In January 2013, the Bar Council's standard contractual terms of business took effect. Following decades of resorting to putting firms on the naughty step, barristers were now able to sue to recover their unpaid fees for professional services rendered.
A good development? As a firm of solicitors, one might think we were not overly ecstatic about it - but as lawyers who love to see our clients get paid, we said "about time". Since Thrings' appointment to the Bar Council Affinity Panel in February 2017, we have been advising barristers on a growing number of debt-related enquiries. Our aim is to help them navigate the choppy seas, ensuring they avoid a storm. After all, the best results come from approaching debt recovery professionally and sensitively.
Understandably, there is caution over whether to sue a professional client. There is the question of preserving long-term or profitable relationships balanced with the desire to recover fees. Some prefer to sit and wait, but this sometimes results in having to write off a debt. One novel way in which we have helped has been to negotiate the assignment of debt from the professional client in order to allow recovery from the lay client.
But what rights do these changes in fortune bring? The standard contractual terms mean:
Payment of the invoice within 30 days of delivery
Payment without deduction or set-off
After 30 days, a right to recover under the Late Payment of Commercial Debts (Interest) Act 1998:
Compensation - between £40 and £100 depending on the size of the debt
Interest at 8% above the Bank of England base rate
The ability to sue the authorised person for payment.
Let's make up an example. A barrister, Mr. B, is owed £1,000 since 1 January 2015. Mr. B can sue for the principal debt of £1,000, plus a compensation fee of £70 - and interest to date of £283.63 (running at a daily rate of £0.23). This makes a grand total of £1,353.63. Show me the (extra) money!
Incorporating the late payments act (LPA) is really helpful, and can make fee recovery more economical, especially for smaller debts. LPA can also be used as a carrot with the offer to waive the LPA on payment by a certain date. We have also seen, and litigated on, a plethora of alternative terms of contract which can bring their own benefits (or indeed challenges).
As solicitors and barristers become more aware - and more used to - the shift in control of fee payment, we are seeing more confidence in those speaking with us. And with limited defences available to payees, we look forward to showing more barristers their money.
Ramona Derbyshire and Amanda Richardson - Thrings LLP