What is a ‘lump sum bill’?

In the law of legal costs, there has long been a distinction between a lump sum bill, of the kind generally given in the first instance by solicitors to clients with whom they have an ongoing working relationship, and an itemized bill which is usually given if a client wants a bit more detail in relation to how the hell legal costs could possibly have blown out to the amount stated in the lump sum bill.  Where the solicitor-client relationship is under a fair bit of strain, or has broken down, itemized bills are sometimes given in the first instance.  They were, and sometimes still are, known also as bills of costs in taxable form.  There is quite a bit of law on what is necessary for a bill to qualify as an itemized bill, but not all that much about what is necessary to qualify as a lump sum bill.  The difficulty is exacerbated by the lack of definition of ‘lump sum bill’ in s. 61 of the Supreme Court Act, 1986 or its successors the Legal Practice Act, 1996 or the Legal Profession Act, 2004.

My friend Richard Antill gave me an old decision of the Supreme Court of Victoria on the question, Stevens v Keogh, unreported, 3 December 1996, Justice McDonald.  Contact me if you would like a copy. A solicitor sued his client for fees. The client defended, called no evidence at trial, and successfully contended that the solicitor’s evidence disclosed no case to answer.  The letter under cover of which the controversial bills was given said:

‘I confirm that at our first meeting I stated that my charge would be at the rate of $150 per hour or pro rata per part.  Accordingly my account simply lists the times spent on the work for you’.

The bill itself said:

‘Interim Account

18 October to 4 November 1993

Re Crampton

To my professional services in taking your instructions to take over the running of your defence to the action against you by Leslie Crampton whereby he alleges assault by you on himself and resultant shock and he requires damages.

Attend in Conference on you and Parncutt of counsel.

File and serve Notice of Change of Practitioner.

File summons to have Crampton’s Statement of Claim struck out.’

There then followed a recitation of periods of time ranging from one minute to almost two hours, totalling more than 22 hours.  A few of them were accompanied by descriptions of the work done during those periods of time, such as ‘Receipt of proposed affidavits from you by fax, followed by the commencement of the preparation of draft affidavits.’  Having reviewed the authorities (see below), Justice McDonald found that the bill was not a lump sum bill.  His Honour said:

‘[The covering letter] gives reason in my view why the bill did not set out a description of the work performed and the services rendered sufficient to make the bill of costs a bill of costs drawn in a lump sum.’

The review of the authorities was as follows:

‘In Re a Solicitor (1955) QB 252 at 277, the Master of the Rolls Lord Denning considered [what a lump sum] bill must contain.  He said:

“It need not contain detailed charges as it used to before 1920.  Nor need it contain all the details which the solicitor will have to give if required, to the Law Society or the Taxing Master.  But I think it must contain a summarized statement of the work done sufficient to tell the client what it is for which he is asked to pay.  A bare account for ‘professional services’ between certain dates or for ‘work done in connection with your matrimonial affairs’ would not do.  The nature of the work must be stated, such as advising on such and such a matter, instructing solicitor to do so and so, drafting such and such a document and so forth.’

In Patel v Sica 1982 VR 273, Kaye J quoted that statement of his Lordship with approval when considering what a lump sum bill of costs delivered to a client in respect of a non-contentious matter should contain.

His Honour further added at page 278 that:

“The purpose of providing details in a solicitor’s bill of costs is to enable another legal practitioner consulted by the client to advise him whether he ought to seek a taxation of the bill provided.”‘

Justice McDonald adopted those statements, and said:

‘To satisfy [s. 61 of the Supreme Court Act] a bill of costs drawn in a lump sum needs to set out a description of the work that has been performed by the solicitor to which the bill relates and the total sum charged for that work.  As it is a bill drawn as a lump sum it will not set out the sum charged against each item of work identified or described. The description of the work must be sufficient to tell the client the work and services that he or she is being charged for.

…

A bill of costs drawn in lump sum which sets out a description of the work that the solicitor has performed and which relates to the bill, being sufficient to tell the client the work and services that have been performed will enable the client or his or her legal adviser to decide whether to request a bill of costs drawn in taxable form.  If the bill of costs drawn in a lump sum was to fall below that requirement, for a client to ascertain the work and services that the solicitor has performed and being the subject of the bill, the client would need to request a bill to be drawn in taxable form.  The fact that a bill of costs may be drawn in a lump sum as distinct from in taxable form does not alter the requirement that the bill must contain sufficient details to inform the client of the work performed, the subject of the bill, sufficient to enable those acting for him to advise him whether a bill drawn in taxable form should be requested.’