1 November 2017Print This Post

There may be trouble ahead

Deadman: More interested in lawyer’s strategy for bringing the case to a commercially acceptable conclusion

Posted by Chris Deadman, director of operations at Litigation Futures Associate Invicta Capital Funding

The High Court has demanded that further cuts be made to costs of over £1.6m claimed by Eversheds.

Mrs Justice Slade said the amount claimed by Eversheds from litigation client Mark Harrison was 4.8 times higher than the firm’s first estimate and about 2.9 times more than a second.

Let me repeat that in case you missed it the first time: 4.8 times higher than the firm’s original estimate, or to put it another way, a mere 480% higher in old money. Even though I am not a lawyer, I do understand the difference between a ‘quotation’ and an ‘estimate’, a distinction discussed in the ruling. I also have no idea about the specific facts in this case nor can I be bothered to find out.

I have never met Mr Harrison and the closest I will probably come to being able to afford the services of Eversheds would be if I won Euromillions and retained them to protect my loot from grasping relatives and friends whom I had drunkenly promised to ‘look after’.

But a 480% difference is right next to Wembley Stadium and TFL’s Jubilee Line on the scale of fiscal wrongness. As a layman, I simply cannot get my head around how some of the smartest people in society can consistently get the task of estimating litigation costs so spectacularly wrong on so many separate occasions. I am not talking about Eversheds here; I am talking about the profession in general. As litigation financiers, we see this kind of error rate occurring with depressing regularity.

The unforeseen costs in disclosure – eg, the budget was based on having to review three lever-arch files of material but 200 pantechnicons of documents pulled up instead – account for a tiny percentage of errors. Most of the time, the lawyer has simply adopted an overly sunny assessment of merits and has failed to consider properly how the other side is likely to respond.

That’s why smart litigation funders are less interested in the legal merits of a claim than they are the lawyer’s strategy for bringing the case to a commercially acceptable conclusion. The lawyer who has a readily comprehensible strategy will have considered not only their own approach but also how their opponent is likely to respond and price that work accordingly.

We can therefore have greater confidence in a budget prepared by someone who has considered how their opponent will react rather than with something prepared by a lawyer who envisages nothing but blue skies and good times.


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