The Law Society and Bar Council have struck a deal to make fee arrangements between barristers and solicitors contractually binding by October.

The changes, which come as the Bar moves to reposition itself ahead of impending Clementi legal service reforms, will enable barristers to sue solicitors for non-payment off the back of a legally-binding invoice.

The scheme will be used across the Bar and will end the archaic system whereby solicitors can be black-listed for non-payment. Any fee dispute will go to a compulsory arbitration scheme before a joint panel. Once a decision has been reached, barristers will be able to sue for outstanding fees.

The agreement ends almost a decade of wrangling over the issue, which was almost resolved in early 2005, before the Law Society dug in its heels over a proposed deal. Historically, objections have included tax disadvantages, the danger of onerous terms being added to the contract and even the 'distastefulness' of lawyers suing each other.

Bar Council chairman Geoffrey Vos QC told Legal Week: "This is a complete revolution – it is intended to be even-handed and fair for both solicitors and barristers. An agreement has never previously been reached on a payment scheme which has been approved and endorsed by both the Law Society and the Bar Council. It will be a big cultural change for both sides and put the profession on a more commercial footing."

The contract will now be fine-tuned by a working party before the two representative bodies spend the coming months educating the profession on how to use it. Members of the working party include Andrew Mitchell and Tim Straker, of the Bar Council's fees collection committee, and Law Society policy adviser Jenny Rawstorne.

Skadden Arps Slate Meagher & Flom litigation head Paul Mitchard said: "For solicitors, the barristers' billing system is antiquated and confusing – it is still based on a 19th century-type billing style. The fact that barristers cannot sue for outstanding fees is ridiculous and an out-of-date theory."

The timing of the agreement is strategically important as it will take effect shortly before the Legal Services Bill allows ownership of firms to take effect.

Mishcon de Reya dispute resolution head James Libson commented: "It will speed up payment and now that direct access is opening up the profession, barristers may need it."

Additional reporting by Charlotte Edmond.