instruction needs.

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