Law firm cannot recover £1m costs of advertising group action

BA: Should not have to pay advertising costs if it loses

A law firm spending £1m on advertising for claimants to join its British Airways data breach group action cannot recover it from the airline in the event of winning, the High Court has ruled.

Mr Justice Saini said these were costs which group action practice PGMBM would have to swallow itself.

We reported last month that PGMBM has become what is thought to be the first law firm in the UK to advertise on TV for claimants to join specific cases and that, as a result, the BA action has become the largest group personal data claim in UK history, notching up over 16,000 clients.

The issue of the costs of the advertising arose as part of the budgeting process which the parties have agreed to apply to the claim. The judge was asked to rule on their recoverability in principle.

PGMBM has so far incurred £443,000 of the £1m it intends to spend on advertising and sought to include the rest in the budget.

The group litigation order made provision (at paragraph 41) for the solicitors to take “reasonable steps” to publicise the action using a proscribed advertisement for publication which described the terms of the order and referred to the data breach.

Saini J said it was clear “as a matter of binding authority” that these were not recoverable costs.

He cited the 2012 Court of Appeal ruling by the then Master of the Rolls, Lord Neuberger, in Motto v Trafigura, who said: “The expenses of getting business, whether advertising to the public as potential clients, making a presentation to a potential client, or discussing a possible instruction with a potential client, should not normally be treated as attributable to, and payable by, the ultimate client or clients.

“Rather, such expenses should generally be treated as part of a solicitor’s general overheads or expenses, which can be taken into account when assessing appropriate levels of charging, such as hourly rates.”

This was, Saini J said, “essentially a reflection” of the indemnity principle.

“In my judgment, the reasoning of Lord Neuberger MR applies directly to the facts before me. The costs which have been incurred and which are to be incurred by the claimant solicitors are, in my view, essentially general overheads, albeit that they are incurred in the context of a GLO.

“They are not the costs that are being incurred pursuant to the GLO, paragraph 41, to which I have already made reference, but are, rather, more accurately described as the costs incurred by the claimant solicitors of ‘getting the business in’. They are not for the account of BA, should BA be unsuccessful in the litigation.”

He concluded that the advertising costs were not recoverable and fell out of the budget.

In another blow to PGMBM, the judge refused its application to extend the 3 April cut-off date for claimants to register.

It said his decision last November to order a split trial on liability and quantum changed the position and that the cut-off date should be a year after the proposed trial on liability began in the summer term of 2022, which would allow for any appeal.

Saini J said that, in deciding instead to extend the date by two months to 3 June 2021, he was balancing BA’s right to know the extent of its exposure – and thus the resources it should put into defending the case – against ensuring potential claimants access to justice.

The extra time would give the recent burst of advertising by PGMBM “to bear fruit”, he decided, adding that those who wanted to join the claim after that date could still apply to join the action.

“They are not permanently shut out, subject of course to what any such new claimants say in their applications.”

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