Scheme for accounting for counsel’s fees

Duncan Murray describes the new scheme of accounting for counsel’ s fees which takes effect from May

The April 2000 Annual General Meeting of the Law Society approved a motion calling for the Council to give notice to the Faculty of Advocates of termination of the existing Scheme for the accounting for and recovery of counsel’s fees with a view to re-negotiating those terms. Notice was duly given and due to expire at the beginning of December 2000. At the last gasp, Faculty took on board the need for change. The notice was extended and detailed negotiations commenced. I am delighted to report that these negotiations have resulted in a new scheme, and the notice was withdrawn last year.

The new scheme is to come into force for instructions issued on or after 1st May 2002. The new scheme is to be found on the solicitors section of the Law Society website – www.lawscot.org.uk. This article is intended to give solicitors a guide to the principal changes and to remind them of their obligations to counsel. I would encourage all having occasion to instruct counsel to familiarise themselves with the new scheme.  

The obligation of a solicitor to meet counsel’s fees has been restated in clause one of the new scheme with the insertion of “reasonably” before “practical” regarding the professional obligation on solicitors to ensure payment of counsel’s fees. While it is accepted this is not a material change in the current position where a solicitor should take reasonable steps to satisfy himself of a client’s ability to pay a fee to counsel before instructing counsel, it was felt appropriate to make it entirely clear that this is not an absolute obligation to indemnify counsel for their fees. First and foremost of the changes is the introduction of a joint committee comprising three members of Faculty and three members nominated by the Society. The current solicitor members are myself, Syd Smith of Thompsons and Robert Carr of Anderson Strathern. The probable ongoing Faculty members are the new chairman of Faculty Services Gerry Moynihan QC and the Treasurer, Neil Brailsford QC. The Faculty’s third representative has still to be identified.

It is anticipated that the Joint Committee will act as a forum where the operation of and matters of common interest arising from the Scheme may be considered, and where necessary amendments be proposed. In particular the Joint committee will review the financial limits for payment of counsel’s fees in terms of guideline 3 to the Scheme’s appendix and make recommendations for their increase on an annual basis.  The current limits are £3,500 for senior counsel and £2,250 for junior counsel. It is anticipated the next increase should be considered at the end of this year.

The Joint Committee will also consider cases where there is a report made by a solicitor in respect of a dispute as to whether there is a good reason for non-payment of a fee. In terms of the new scheme if a proposed fee note is issued by counsel at the end of May and being due for payment still remains unpaid at the beginning of September, Faculty Services will write to the instructing solicitor. The letter will be in standard terms and will intimate that if the solicitor has a reason for non payment of the fee he should within 21 days provide a brief report for the Joint Committee explaining the reason for non payment and a proposed timescale for payment or an explanation as to why he believes the fee note should be withdrawn. This response will then be considered by the Joint Committee along with any representations from the counsel concerned. If no response is received within the time limit the matter will pass directly to the Dean of Faculty. It remains the position that the ultimate determination of the matter rests with the Dean of Faculty as to whether or not he concludes a good reason has been given. In cases where a report is provided by the solicitor the Dean will have the benefit of the Joint Committee’s view of the position before considering the case himself.

We have high hopes for the Joint Committee. A joint committee in waiting has operated informally since last summer and has agreed the increases in the limits for deferment under guideline 3.

It has also been the forum which has taken forward the negotiations and has allowed for detailed discussions with Faculty Services’ Accountant, Tony Parker, regarding how, from the practical operational end of Faculty Services activities, changes can best be effected. The Society sought the profession’s views through a questionnaire as to how information could best be provided by Faculty Services to firms.  There was a highly encouraging response although very mixed views were expressed and no real consensus was achieved. I would encourage firms to approach Faculty Services to see whether a better layout of reports more suitable to their individual needs can be provided. The fact is the Faculty Services computer system is now fairly long in the tooth and lacks flexibility. One of my aspirations for the Joint Committee is if Faculty do get down to upgrading their computer system, the Committee can play a part in seeking to ensure their new system is specified to have much greater flexibility and to do what we, as instructing solicitors and their customers, want.

A key change incorporated into the new scheme is that following the issue of a proposed Fee Note, contact should be with Faculty Services and not with Counsel’s Clerk. This is a practical measure intended to stall the computer process automatically progressing the matter and to put the onus on Faculty Services Ltd to resolve the matter. There should therefore be no doubt as to who is to deal with any query.

Another important modification is that the instructing solicitor now has in terms of Clause 5.3 six weeks rather than one month to query the level of a fee. In the absence of agreement over the level of fee the dispute is resolved by taxation of the fee.

It remains the case that it is open to the instructing solicitor to seek to agree the level of fee in advance of instructions being issued, a practice which is to be commended.  

In terms of paperwork we have persuaded Faculty that there is no good purpose in sending six monthly reminders about deferred matters which was never provided for under the scheme but had become their practice and a considerable bugbear to the profession - an irritation magnified by the format of the enquiry. We have accepted that such an enquiry will now be part of the scheme in speculative and Legal Aid cases, and cases under the deferred guidelines. Faculty Services Limited will however only make enquiry regarding completion one year after the last note of proposed fee was rendered rather than the six month enquiry which had become their practice. Additionally after 1st May the format of any such enquiry is to be modified to be more user friendly.  

The new scheme now also provides a timescale for counsel to submit a fee note which as many of you will be aware can be a source of difficulty. In terms of Clause 1 (3) if the instructing solicitor sends a reminder in writing thirty days following the completion of a piece of work and a fee note is not issued within the following six weeks then the instructing solicitor will have no obligation to make payment.  Counsel will be entitled to make representations to the Joint Committee regarding their failure to submit a fee note timeously.  

I believe the new scheme addresses the profession’s concerns regarding speculative fees.

Clause 4.2    Provides a definition of a speculative case –

“where the solicitor is only to be paid a fee if the client is successful in the litigation.”

It should also be noted that it is essential that the fact that it is a speculative action must be made clear in every letter of instruction to counsel. I would recommend as good practice to avoid any doubt that solicitors include a reference that instructions are on the basis of this clause in each and every letter of instruction. Furthermore in terms of clause 5(5) it will be possible, in personal injury cases only, for pursuers’ agents to instruct counsel on a judicial expenses only basis (i.e. judicial expenses actually recovered) but again that must be stated in every letter of instruction.

The new scheme is a significant improvement on its immediate predecessor and addresses many of the profession’s concerns. The Joint Committee does provide a forum for ongoing discussion, which is clearly desirable.  One area which is the subject of ongoing discussion is the transitional arrangements. Concluded views have not been reached on these and a degree of flexibility would seem to be appropriate. It should be borne in mind however that the old scheme will apply to pre 1 May 2002 instructions.

 I should like to take this opportunity to again pay tribute to Syd Smith and Robert Carr whose original motion and efforts in negotiations with Faculty along with those of Bruce Ritchie, Director of Professional Practice, Past President Michael Scanlan and John Newall have taken us forward to what I hope will be a new dawn.  I welcome feedback on the operation of the new scheme and issues which practitioners wish the Joint Committee to consider. Please direct these to Bruce Ritchie, Director of Professional Practice at the Society, who is secretary to the Joint Committee.

Duncan L Murray Convener, Judicial Procedure Committee

Members can contact Lisa Anderson at the Society to request a copy of the Scheme or view it at www.lawscot.org.uk