Recovering shortfall in costs from client’s damages
During the rough-and-tumble of a typical detailed assessment hearing, where the judge will be making multiple ex tempore decisions, it is routine to hear criticisms of the amount of time claimed by the receiving party and/or criticisms of certain items that have been included within a bill of costs. It is much less usual to see such criticisms make their way into a reserved/reported judgment as such decisions are usually dealing with technical points of principle.
The reserved judgement of Senior Master Gordon-Saker in ST v ZY  EWHC B5 (Costs) will therefore make awkward reading for Irwin Mitchell (“IM”), the solicitors concerned. The judgement was handed down, in part, expressly for release to BAILII (ie for wider reading).
The Court was dealing with a personal injury case where the successful claimant’s solicitors were seeking to recover a costs shortfall from the claimant’s damages.
The very fact that seeking such recovery was viewed as being unusual was highlighted:
“In the years since the 2012 Act came into force, some solicitors have sought to recover their success fees from their clients when acting for children or protected parties. In the Costs Office I am aware of only two firms of solicitors who, in such cases, regularly seek to recover the fees which exceed the basic charges recovered between the parties.”
In relation to the instructions that had been given to IM’s counsel in advance of the detailed assessment hearing:
“It was … unfortunate that on the day that the bill was listed for detailed assessment [IM’s counsel] told me that he had not been provided with the full set of IM’s papers in advance of the hearing, although the court had been provided with them electronically. On the previous two occasions when I have listed IM’s bills for detailed assessment under r.46.4(2), counsel had not been provided with the full set of papers. To misquote Lady Bracknell, once would have been a misfortune. Thrice begins to look like a policy.”
In terms of some of the items claimed within the bill, where any shortfall in recovery was being sought from the client:
“Quite why it would be reasonable to charge for even a junior fee earner to spend 48 minutes researching the APIL Guide to Fatal Accidents to see who can bring a claim for loss of dependency and then spend 30 minutes considering an internal guidance note on fatal claims by the costs management team is unclear.”
IM had been acting in relation to claims brought on behalf of various individuals in addition to the claimant (“C”). In terms of whether the bill had properly excluded costs relating to those other than the claimant:
“No particular thought would appear to have been taken to separate out the costs for which C is not liable.”
In relation to one of the main issues the Court was considering, namely whether costs in excess of the last approved cost budget were “unusual in amount”:
“I should add that I think it very surprising that a solicitor would not tell their client that the budget had been exceeded and that the costs in excess of the budget would not be recoverable. … Instead IM appear to have been happy simply to ignore the budget and incur costs which they would or should have known would not be recovered from the Defendant.”