Court Rules in Favor of Client in Cost Dispute with Law Firm Following Informal Resolution

Introduction

The case of Sylvia Olukoya v Riverbrooke Solicitors Ltd presents a significant assessment of a law firm’s claim for costs against a client post an “Informal Resolution” with the Legal Ombudsman. The case, adjudicated by Costs Judge Leonard, examines key legal principles including contract formation, statutory billing, promissory estoppel, and the permissibility of revising a solicitor’s final bill. This article aims to dissect the court’s findings and elucidate the legal principles applied, offering legal professionals an in-depth understanding of this complex case.

Key Facts

Sylvia Olukoya contracted Riverbrooke Solicitors Ltd to assist in Tribunal proceedings against the London Borough of Tower Hamlets. A dispute arose regarding the law firm’s costs which were higher than initially estimated. Upon referral to the Legal Ombudsman and subsequent discussions, an Informal Resolution was reached where Olukoya agreed to a “full and final bill of costs” totalling £13,000, which she paid. Almost three years later, Riverbrooke Solicitors issued a “Revised Final Invoice” claiming additional costs. Olukoya filed an application under section 70 of the Solicitors Act 1974 for the assessment of this revised bill.

Legal Principles

Contract Formation and Enforceability

The court applied the principles set out in RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production) [2010] UKSC 14, which mandates an objective review of what was communicated between parties to determine if a legally binding agreement was intended. It found that the terms of the Informal Resolution, communicated through the Legal Ombudsman, constituted a legally binding contract that both parties had actioned. The Informal Resolution provided ample consideration from Olukoya, notably the cessation of her complaint and forfeit of possible additional remedies.

Statutory Billing

A solicitor’s final bill is established as “final” as noted in Bilkus v Stockler Brunton [2010] EWCA Civ 101. Hence, it is rendered binding and cannot be amended without the client’s agreement or the court’s permission. The court ruled that the original “Final Invoice” delivered by Riverbrooke Solicitors constituted a statutory bill. Thus, the firm required but lacked court permission to issue a “Revised Final Invoice,” making it unauthorized and assessable at nil.

Promissory Estoppel

Promissory estoppel entails the prevention of a party from enforcing their legal rights based on a clear promise, upon which the other party has relied upon to their detriment or altered their action as observed in Combe v Combe [1951] 2 KB 215. In this case, the court inferred that promissory estoppel barred the Defendant from asserting the “Revised Final Invoice” due to the Claimant’s actions following the Informal Resolution. The court rejected the Defendant’s claim that the Claimant acted inequitably, thus preserving Olukoya’s reliance on the Informal Resolution against the revised claim.

Outcomes

The court’s assessment resulted in a uniformly unfavorable outcome for Riverbrooke Solicitors. It concluded:

1. The agreement brokered informally was legally binding, leaving no scope for additional billing.
2. Without the court’s permission, which was neither sought nor could be retrospectively justified, Riverbrooke Solicitors were not entitled to revise their final bill.
3. Promissory estoppel would have further prevented Riverbrooke Solicitors from pursuing the “Revised Final Invoice” based on the Claimant’s reliance on the Informal Resolution.

Conclusion

The detailed scrutiny in Sylvia Olukoya v Riverbrooke Solicitors Ltd reinforces the binding nature of informal resolutions brokered through the Legal Ombudsman process and the stringent requirements governing the revision of statutory bills. The case also illustrates the doctrine of promissory estoppel as a defense to unpermitted billing revisions. The court’s findings rectify the attempt by Riverbrooke Solicitors to seek additional costs beyond an accepted full and final bill, vouching for the sanctity of settled agreements and citing paramount public policy considerations. Legal professionals should heed the implications of this case regarding any contractual outcomes through informal resolutions and the definitive nature of statutory billing in solicitor-client relationships.