Legal Cost Specialists

Motto v Trafigura – Funding costs

I continue to see, on a virtually daily basis, claims for costs that include work relating to funding, notwithstanding the clear judgment from the Court of Appeal.

The last time I mentioned this, readers replied with comments such as:

“Clients won’t let me leave it out”

and

“Why do the Defendant’s job for them? Keep it in I say.”

Now when I see bills including this type of claim, I raise a standard dispute along the following lines:

“It is noted that work is claimed relating to funding (eg items x and y) despite clear Court of Appeal authority from 2011 (see paragraphs 108, 114 and 145(vii) of Motto v Trafigura Ltd [2011] EWCA Civ 1150) that such work is not recoverable. It is clear that those responsible for drafting the Bill and checking the same are not aware of the distinction between recoverable and irrecoverable work and it is anticipated that other non-chargeable attendance time and routine communications with the Claimant have been included. The Defendant, adopting a broad-brush approach, offers x% of the attendance time and routine communications claimed. If the same is not accepted the Court will be asked to determine the recoverability of each and every item claimed and the Defendant will request that the cost of this task be paid by the Claimant in any event.”

Oh, and don’t expect to recover above Grade D rates for drafting your bill where you get the basics wrong.

16 thoughts on “Motto v Trafigura – Funding costs”

  1. Youve clearly seen some of my Replies to Defendants, whom insist on completely misquoting “Brush” on estimates, or “Bailey” on asking for a private retainer, or “Hollins” on attendance notes production to prove funding enquiries – need I go on??

    All of these and more I see on a daily basis, from reputable defendant costs firms, whom clearly use precedents in the chance they trip up the unwary and get disclosure or reductions they werent expecting. And the Courts completely ignore it, regardless of the old 47.18 “whether a party has unreasonably raised or maintained an issue….”.

    And yes, of course, drawing bills is Grade D work. but apparently Objecting to them is Grade C?? For not only getting it wrong, but actively drawing a Court Pleading which misrepresents case precedents to the Court?

  2. I couldn’t agree more Simon. Where basic rules are not followed, that earns nothing other than withering contempt on my part. My particular bugbear is the claiming of letters received as a chargeable item. This also is basic – if you don’t know it, you’re clearly useless and shouldn’t be doing this work. If the arguments are as you say – why do the defendant’s job – then we are talking about lawyers who just don’t understand what being a professional and having professional integrity is about. If a lawyer certifies a bill knowing that it contains irrecoverable items, I regard that as professional misconduct.

    Conversely, where I can see that the person who prepared the bill identified non chargeable items and excluded them, I presume a decent level of competence and integrity and such a person will end up with a much better offer.

  3. Yup, it’s just so pointless putting in work that cannot be recovered. Especially when a client comes back and says “my bill was reduced by x-amount so please will you reduce your charge?” I just think “no, a huge amount of that is the work I said we should leave out in the first place!”

    OTOH, some good has come of this. I’ve just been quoted by Simon on his costs blog 🙂

  4. Truly Eminent Costs Professional

    This is a catch 22 situation.

    However, only eminent draftsmen can include the time on funding, or an apportioned element of it but not specifically refer to it as funding.

    The skill involved in this task is providing a legitimate explanation for the time which does not refer to funding, and which at the same time, does not appear fraudulent if seen by a Judge!

    I would include an example but I dont want to be giving away the tricks of the trade.

  5. To survive I need work. To obtain work I need clients. To acquire clients I need a reputation. That reputation is built on trust and confidence!

    Now if my client asks me to claim time associated with funding, notwithstanding the fact that we both know this is irrecoverable, I am in no position to refuse!

    Regardless, no one really expects to recover this time Simon, but we all know that a lot of Defendant firms work on a percentage basis! If I draft a Bill which claims funding time and it totals £10,000.00, and the paying party seeks a reduction of, oh let’s say 20%, I recover £8,000.00. Now if I draft the same Bill without claiming funding time it may come out at £9,500.00. If the paying party again seeks a reduction of 25%, I recover £7,600.00!! It’s simple economics, and borne primarily out of the Defendant’s bad habit of seeking a percentage reduction to a Bill, rather than actually looking at the Bill and making a reasonable, and respectful, offer for costs, on the basis on those claimed within the Bill itself, not just on the N252.

