16 December 2015Print This Post

High Court slashes £11m from costs budgets of nine law firms

RCJ

Supperstone J: firms’ costs budgets “disproportionately high”

The High Court has taken an axe to costs budgets submitted by nine claimant and defendant firms involved in a group litigation claim brought by construction workers, cutting the combined total from £30m to less than £19m.

The claimant firms include Thompsons and Leigh Day, the defendant firms Herbert Smith Freehills, Macfarlanes and Eversheds.

Mr Justice Supperstone said the total incurred and estimated costs for the whole case were £22m for the claimant firms and £27m for the defendant firms – “aggregating just short of £50m”.

He said the court was “presently concerned” with 28 lead cases, out of a total of around 570. The judge said the parties accepted the suggestion of Senior Costs Judge Master Gordon-Saker, who sat as an assessor in the case, that the eventual costs of the claims, with additional liabilities and VAT, could reach £100-£150m.

The court heard that the claims involved allegations of the “secret vetting of activities carried out by a group of major construction companies over many years”. A group litigation order was made in August 2014.

The case was treated as a pre-2013 claim, with the court using its case management powers under CPR rules 3.15 and 44.4, practice direction 3E on costs management, and the approach to proportionality set out in Home Office v Lownds.

Delivering judgment in Various Claimants v McAlpine and others [2015] EWHC 3543 (QB), Supperstone J said: “Recognising that this is a complex case which raises a number of difficult legal and factual issues, nevertheless, in our view, the costs appear to be disproportionate.

“In reaching this conclusion we have had regard not just to the monetary value of the claims, and general and aggravated damages, but also to the important non-monetary remedies.”

Supperstone J said that having taken the view that the costs were disproportionate, the court had considered whether the work set out in the costs budgets of the nine law firms for the period after 2 October 2015 was “necessary and whether the total figure for each phase is reasonable.”

The High Court cut the costs budgets submitted by Thompsons from £5.07m to £2.65m, by Leigh Day from £2.96m to £2.19m, by OH Parsons from £3.45m to £1.87m and Guney Clark Ryan from £2.83m to £1.79m.

The five defendant law firms fared little better. The costs budget of Macfarlanes was cut from £7.66m to £5.23m, Eversheds from £3.18m to £1.75m, Wragge Lawrence Graham from £2.6m to £1.44m, Herbert Smith Freehills from £1.7m to £1.45m and Paul Hastings from £576,000 to £466,000.

Supperstone J said that in considering the costs budgets, the court had regard to the number of counsel and solicitors, which firm was said to be leading a particular exercise, the number of hours of work claimed/reasonably required, hourly rates and costs incurred before 2 October 2015.

Concluding that the costs set out in each law firm’s Precedent H were “disproportionately high”, Supperstone J said: “When considering reasonable and proportionate costs post 2 October 2015 we have taken into account the costs that have been incurred before that date, and have proceeded on the assumption that of such incurred costs only those which are reasonable and proportionate will be allowed on detailed assessment.”

The High Court made a costs management order in accordance with CPR 3.15(2), reducing the firms’ costs budgets.

By Nick Hilborne

Tags: , ,


Leave a comment

We encourage you to be part of the Litigation Futures community but please note that all comments will be moderated before posting. We draw your attention to clause 5 of the Terms and Conditions of the site, which deals with user-generated content.