Solicitors Not Held To “Inadequate” Costs Estimate

Griffin v Kleyman & Co Solicitors Ltd related to costs as between solicitor and client following ancillary relief proceedings arising from Clare Griffin’s divorce from her husband Christopher Griffin. Ms. Griffin instructed three different firms of solicitors over the course of the proceedings – first Tanners, then Adrian Bressington of AB Family Law, and finally Kleyman & Co Solicitors Ltd from May 2020 through the conclusion in May 2021. Costs mounted significantly with each firm, beyond what was initially estimated. With Kleyman & Co, costs ultimately totalled £181,954.64.

The Claimant brought proceedings under s70 of the Solicitors Act 1974 for an assessment of the Defendant’s costs. By way of a preliminary issue the Claimant sought a determination that the costs be limited to the amount of one of two estimates provided to her by the Defendant, both of which had been significantly exceeded.

Key Issues in Dispute

1. Whether Kleyman & Co provided adequate costs estimates and information to Ms. Griffin at the outset and as the matter progressed, as required by the Solicitors Code of Conduct.
2. If the estimates were inadequate, whether the court should limit the costs Ms. Griffin is required to pay Kleyman & Co to an amount deemed reasonable based on the estimates provided.
3. To what extent Ms. Griffin relied on the estimates given, and whether she was deprived of the opportunity to make informed decisions on how to proceed based on lack of proper costs information.
4. Whether there were justifiable reasons for the actual costs substantially exceeding the estimates, such as unforeseeable developments in the case and Ms. Griffin’s own conduct in persistently disregarding advice aimed at keeping costs down.

Claimant’s Position and Arguments:

1. Kleyman & Co should have provided an accurate costs estimate at the outset of the retainer in March 2020, or at the latest by May 2020. The lack of a timely and accurate estimate deprived her of the ability to make informed decisions.
2. The May 2020 estimate of £57,138 and the July 2020 estimate of £60,000 on top of incurred costs were both inadequate. The final bill of £181,954.64 was nearly triple the July 2020 estimate.
3. Ms. Griffin relied on these estimates and would not have proceeded with Kleyman & Co had she known the true costs. She was unable to explore alternative options due to the lack of proper estimates.
4. Kleyman & Co should have revised their estimates upwards sooner but failed to do so. Delivering huge bills during and after the September 2020 trial was unacceptable when they greatly exceeded the estimates.
5. There is no valid excuse for the failure to provide accurate estimates, and Ms. Griffin’s conduct does not justify the omissions or the final bill amount.
6. The court should limit recoverable costs to £57,138 based on the May estimate, £82,648.80 based on the July estimate, or one of those figures plus a small allowance for post-trial work capped at £6,000. This represents the reasonable amount for Ms. Griffin to pay based on her reliance on the estimates.

Defendant’s Position and Arguments

1. It was not possible to give an overall estimate at the outset in March 2020 when the scope of work was unclear. Estimates were provided as soon as practicable in May and July 2020, with the July estimate being the operative one.
2. The May and July estimates were necessarily heavily caveated due to many unknowns and variables at play. They were a rough guide only and not intended to be relied upon as a maximum cap.
3. Regular interim billing kept Ms. Griffin apprised of mounting costs. Her reactions show she was not relying on the estimates alone.
4. The estimates were exceeded for valid reasons, including unforeseeable developments (eg Imerman issues, extended trial, illness of counsel) and most significantly, Ms. Griffin’s own unreasonable conduct in disregarding advice to keep costs down.
5. Ms. Griffin’s conduct drove the costs well beyond any reasonable estimate, so Kleyman & Co cannot be faulted or limited to any artificial cap. It would be unfair for Kleyman & Co to go uncompensated for the extra work caused by Ms. Griffin’s conduct.
6. A line-by-line detailed assessment is the only fair way to determine reasonable costs payable to Kleyman & Co, not an arbitrary limit based on estimates. Reasonableness must be considered in light of all the circumstances, not just the estimates provided.