    You may not like it, you may not practice it, but you can’t deny it does not happen. Until such time as I see the vast majority, and not just the small minority, of paying parties putting forward offers reflective of the Bill as drafted, then I see no reason to change my approach.

    TECP: That is tantamount to fraud and I do not approve. I claiming funding time open and honestly in my Bill. If the Defendant pick up on it so be it, we both know what’s going to happen. If they don’t, as if often the case, more fool them!

  6. TECP what a load of old tosh! You, like may others, are simply describing what HAS been done (funding) as something that was NOT done, in order to keep the time spent in the Bill. This stands out like a sore thumb in Bills of Costs. When a particular item is disputed / queried, you will no doubt simply ‘maintain’ that it perfectly recoverable and no doubt ‘maintain’ that there are no funding costs claimed in the Bill. This is all done in the hope that you dont end up at a DAH having to prove this. Anon 12.27 is right, this is tantamount to fraud, which you escape by virtue of reaching settlement prior to a hearing.

  7. Truly Eminent Costs Professional

    I agree that it would be fraud if the time taken was solely in relation to funding.

    For example – preparing CFA Engaged 1.5 hrs – this would not be claimed at all in my bill.

    However, if we have a more detailed attendance note that says for example

    ”carrying out full risk assessment and preparing cfa; considering mechanism of the accident, documentation received, cross referencing and considering advice to be given to the client – Engaged 1.5 hours”

    This could be apportioned as ”considering liability and mechanism of the accident: Engaged 1 hour (apportioned to exclude 0.5 hours work relating to funding [i.e. the CFA])

    My point is, as long as there is sufficient ‘meat’ in the attendance note bona fide recoverable (and not fraudulent) time can be apportioned out or, in some cases, can be claimed in its entirety.

    Its not always black and white.

  8. Well yes, but that’s not what you were initially referring to…

    “However, only eminent draftsmen can include the time on funding”

    i.e. include all the time but drop the part of the description relating to funding

  9. Truly Eminent Costs Professional

    Well, thats for me to know and you to prove my learned friend!

    The point is only eminent draftsmen can include time that amateurs would perceive to be in relation to funding only.

    It really is schoolboy stuff. Show me a ”draftsman” that automatically excludes anything relating to funding, and I will show you a potentially negligent and ill informed draftsman.

    Perhaps in time you can be truly eminent as well my learned friend.

    I will, if you like, provide training sessions (at a reassuringly expensive price).

  10. I’ve seen a number of standard bills from cost drafting firms where pre Motto funding work was always identifiable even when undertaken with other work. The time claimed was usually 1 hour or 1.5 hours. Post Motto the reference to funding has been replaced by phrases such as “Considering and preparing documents to advise the client” or just “Preparing documents” but the times remain the same? That it relates to funding is usually recognisable by its chronology within the bill. I have also heard of a draftsman who now includes communications with the ATE providers in with the client on the loose premise the provider is the agent of the client.

    I’ve also come across a number of cases, not CPR 45 fixed costs, where there has been a refusal to disclose the CFA but it has subsequently come to light the success fee is less than the 100% claimed in the bill. Often this has been where a case has settled in advance of a trial but there is a 2 stage success fee with the 100% only applying if the matter goes to trial with a lesser percentage if the case settles. In one recent case 100% was claimed on a CFA with a single success fee but the document itself only provided for 12.5%. It turned out this was an error when the CFA was prepared but it had never been spotted or corrected.

    At the end of the day it comes down to ethics and professionalism. I can count on one hand the number of draftsman I would accept their word on just the two issues above let alone anything else

  11. So TECP, you would turn up to a DAH and seek to justify that time before a Judge? Or would you concede the funding element prior to the hearing?

  12. Truly Eminent Costs Professional

    No!

    Please understand that the time claimed does not relate to funding!

    Is it too much to ask for you to consider that time relating to, for example, preparing a letter to BTE/ATE insurers about the prospects of success, causation or any other pertinent issue may require (not duplicated) work to materially progress the claim?!

    I actually cant believe there are some people out there who really have not got a clue!

  13. Could I just ask, that is this not now a moot point as the use of case law in PODs and PORs is supposed to be avoided under the new precedent G and Jackson reforms in rule 47?

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