A law firm has charged a client £3,000 in addition to a VAT of £600 for work done on a probate transaction. The client has complained that the cost is too high and not what was expected. The client refuses to pay. The firm has realized that there was a mistake in the billing and has decided to reduce the bill to £2,500 with VAT reduced to £500.
Which of the following statements best describes the firm's best course of action?
A law firm has charged a client £3,000 in addition to a VAT of £600 for work done on a probate transaction. The client has complained that the cost is too high and not what was expected. The client refuses to pay. The firm has realized that there was a mistake in the billing and has decided to reduce the bill to £2,500 with VAT reduced to £500.
Which of the following statements best describes the firm's best course of action?
The firm should adjust its accounting records to take this abatement into account and send out a new bill.
(D) The firm should update its appropriate ledgers to reflect the reduction of costs and send the client a new bill.
Option (A) is incorrect as the firm should not demand full payment from the client once it has acknowledged its mistake. Instead, it should issue a revised bill.
Option (B) is incorrect as firms are required to comply with the SRA Accounts Rules and the Code of Conduct. Any errors must be rectified promptly, and it would be inappropriate to withhold information from clients or involve the SRA.
Option (C) is incorrect because the firm is not obligated to waive the entire fee. It must only correct its mistake.
Option (E) is incorrect because the firm must record the cost reduction on its internal accounting ledgers.