Guidance from a debt expert
When getting your fees in turns into a chore, there is no substitute for lessons learnt 'at the coal face' of debt collection.
Harsh economic times
A few years ago, apart from sole practitioners or two-partner firms, the failure of a law firm was a rare, and usually newsworthy, event. That sort of thing simply didn’t happen to solicitors, said Simon Love, a senior associate in the professional risks group of Reynolds Porter Chamberlain LLP (see New Law Journal 05 February 2014).
However, a number of high-profile failures during the past year has made it clear that the solicitors’ profession is not immune to the effects of the prevailing harsh economic conditions. Any expert seeking proof has only to enter ‘solicitors firms in liquidation’ into a search engine for the horrific scenario to be displayed. Up comes Follet Stock, Cobbets, Thornleys, Manches, Stefan Cross, Wilson Solicitors LLP and Hacking Ashton LLP. And the latest big firm to give notice that it is considering appointing liquidators is Linder Myers LLP. The list goes on.
A paper entitled Steering the Course (Google SRA steering the course for more information) published recently by the Solicitors Regulation Authority is well worth a read by any expert who has been waiting patiently for a firm to pay an invoice. A key finding is that in 82% of cases the most frequently defined indicator of a law firm at risk was the failure to pay debts to, amongst others, instructed experts.
Professional credit control is key
It is, to coin a phrase, a truth universally acknowledged that expert witnesses involve themselves in litigation mostly to supplement their income. By so doing, experts submit themselves to a complex code of conduct, and open themselves to risks of negligence actions, performing work that is ancillary to their main occupation. Of course, some experts take on such work out of a sense of public duty, but the vast majority of expert instructions are undertaken as paid work.
Yet, perhaps because for many the income from acting as an expert witness is seen as ‘pin money’, an astonishingly large number of expert witnesses treat collecting their fees in a laissez faire manner, taking little or no interest in ensuring that the solicitor pays on time.
Few expert witnesses appear to relish the prospect of tangling with the lawyer who fails, refuses or neglects to pay on time, or even to pay at all. Having been effectively blocked and diverted by the law firm’s administrative staff, many experts simply throw in the towel.
At any meeting of expert witnesses, lunchtime chats quickly turn to examples of a lawyer’s persistent failure to pay a bill. Some expert witnesses give up chasing the payment straight away. Many more, though, wrongly think that all that needs to be done is to enter the portals of the small claims court. But gaining a Court Order is one thing – getting paid is quite another! It was against this background that the author, who some 25 years ago founded the UK Register of Expert Witnesses, created in 2012 the start up venture ‘Debt Collection for Expert Witnesses’ to provide some professional relief for the frustrated expert witness.
The writer’s experience in dealing with truculent solicitors over the past 2 years has been most revealing, and there are a few key themes that have emerged. It is hoped that by raising awareness of these amongst experts in the UK Register of Expert Witnesses, their impact on payment times can be somewhat neutered.
Make it clear
Experts who fail to set out clearly their terms of payment, and make sure they obtain the solicitor’s written agreement, have only themselves to blame when fees don’t get paid in a timely fashion. If the time for payment is not unambiguously set out before undertaking any work, it becomes quite impossible to claim that payment is overdue. As a result, it is frequently impossible to effectively chase payment.
Experience shows that solicitors who do not pay on time can be divided into two groups:
- those who are simply incompetent, having failed to get the monies to pay the expert witness from their private client or from the legal aid fund, and
- those who do obtain the funds but, presumably because of their own cashflow problems, they delay or, in some cases, refuse to pay the expert.
It is worth working out with which type of lawyer you are dealing. If the former, then it is likely that some prompting may resolve the matter reasonably quickly. But if you face the latter type of lawyer, you need to move straight to professional debt collection measures.
Don’t agree variations
For those expert witnesses who have taken the proper course and made it clear when payment is due – which is done through terms of engagement – a number go on, unwisely, to allow themselves to be persuaded by hard luck stories to vary their terms.
