So you are engaging a Solicitor to carry out work for you on maybe a property such as a purchase,a sale or any other work that involves a cost to you, what happens?
Like any transaction you like to know how much it costs- is it a fixed cost? Or will it increase due to extra work that arises after they start to work for you?
“Section 68” refers to a section of the 1994 Solicitors Act which outlines the basis of three headings on which your legal fees are based.
- It could be a fixed amount – if something is straight forward and the process is fairly procedural without the possibility of extra work being needed then a fixed fee is usually appropriate.An example of this would be an Injuries Board Application for compensation where the expertise of the Solicitor is needed at the end to estimate what the actual value of the claim is as distinct from what the Injury Board offer you.
- It could be the time spent on the file – here the new Legal Services Act 2015 updates the 1994 Act and it looks like it is going to recommend as far as possible using time as the basis for calculation of fees. It is interesting to see that in America which we always thought was ahead of us here in Europe, they are moving away from a time-based bill to more of a fixed fee system with allowance for any extras that may arise.
- The third basis of calculation of fees are laid down in the High Court Rule Order 99 to be precise.
- There are seven guidelines which are as follows:-
- The complexity, importance, difficulty, rarity and urgency of the matters involved.
- Where money or property is involved, its amount or value.
- The importance of the matter to the client.
- The skill, labour, or responsibility involved and the extent of any personalised or specialised knowledge given or applied by the Solicitor.
- The number and importance and complexity of the documentation perused.
- The time, the place and where and in what circumstances the business or any part thereof is transacted.
- The time reasonably expended thereon.
You will see in these, the time is only one of the criteria used and for that reason it gives more flexibility in relation to issues which might come up during any particular transaction. The office of the Taxing Master (nothing to do with tax or Revenue) is the independent assessor of any bill provided for legal services- that office uses the above seven guidelines if you want to dispute any bill as you are entitled to do as a consumer.
When should you receive a Section 68 Letter?
Well the 1994 Act states that you should get it “as soon as practicable”. It gives no further guidance. To be fair when starting a matter for a consumer, the lawyer has no idea how long it will take, how many issues will arise and whether it will all go to plan…it usually doesn’t!
You see Solicitors sell time and expertise, they only have so many hours to sell in the day and year. Believe it or not, it is estimated to be only about 1400 hours per year which can be sold. You must allow for weekends, closed days, holidays, hours when further training is required (twenty hours in 2017 for Solicitors) and you have to eat, sleep and have some life outside work as well. So each working hour must pay and there are bills to be paid each month, whether fees are earned or not.
So where does that leave you in figuring out what the legal advice/service will cost you?
We work on the principle (fair) to give you an estimate of what we think it will cost you from previous experience of a similar transaction. We will include a clause to cover “unforeseen circumstances” when they arise. You will be amazed what can happen out of the blue!
In house purchases, buyers sometimes change banks after getting a better offer on loan packs, after Contracts have issued. Bank themselves sometimes change the terms of the loan. Sometimes there are delays outside the buyers control and the loan pack itself goes out of date and must be re-issued. Sometimes the property to be bought is not all on the folio. Sometimes people put extensions on their houses and do not apply for Planning Permission and the buyer will not buy it unless planning permission has been granted which can cause delay.
It is a bit like extra building work required when you start to renovate a house. When assessing price, there is no knowing that is going to happen when the renovation starts. Legal work is much the same, Solicitors get paid for taking responsibility and checking out the situation so that there is no hidden dangers or traps in the purchase to take that all through third parties it takes time. We often say we are as quick as the slowest member of the chain, which we think is a fair assessment of what can happen.
In summary Section 68 Letter is a guide to you, but no more than that. It is to be replaced by a new Section 105 in the 2015 Legal Services Act so we will wait and see if the drafter of the new Act will be better able to encompass all the areas referred to above for assessment of costs to you as a consumer in the future.
As always if you would like more information please do not hesitate to get in touch with us here