Engagement Letter Not A CBA Where Hourly Rate Increases Entirely At Solicitor's Discretion

The Senior Courts Costs Office has determined that a retainer providing for unilateral, open-ended hourly rate increases lacked the certainty required for a contentious business agreement, and that invoices expressly covering only work “posted to date” were not interim statutory bills.

SAFRA V WILMER CUTLER PICKERING HALE AND DORR LLP [2026] EWHC 703 (SCCO)

In Safra v Wilmer Cutler Pickering Hale and Dorr LLP, the Senior Courts Costs Office addressed whether an engagement letter providing for hourly rates subject to periodic review at the solicitor’s discretion constituted a contentious business agreement under section 59 of the Solicitors Act 1974, and whether invoices marked as including only services and disbursements “posted to date” qualified as interim statutory bills. Costs Judge Leonard held that the engagement letter was not a CBA because its open-ended provisions for unilateral hourly rate increases lacked the requisite certainty, distinguishing cases involving fixed annual percentage increases. The court further found that the solicitor’s monthly invoices were not interim statutory bills as they expressly reserved the right to charge for work undertaken but not yet recorded in the relevant period, thereby lacking finality. Instead, the invoices collectively comprised a single Chamberlain bill delivered when the final set was provided after termination of the retainer. The decision establishes that solicitors cannot rely on CBA protections where fee variation mechanisms are entirely discretionary, and that invoices explicitly incomplete for their stated period cannot trigger section 70 time limits, regardless of contractual billing provisions or the parties’ conduct during the retainer.

[214] There was, accordingly, a significant element of uncertainty within the Engagement Letter as to the hourly rates the Defendant would be paying from time to time. That is wholly inconsistent with the proposition that the Engagement Letter was a CBA. My conclusion is that it was not.

Citations

Safra v Wilmer Cutler Pickering Hale and Dorr LLP [2026] EWHC 703 (SCCO) The principal judgment under review. Street v Mountford [1985] A.C. 809 The agreement’s legal nature is determined by its effect rather than the parties’ labels for it, affecting whether an agreement is considered a lease or a licence in costs evaluation. Wilson v The Specter Partnership [2007] EWHC 133 (Ch) The determination of whether an agreement is a contentious business agreement (CBA) depends on its substantive characteristics, not its label, thereby affecting rights to statutory taxation under the Solicitors Act 1974. Chamberlain v Boodle & King [1982] 3 All ER 188 A CBA requires certainty about charging rates so a client understands potential costs, lacking which affects a client’s right to challenge fees. Holcroft v Thorneycroft Solicitors Ltd The determination of an agreement’s nature as a non-contentious business agreement or otherwise affects the application of statutory cost assessment provisions. Hollins v Russell [2003] EWCA Civ 718 Conditional Fee Agreements can be considered contentious business agreements depending on compliance with section 59, influencing statutory assessment rights. Acupay System LLC v Stephenson Harwood LLP [2021] EWHC B11 (Costs) Charging rates within a CBA must not allow arbitrary increases; if they permit negotiation or objection by the client, consistency with section 59 is maintained. Bari v Rosen [2012] 5 Costs LR 851 An interim statute bill must be complete for the work period it covers, which allows the solicitor to demand payment and limits client’s challenge rights within statutory timeframes. Slade (t/a Richard Slade And Company) v Boodia and another [2018] EWCA Civ 2667 Interim statutory bills must present sufficient finality and clarity; serving partial bills is permissible if they pertain distinctly to profit costs or disbursements. Ivanishvili v Signature Litigation LLP [2024] 1 W.L.R. 4636 Interim statute billing throughout retainer duration impacts clients’ assessment timing, with courts wary of prejudicing clients in ongoing litigation. Ralph Hume Gary (a Firm) v Gwillim [2002] EWCA Civ 1500 A bill must include sufficient description for the client’s assessment advice—transparency in billing underpins legal protection and client understanding in statutory assessments. Falmouth House Freehold Co. Ltd. v Morgan Walker LLP [2011] 2 Costs L.R. 292 Special circumstances justifying assessment are determined based on case-specific factors compared to typical situations, affecting court willingness to grant costs reviews. Wilsons Solicitors LLP v Bentine [2015] EWCA Civ 1168 Significant deviation from expected case norms may constitute special circumstances for justifying statutory assessment under section 70.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

