The High Court has criticised a law firm’s “very heavy reliance on partner time”, and the “astonishing” amount of time junior counsel was planning to spend in preparing for trial, as it slashed by more than half many of their budgeted costs for representing two claimants in the phone hacking litigation against Mirror Group Newspapers.
Chief Master Marsh said many features of the second wave of the litigation were different from the standards costs regime and similar to a group litigation order, but it did not operate in a “wholly parallel universe”.
The cases of former TV presenter John Leslie and former Celebrity Big Brother contestant Chantelle Houghton are the first in the second wave.
Though the phone hacking litigation uses a novel system of template cost budgeting to avoid having to create one from scratch each time, it was agreed that these two cases should have bespoke individual budgets.
Mr Leslie’s proposed budget was for £1.25m, Ms Houghton’s for £723,000, both figures significantly higher than the template budgets provided.
The master said he struggled with applying the principle of proportionality. “It seems to me that the only principled way of applying the test in these cases is to have only very limited regard to the possibility that proportionality may produce a cap that will limit what would otherwise be a reasonable figure.
“This is what the parties have done in their submissions. To take any other approach in this bespoke litigation risks the court merely applying arbitrary limits because there is no financial reference point for proportionality.
“It seems to me that the wider factors I have summarised, in particular the public importance and test case factors, will have the effect that if the costs are reasonable they are proportionate.”
Going on to each budget phase, the master described the hours included for witness statements as “grossly excessive and well above what is within a range of reasonable costs”.
He went on: “The amount of the time that has been budgeted suggests strongly that the statements will have only a passing connection with the direct recollection of the witnesses. They will have become an artificial construct of the lawyers.”
Chief Master Marsh cut the amount allowed for Mr Leslie’s witness statements from £99,000 to £60,000. Ms Houghton’s budget was cut from £85,000 to £50,000.
On disclosure, he said: “Mr Leslie’s budget shows very heavy reliance on partner time.
“This is not justified and the majority of the time reasonably spent on disclosure should be charged at the associate and paralegal rates.”
Mr Leslie’s budget for disclosure was cut from £98,000 to £75,000. Ms Houghton’s had already been agreed at £56,000.
The master described the costs budget figures of £150,000 and £139,000 for trial preparation as “very large sums indeed”.
He went on: “Mr Leslie’s budget is made up of 195 hours of partner time, 160 hours of associate time and 50 hours of time spent by a trainee. In Ms Houghton’s budget, the equivalent figures are 150 hours, 180 hours and 50 hours.
“They total in each case 405 hours and 380 hours. I am satisfied that these amounts of time are a completely artificial budgeting construct and not a genuine estimate of time that will be spent on the limited tasks that fall within this phase.”
The master slashed the figure for Mr Leslie by more than 50% to £70,000, and for Ms Houghton by almost 50% to the same amount.
On the trial itself, he renewed his criticism of excessive reliance on partner time.
“Both budgets provide for a partner and an associate/assistant to be present in court each day and allow 10 hours for each day. In addition, provision is made for 20 hours of paralegal/trainee time.
“The budgets total £110,400 for Mr Leslie’s solicitors and £113,450 for Ms Houghton’s. I accept that two fee-earners need to be involved but I do not accept that is necessary for a partner and an associate to be involved for the whole trial period.
“A more reasonable and proportionate combination is a partner, or an associate, to attend with a junior fee-earner, although it is reasonable for the partner to be present at key moments.
“It is also unnecessary for the representatives for both claimants to be in court for the entire trial.”
The costs budgets for the trial were reduced to £50,000 for each claimant.
Chief Master Marsh was equally scathing about the costs estimates for David Sherborne, the claimants’ “very experienced” junior counsel.
He said the figure of £330,000 for Mr Sherborne for the 15-day trial, and £107,000 for Julian Santos, the ‘junior’ for the trial, were “far in excess of what is within a range of reasonable costs”.
He added: “Mr Sherborne’s brief fee, broken down using an hourly rate of £400 per hour, involves him charging for an astonishing 625 hours of work in preparation for a 15 day trial.
“Allowing for a 10 hour day this amounts to 62 days of work (52 days if he were to charge for 12 hour days). It is difficult to conceive these are genuine periods.”
Cutting the brief fees down to £190,000 and £75,000 respectively, he commented: “It is not in dispute that these are ‘two counsel’ claims. However, Mr Sherborne has not taken silk and there is
NOTE: This article initially named Atkins Thomson as acting for the claimants. In fact, it was acting on behalf of the group in relation to other costs issues. Hamlins is acting for Chantelle Houghton and Taylor Hampton for John Leslie.