Justice 1 Committee, 31 Mar 2004

Meeting date: Wednesday, March 31, 2004

Official Report 180KB pdf

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Legal Fees (Transparency)

Item 2 is on transparency of legal fees. I refer members to the paper that the clerks have prepared, which sets out the background to correspondence on the matter.

The matter is on the agenda because Margo MacDonald MSP wrote to me, in my capacity as the convener of the Justice 1 Committee, about a constituency case concerning a solicitor's fees. As members know, the committee will not become involved in individual cases, but it may pursue general points if it wants to do so. I thought that the correspondence raised general points about the transparency of solicitors' fees and I decided to move the matter on a wee bit. I wrote to the Scottish legal services ombudsman to ask for her view on whether solicitors' fees are sufficiently transparent for the ordinary person. Members have a note from the clerks that summarises the action that was taken and the interesting response that we received from the ombudsman, which reads:

"Despite recommendations by the Ombudsman and unlike the Law Society in England and Wales, the Law Society of Scotland does not have a practice rule that, at the beginning of the solicitor-client relationship, solicitors send a letter of engagement, setting matters out clearly, such as charges or charging rates, how much may be paid to other parties on the client's behalf and when they expect to be paid".

As far as the ombudsman is concerned, there is clearly room for improvement.

It is for the committee to decide whether to take the matter further. I thought that it raised wider issues, given my experiences with constituents who think that, when they engage a solicitor, it can be quite hard to establish how they are being charged. Of course, we could relate any work to our continuing work on the inquiry into the regulation of the legal profession. Certainly, the ombudsman thinks that there should be improvement, at least in one area. I invite comments from members.

I am happy with the recommendations for action in paragraph 7 of the note from the clerk.

Two points arise. One arises when people end up in dispute with a solicitor over charges. However, a more general point is that people who consult a solicitor often come away quite concerned about what they have got themselves into. Paragraph 5(a) in the paper says:

"unlike the Law Society in England and Wales, the Law Society of Scotland does not have a practice rule that, at the beginning of the solicitor-client relationship, solicitors send a letter of engagement"

to explain certain things about charges, when they expect to be paid, and so on. From anecdotes from many people, I know that that causes concern. People are not sure what they are getting themselves into. Issuing a letter would be good practice. That alone would make the situation much clearer than it is at the moment. However, I am happy with the action points in paragraph 7.

We need more information. Paragraph 5(a) seems quite reasonable but I have doubts about the suggestion in paragraph 5(b), which might be too much of an imposition. We should write to the minister and seek the views of the Law Society of Scotland on the ombudsman's comment. That would give us the background information that we need to make a reasoned and good decision.

I support the proposal in paragraph 5(a) on the letter of engagement. If someone came to work on your house, you would want a quotation—or at least an idea—of how much it would cost. It would be good practice for solicitors to advise clients at the outset of the approximate cost of any work. I am surprised that that does not happen.

I am a lay person and when I saw the correspondence from the constituent concerned—a Mr Wilson, who went first to the auditor of court, which is what you do—things were not made any clearer. Members will see that we have received a table of fees from the Law Society of Scotland. If I was confused before, I was certainly confused when I saw the table. Although it sets out clearly what solicitors can charge, you could draw any conclusion from it. I know that solicitors cannot always predict what they are going to charge their client, but, when the client receives the bill, the figures should be obvious. I do not think that people should have to refer the matter to the auditor of court just to understand what a solicitor has charged. There is dissatisfaction about that.

I agree with everything that has been said. The situation seems bizarre and I agree with the two action points in the paper. Margaret Mitchell mentioned paragraph 5(b). I find it extraordinary that the Law Society of Scotland thinks that there would be a huge number of extra charges just to produce an itemised bill. I would expect an itemised bill from anybody whom I engaged to do work for me. I would want to understand clearly what the charges were, and I would then be happy to pay. If I bought something, I would expect to be charged for it, and I would expect to be able to see how that charge had been arrived at. I find bizarre the Law Society's idea that just drawing up an itemised bill would lead to lots of extra charges for clients. I agree with the ombudsman's point about new technology. Producing an itemised bill is not a big task—it should be quite easy. Therefore, I would like us to ask the Law Society of Scotland why it feels that such extra charges would arise. It does not seem reasonable to me.

I think that the problem may lie in just how itemised the bill becomes. If a case has gone on for a long time and a bill has not been sent in the interim, the cost of producing an itemised bill could be excessive. I do not know. We need more information. For example, are we talking about every phone call that has been made over a period of two years? It is certainly worth writing to the Law Society of Scotland to ask for an answer.

I was surprised by the comment in the paper that the auditor of court was "not appropriately qualified". I had assumed that the auditors would automatically have to be legally qualified; perhaps there does not have to be a stipulation that they are. I would like to know more about the appointing of auditors of court and about the qualifications required.

Does the committee agree that we will take action as suggested in paragraphs 7(a) and 7(b) of the clerk's note, and that—in response to Margaret Mitchell—we will obtain a note or other information on the role of the auditor of court? We will seek that information from the Executive, so that members are furnished with all the facts about what that person does. If there are issues to raise, members will have the opportunity to take them up.