A solicitor’s retainer for contentious business will not constitute a contentious business agreement (“CBA”) within the meaning of section 59 of the Solicitors Act 1974 where it contains open-ended, unilateral provisions permitting the solicitor to increase hourly rates at times and by amounts entirely at the solicitor’s own discretion. Such provisions are inconsistent with the requisite degree of certainty as to the charging mechanism that a CBA demands. [206–214]
Where a retainer expressly confirms the client’s right to apply for assessment of the solicitor’s bill under Part III of the Solicitors Act 1974, that provision is inconsistent with the retainer constituting a CBA, since the effect of section 60(1) is to remove the client’s ordinary right to a statutory assessment. A retainer that preserves that right cannot properly be characterised as a CBA. [203–205]
An interim bill delivered by a solicitor during the currency of a retainer will not qualify as an interim statutory bill unless it is complete and final in respect of the period it covers. Where the face of an invoice expressly reserves the right to render further charges for work performed during the same period — for example by stating that it “includes only services and disbursements posted to date” — the invoice lacks the requisite finality and cannot constitute a statutory bill. [262–282]
Where a series of non-statutory interim bills fails individually to qualify as statutory bills, those bills collectively constitute a single “Chamberlain bill” delivered upon the date the final bill in the series is rendered. The time limits under section 70 of the Solicitors Act 1974 run from that date, and the court’s jurisdiction to order assessment under section 70(2) is engaged accordingly. [283–286, 420–421]
In the absence of an express direction by the client as to the allocation of payments against multiple outstanding invoices, the right of allocation passes to the solicitor as creditor, who may apply payments to discharge the oldest outstanding invoices first. A client who makes periodic payments without giving specific instructions as to their allocation cannot subsequently assert that those payments were referable only to the invoices for the corresponding period. [296–328]

[267] The clear meaning of that phrase is that some of the work performed by the Defendant during the period covered by each invoice might not have been "posted", in other words recorded upon the Defendant's systems, at the time of delivery and accordingly might have to be included in a subsequent invoice. In other words, none of the finalised invoices are stated to be final for the period they cover: quite the contrary.

Key Findings In The Case

Costs Judge Leonard found that the Engagement Letter between the Claimant and Defendant was not a Contentious Business Agreement (CBA) due to its unilateral, open-ended provisions for hourly rate increases, which lacked the requisite certainty for a CBA. [416]
The court concluded that the Engagement Letter did not constitute a CBA because it expressly preserved the Claimant’s right to apply for assessment of the solicitors’ bills under Part III of the Solicitors Act 1974, which is inconsistent with the effect of section 60(1) to remove such rights. [419]
Judge Leonard determined that the Defendant’s invoices did not qualify as interim statutory bills because they lacked finality, expressly reserving the right to render further charges for work performed during the covered period, which contravenes the requirements for such bills. [419]
It was established that the series of non-statutory interim bills collectively formed a single Chamberlain bill, delivered upon the date the final bill in the series was issued, thus engaging the court’s jurisdiction to order assessment under section 70(2) of the Solicitors Act 1974. [420]
In the absence of express allocation instructions from the client, the court found that the Defendant was entitled to allocate the Claimant’s payments to discharge the oldest outstanding invoices first, according to general principles of payment allocation. [322]

[412] I would not normally attach conditions for an order for assessment on an application made, under section 70(2), within three months of delivery of the relevant bill. In this particular case, given the history and the sheer amounts involved, I would have considered making an order for a payment on account of about 50% of the Defendant's total bills, but that has already been paid.

The Senior Courts Costs Office’s decision in Safra v Wilmer Cutler Pickering Hale and Dorr LLP [2026] EWHC 703 (SCCO) addresses fundamental questions about the requirements for contentious business agreements and interim statutory bills in the context of a high-value international arbitration retainer.

Background

The claimant retained the defendant solicitors in September 2022 to represent him in five consolidated LCIA arbitrations and related proceedings concerning disputes within his family over his late father’s US $23 billion estate. The engagement letter provided for remuneration by reference to specified hourly rates, with provision for the defendant to review and revise billing rates periodically, notifying the client of changes as and when they occurred.

