Legal bodies run the gauntlet of creating contracts for sets’ fees

It is against this backdrop that solicitors and barristers alike are considering introducing standard terms of contracts to make sure payments are made within a reasonable time period.

For the last seven years, the Bar ­Council and the Law Society have been engaged in discussions about exactly what shape a barrister or solicitor ­contract should take.

Historically, a gentleman’s agreement existed between Law Society and Bar Council members, whereby chambers agreed not to sue for fees owed if lawyers agreed not to sue for negligence.

Then in 2001, without officially informing the Bar Council, the Law ­Society removed a clause from its code of conduct that meant not paying ­barristers’ fees would amount to ­professional misconduct.

Bar sources claim the primary ­motivation was that the number of ­complaints had escalated to such an extent that the Law Society ended up with a backlog of investigations. “It wanted to clear the backlog so, without reference to the Bar Council, they removed the clause,” a senior source says.

In response, the Bar Council called for contractual terms of agreements to give its members, who were instructed on commercial matters as a means of enforcing a solicitor’s promise to pay up.

The problem was, and still is, that the breadth of work the contract would have to cover was so immense and complex the negotiations spiralled out of control.

As such the Law Society refused to accept the initial framework because, one source says, “the wording was ­draconian” and “the Law Society refused to bind its members to contracts to which it had agreed”.

Furthermore, legal opinion was sought to ensure that by thrusting a ­contract on the profession, the bodies were not in breach of competition laws. “Because the barrister said it did breach the rules and nobody liked that answer, they went to look for another opinion,” the source says.

A clerk involved in the talks says all those involved were “guilty of overengineering things… it began to get absolutely ridiculous”.

One insider recalls: “There was a complete breakdown in talks so the LSLA [London Solicitors Litigation Association] got involved about two years ago to try to bring everyone back together.

“They tried to refine the contract so it could be agreed on both sides. One issue was whether it should be a requirement to have a contract or a default. So it was decided that because we’d prefer ­commercial firms to regulate their own arrangements rather than having to abide by some Law Society contract, these would be guidelines.”

The framework, which took more than seven years for all parties to agree, then had to be sent to the Ministry of Justice (MoJ) to make sure it was not in breach of any Legal Services Act clauses.

It has now got MoJ approval and the Bar Council is expected to publish the guidelines early next year. These will not be obligatory, but when used will give barristers a way to legally bind solicitors’ liability for fees.

However, there are already problems ahead, with chambers slamming the 15-page document for being convoluted and preferring instead to issue their own two-page contracts.

This is yet to be commonplace, but Hardwicke Chambers introduced terms of engagement letters a year ago and it is understood that Blackstone Chambers has done the same, with other leading sets considering following suit.

The collection of barristers’ fees remains largely an unspoken topic because chambers would rather miss out on a payment than bite the hand that feeds.

Enterprise Chambers members Robert Duddridge and Saiba Ilyas broke new ground when they pursued West End firm Sibley & Co for fees owed. Yet the set’s senior clerk Antony Armstrong stressed it was “very rare” for barristers to sign contracts agreeing fees.

He says: “It was only done by two of our members in the Sibley case, precisely because special circumstances raised a serious concern that the fees would not be paid. We do not expect these ­circumstances to repeat themselves.”

These issues are beginning to take root in the clerking room and it is only a matter of time before a major firm is on the receiving end of a writ for non-payment.