Costs Judge Leonard first set out his determination of the following:

• • The Defendant’s Professional Obligations
  • The Timing and Adequacy of the Defendant’s Costs Estimates
  • Whether and When Updated Estimates Should Have Been Given
  • The Claimant’s Reliance on Estimates
  • Whether There Is an Adequate Explanation for Costs Exceeding Estimate

The Defendant’s Professional Obligations

• The Code of Conduct is flexible, requiring solicitors to provide the best possible costs information at the outset and as the matter progresses. In some circumstances, it might only be possible to provide a tentative and highly qualified estimate initially.
• Ms. Kleyman’s statement that providing a more specific estimate would have been irresponsible, given the inadequate information available, was consistent with her professional obligations.
• There iss no authority or requirement in the Code of Conduct for solicitors to provide a range of estimates covering various contingencies.
• The obligation is to provide a realistic indication of the likely cost based on the information known at the time.
• Initial estimates were based on the premise that the client would accept reasonable advice and behave in a manner conducive to the cost-effective conduct of the case.
• If the client refuses to accept reasonable advice and behaves unreasonably, leading to increased costs, the solicitor should not have to bear the financial consequences of the client’s conduct.
• Solicitors might need to update estimates if the client’s conduct persistently increases costs, but they are not obliged to provide estimates based on the assumption that the client would continue to behave unreasonably.

The Timing and Adequacy of the Defendant’s Costs Estimates

• When the retainer began on 6 March 2020, the Defendant was not instructed to conduct the ancillary relief proceedings, so there was no obligation to provide an estimate for that work. Any estimate given at that stage would have been rendered meaningless by subsequent events.
• As of March 2020, the scope of the Defendant’s instructions was still unclear, making it impossible to provide a realistic and reliable estimate.
• Even by 24 April when the Defendant was instructed to take over from Mr. Bressington, they did not have enough information to provide a reliable estimate. The Claimant was still attempting to put together a comprehensive set of papers, and the information provided was partial and not entirely accurate.
• The Defendant’s May 2020 estimate was offered as soon as reasonably possible and was necessarily heavily qualified. It was characterised as a “rough guide” and was effectively superseded by the July 2020 estimate.
• The July 2020 estimate was an update to the May 2020 estimate, as required by the terms of the retainer. Although it was prepared for the purpose of obtaining funding from Novitas, it was accepted by the Claimant as an update.
• The July 2020 estimate was the pertinent one for the purposes of the assessment. While it was not a “maximum” figure, it was intended to ensure the Claimant had sufficient funds to pay the Defendant’s fees to trial and was meant to be reasonably reliable.
• The July 2020 estimate could be read as an estimate of all costs to the complete resolution of the proceedings or only costs to the end of trial. The phrase “all costs going forward” favoured the former interpretation, but the breakdown of stages concluding with the end of trial suggested the latter.
• The July 2020 estimate fit both descriptions, with the implication that it was intended to cover post-trial costs without further adjustment. While it would have been better to mention post-trial costs, it was not possible to provide a reliable forecast for them in July 2020, and it was reasonable to expect they would be quite limited.

Whether and When Updated Estimates Should Have Been Given

• The July 2020 estimate of £82,648.80 included costs billed to the end of June 2020 and extended to the anticipated end of the September 2020 hearing. It also assumed that post-trial costs would not require significant adjustment.
• By the end of August 2020, costs, disbursements, and VAT came to just under £80,000, not including counsel’s brief fees estimated at £21,000. It should have been obvious that the July 2020 estimate would be substantially exceeded, and the Defendant had a contractual obligation to notify the Claimant but did not do so.
• However, as observed in Reynolds v Stone Rowe Brewer, whether an estimate has been updated is not always the main issue. In this case, an updated estimate so close to trial would have made little difference, other than worrying the Claimant. The real question was whether the July 2020 estimate itself was inadequate.
• No estimate was given for the post-trial period from the handing-down hearing on 6 October 2020. On 30 September 2020, Ms. Jones advised the Claimant about further work likely to be required but explained that an estimate could not be provided until the outcome of the proceedings was known.
• The Claimant responded by asking the Defendant and Ms. Dunseath to do nothing without precisely costing it in advance, which was not possible. The Claimant also instructed Ms. Kleyman to achieve what she believed to be her full entitlement, despite her dissatisfaction with the September 2020 hearing. Ms. Kleyman could not have offered an estimate for such an unachievable goal.
• Ms. Kleyman should have provided a further estimate after 6 October, in accordance with her professional obligations, even though it might have been difficult given the Claimant’s tendency not to follow advice.
• Any estimate would have been based on a realistic approach to implementing HHJ Williams’ order, with a warning that costs could be much higher if the Claimant failed to heed warnings about continuing conflict. Such an estimate would not have borne any real relation to what followed and likely would not have changed the course of events.
• The correspondence to the end of the retainer in May 2021 recorded a saga of practical complications, arguments about the marketing and sale of Skyview, procedural wrangling, continuing conflict between the parties, and ever-mounting costs, much of which was not foreseeable in October 2020.

