Division C: Form of Business Accounts and Taxation

NOTE:

This guidance does not apply to the taxation of solicitors' accounts remitted to the Auditor of the Court of Session in terms of Rule 42.7 of the Rules of the Court of Session or to a Sheriff Court Auditor in terms of the Act of Sederunt (Solicitor and Client Accounts in the Sheriff Court) 1992 (SI 1992 No 1434);

1. Business Accounts - preparation and presentation

(a) The form in which a solicitor presents a business account is a matter for the solicitor's personal preference but if the person liable to pay requires details, the solicitor must give a narrative or summary sufficient to indicate the nature and the extent of the work done. If a breakdown is requested the solicitor should give such information as can readily be derived from the records, such as the total recorded time spent, the number and length of meetings, the number of letters and of telephone calls. No charge may be made for preparing the note of fee or for the provision of such information. However if having been given such information the party paying insists on a fully itemised account, the cost of preparing that may be charged to them.

(b) A solicitor may submit his file to a law accountant or auditor for assessment of the fee either before or after the note of fee is issued, but it is stressed that a unilateral reference of this kind does not constitute a taxation. Such an assessment of a fee must never be represented as a taxation; as having any official status; or as being final and binding. The fee for such a reference is not chargeable to the party paying unless that has been included in the terms of business intimated to the client at the outset. If a note of fee which has been assessed in this way requires to be taxed (see 2 below), it should be taxed by an Auditor of Court.

Where a solicitor acts:

  • as an administrator of a client's funds under a power of attorney where the granter is incapable; or
  • in a representative capacity, e.g. a sole executor

he should consider having a fee note prepared by an Auditor of Court.

2. Joint Remit for Taxation

A solicitor and client may agree that the solicitor's fee should be taxed by an Auditor of Court in advance of a note of fee being issued.  Only a small number of court auditors are permitted to carry out such a taxation.

The solicitor and client should sign a joint remit to the Auditor in terms similar to the following:

(place) (date). I, AB (client)  and we, Messrs E & F, Solicitors, hereby request the Auditor of the (Sheriff Court of .... /Court of Session) to tax the remuneration due and payable to the Solicitors for their whole work and responsibility in connection with (matter) and agree that the Auditor's decision on matters of taxation will be final and binding. [In executry add - The Auditor's fee for carrying out the taxation will be payable out of the estate before distribution to residuary beneficiaries]

Signed: AB, E & F

This precise wording however is not essential. All the Auditor requires is to be satisfied that both parties accept that the taxation will be binding. Any reasonable written record of such an agreement will be sufficient for the Auditor.

A formal diet of taxation will not usually be required in these cases. Note that the client is entitled to refer a complaint of inadequate service to the Scottish Legal Complaints Commission irrespective of the outcome of the taxation.


3. Taxation of disputed business accounts

(a) If an account continues to be disputed after the provision of the information set out in 1(a) above, the solicitor must inform the paying party of the availability of taxation by an Auditor of Court, and of the procedure involved. If the payer has not requested a fully itemised account, the solicitor may have such an account prepared at his own expense. That full account may be submitted for taxation even if it is for a greater amount than the original note of fee.

(b) A solicitor who is a co-executor with an unqualified person must not make a unilateral reference for taxation. Such a reference needs the concurrence of the other executor.

(c)  The solicitor cannot refuse to agree to taxation unless the client is to pay the account and the solicitor and client have entered into a written fee charging agreement in which the actual fee has been agreed, as opposed to the basis on which the fee is to be charged. Refusal to submit the account for taxation may lead to a conduct complaint.

(d) The solicitor and client should agree whether an Auditor will tax the account, failing which the account should be taxed by the Auditor of the Court of Session.

(e) The solicitor must then forthwith submit the file and all relevant information including the note of fee or detailed account to the chosen Auditor who will decide whether to proceed by way of oral or written representations. If there will be an oral hearing this will be intimated to the client and the solicitor. There will be no appeal against the decision on whether to have an oral hearing or to proceed by written representations. If it will be written submissions, each party will be made fully aware of the other's representations.

(f) The decision of an Auditor on matters of taxation will be final and binding. However the client or party paying is entitled to refer a complaint of inadequate service by the solicitor to the Scottish Legal Complaints Commission irrespective of the outcome of the taxation.

 

4. Charge for taxation

If the taxation is by an Auditor a fee, usually of 4% of the amount of the account as presented for taxation, will be charged, and may attract VAT.

In the case of disputed business accounts, any award of expenses of a taxation - not only the Auditor's fee (which may be apportioned between the solicitor and the client) but also the time and expenses of parties attending - is wholly within the discretion of the Auditor. If the matter is settled within the seven days preceding the arranged oral hearing, the Auditor may still charge a proportion of his fee, not exceeding 50%, at his discretion.

 

Back to Table of Contents