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apportion the purchase price between the several folios
in the same proportion as the rateable valuation for
the purpose of ascertaining the costs.
INTEREST ON COSTS
The Council was asked to advise a member who drew
attention to the unfavourable position of solicitors who
often remain out of their costs and outlay for consid-
erable periods. Even where interest can be charged it is
at a rate of 4 per cent and the costs and outlay when
received are often of considerably lower purchasing
power than at the time when the work was done.
Accountants use the term "discounted cash flow" to
indicate the effect of inflation on delayed receipts. The
legal position with respect to interest on solicitors' costs
is shown below.
(1) Before Judgment
(a)
Non-contentious business
Section 5 of the Solicitors Remuneration Act, 1881,
enacted that any general order under the Act might
authorise and regulate the taking by a solicitor from his
client of security for future remuneration in accordance
with any general order to be ascertained by taxation or
otherwise and the allowance of interest. Clause 7 of
the Solicitors Remuneration General Order, 1884, pro-
vides that a solicitor may accept from his client and a
client may give to the solicitor security for the amount
to become due to the solicitor for business transacted
by him and for interest on such amount but so that
interest is not to commence until the amount is ascer-
tained either by agreement or taxation. A solicitor may
charge interest at 4 per cent per annum on his disburse-
ments and costs whether by scale or otherwise from the
expiration of one month from demand from the client.
It has been held that the mere delivery of a bill is
sufficient demand sot hat a delivered bill for non-
contentious work carries interest at 4 per cent from one
month after delivery at least in the absence of unreas-
onable delay in claiming interest.
It is not apparently the practice of the taxing masters
to compute interest under paragraph seven and must
therefore be recovered by action [re Keeping and Gloag
(No. 2) (1888) 23 L.J.N.C. 63].
(b)
Contentious business
Section 17 of the Attorneys and Solicitors Act, 187G,
provides that on every taxation of costs or disburse-
ments the taxing officer may allow interest at such rate
and from such time as he thinks just on monies dis-
bursed by the solicitor for his client and monies of the
client in the hands of the solicitor and improperly
retained by him. This does not apparently apply as
between party and party.
(c)
By agreement
An agreement by the client to pay interest on costs if
valid in other respects would appear to be binding on
the client provided the solicitor explains to the client
that apart from agreement interest is not payable on
taxed profit costs in contentious matters unless the court
in its discretion so orders.
(2) After Judgment
The usual interest at 4 per cent or the current rate
chargeable on judgment debts is payable from the date
of the judgment.
(3) Common Law
A solicitor may take security from his client for costs
due but not for future costs nor for costs over and
above those justly due. Where interest is payable under
such security no distinction appears to exist between
costs for contentious and costs for non-contentious
matters.
(4) Future Costs
(a)
Non-contentious business
Paragraph 7 of the S.R.G.O., 1884, mentioned above
entitles the solicitor to accept from his client security
for the amount to become due to the solicitor for busi-
ness to be transacted for him and for interest on such
amount but so that interest is not to commence until
the ambunt is ascertained either by agreement or
taxation.
'
(b)
Contentious business
As mentioned, Section 16 of the Attorneys and Solici-
tors Act, 1870, enables a solicitor to take security from
his client for future fees, charges and disbursements to
be ascertained by taxation or otherwise. If the agree-
ment includes a provision of interest on future costs it
would have to be in writing under Section 4 of the
same Act and would be subject to examination by the
taxing master.
The position as regards non-contentious business
would appear to be adequately covered by par. seven
of the Solicitors Remuneration General Order, 1884, if
the reference to interest at 4 per cent were changed ot a
reference to interest at current bank rate from the date
of delivery of the bill and if the taxing masters were
given a direction to include the interest automatically
on taxation of the costs. The inclusion of similar provi-
sions as regards contentious business would also require
amending legislation.
Lastly, the matter would have to be considered from
the point of view of the public relations of the profession.
It would probably have a detrimental effect although it
is now becoming common practice of trading and com-
mercial concerns to notify customers that outstanding
amounts will carry interest at a specified rate.
The personal relations of solicitors with their own
clients from the operation of such provisions would be
a matter for individual practitioners. Many would not
wish to claim interest from established clients.
The member who raised the question noted the grow-
ing tendency of commercial firms to tighten credit to
one month from the date of presentation of the account.
The Revenue Commissioners charge interest on monies
outstanding and it appears that the solicitor is in a
more difficult position. It has not been the practice of
clients to pay or solicitors to charge interest on long
standing accounts. The member suggested with a view
to minimising the situation where work is finished and
fees are outstanding for years despite application conse-
quent upon the solicitor being reluctant to sue his own
client whether it would be feasible in any legislation
dealing * with solicitors' accounts that the accounts
should bear interest at current bank rate from a date
three months after the furnishing of the account. If
this interest was to be computed annually at a com-
pound or even simple rate it would have the effect of
giving people an inducement to pay their accounts
promptly.
The Council while considering the matter of consid-
erable importance to the profession were of the opinion
that it would be inopportune at the present time to
apply for any alteration in the law or practice of the
taxing office in regard to the matter of interest on costs.
It is, however, a matter to be borne in mind in any
negotiations with the statutory committees dealing with
costs or with the Department of Justice.
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