Avoiding Ombudsman Referral: Best Practices in Legal Cost Transparency for Client Satisfaction

The Legal Ombudsman (LEO) recently released the third edition of “What Constitutes Good Costs Service,” a crucial read for all lawyers engaging with clients.

In this article, I underscore the primary recommendations from the report. Following these guidelines will diminish the likelihood of client complaints and potential investigations by the LEO.

Pre-engagement: Establishing good cost practices commences before formal client engagement. Ensure full compliance with the SRA Transparency Rules within your firm. Clear and truthful information on your website and marketing materials is imperative, preventing client misconceptions regarding services and associated charges.

Initial free consultation: If your firm offers a complimentary initial consultation, transparency regarding chargeable time beyond this is vital. Clearly communicate any associated fees, ensuring their reasonableness.

Charging structures: Irrespective of the charging framework employed, elucidate its mechanics and inclusions to meet LEO’s expectations. Lawyers should unequivocally convey this information to their clients.

Anticipated future costs: At the case’s outset, disclose all intended billing costs to your clients. Additionally, inform them about likely third-party expenses, such as insurance premiums, barrister fees, surveyor costs, and searches. Although predicting case outcomes is challenging, it’s crucial to guide clients on expected expenditure.

Any modifications to charges should be justified, with clients comprehending the reasons. Best practice advocates providing or confirming cost adjustments in writing.

Reasonable estimates: Clients typically seek an estimation of their overall case expenses. Use your professional judgment to provide an approximate figure, managing their expectations regarding potential cost ranges, particularly in litigation cases.

Disbursements: Clearly articulate additional charges related to a case to avoid client confusion or dissatisfaction. Unambiguous language is essential to inform clients about these potential expenses.

Client care letter: Ensure that the client comprehends the course of their case and the associated services and costs outlined in the client care letter. Tailor cost information to suit individual client needs.

Managing cost changes: Keeping clients informed about evolving case costs is crucial. Regular updates and consultation regarding potential cost escalations or alternative approaches are essential to empower clients in managing their expenses.

In instances where case complexity increases costs, communicate this clearly to the client. For example, if a barrister’s advice becomes necessary, explain the rationale behind it and the associated cost.

Billing: Transparency in billing mitigates complaints. Clients should be informed about forthcoming charges for any services rendered, including the intended actions and associated costs.

Key principles: To mitigate client complaints about costs, uphold three fundamental principles:

1. Clients should never be surprised by their lawyer’s bill.
2. Clearly inform clients of any intended charges, promptly and explicitly.
3. Maintain accurate records of all cost-related information provided, including client acknowledgments of their understanding.

For further discussion on the themes covered in this article, contact me at ih@hopkinslegalconsulting.co.uk or 0791 666 9095.