Law firms can suspend work for non-paying clients
08 May 2012
The England & Wales Court of Appeal (EWCA)
has ruled that a law firm can suspend work for a client who does
not pay its interim charges, even if he was not forewarned that the
bill would exceed the firm's original estimate.
In the case, one Gary Minkin had retained the
services of London law firm Cawdery Key Fireman & Taylor (CKFT)
to conduct his divorce litigation. (Cawdery Kaye Fireman &
Taylor v Minkin  EWCA Civ 546). Part way through the dispute,
CKFT unexpectedly presented him with an interim account of GBP5,472
including VAT and disbursements - well above the original estimate
of GBP3,000 plus VAT. Minkin said he could not pay until the court
had granted him a costs order against his wife, and after some
correspondence the firm stopped acting for him.
Minkin went on to represent himself at his
family court hearing. Later he requested a full explanation of
CKFT's fees (in fact, its unexpectedly high charges were the result
of some unexpected actions of Minkin's ex-wife).
CKFT duly sued him for payment of its fees.
The first hearing in September 2010 did not go its way: the judge
ruled not only that it had wrongfully terminated its services to
Minkin, but that it could not charge him any fees and even had to
refund him the GBP2,000 he had previously paid on account.
The firm appealed to the High Court, where in
February 2011 it again lost on the grounds that it had breached its
contract with Minkin.
Now, however, the Appeal Court has overturned
both the lower court judgements and upheld CKFT's demands. Lord
Justice Ward said Minkin's refusal to pay its bills mounted to a
termination of the retainer and thus the firm was entitled to stop
acting and to collect payment for the work it had done. The client
could not refuse to pay merely because the bill exceeded the
initial non-binding estimate, he said - even though the firm had
failed to discharge its obligation to warn him that the fees were
running ahead of the estimate.
"Once there was a cogent explanation for the
increase it was unreasonable for Mr Minkin to continue to refuse to
pay, particularly since if he was dissatisfied with the amounts he
could have challenged them", added Lord Justice Elias.