Dechert -v- ENRC – 27.1.2017

The above case has received substantial coverage in the legal press. The global legal costs run to over £15m+. Well it was going to happen some time, i.e. the courts or the regulators getting a grip of the mess in the legal profession of lack of budget information/accuracy/updates. Advocating on this issue for over 2 decades.  I wrote an article called Budget based billing in 1999, published in Legal 500.The whole purposes of my work on the Tool Kit on Costs Management published by the Law Society in 2013 was to give the legal profession, specifically the small law firms the tools to be able to provide budgets/costs information/updates to their clients. As it sold a grand total of 2 in 2016, I suspect not! The legal profession has buried its preverbal head in the sands.  Well wake up and smell the coffee, if legal costs, as in this case can end up in court because of lack of budget information/accuracy/updates wait till the rest of the world catches on.

The judgment  in this case runs to over 100 paragraphs. I have picked out the 2 paragraphs as a stark warning to the legal profession that the courts will not tolerate the BAD old ways of budgets/client transparency.

 51              Mr Gerrard’s view that the work was difficult to predict is prevalent in every estimate that he has given. But any such difficulty is in my view wholly insufficient to cover the gap between the estimates and the reality. Mr Gerrard’s phrasing is redolent of costs estimates from ten or more years ago where a solicitor would routinely say that the costs to be incurred were impossible to predict. As recorded above, Mr Gerrard referred in his first estimate to the need for efficiency, careful consideration and intelligent targeting of time and resources. He indicated that the claimant would be kept informed of the likely costs as the matter progressed. The discrepancy between that approach and the reality of brief estimates only produced reactively, and which were invariably underestimates, is vast.

52.               The work carried out in this case straddles the period of the review of Lord Justice Jackson. The need to improve the prospective understanding of costs through budgeting was writ large within that report and given prominent publicity. In that environment, it is simply not sufficient for a solicitor to provide an early estimate which is then not updated for a considerable period. I have already commented that the original estimate made seemingly unrealistic assumptions on the work that would be required and in my view it was almost inevitable that it would be exceeded once the investigations had begun.

 Paragraph 34.An example given of actuals/budget figures.

 Monthly estimate for 2012 April to August  between £350K to £400K.

Actual Costs 

May £696K

June £492K

July £596K

Aug £622K.

 Monthly estimate for 2012 September –  Dec £530K -£560K.

Actual costs

Sept £784K

Oct  £1.35m

Nov £1.14m


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