Are solicitors entitled to make any deductions from an out of court settlement award?

[pacu]

Are solicitors entitled to make any deductions from an out of court settlement award?

My mother in law recently made an out of court settlement of €12,500 in a personal injury claim.

Her solicitor phoned my sister in law a few days later saying they were holding back €2,000 to cover 'shortfalls'.

When this was queried the amount was dropped to €1,500. When queried further, the next day, the figure was further dropped to €500.

Our understanding is that both sides legal costs were covered separately.

 

[MOB]

Re: Solicitors Charges

A few things to say about this:

1. There can certainly be circumstances in which there would be a 'shortfall' as these solicitors put it.

2. In case of claims settled at PIAB stage, some insurers will make what they call a 'contribution' to legal costs while some will refuse to pay anything. So there are certainly some cases settled where the legal costs must be paid out of the 'compo cheque'. PIAB itself awards legal costs only in limited cases.

3. It would be easy to draw the conclusion that there was no shortfall in this case ( and that may be the truth of the matter). However, there may be other reasons. The fact that the solicitors dropped their extra charges so quickly may be due to some or all of the following:

A. Extra charges not justified in this case, and solicitors are in effect backing down.

B. Extra charges are justified in this case but solicitor has done a poor job of keeping the file and the extra charge cannot easily be justified on paper. ( To take an extreme example - if the claimant and\or her daughter have been ringing twice a week for 6 months to monitor progress and the solicitor has always taken and dealt with calls, and has made follow-up calls to doctor, insurer, etc. , but has been poor at documenting this work). So if solicitor thinks client is going to make a fuss over the charges, he\she might prefer to just draw a line under it ( and resolve to keep a better file in future........)

C. Extra charges are justified and the file would show this - but the solicitor is the type who would rather back down than have a fee dispute ( more common than you would think)

I concede that Explanation A above is frequently the winner in this 3-horse race, but I am not at all sure that it is the most frequent winner. That said, I don't do a lot of compensation claims,

See the courts website for a succinct explanation:

http://www.courts.ie/offices.nsf/lookuppagelink/8AFDD6975A6F081380256E7B004D9971

Just to say also - taking the extra payment by way of deduction from the compensation money is only allowed if you have the client's written authority. This is a measure brought in over ten years ago to combat some perceived abuses with compensation cheques (specifically it was alleged that claimants were getting a cheque from their solicitor without knowing, caring or being told how much they had been charged out of the 'compo cheque'). Like many regulatory measures, the rule is not really effective against a determined and cynical solicitor who might want to abuse his client's trust. However the perceived abuses were probably not all that common anyway and are certainly not common today.

 

[whitegrass]

Re: Solicitors Charges

good post MOB.

Also, under section 68(6) of the Solicitors Amendment Act 1994 a client is entitled to the details of the costs charged in the case. Also the client is entitled to a letter setting out the charges or basis of charges at the outset of a case.

It is true that Solicitors do not recover all charges in PI cases, some simply do not raise the issue, some bill the incidental outlays (eg if a Doctor charges a fee of €500.00 for a report the taxing master (arbitrator on costs) may only allow €350.00 therefore a shortfall of €150.00 and some charge a global amount which might more than cover any shortfall in outlays and fees allowed.

The Solicitor should properly send his bill to both the insurance company and client. If his bill is fair from a Solicitor and Client viewpoint (i.e. it represents all taxable professional fees and actual outlays) then the client should be liable to pay for the difference between what the insurance company properly pays and the actual bill.

 

[pacu]

Re: Solicitors Charges

Thank you MOB and whitegrass for your most informative and helpful posts.

 

[a lawyer]

Re: Solicitors Charges

just to chip in - MOB has hit the nail on the head

I would drop a bill in a PI case to save hassle, and potentiallly keep future business. I think one would have to see what the overall bill was to decide in this instance whether the original €2500 was in fact fair (the "round figure" nature of it would not give me great hope for my collegue i'm afraid)

that said, i've found that if you do set it out for the client what exactly any deduction from settlement money relates to - and not hide what is being recovered from the Defendant's insurers, people are not ordinarily going to complain (seems self evident but i think not doing this properly was the profession's problem 10-15 years ago)