LEGAL SERVICES Ombudsman Michael Barnes has called for the introduction of a new solicitors' fee at cost or below to curb soaring legal bills for private clients.
He wants the rate to take
effect after an action has overrun a time threshold which would be agreed at the opening of the action.
The measure would cut the number of cases in which the client had run up legal bills which exceeded the amount they were trying to recover from the plaintiff.
But the idea was immediately condemned as “stupid” and “half-baked” by Henry Hodge, deputy vice-president of the Law Society.
Barnes, speaking at the launch of his annual report, said a combination of hourly rate charging and poor advice to clients on the likely costs and risks of taking action, had led to clients being hit by exorbitant bills.
One case involved a builder trying to recover £9,800 and incurring total costs of £26,000 after losing his case.
The bill included a £5,000 fee for an expert witness which the client had not sanctioned.
Barnes calls the hourly rate an “open-ended system without any incentive for solicitors to deal with work quickly”.
He adds: “The sensible thing is to have a structure where the fee is agreed, which includes an estimate of a certain number of hours which the work is expected to take.
“There should be an hourly rate which comes into play after those hours have been used up, which is a sort of 'level' hourly rate, so that it is uneconomic or almost uneconomic from the point of view of the solicitor, so you preserve an incentive to finish the work quickly.”
If the work proved far more complicated than could be foreseen, then a fresh estimate should be agreed by client and firm.
Barnes said the Law Society's written professional standards should make it clear that solicitors should give their clients the best available information on the likely costs of the case.
However, Henry Hodge, vice-president of the Law Society, says: “The idea of penalising solicitors because the case doesn't finish quickly is stupid and half-baked.”