Is the SRA playing with fire when it plays with words?

This paper addresses the SRA policy on what amounts to a Fixed Fee which was announced in January 2014

Fixed Fees are, they explain, to be distinguished from an Agreed Fee.  Whilst Agreed Fee is defined in the SRA Glossary, the new concept of Fixed Fee does not appear there or anywhere else in the rules.

Who does it affect?
• Heads of Litigation and Family departments
• Fee-earners responsible for billing so-called unbundled legal services


For years now the Agreed Fee has been defined by reference to a synonym: “fixed”, in fact the SRA Accounts Rules, 2011 (SAR) still use this definition.  The concept of the Fixed Fee is highly likely to catch an unsuspecting and largely unaware Profession off guard thrusting members into professional difficulties because of policy adjustments by the Regulator.  This approach hardly meets the Principles of Better Regulation to which the SRA, as a modern regulator, aspires to achieve.

Like Humpty Dumpty in “Through the Looking Glass” the SRA appear to be saying to the Profession that “…when [they] use a word it means just what [they] choose it to mean – neither more nor less”.

The first time this distinction between agreed and fixed fees appeared was in January 2014 when Issue 38 of SRA Update drew attention to a new FAQ posted on the SRA web site which says this:

Fixed fees are usually set at the beginning of a retainer and are payable on completion of the work required e.g. Divorce (excluding ancillary relief) £300 plus vat. Where you require costs on account of this fixed fee (as above), the costs must be paid into the client account in the usual manner. These monies have the usual protections for clients as they remain within the client account. At the conclusion of the matter, a final bill is delivered to the client in the usual way and the monies then transferred to the office account in accordance with rules 17.2 and 17.3 SRA Accounts Rules, 2011.

An agreed fee is a fee, the terms of which must be evidenced in writing and must be paid into the office account. The fee cannot be varied upwards and is payable, by the client, whether or not the work is completed. The money does not have the usual protections afforded to clients as it is office money, belonging to the firm. You must ensure that you have achieved the relevant outcomes in Chapter 1 of the SRA Code of Conduct 2011 and that clients signing up to an agreed fee are aware of the implications of paying it and consent to this before any payment is made.

What does this mean?

Any explanation elsewhere in the SAR?

“Fixed” appears nowhere in the SAR save as a synonym for “agreed” in the context of Agreed Fees. The confusion caused by the introduction of Fixed Fees is compounded by references to Agreed Fees defined by the synonym fixed throughout the SAR.

The starting point is obviously rule 17.5:

A payment for an agreed fee must be paid into an office account. An “agreed fee” is one that is fixed – not a fee that can be varied upwards, nor a fee that is dependent on the transaction being completed. An agreed fee must be evidenced in writing.

But exactly the same rule appears again in rule 19(5) dealing with the transfer of costs.

Further, guidance note (vii) to rule 25 SAR deals with contracting out of paying interest to clients on monies held by solicitors for their clients:

Any right to charge the client, or to stipulate for a charge which may fall on the client, would be excluded by, for instance, a prior agreement with the client for a fixed fee for the client’s matter…

Where fixed fee clearly means agreed fees.

Just to add further confusion yet another FAQ on the SRA website refers to “agreed fixed fees”, a term also not defined by the SRA Glossary;

Can the bright lamp of history illuminate?

The earliest versions of the Accounts Rules use the term “agreed fees” in the sense with which solicitors are very familiar.  There is no reference anywhere to the concept of Fixed Fees which appears, it would seem, for the first time in January 2014.  See, Solicitors Accounts Rules 1945-59 rule 9(2) and notes thereto reproduced in Lund, A Guide to the Professional Conduct and Etiquette of Solicitors, first edition, 1960.

Can Humpty Dumpty help?

Of course he can, as he says to Alice later in their exchange:

“They’ve a temper, some of them—particularly verbs, they’re the proudest—adjectives you can do anything with, but not verbs—however, I can manage the whole lot! Impenetrability! That’s what I say!”

Agreed and Fixed are both participle adverbs meaning that they take the characteristics of a verb and an adjective.  In this case the use of the words “fixed” and “agreed” as verbs both govern the object (fee) and the use of those same words as adjectives qualify the noun (fee, again, of course).

They are synonyms with an etymology which derives from words such as rigid, immoveable, settled and immobile.  If they mean the same how can Fixed Fees and Agreed Fees be as different as clearly the SRA intend them to be?  Of course impenetrability may be the order of the day but, if so, it is not helpful, quite the opposite.

The definition of fixed fee may be that found in guidance note (vii) to rule 25 where it is said interest would be excluded in the context of:

…an estimated fee which cannot be varied upwards in the absence of special circumstances.

So that fixed fees used as a term of art are simply estimated fees which cannot be changed for which any payment must be paid into clients account until billed at the end of the retainer.

It would be much better if the SRA used that phrasing rather than a phrase such as fixed fee which has been so indelibly linked for so long as a synonym for agreed fees in the minds of the profession.

The problem that arises from this confused piece of policy making on the hoof is of course for those firms in particular undertaking large volumes of work on the basis of agreed fees or supporting Litigants in Person with so-called unbundled legal services.

From our experience of regulatory investigations taking place before the new FAQ on Fixed Fees was posted, the SRA are highly likely to attempt to characterise certain types of agreed fees (e.g. in immigration or conveyancing work) as fixed fees.  In such cases the SRA have not hesitated in accusing solicitors of dishonesty in paying fixed fees into office account rather than client account.

This development is, or should be, a major concern for solicitors in a market place where the use of agreed fees is becoming increasingly vogue but where so little publicity has been given to what is a major change in the regulatory position of agreed also known as fixed fees, see rule 17.5 SAR.

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