How the Law Society of England and Wales control external legal costs!

 

In the IN THE COMPETITION APPEAL TRIBUNAL June 2016

http://www.catribunal.org.uk/files/1249_Socrates_Judgment_CAT_10.pdf

In the matter of:

SOCRATES TRAINING LIMITED –v- THE LAW SOCIETY OF ENGLAND AND WALES

Brief:

In this costs capping hearing, The Law Society of England and Wales, sort costs in excess of £637,000 (on reduced hourly rates of city law firm, Norton Rose Fulbright) in regard to a claim against them of £500,000.

The Law Society’s costs were subsequently capped at £350,000.

 BRIEF FACTS OF CASE.

In the present case, the claimant is an SME with an annual turnover of some £750,000.

The claim alleges an abuse of dominant position by the defendant, the Law Society, and seeks an injunction and damages. The part of the case that is subject to the FTP by order of the Tribunal is limited to the injunction claim. If an abuse is established, then the question of damages has been split off for a subsequent trial outside the FTP. However,

it is relevant to note that the damages are quantified in the claim form at £112,500, on the basis that by reason of the conduct complained of the claimant has lost the custom of some 75 firms who would spend some £600 each for two and a half years. In pure financial terms, as a competition action this is not a large claim. Of course, if an injunction were not granted after trial, the ongoing loss would be greater, so it may be said that the value of the claim is not limited to the damages to trial but extends several years into the future. Even so, it is hard to see that in broad terms it is over £500,000.

 Costs Capping Application.

Both sides have put in costs budgets as directed. The claimant’s budget is in the total sum of some £220,000, which includes almost £56,000 for an expert economist. The defendant’s budget is a little over £637,000, including a little over £33,000 for an expert economist.

The Law Society, having initially instructed a well-known firm of solicitors in Birmingham, then changed to instruct a major firm in the City of London. Mr. Scott, a partner in the Law Society’s current solicitors, explains in his witness statement and as I accept, the solicitors have reduced their fees below their usual commercial rate. However, even with this reduction the charge amounts to £395 an hour for the partner and £315 an hour for a senior associate. I note that the trainee solicitor is charged at £150 an hour.

Specific Issues on the Budgets

(1) So far, this case has involved the preparation and then amendment of a defence, which was drafted by counsel, attendance at one case management conference and consideration of issues concerning disclosure, but not any actual disclosure. I find it surprising and certainly not reasonable that the solicitors have spent 450 hours since being instructed on the 25 April 2016 at a cost of almost £140,000.

( 2) I note that the fees for preparing witness statements are calculated on the assumption that each of the four witness statements would be 30 pages in length. Even on that assumption, I do not think it is reasonable or necessary for the partner to devote 40 hours to reviewing those witness statements, and reviewing the statements of no more than three witnesses from the other side, when the other members of the team are also devoting 235 hours to this task.In addition, there is a charge of £16,000 for counsel’s work under the same head.(

(3) Given that the expert economist is charging the fees of some £33,000 for his or her work on the experts’ reports, which I do regard as reasonable, it is not, in my view, reasonable or necessary for the solicitors and counsel to incur further fees of over £50,000 in connection with the preparation of the expert’s report, which, of course, has to be prepared by the expert not by them, and then consideration of the report produced by the other side’s expert. Some expenditure of time on that is clearly justifiable, but, in my view, not this much.

(4) For the solicitors to charge over £103,000 for trial preparation and attendance at a three to four day trial – all that, of course, quite apart from counsel’s fees –seems to me excessive. I should observe that it is, of course, the claimant’s solicitors, not the defendant’s solicitors, that will be preparing the trial bundles and this is not a case where those bundles will comprise many thousands of documents.

 

Conclusion:

Standing back, on the material now before the Tribunal, in my judgement the appropriate figure for a cap on the claimant’s recoverable costs from the Law Society is £200,000, and the appropriate figure for a cap on the Law Society’s recoverable costs from the claimant is £350,000

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