Manches had paid £1,000 to a former client after he complained to the Office for the Supervision of Solicitors (OSS) that the firm summonsed him to court for not paying a non-existent bill and then haggled over his £132 claim for costs.
The payment, made by Manches senior partner Alasdair Simpson, persuaded businessman Daniel Englender to withdraw his complaint to the OSS.
The dispute between Englender, who had been advised by Manches head of corporate Simon Smith, and the firm stemmed from its decision to take him to court for not paying its £2,000 bill without ever having sent him the original, although it had sent him a warning letter.
Manches subsequently conceded that it had issued the summons in error, but it disputed his £132 costs bill for preparing the hearing.
When Englender submitted the costs for taxation they were increased to £349.
And although Manches made no submissions to dispute the costs at the time, the firm applied to have his application for costs set aside three months after the judge had approved them.
The practice told Englender that it had received court approval for this move and asked him to confirm that he would not execute judgment 'in contravention of the court's approach'.
Englender complained that this was 'a situation that does not exist in law'.
He then instructed Bird & Bird and, in November 1996, after four weeks of negotiations, Manches finally agreed to pay the original costs order and Bird & Bird's costs.
After more negotiations with Bird & Bird, Manches eventually, in February 1997, reduced its original bill, which Englender then paid.
In January this year, after Englender filed a complaint to the OSS, Simpson invited Englender to his office and paid him £1,000, the maximum the OSS can award, to settle the complaint.
Simpson said: 'I'm happy to accept that we made two administrative errors... I paid him £1,000 ex gratia to resolve the matter and he accepted that.'
Simpson accepted that the firm had been unable to prove that Englender had received the original bill.
Another error, he said, occurred when the executive in charge of the case filled out a form saying that the firm wished to be present at the taxation hearing, without realising that costs would be taxed as drawn if objections were not received within 21 days.