Between December 2022 and September 2024, the defendant rendered invoices totalling over US $35 million. The claimant made payments totalling approximately US $16.4 million but disputed the balance. In December 2024, the claimant applied for assessment of the defendant’s bills under Part III of the Solicitors Act 1974.

The parties agreed that a number of preliminary issues should be determined before any assessment proceeded, including whether the engagement letter constituted a contentious business agreement (CBA), whether the defendant’s invoices were interim statutory bills, when any statutory bills were delivered, and whether the court should order assessment.

Was the Engagement Letter a CBA?

Costs Judge Leonard held that the engagement letter was not a CBA within the meaning of section 59 of the Solicitors Act 1974. While the letter provided for remuneration by reference to hourly rates (a permissible basis for a CBA following the 1990 amendment to section 59), it lacked the requisite certainty.

The critical defect was the engagement letter’s provision for hourly rate reviews. The letter stated that rates would be reviewed periodically and could be revised, with changes notified to the client as and when they occurred. Crucially, the timing and amount of any increases were entirely at the defendant’s discretion, with no fixing mechanism.

The judge distinguished cases such as Acupay System LLC v Stephenson Harwood LLP [2021] EWHC B11 (Costs), where a CFA provided for annual increases at a fixed rate of 3%. Here, the defendant’s right to increase rates was “entirely open-ended” as to both timing and amount. The defendant’s only obligation was to notify the client when increases took effect; there was no requirement for prior consultation or agreement.

Applying Wilson v The Specter Partnership [2007] 6 Costs LR 802, the judge held that “the purpose of a CBA is to fix the fees, or provide a fixing mechanism, so that the parties (and in particular the client) know where they stand.” The engagement letter’s unilateral, open-ended review provisions created “a significant element of uncertainty” inconsistent with CBA status.

The judge also noted that the engagement letter’s reference to the client’s right to apply for assessment under Part III of the Solicitors Act 1974 was inconsistent with it being a CBA, which would have restricted that right under sections 60 and 61.

Would the CBA Have Been Unreasonable?

Although unnecessary given the finding that the engagement letter was not a CBA, the judge considered whether it would have been unreasonable under section 61(2)(b) if it had been a CBA.

The judge found that the negotiation process was fair. The hourly rates were individually negotiated with experienced lawyers acting for a sophisticated businessman, and were set by reference to comparable rates charged by other advisers. The defendant was under no obligation to explain the distinction between CBA and non-CBA retainers.

However, the judge would have found the agreement unreasonable. A retainer providing for entirely open-ended hourly rate increases, while simultaneously removing the client’s rights under section 70 to challenge those rates on assessment, would have been unreasonable. Had the engagement letter been a CBA, it would have been set aside and the defendant’s costs assessed in their entirety.

Did the Engagement Letter Permit Interim Statutory Bills?

The judge held that the engagement letter did contractually permit the delivery of interim statutory bills. The letter provided for “monthly statements for work performed and expenses recorded on our books during the previous month,” stated that such statements were “due and payable upon receipt,” and required the client to raise any queries “in a timely fashion.”

While the word “ordinarily” qualified the timing of monthly statements, the engagement letter clearly indicated that each statement would cover all work performed during the previous month. The reference to expenses “recorded on our books” did not prevent the statements from being interim statutory bills, given the principle in Slade v Boodia [2018] EWCA Civ 2667 that separate bills may be rendered for profit costs and disbursements.

Were the Invoices Actually Interim Statutory Bills?

Despite the contractual right to deliver interim statutory bills, the judge held that the defendant’s invoices were not in fact interim statutory bills because they lacked the essential characteristic of finality.

Each invoice (whether draft or finalised) contained the wording: “Includes only Services and disbursements posted to date.” The judge held that the clear meaning of this phrase was that some work performed during the period covered by each invoice might not have been recorded at the time of delivery and might have to be included in a subsequent invoice. The invoices were therefore expressly not final for the periods they covered.

The defendant’s attempt to interpret this phrase as merely indicating that further charges might be rendered for subsequent periods was rejected as not viable. There would be no reason for an invoice covering a specified period to include a redundant warning about charges for future periods.