The Claimant’s Reliance on Estimates

• The judge did not accept the Claimant’s assertion that she understood the July 2020 estimate to represent the absolute maximum she would have to pay. The Claimant’s reaction to the September 2020 bills, which brought costs to over £100,000, was not consistent with such an understanding.
• The Claimant’s evidence regarding reliance on the estimates was of limited assistance. While she relied on all her advisers’ estimates and advice, and put herself in debt for “the greater good” of achieving her aims in the proceedings, the Defendant did not promise that the outcome would deliver everything she wanted or that their charges would be linked to the outcome.
• The Claimant’s complaint that she switched solicitors to the Defendant because of their “promises over costs” was not supported by the evidence. The Defendant did not offer any estimate before 20 May 2020, and while they agreed to act in a cost-efficient way, they did not promise that costs would be limited to any specific figure.
• The Claimant’s complaint that she would not have instructed the Defendant if she had known the ultimate cost was merely an expression of hindsight and not helpful in determining the issues at hand.
• By the date of judgment on 6 October 2020, costs were around £141,000, compared to the July 2020 estimate of £82,648.80. By the end of the retainer, costs were £181,954.64, more than double the July 2020 estimate.
• The key question was what the Claimant might have done if an estimate of £140,000 to trial or £180,000 to the end of the retainer had been given in July 2020. The only relevant evidence was that by the end of the proceedings before HHJ Williams, the Claimant felt “stuck” with no option but to continue with the Defendant.
• The judge accepted that the rapid accrual of costs in excess of the July 2020 estimate left both parties in a difficult position. The Defendant’s decision to continue acting on the understanding that fees would be paid after HHJ Williams’ order was implemented, and the Claimant’s instructions on that basis, was a pragmatic solution and the best option for both at the time.
• Regarding costs billed between October 2020 and May 2021, the Claimant said she would never have accepted that level but did not indicate what she might have done with advance warning. Given her lack of funds, changing solicitors seemed unlikely.
• The judge concluded that the Claimant, despite her concerns about costs, might have been willing to invest £140,000 or even £180,000 to secure a half share of £7-7.5 million, if the Defendant was willing to wait for payment until assets were divided. Her dissatisfaction lay in spending so much without securing the desired outcome.
• For costs after 6 October 2020, the judge accepted Ms. Kleyman’s evidence that the Claimant was fixated on her belief that Mr. Griffin had “stolen” from her and lost sight of reason and commerciality. The Claimant’s determination to retain Skyview, against advice and based on an unsupported conviction that she was in competition with her husband for it, had substantial and regrettable costs consequences which the Defendant could not have foreseen and cannot be held responsible for.

Whether There Is an Adequate Explanation for Costs Exceeding Estimate

• The Claimant complained that all three of her solicitors substantially departed from their initial estimates, which was true of Tanners and appeared to be true of Mr. Bressington, given the remaining Novitas facility when he was disinstructed.
• However, this did not necessarily indicate failings on the part of the solicitors. They had to revise their initial views in the context of ancillary relief proceedings that, due to the issues and conduct of both parties, defied reasonable cost estimates based on broad experience.
• The speed and extent to which the Defendant’s July 2020 estimate was exceeded by the end of trial initially tended to support the conclusion that it was over-optimistic and inadequate. However, Ms. Kleyman argued that if the Claimant had conducted herself reasonably, the final costs would have been close to the July 2020 estimate, excluding some unexpected developments.
• The judge considered this perfectly possible, noting that if a client takes up twice as much of a solicitor’s time as reasonably necessary, costs are likely to be double a previous reasonable estimate. The Claimant’s repetitive behavior, as evidenced by her email thanking Ms. Kleyman for listening to her “repeat myself over and over,” would have multiplied Ms. Kleyman’s time-based charges.
• Two factors militated against the conclusion that the July 2020 estimate was inadequate. First, it did not account for developments that could not have been reasonably anticipated, such as multiple disclosure applications, unanticipated expenses, the Imerman issue, Ms. Dunseath’s illness during trial, the extended trial, the need for written closing submissions, and the Claimant’s resistance to the proposed closing submissions.
• Second, and more importantly, the July 2020 estimate reflected the Defendant’s understanding that the Claimant wanted to minimise costs. However, the documentary record demonstrated that much of what Ms. Kleyman said about the Claimant’s conduct and its inflationary effect on costs was justified. Despite her anxiety about costs, the Claimant was either unable or unwilling to work effectively with the Defendant to keep costs reasonable, despite repeated warnings.
• Restricting the Defendant’s recoverable costs to the amount of the July 2020 estimate would leave the Defendant unpaid for extra work undertaken precisely because the Claimant refused to take sensible advice and conduct herself in a reasonable, realistic, and cost-effective manner.
• Identifying the level of costs that might have been incurred had the Claimant acted more reasonably was not possible, as the Defendant’s fees were inextricably bound up with the Claimant’s day-to-day instructions and conduct. The Claimant’s actions made it impossible to identify any figure by which her costs and disbursements should be limited.
• Therefore, it would not be right to limit the Defendant’s recoverable costs to the July 2020 estimate, that estimate plus an arbitrary figure for post-trial costs, or any other identifiable figure. The only way to determine a reasonable amount for the Claimant to pay the Defendant was to undertake a detailed assessment, evaluating what the Defendant did on the Claimant’s instructions and taking into account the Claimant’s counter-allegations about duplication and wasted costs.

