QC’s £1.5m brief fee for nine months’ work “reasonable”


Gordon-Saker: No doubt it was a reasonable fee

The Senior Costs Judge has approved a £1.5m brief fee for a leading QC who worked on a “titanic” commercial dispute almost exclusively for nine months.

Approving £3.3m in brief fees in all for two QCs and two juniors, Master Gordon-Saker said “it is not part of the court’s function to determine what the reasonable annual earnings of members of the Bar should be”.

He said the 2013 case of Deutsche Bank v Sebastian Holdings – which saw the claimant bank awarded $243m in damages over an unpaid margin call and fight off an $8bn counterclaim – was “towards the top end of work in the Commercial Court”.

The claimant was entitled 85% of its costs on the indemnity basis. It is seeking some £53m in all.

The bank, whose solicitors were Freshfields Bruckhaus Deringer, instructed David Foxton QC – at the time of Essex Court Chambers and now a High Court judge – Sonia Tolaney QC of One Essex Court, Henry King (now a QC) of Fountain Court, and James MacDonald of One Essex Court.

At the time of the trial, both Ms Tolaney and Mr MacDonald were at 3VB; Ms Tolaney QC took silk in 2011, two years into the proceedings.

Mr Foxton’s brief fee was £1.5m, Ms Tolaney’s £900,000, Mr King’s £496,000 and Mr MacDonald’s £400,000. Norwegian billionaire Alexander Vik, the sole owner of the defendant who has been ordered to pay the costs, offered them £750,000, £600,000, £300,000 and £200,000 respectively.

Master Gordon-Saker said: “It is not in issue that this was titanic litigation involving huge sums of money. Because of the sums involved, or potentially involved, it was of importance even to very wealthy parties. It was extremely complex and document heavy…

“I have no doubt that all of the counsel instructed will not have been working on much else from the delivery of their briefs until the conclusion of the hearing, a period of about nine months.

“[Nick Bacon QC for the claimant] submitted, and I think he is correct, that the pool of hypothetical counsel capable of conducting this case was small.”

Mr Bacon, a leading costs counsel at 4 New Square, told the court that the fees for all four counsel were negotiated down.

In the case of Mr Foxton QC, whose clerk initially asked for £1.65m, Mr Bacon QC argued that these were “not the particularly high fees of the pre-eminent”. An example of that, he suggested, would be “the rumoured brief fees in Berezovsky v Abramovich, which was tried in 2012”.

The judge ruled: “Given the size of the case and the burden that he assumed, even where some of that burden was shared with others, I cannot say that the brief fee of £1.5m for Mr Foxton QC was unreasonable…

“I think that it bears a reasonable relationship to the fee paid to Miss Tolaney QC, given the difference in seniority and their respective roles in the litigation.

“Reasonableness is never a single figure and this fee is towards the top end of what I would consider to be reasonable for a fee agreed in 2012, particularly having regard to the work which was agreed to fall outside of the brief fee (post-brief preparation, refreshers on non-sitting days and closing submissions).

“I do not have a doubt that it was a reasonable fee. However if I did, the claimant would have the benefit of it.”

The judge noted Mr Bacon’s comment that Ms Tolaney’s fee was “the subject of extensive negotiation directly involving the client”, adding: “I am happy to accept that this fee was the subject of negotiation but counsel’s clerk’s initial pitch is of course nothing more than that.”

There were “no rules of thumb or conventions” regarding the appropriate ratios of fees between first and second leading counsel.

“Miss Tolaney QC will have assumed a significant burden in relation to the areas of the case which were devolved to her but she will not have had the overall burden or responsibility assumed by Mr Foxton QC. A ratio of about two-thirds of the fee of the senior leader seems to me about right.”

The ratios of the juniors’ brief fees to the fees of leading counsel were also “roughly appropriate” and the judge found them reasonable.

Master Gordon-Saker said: “There was, and in my view still is, a rule of thumb that junior counsel should be entitled to one-half of the fees of leading counsel, subject to the junior doing more or less than would normally be expected… That becomes less helpful where there is more than one leader or more than one junior.”

He also ruled on a preliminary issue of whether the fees of Deloitte were properly recoverable as costs of the action. The firm is seeking £24m as forensic loss, margin calculation, equity valuation and computer forensic experts and litigation advisors.

The judge said the fees were recoverable subject to a determination of whether they were reasonably incurred and reasonable in amount, and subject to the disallowance of fees which should properly form part of Deloitte’s overheads, such as qualitative reviews and risk assessment.





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