Justice 1 Committee, 23 Jun 2004

Meeting date: Wednesday, June 23, 2004

Official Report 117KB pdf

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Legal Fees (Transparency)

Item 3 is on the related topic of legal fees. The committee will recall that we first considered the issue at our meeting on 31 March, in response to a letter from Margo MacDonald about a constituent of hers who had a dispute about legal fees and who had complained about the auditor of court. We thought that the issue was worth pursuing. We have received some information from the Law Society that outlines how fees are calculated; it is in members' papers. I thought that it was important to deal with the matter separately from the regulation of the legal profession, given that we had pursued it independently through correspondence.

I invite members to comment. We know that the ombudsman shares our view that the issue of transparency in legal fees needs to be pursued further. In particular, letters of engagement—which are just letters to clients that indicate roughly what the costs will be—require consideration. The ombudsman had been concerned that, although some solicitors were issuing letters of engagement, not all of them were doing that as a matter of procedure. Members will note from their papers that the Law Society is considering the issue at its meeting, which I think is at the end of this week.

I have examined all the options in the note by the clerk, paper J1/S2/04/25/2, and I favour option (b) as an initial way of progressing the matter. That would involve accepting the offer of having a meeting with members of the Law Society's remuneration committee to discuss the transparency of fees. I feel that having such a meeting would give us the benefit of receiving responses to our questions and would allow us to decide on a positive way of proceeding.

I agree with Margaret Mitchell. I think that, initially, we should choose option (b). Once we have met with that body, we can consider what other steps are necessary. That is the way forward that I support.

To an extent, I go along with that suggestion. Given that the Law Society is intending to consider the matter this week—I believe that its meeting is on 25 June, not 23 June, as our papers suggest—it might be useful to have a meeting with the remuneration committee at some point after that if the Law Society refuses to introduce a procedure of issuing letters of engagement. However, if the Law Society introduces such a procedure, which is the main issue that we have been focusing on, I wonder what we would discuss with the remuneration committee. If we intend to carry out some more detailed work on the transparency of legal fees overall, such a meeting would be fair enough but, if all that we want to discuss is the sending out of letters of engagement, I am not sure what we would gain from a meeting if the Law Society agrees at the end of this week to implement such a procedure. If we are to meet the remuneration committee in those circumstances, it would be helpful to have some clarification of where we are going.

It is important to highlight some of the background issues that have arisen as a result of the original correspondence from Mr Wilson. Members will note that there is a late paper that draws attention to Mr Wilson's experience.

There are two issues. The first is about letters of engagement and the second is about itemised bills—the bills that people get at the end of the process. Mr Wilson's dispute, which was about the itemised bill, involved the auditor of court. Although he was successful in reducing his bill, he still felt that the fee was too high and that it was difficult to check whether his bill was correct.

The area is complex and I do not think that we should attempt to simplify it. I think that the issue that we should pursue is the situation that ordinary people who have never previously engaged a solicitor find themselves in when they walk in off the street. They are afraid of walking through solicitors' doors, because they do not know what the bill will be at the end of the day.

I accept that the work cannot be predicted, because the lawyer does not know exactly what will need to be done, but more could be done by the profession to get people to understand at an early stage what the costs will be. To be honest, I was astonished to find that in Scotland we do not have letters of engagement as a matter of routine.

I suppose that the fees table that we have been given might be straightforward for a solicitor, but a truck could be driven through it, because one can pick and choose the items on it. It is not a question of suggesting that the profession is not issuing accurate itemised bills; the issue is ensuring that the process is transparent. That is what I picked up from Mr Wilson's case and we should pursue it. As it happens, the ombudsman also believes that there is an issue.

It may well be that, by the time the Law Society meets at the end of this week, the issue will have been resolved, which would be good news. The committee could then decide whether there is still work to be done or whether it wants to leave the issue to the Executive consultation.

You are right, convener. It would be worth meeting the Law Society to discuss itemised billing. There is a balance to be struck. It could be too onerous to log every phone call but, equally, we are conscious that there are issues of transparency. The general public should have a clear and realistic breakdown of what they are being charged for. Such issues could be clarified. It would be worth while meeting the Law Society—putting to one side the issue of the letter of engagement—even if the issue is resolved.

How does the committee wish to proceed?

I have listened to the discussion and I agree with Michael Matheson. What we do depends on what happens this week at the Law Society's meeting. I am not sure that there would be much point in our having a meeting to discuss only one item. Option (d) in the note from the clerk is to write to the Law Society about ensuring that people know that they have the option to have their account audited. We could widen that out and write to the Law Society on the overarching point about the final itemised bill being clear. I am not sure whether it would be worth having a meeting before we get that response, particularly in light of the fact that the other issue may be resolved by the end of the week. I would like to do the letter first, wait and see what happens with the meeting, then take a decision on whether we should have a meeting.

That would be sensible. We would not rule out option (b), which is to have a meeting with the Law Society, but, in the meantime, we would await the outcome of its meeting. We will proceed with an invitation to the ombudsman to come to the committee as per the previous item, which would allow us to put questions to her on the issue that we are pursuing. After that, if we are not satisfied that progress is being made, we can come back to option (b), which is to consider having a meeting with the Law Society—as it has offered to do—or to appoint a reporter on the subject.

I am happy for us to do that, if that is the will of the committee.

I think that that is the consensus. Before we close the item, we should note on the record that the Executive's response is encouraging, because it seems to agree that there should be a rule that requires solicitors to send out letters of engagement. In her letter, the Minister for Justice states that, in her view,

"it would be in the interests of the users of legal services in Scotland if there was a practice rule".

There is also something in the letter about the auditor of court. I am pleased with the Executive's response, because it agrees with our position, which is helpful in making progress.