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Any expenses incurred by the lawyer during a case and any payments made on the client's behalf will be added to the legal fees. This applies whether or not the lawyer's fees are fixed.
Here are examples of some expenses you might come across in lawyers' bills:
94 Search (or 94A or 94B)
Bankruptcy Search
It is not possible to buy a house if you are bankrupt, or to sell one or to get a mortgage on one, so lawyers always check whether anybody involved in a transaction is an undischarged bankrupt, and this search is the way they do it.
Barrister's Fees
When a client has a solicitor, sometimes the solicitor will recommend that the client engages a barrister, sometimes called counsel. This might be for a specialist opinion about something or to argue a case in court, for example.
Counsel will charge professional fees just like the solicitor does, but by the long and ancient tradition of the legal profession, barristers tend to send their bills to the solicitor, not direct to the client. The solicitor then includes the barrister's fees on his own bill, that he then sends out to the client as an expense.
Solicitors sometimes also consult counsel on matters, but not on the client's behalf, but on their own behalf. In this event the barrister's fees are not rechargeable to the client, because counsel is not acting for the client, it is acting for the solicitors. However, because the barrister in that situation is effectively acting as if he were one of the solicitor's firm's in-house lawyers the solicitors are entitled to charge for the barrister as part of their own fees, a bit like sub-contracting. In this situation therefore barrister's fees might not be separately specified on the solicitor's bill, because the barrister's fees are not fees to the client, they are fees to the solicitor, just the same way as the salaries to the staff in the solicitor's office.
Court Fee
Whenever you're involved in court proceedings, at various stages the court charges a fee to cover administrative costs. These are invariably recharged to the client by lawyers at cost. No VAT is payable on them.
Final Search
Once lawyers have got their Office Copy Entries from the Land Registry to show them what's on the Land Register about a particular property, it usually then takes quite some time to complete the transaction in connection with which they were wanted.
During that period anything could have happened — a new mortgage could have been slapped on the title, a neighbour could have registered a claim against the title, or anything. So it's important that before any transaction is finalised a last minute check is done to ensure that nothing of this nature has happened since the paper print out from the Land Registry entries was first issued some time before.
This final search is that way of updating the information so that the matter can then proceed to completion safe in the knowledge that no last minute changes have been gone unnoticed.
Insurance Premiums
Lawyers are not really in the insurance business, so they will tend to leave arranging insurance policies to people who are more qualified than they are to do the job. However, they do sometime arrange insurance policies where the need for the insurance is closely wound up with the legal work they are doing.
For example, in house moves it sometimes happens that, say, an old deed cannot be found. Maybe it is not all that important a deed anyway, but just to be on the safe side an insurance policy is arranged. This is just in case the deed ever turns up and turns out to be more significant than was thought.
If a lawyer arranges an insurance policy for you the premium will be recharged to you at cost. The lawyer will not make a profit on the insurance premium, though they may levy a charge for the time spent in choosing it and arranging it, for example.
Land Registry Fee
Once a property has been sold, or given away, or dealt with in any other way, e.g., grant of a right of way, the details almost invariably have to be submitted to the Land Registry, and the Land Registry charges a fee for processing the information and updating the Land Register records accordingly.
Local Search
This is a standard set of enquiries used by lawyers for answering by the local council about a property and for example whether it's going to be compulsory purchased to build a new motorway or airport, etc, and whether the sewers are public, whether the roadway that leads to it is a public highway, and so on.
Office Copy Entries
Ownership of houses is registered at the Land Registry.
An Office Copy or an Official Copy is simply a printed copy of the computer print out from the Land Registry showing the details of a particular property, and who owns it, and whether there is a mortgage on it, and so on.
Official Copy Entries
Pre-completion Search
Priority Period
When a Final Search is made, it is designed to get up to date with the Land Registry information so that a transaction can be completed with the most up to date information.
However it usually still takes a little while, even if only a few days in some cases, for that transaction then to be subsequently registered with the Land Registry, and it's possible in theory that something could be slapped on the Register even during that short period.
For this reason when a Final Search is made the search result comes with what is called a Priority Period. What this means is that once the search certificate has been issued if a subsequent application to register some sort of dealing with the property is submitted to the Land Registry within this Priority Period then that transaction will take priority over anything else that might arise in the Land Registry office concerning that property in the meantime.
In practical terms in most cases this means that this other transaction will be defeated altogether by the sale, which does give the buyer the security that they need in completing the transaction.
Probate Registry Fees
These are payable whenever you apply for probate for a deceased's estate. They are payable to the Probate Registry and your lawyer will recharge them to you at cost.
Stamp Duty
Stamp Duty is chargeable on almost all purchases of houses and commercial property in various scales depending on what it is and how much money has changed hands for it.
Broadly speaking for houses and flats stamp duty is 0 for a price up to £125,000. It's then 1% if the price is between £125,000 and £250,000, and then 3% if the price is above £250,000 up to £500,000. And then 4% if the price is above £500,000.
Bear in mind that these percentages apply to the whole amount. For example, if you sell your house for exactly £250,000 the Stamp Duty is 1%, which is £2,500. If on the other hand you sell it for £250,001, the rate goes up to 3%, and this is charged on the whole amount, not just the excess. So the Stamp Duty is now £7,500. £1 extra on the price puts £5,000 extra on the stamp duty bill.
This is why you never ever see houses for sale for £250,001.
How much?
The amount of an expense that a lawyer charges to you should be exactly the same as the amount that the lawyer has been charged by whoever the payment has been made to. Lawyers do not make a profit on expenses.
Most of these amounts are fairly standard for the type of expense in question but occasionally, they can vary. For example, if a lawyer is dealing with administration of the estate of a deceased, that might include, for example, payment of the deceased's last gas bill which could obviously be of any amount.
Where an amount of any payment due is notified to your lawyer by a third party your lawyer will rely on that notification in good faith without checking it unless specifically instructed otherwise.
At cost?
Expenses should be charged by the lawyer to the client at cost. This is as opposed to, for example, where the lawyer outsources legal work on the case to others. This is not a expense it is just the same as the lawyer doing it themselves. So that would be charged as the lawyer's own charges and may or may not be at cost.
If any profit margin is added on to the expense by the lawyer, then it is not really an expense any more, it is a fee payable to the lawyer and should be described as such.
The lawyer will then, after deducting his profits, pay the expense.
Alternatively, if the lawyer outsources legal work on the case to others, this too is not an expense, it is just the same as the lawyer doing it themselves. So that can only be charged as an expense if it is recharged to the client at cost, if there is any profit margin on it, then it should be described as the lawyers fee.
Getting the expenses back again
In litigation where a court orders one party to pay costs to the other, the expenses are subject to assessment by the court just the same as the fees of the lawyers. So you might not get back the full amount or (to look on the bright side) if you are the payer you might not have to pay the full amount. But this does not affect your responsibility to pay the full expense to your lawyer.
Your own expenses
You might incur expenses of your own that you pay yourself rather than have your lawyer pay for you. You should keep a record of these in case you end up being able to reclaim these expenses from anybody else. In particular where a court orders one party to pay costs to the other, that is not necessarily limited just to the expenses that have been incurred via the lawyer.