Summary of Conclusions

Costs Judge Leonard found that the only pertinent estimate given by the Defendant was the July 2020 estimate, which included costs already billed and came to £82,648.80. It should have, but did not, mention post-trial costs:

“For the purposes of determining whether the Defendant’s costs, as recoverable from the Claimant, should be limited by reference to estimates, the only pertinent estimate given by the Defendant was the July 2020 estimate. Read properly in context, the July 2020 estimate included costs already billed and came to £82,648.80. It should have, but did not, mention post-trial costs. There would at the time however have been insufficient information to offer an estimate of post-trial costs and it would have been reasonable to expect that such costs would not be substantial.” [239]

“After the July 2020 estimate, costs accrued so fast and so substantially that the actual figure to the end of the September 2020 hearing was in the region of £141,000. There is however an explanation that accounts for at least some of the difference between the July 2020 estimate of £82,648.80 and the actual figure of £141,000.” [240]

He found that part of the explanation for the difference between the estimate and actual costs was due to developments that were not reasonably foreseeable:

“Part of that explanation lies in developments that were not so reasonably foreseeable as to fall within the July 2020 estimate.” [241]

“Part of it lies in the conduct of the Claimant. Any estimate given by the Defendant would necessarily have been based upon the premise that the Claimant would accept reasonable advice, act in a reasonable way, avoid incurring substantial unnecessary costs and heed repeated warnings that she was incurring substantial unnecessary costs.

“The Claimant did none of those things. Despite repeated warnings, she habitually caused unnecessary costs to be incurred, making it inevitable that the July 2020 estimate would be exceeded. The Defendant is entitled to be paid for any costs incurred in consequence of that conduct.” [242-243]

He found that:

“The Defendant should have updated, but did not update, the July 2020 estimate when it became clear that it would be exceeded. That would already have been the case at least by the end of August 2020. Any such update would not, however, have changed the course of events to the end of trial.” [244]

And:

“After the final ancillary relief hearing in September 2020, the Defendant was not in a position to provide any useful further estimate of future costs until the outcome of the ancillary relief proceedings was known. That would have been on 6 October 2020. An updated estimate of future costs should have been given then. None was given then or subsequently, despite the fact that the Claimant, who had incurred costs of approximately £141,000 to 6 October 2020, went on to incur another £40,000 approximately in further costs.” [245]

The judge found that even if an estimate had been given after 6 October 2020, it could not have foreseen the substantial difficulties in finalising and implementing the order, much of which was due to the Claimant’s unreasonable conduct.

“Any such estimate could not, however, have foreseen the substantial difficulties attendant upon the finalisation and the implementation of the order of HHJ Williams, much of which came about in consequence of the Claimant’s own unreasonable conduct, against the advice of the Defendant. Again the Claimant, not the Defendant, must bear the burden of costs incurred in consequence of such conduct; again, that conduct makes it impossible to identify any overall figure to which the Defendant’s costs should be limited; and again it is unlikely that the provision of an estimate by the Defendant after 6 October 2020 would have had any material effect on the course of events.” [246]

Taking everything into account, the judge determined that it would not be appropriate to set a limit on the Defendant’s recoverable costs by reference to estimates given or not given. A full detailed assessment was necessary to identify the reasonable amount payable by the Claimant to the Defendant:

“For all those reasons, it would not be appropriate to set a limit upon the Defendant’s recoverable costs by reference either to estimates given or estimates not given. Absent a settlement, it will be necessary to identify the amount that it is reasonable for the Claimant to pay the Defendant by proceeding to a full and detailed assessment of the Defendant’s bills.” [247].