Signature Litigation LLP v Ivanishvili

Factual and Procedural Background

The appeal arises from a decision by Costs Judge Leonard on 28 November 2023, who declared that 79 invoices rendered by the Appellant to the Respondent between 31 March 2016 and 26 October 2022 were not interim statutory bills under section 70 of the Solicitors Act 1974 ("the 1974 Act"). These invoices, totaling nearly £13 million and paid by the Respondent, were held not to attract the time limits for challenge and court assessment under s.70 because they were neither final nor complete. The invoices represented 65% of the Standard Fee, with the remaining 35%, plus an Uplift Fee and Success Fee, contingent upon achieving certain outcomes. The Appellant was engaged as global co-ordinating counsel for the Respondent and other beneficiaries in multi-jurisdictional litigation against a financial institution concerning alleged asset mismanagement.

The Appellant's contract of retainer consisted initially of a June 2016 engagement letter and standard terms, incorporating a conditional fee arrangement (CFA) under which the Respondent was liable to pay 65% of the Standard Fee as a discounted rate and the remainder plus additional fees upon successful recoveries. This arrangement was varied in September 2021, clarifying contingencies for further payments based on recovery thresholds.

The Appellant issued monthly invoices reflecting the discounted rate, all paid by the Respondent without challenge. The Appellant terminated the retainer in September 2022. The judge below found no agreement or conduct supporting the invoices as interim statutory bills. The Appellant was granted permission to appeal, with the pivotal issue being whether the invoices could be interim statutory bills under s.70 of the 1974 Act.

Legal Issues Presented

1. Whether the invoices rendered by the Appellant to the Respondent constituted interim statutory bills for the purposes of section 70 of the Solicitors Act 1974, given that they represented only part payment (65%) of the Standard Fee with further contingent fees payable upon achieving specified recoveries.
2. Whether the conditional fee arrangement and the contractual terms permitted the rendering of interim statutory bills that were final and complete in respect of the work covered.
3. Whether the judge erred in requiring clear and informed consent from the Respondent that the invoices were interim statutory bills.
4. Whether the parties’ conduct could imply an agreement to treat the monthly invoices as interim statutory bills.

Arguments of the Parties

Appellant's Arguments

• The 65% discounted fees invoiced were final and standalone entitlements for the work done during the invoiced periods.
• The further contingent fees (remaining 35% of the Standard Fee, Uplift Fee, and Success Fee) were not additional fees for the same work but represented a risk-based return for achieving specified recoveries, essentially a separate entitlement.
• The invoices were final in respect of the subject matter of the Discounted Fee, and subsequent invoices for contingent fees would relate to a different subject matter.
• Reliance on the authority in In Re Romer & Haslam to support that interim invoices need not be obviously based on running accounts to be interim statutory bills.
• Suggested that the references to 'final', 'complete', and 'self-contained' in the case law were unsatisfactory and not well-founded.
• Argued that payment of the invoices without challenge indicated their status as interim statutory bills.
• Raised concerns about the practical consequences of the judge’s decision, including potential chilling effects on the use of CFAs and the risk of stale challenges to invoices rendered years earlier.

Respondent's Arguments

• The Appellant’s characterisation of contingent fees as separate from the work done was artificial and inconsistent with the retainer.
• The invoices represented only a temporary discount on the full Standard Fee, which remained payable if contingencies were met, meaning the invoices were neither final nor complete.
• The risk-based return was essentially the risk itself, as the contingent fees were part of the total fees for the same work.
• Any assessment of the invoices at the discounted rate would be incomplete and potentially misleading, as the full fees might be significantly higher.
• Allowing the invoices to be interim statutory bills would prevent the Respondent from challenging the contingent fees later, undermining statutory protections.
• Emphasised the necessity of clear and informed consent for invoices to be treated as interim statutory bills, which was not present.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by affirming the established legal principle that, under section 70 of the Solicitors Act 1974, a solicitor’s bill must be final and complete to constitute an interim statutory bill. This principle is deeply embedded in case law, including Bari v Rosen, Davidsons v Jones-Fenleigh, and Boodia 1. The court rejected the Appellant’s attempt to dilute finality by treating the discounted fees and contingent fees as separate subjects of interim statutory bills, emphasizing that the "subject matter" of the invoices must be synonymous with the work done.

The court analysed the contractual arrangements and found that the 65% discounted fees invoiced represented only part payment for the same work that the full Standard Fee covered. The remaining 35% and additional fees were contingent parts of the overall remuneration for that same work, not separate fees for different work. Thus, the invoices were neither final nor complete.

Considering the conditional fee arrangement (CFA), the court noted that CFAs inherently involve conditional payments contingent on outcomes, which conflicts with the statutory requirement of finality and completeness for interim statutory bills. The court relied on recent authorities (Sprey v Rawlinson Butler LLP, Winros Partnership, and Richard Slade v Erlam) that held invoices under CFAs are not interim statutory bills.

The court also rejected the Appellant’s reliance on the Victorian authority In Re Romer & Haslam as outdated and not addressing the modern issues raised by CFAs and partial payments. The court dismissed the argument that payment without challenge converts an invoice into an interim statutory bill if it lacks finality.

On practical concerns, the court acknowledged the risk of stale challenges to invoices but found no compelling reason to depart from the statutory scheme and established principles. It noted the absence of evidence on wider implications and that the 1974 Act has been criticized for being outdated but remains the governing law.

Ultimately, the court concluded that the invoices issued at the discounted rate were not interim statutory bills because they were not final and complete, and thus the protections and restrictions under s.70 did not apply to them.

Holding and Implications

The court DISMISSED the appeal, affirming the decision below that the invoices rendered by the Appellant were not interim statutory bills under section 70 of the Solicitors Act 1974.

This ruling means that the Respondent retains the right to challenge the invoices despite their having been paid and despite their age, as the statutory time limits for challenge under s.70 do not apply to these invoices. The decision underscores the difficulty of reconciling conditional fee arrangements with the statutory regime governing solicitors’ bills and highlights the need for legislative reform to address modern billing practices.

No new precedent was established beyond the application of existing principles to the facts of this case. The court’s decision reinforces the established requirement that interim statutory bills must be final and complete in respect of the work covered, and that partial or discounted invoices with contingent further fees do not qualify.