The judge also noted discrepancies between draft and finalised invoices. For example, the figure for legal fees in the March 2023 invoice changed from US $967,337 in the May 2023 draft to US $1,011,675 in the September 2023 draft to US $1,017,435 in the September 2024 final version. This supported the conclusion that it could take months for the defendant’s fees for a given month to be finalised, consistent with the warning that invoices might not comprise all fees for the period covered.

The Chamberlain Bill

Since the individual invoices were not statutory bills, the judge held that the complete series of invoices together comprised a single “Chamberlain bill” (following Chamberlain v Boodle & King and Bari v Rosen [2012] 5 Costs LR 851). This bill was delivered on 17 September 2024, when the defendant sent the claimant a comprehensive set of finalised invoices.

The claimant’s application for assessment was made on 17 December 2024, within three months of delivery. The Chamberlain bill was part-paid. Accordingly, the court had jurisdiction under section 70(2) to order assessment without the need to establish special circumstances under section 70(3).

Allocation of Payments

Although unnecessary given the Chamberlain bill analysis, the judge addressed how the claimant’s payments should have been allocated had the invoices been interim statutory bills.

The defendant contended that payments should be allocated to the oldest outstanding invoices first (following the rule in Clayton’s case and minimising interest). The claimant argued that monthly payments of US $400,000 (later US $600,000) were intended to be allocated to the corresponding monthly invoices.

The judge preferred the defendant’s analysis. Under Simson v Ingham (1823) 2 B&C 70, it was incumbent on the claimant to specify how payments should be allocated; failing that, allocation was for the defendant. The only evidence of specific instructions was the claimant’s witness evidence given under cross-examination, which the judge found unreliable. The defendant had clearly explained in October 2023 how it was applying payments, and the claimant had not objected at the time.

Special Circumstances

Again addressing the position had the invoices been interim statutory bills, the judge considered whether special circumstances justified assessment of bills falling within section 70(3).

The judge held that special circumstances did exist, primarily relating to the provision of costs information. The defendant had failed to comply with its obligation under paragraph 8.7 of the SRA Code of Conduct to ensure the client received the best possible information about costs as the matter progressed.

Costs information was provided sporadically. For example, no information was given for the period December 2023 to July 2024 (when bills totalling over US $14 million were incurred) until after termination of the retainer in September 2024. The defendant offered costs information on three occasions but should not have waited to be asked; it was obliged to provide such information proactively and regularly.

The judge also attached weight to the defendant’s response to concerns raised in December 2022. The claimant’s representative had explained that the claimant could not afford fees at the level of the first three months and asked whether fees could be managed at around US $400,000 per month. The defendant’s partner responded: “We’ll find a way to make that or something else he wants work.” This assurance was comparable to a costs estimate and relevant to assessment of reasonableness, following Mastercigars Direct Ltd v Withers LLP [2009] 1 WLR 881. In the event, fees averaged about US $1.5 million per month.

The judge rejected arguments based on the size of individual time charges or expenses, finding these generally explicable given the scale and complexity of the arbitrations. However, the failure to provide adequate costs information as fees accrued to levels far beyond what the client had indicated he could afford constituted special circumstances justifying assessment.

Conditions of Assessment

The judge declined to impose any conditions on the order for assessment. While the claimant was based outside the jurisdiction and was understood to be extremely wealthy, he had already paid almost 50% of the claimed fees. The defendant had been aware from the outset that the claimant was based abroad and could have taken steps to protect its position. The current situation was “at least as much the responsibility of the defendant as the claimant,” particularly given the inadequate provision of costs information.

CFA Is A Contentious Business Agreement, High Court Rules

An Agreement To Pay A Fixed Sum In Relation To Work Already Done Was Not A Contentious Business Agreement

Interim Statute Bills And CFAs, Can They Co-Exist? | Court of Appeal Decision

Interim Statute Bills And Special Circumstances Under s70(3) Solicitors Act 1974

A Solicitors Act Compliant Statute Bill Must Contain All Disbursements Incurred During The Period To Which It Relates

s70(3) | ‘Exceptional Increase’ In Hourly Rates Gives Rise To Special Circumstances

Specialist costs services across the UK

TMC Legal provides expert costs drafting, negotiaton and costs budgeting services together with representation in detailed assessment hearings. Our experienced costs lawyers and law costs draftsmen act nationwide. Contact us today.