In one case, that began back in 2010, an expert who had a clear agreement for payment within 30 days of delivery of the fee note was persuaded to agree to a request that payment time would be extended to the end of the case, then ‘listed for 12 weeks ahead’. To the expert witness, ‘the end of the case’ meant at the end of the trial. However, when chased for payment, the solicitor maintained that it meant ‘at the conclusion of the final determination of the costs by the Court’, a process over which the expert has no control. Three years have elapsed and quarrels between the various solicitors in the costs assessment process mean that the expert remains unpaid in 2014! So don’t agree to contractual variations.
Don’t fall for extravagant questions
An expert witness who, following the overriding duty to be independent, produces a report the instructing solicitor finds ‘unhelpful’ – by which the lawyer generally means ‘doesn’t support the case I’m building’ – can sometimes be faced with a barrage of questions.
While Civil Procedure Rule (CPR) Part 35.6 does not cover this situation – that section is about asking questions of either the other side’s expert or an SJE – its guidance is worth bearing in mind. CPR 35.6(1) requires that questions are proportionate, and CPR 35.6(3) stipulates that the answers to questions should be treated as part of the expert’s report. Expert witnesses who are on the ball make sure that there is a clear understanding that their initial costs estimates do not include answering questions. For that activity, either the agreed hourly rate will be charged or a supplemental arrangement is necessary.
Another common mistake is for expert witnesses to create payment problems by issuing a large invoice without warning. If it will take £2,000 to deal with the questions, then it is far better to make that clear, and get agreement to it, before the work is done.
Review the backlog
In the present financial climate, all expert witnesses whose fee notes have not been paid on time should immediately undertake a review to ensure that, unbeknownst to them, the solicitors haven’t entered into a company voluntary arrangement.
In England and Wales, these matters are reported in The Gazette (see https://www.thegazette. co.uk). Few experts read that publication on a regular basis and so do not take avoiding action before ‘Notice of Dividends’ are published and their debts become irrecoverable. It is well worth a quick check on The Gazette website to determine if the firm in question is in trouble.
Asking the court to help
Most expert witnesses are aware that CPR 35.14 provides for them to ask the Court for direction under Part 35.14 if they find themselves in difficulties. However, because there is no guidance on what form a request for direction might take, nor what direction to seek, taking advantage of this power is difficult. That an expert must also ‘file written requests and provide copies to all parties’ does nothing to ease the practical problems.
The writer has seen examples of expert witnesses writing a letter to the court manager, writing a letter to the judge, and filing a form N244 (and then being astonished to find that they are charged a fee of £80 for their efforts). There is no simple answer, particularly in county court actions. The county court is a law unto itself, and an approach made successfully to one venue will be rebuffed by another. However, this may improve now that we have only one county court.
Court staff have little idea about how much help they are supposed to provide. They are instructed that they cannot advise on matters of law, but they are given no guidance concerning what that means in practice. The result is that they play safe and suggest that the enquirer should ask their solicitor or their local Citizens Advice Bureau. Even if the expert witness manages to get a letter explaining the problem put in the judge’s work box, the likely response will be that courts do not case manage by correspondence!
So, the advice at present is not to spend too much time on this approach, although a threat that you are about to use it might focus some minds.
Be brave, be determined
Expert witnesses who, generally speaking, are not trained negotiators sometimes create their own difficulties because they feel guilty asking to be paid. A common scenario is the expert who has been booked for a trial but, at the last minute, is told not to attend. Despite the fact that fees for late cancellation of trial attendance, the cause of which is entirely out of the expert’s hands, are provided for in the terms of engagement, some experts are reluctant to issue a fee note or, if they do, to chase payment with any vigour. This is a very poor strategy and simply encourages the solicitor to think that, if resisted, no payment will have to be made.
The advice is to be as professional in your debt chasing as in your report writing. Teach your lawyer that avoiding your fee will be no easy task!
As a matter of principle, no solicitor who earns pocket money by getting interest on money he owes to you should be allowed to keep it! All experts should include in their agreements a provision for interest on overdue fees. Expert witnesses who incorporate into their contracts a term that payment delayed beyond the agreed time will attract interest at 8.0% above the Bank of England base rate will find that the problem of late payment reduces notably. However, trying to make claims for large amounts of interest runs the risk of being attacked under the Unfair Contracts Terms Act 1977 as amended. So, most expert witness terms should keep to the model set out by the Late Payment of Commercial Debt (Interest) Act.
Barry F Pamplin