CA says huge solicitor-own client costs assessment can be held in private

What the costs assessment will look like

What the costs assessment will look like

The Court of Appeal has upheld a decision to conduct a solicitor-own client assessment in private so as to protect legal professional privilege (LPP), even though the client had given a waiver to enable international law firm Dechert to defend its multi-million pound bills.

The court noted just how important the issue seemed to be to both parties, with no fewer than five QCs, including Lord Pannick, deployed in total.

In Dechert LLP v Eurasian Natural Resources Corporation Ltd [2016] EWCA Civ 375, the law firm was called in by Eurasian (ENRC) to handle an investigation into allegations by a whistleblower.

Dechert billed more than £16.3m over two years before the retainer was terminated. ENRC accused the firm of serious overcharging – which it denies – and applied for a detailed assessment under section 70(3) of the Solicitors Act 1974. The assessment will apply to at least £5m and possibly as much as £11m of the costs billed.

Dechert said that to defend itself properly, it would have refer to privileged material. ENRC did not want the Serious Fraud Office to be able to hear this by attending the assessment, and sought to have it held in private. The company made clear that if this did not happen, it would withdraw the application for assessment.

At first instance, Master Haworth refused to order a private hearing, saying that ENRC had chosen to bring the matters into the public arena and had to accept the consequences.

However, this was overturned by the High Court. Mr Justice Roth accepted ENRC’s argument that while LPP had, by implication, been waived to enable Dechert to contest the assessment, the waiver was limited to that particular purpose and did not constitute a general waiver.

Dechert had argued that once a waiver was granted, it was complete and there was no basis for finding a limited waiver in circumstances where the solicitor already had all the documents in its possession.

But Roth J ruled that it was in the interests of justice to preserve the confidentiality from any wider disclosure. A public judgment could vindicate Dechert’s reputation, if necessary, he said.

Dechert appealed, arguing that by commencing proceedings against its former solicitors, ENRC had waived any right to claim privilege in respect of any documents relevant to determining the claim, and that the implied waiver was general and for all purposes.

Giving the lead judgment of the appeal court, Lady Justice Gloster said she had “no difficulty” in upholding Roth J’s decision to hold the hearing in private.

“His conclusion that putting the material (whether subject to continuing LPP or not) into the public domain would prejudice ENRC as against the SFO in its criminal investigation cannot be faulted…

“Simply because there has, or might have, been an implied waiver of LPP does not mean that ENRC should be deprived of all protection for its previous confidential dealings with its solicitor. That is particularly so, where… in my judgment Dechert has no substantial legitimate interest in having the section 70 proceedings heard in public that could possibly outweigh ENRC’s entitlement not to incriminate itself through disclosure of confidential communications with its solicitor.”

However, Gloster LJ continued, ENRC did not argue its case on this basis and so she had to consider whether the company had waived LPP on a limited or absolute basis.

She said: “I find the answer a simple one. In my judgment the authorities clearly demonstrate that there is a concept of waiver for limited purposes and that this is clearly what happened in this case.”

Lady Justice King and Lord Justice David Richards agreed.

Dechert was represented by Mark Howard QC, Simon Browne QC and Tony Singla, instructed by Clyde & Co, while ENRC had Lord Pannick QC, Richard Lissack QC, Benjamin Williams QC and Tamara Oppenheimer, instructed by Signature Litigation.

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